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2017 (8) TMI 1239 - AT - Income TaxExemption u/s 54 denied - purchase of property in apartment - to be treated as purchase or construction of residential property - eligibility period of 2 years or 3 years - possession was not taken till filing of return - Held that:- As per CBDT Circular No. 471 dated 15/10/1986 read with Circular No. 672 dated 16/12/2993 the terms of scheme of allotment and construction of new apartment as provided in apartment buyers agreement are similar to those as mentioned in para 2 of CBDT Circular No. 471 dated 15/10/1986. The reliance of the assessee on various case laws supports the case of the assessee. The assessee has complied with all the conditions for making investment of capital gains in asset which cannot be termed as new asset as the old asset was sold on 11/4/2008 and time limit for investing capital gains in construction of new asset would have expired on 10/4/2011 but the assessee prior to that had entered into an apartment buyers agreement on 3/1/2007. Thus, the assessee has proved its stand along with the documentary evidence which was totally ignored by the Assessing Officer as well as by the CIT(A). Treating the interest expense on borrowed funds towards cost of acquisition of residential house as transferred the assessee had not claimed such interest expense as a deduction on such self occupied property under any Section like that of Section 24(B) or Section 57 of the Act. Therefore, the assessee is entitled to claim it as part of cost of acquisition of such house. The same is supported by the Karnataka High Court judgment in case of CIT Vs. Maithrevi Pai [1983 (11) TMI 43 - KARNATAKA High Court] wherein it is held that interest paid on borrowings for acquisition of a capital asset must fall for deduction u/s 48 of the Act provided the same has not been claimed as a deduction under other heads like those u/s 57 of the Act. Thus, the order of CIT(A) is set aside. - Appeal of assessee allowed.
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