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2017 (1) TMI 1700 - AT - Income TaxDeduction u/s 54F - capital gain arising on transfer of Long Term Capital Gain Asset - AO found that the conditions specified in section 54F of the Act was not satisfied in the case of the assessee - delay in completion of construction activity of the residential house - HELD THAT:- We find ourselves in agreement with the proposition canvassed on behalf of the assessee that section 54F is a beneficial provision for promoting the construction of residential house and therefore requires to be construed liberally for achieving that purpose. The intention of literature is to encourage investments in the acquisition of residential house and completion of construction or occupation is not the strict requirement of the law so long as the consideration has been appropriated for construction of a residential house. The condition of construction of residential house within a period of 3 years has been somewhat read down and relaxed by the judicial precedents as relied upon by the assessee. Merely because the construction could not be completed within a stipulated period of three years after the date of transfer of original asset as contemplated under section 54F of the Act, this by itself would not act as an handicap for availing benefit of 54F. Several objections on facts have been recorded by the CIT(A) while denying section 54F of the Act. The objections ranges from purchase of only plot of land and no evidence of construction cost tagged thereon to objection in the form of purchase of plot prior to transfer of original asset in derogation of condition stipulated u/s 54F whereby deployment of funds in construction activity only after the transfer of original asset is eligible for relief. These objections recorded by CIT(A) as extracted supra are essentially factual in nature. The money stated to be utilized and appropriated towards purchase of plot of land and construction of residential house thereon after the transfer of original asset in terms of S. 54F is required to be ascertained to determine the eligibility of claim. In the absence of factual details before us, we are unable to address the factual controversies involved. It was asserted on behalf of the assessee that the construction of a residential house has been eventually completed. Copies of some electricity bills were produced to lend support to such assertions. Bare reading of S. 54F would suggest that construction of house beyond stipulated time limit of 3 years is not the only condition precedent for eligibility of deduction claimed. The other conditions would thus continue to apply. Matter is to examined afresh after granting proper opportunity of being heard to the assessee. It will be open to the AO to verify the entire issue de novo and satisfy himself that the conditions of section 54F have been duly complied with. However, in the same vain, we clarify that mere delay in completion of construction activity of the residential house will not act as a fetter for eligibility of deduction under section 54F of the Act. The issue is thus set aside and remitted back to the file of the AO in terms of directions noted above. Appeal of the assessee is allowed for statistical purposes.
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