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2018 (6) TMI 410 - AT - Income TaxEntitlement to exemption u/s 54F - amount is not directly invested in purchasing of the villa, rather it is routed through mutual funds - Held that:- The capital asset was sold on 26.02.2011. The capital asset was purchased on 31.03.2011 and before the purchase of the capital asset the amount was deposited in mutual funds. Therefore in the considered opinion of the bench, before the date of filing of the return, not only the capital asset was purchased by the assessee on 31.03.2011, but also the assessee had deposited and invested an amount of ₹ 15 lakhs with Canara Bank. Therefore the assessee has fulfilled all the conditions required u/s.54F for the purposes of claiming the exemption, in our view deposit of money by the assessee inter-alia in mutual fund prior to purchase of residential house albeit will not make any difference if the assessee had purchased the residential house within the time provided by the Act - Decided in favour of assessee. Proportional exemption - assessee had only invested the amount of ₹ 1,94,49,302/- in purchasing the villa and has also invested an amount of ₹ 15 lakhs in Canara Bank, a scheduled bank - Held that:- the assessee is entitled to the exemption for the amount spent either for fixing the doors or amount paid to the architects or purchasing the installations which were necessary for making the house habitable to the maximum amount of ₹ 16,26,300/-. - As in terms of Section 54F the assessee is only entitled to proportionate exemption vis-a-vis, cost of the original asset and the cost of the new assets. In the light of the above, the AO is directed to recomputed the capital gains exemption.
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