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2017 (11) TMI 667 - AT - Income TaxDeduction u/s 54F entitlement - assessee is seeking exemption on the ground that it has constructed a residential house - objection of Assessing Officer are three-fold, firstly the assessee has 1/8th rights over the property on which the new asset is constructed; secondly, the construction started prior to transfer of original asset and thirdly the new asset can not be treated as residential house as same has been constructed on the commercial land - As per assessee by way of settlement amongst the co-owners, the assessee was given absolute rights over the new asset thus the assessee is entitled for exemption as claimed Held that:- We find that the Revenue has not brought any material on record suggesting that on commercial land no residential house can be constructed. Even there is no material suggesting that any unauthorized construction by the assessee would debar it from claiming exemption u/s 54F. In the absence of such material, in our considered view benefit of section 54F cannot be denied. PP Another objection of the AO is with regard to the fact that construction of residential house was started prior to transfer of original asset. This objection is also misplaced when the assessee is entitled to exemption u/s 54F if the residential house is purchased one year before the transfer of the original asset. Therefore, in our considered view merely because the construction was started prior to transfer of original asset, if same is completed within three years of transfer of original asset, would not come into way of entitlement of exemption. Another objection of the AO is that the assessee is having 1/8th share in the commercial land on which the new asset has been constructed. The explanation of the assessee is that by way of settlement the assessee was given absolute rights on the new asset. We are of the view that this claim of the assessee requires verification at the end of the AO. Therefore, we modify the finding of ld. CIT (A) to the extent that AO would verify from other co-owners about the factum of relinquishment of their rights into new asset. If the AO finds correctness into the claim of the assessee, he would allow the entire claim lest he would restrict the same to the extent of 1/8th of the cost of construction of new asset. Ground No. 1 of the revenue’s appeal is partly allowed for statistical purpose
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