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2019 (2) TMI 116 - AT - Income TaxDeduction u/s 54 denied - payment made prior to the sale of the old property - assessee made payments after 10.04.2011 i.e. beyond the period of 3 years from the date of sale of old property - as property was not acquired within the stipulated period of three years and consequently, assessee is not entitled for deduction u/s 54 - Held that:- In CIT vs H.K. Kapoor (1997 (8) TMI 44 - ALLAHABAD HIGH COURT) held in unequivocal terms that in view of the decision of the Karnataka High Court in the case of CIT vs. J.R. Subramanya Bhat (1986 (6) TMI 7 - KARNATAKA HIGH COURT) the capital gains arising from the sale of the old house to the extent it got invested in the construction of the new house would be exempt u/s 54 and Section 54 does not lay down that the construction of the new house must taken after the sale of the old residential house or that the sale proceeds of the old residential house must be used for the construction of the new residential house. The law is fairly settled on this aspect that for acquiring the new house, it is not necessary that the assessee must utilize only the sale proceeds of the old house. By respectfully following this line of decision of the higher fora, we hold that the authorities below are not correct in refusing to accept the claim of the assessee to deduct such part of amount which was invested in the construction activity of the new house earlier to the sale of the old house. Turning to the other limb of the contention of the authorities below that the assessee did not acquire the property within three years from the date of the sale of the old house, the fact remains that there is no dispute that except the sum of ₹ 22,91,382/-, the entire sale consideration for the new house was invested on or earlier to 23.3.2011 i.e. within 3 years from the date of the sale of the old house. No substance in the objection taken by the authorities below to disallow the claim for deduction u/s 54 of the Act. - Decided in favour of assessee.
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