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2019 (8) TMI 289 - AT - Income TaxDeduction u/s. 54 - denied deduction on the ground that since the Assessee was not owner of the land, the condition laid down in Sec.54 for claiming deduction was not satisfied - assessee purchased only tenancy rights and therefore was not entitled to deduction u/s.54 - HELD THAT:- As rightly contended by the learned counsel for the Assessee, when exemption is claimed under the second limb of Sec.54, i.e., utilization of the capital gain in construction of one residential house in India, all that the Assessee has to do is to invest the capital gain in construction of a residential house. It is immaterial whether the Assessee has ownership of the land over which the new asset i.e., one residential house in India, is constructed. Such a condition does not emanate from a plain reading of Sec.54 . In our view the AO fell into an error in reading such a condition and refusing the claim of deduction u/s.54. As rightly submitted deduction in the case of Yogesh Sunderlal Shah [2012 (9) TMI 769 - ITAT MUMBAI] was claimed by the Assessee u/s.54 on the first limb i.e., purchase of a new asset i.e., a residential house and not on the basis of the second limb of Sec.54 viz., construction of new asset i.e., one residential house in India. Since the words used in Sec.54 of the Act in so far as it relates to the first limb are “purchase” of a new asset, there was scope for examining regarding ownership of the new asset purchased, but such conditions cannot be extended to a case of deduction u/s.54 claimed on the basis of the second limb viz., construction of new asset i.e., one residential house in India. The requirement of Sec.54 in the second limb is that capital gain should be used in construction of residential house and nothing more. Assessee in the present case is the owner of the superstructure constructed by utilizing the capital gain and this is clear from clause-10 of the lease deed by which the land over which the construction has been put up was given on lease to the Assessee. Therefore, the deduction u/s.54 of the Act ought to be allowed to the Assessee as claimed by the Assessee. - Decided in favour of assessee.
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