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2019 (4) TMI 203 - AT - Income TaxDenial of exemption u/s.54F - construction of new residential house on land purchase of two parts one before sale of assets - HELD THAT:- It is important to bear in mind that sale of an original asset and side-by-side purchase or construction of a new residential house is not only an important decision of one’s life having repercussions for a longer period of time, but is also a time consuming matter as the concerned person has to mobilise his resources. If a plot is purchased in contemplation of ensuing construction within a reasonable time even before the transfer of the original asset, there can be no fetters on the allowability of exemption u/s 54F, if other conditions are fulfilled. What is a reasonable period, depends on the facts and circumstances of each case, which should normally not exceed two years before the date of transfer of the original asset, albeit such a period of two years cannot be a benchmark. A plot of land purchased prior to such a reasonable period cannot ordinarily be viewed as having been purchased for starting construction of a new residential house. It, ergo, follows that so long as the construction of a new residential house is completed within a period of three years from the date of transfer of the original asset, the benefit of exemption u/s.54F has to be allowed with reference to whole of the cost of plot or the cost of construction thereon, even if such a process of purchasing the plot or constructing the house started within a reasonable time anterior to the date of transfer of the original asset. The date of purchase of the first part of the plot on 11.10.2010, which is within the reasonable period as discussed above, constitutes the date of initiation of process of construction, and the deadline for the completion of construction would be 10.6.2015. As the construction actually got concluded latest by 15.9.2014, we hold that the assessee is entitled to exemption u/s 54F with reference to the full amount of ₹ 1.12 crore spent on purchase of two parts of land and construction of new residential house thereon. The impugned order is overturned pro tanto.
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