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2018 (2) TMI 670 - AT - Income TaxRestricting the deduction under section 54 - actual consideration for the new house property determination - purchase within specified time limit under section 54 - what is the cost of the new residential house so purchased by the assessee at C 6 Anandvan Complex - Held that:- The arrangements for separate purchase of furniture and fixtures were indeed artificial, but the remedy did not lie in declining deduction under section 54 to the buyer to that extent. The remedy was in bringing the right amount of capital gains to tax by ignoring the nomenclature of sale of personal effects, specifically excluded under section 2(14)(ii) from the definition of capital assets, as sale of residential property. That, however, was not done. It could not have been open to the authorities below to treat the payment of ₹ 18,00,000 on account of furniture and fixtures on standalone basis, and thus exclude it as a separate item rather than as a “cost of the residential house so purchased”. In our considered view, therefore, the assessee is entitled to deduction under section 54F by treating entire amount of ₹ 78,00,000 as the “cost of the residential house” purchased within specified time limit under section 54. Here is an NRI who decided to sell a fairly spacious house in his hometown, and yet, to keep his India connection alive, invested a part of these sale proceeds in a smaller residential unit, but he has been declined the legitimate deduction under section 54 in respect of the same, only for the reason, as the circumstances suggest, that he is made an unwilling party to artificially splitting of sale consideration to minimise the capital gains burden of the seller. Leaving even this aspect of the matter aside, quite clearly the sale of furniture and fixtures was an integral part of the deal of buying the house property. Whichever we way look at it thus, the assessee was wronged in partial denial of deduction. Now that the facts on record demonstrate that the actual consideration for the new house property was ₹ 78,00,000, he is being sought to be declined resultant relief on the ground that this particular plea was not taken earlier. That is certainly not a fair treatment to an assessee. What matters really is that whether the assessee deserves the relief on merits or not, and when the assessee deserves the relief on merits, such technicalities should not be allowed to come in the way of justice to the assessees. We are, therefore, not inclined to uphold the technical objection raised by the learned Departmental Representative. We uphold the grievance of the assessee, and, accordingly, direct the Assessing Officer to delete the disallowance of deduction under section 54 to the extent of ₹ 18,00,000. The assessee will get the relief accordingly. - Decided in favour of assessee
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