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2020 (1) TMI 254 - AT - Income TaxDenying benefit of section 54 - AO did not allow exemption to the assessee on the ground that residential house was not constructed within three years of sale of house property and even at the end of the stipulated period of three years, the house was incomplete - HELD THAT:- What is required under the section is that the assessee should take steps to make investment in a residential house. Thus, emphasis is on the utilisation or investment of capital gain in construction of residential house. Claim of the assessee is that he had invested full sale consideration, and over and above that, some more money and total investment is at ₹ 64.74 lakhs. Hon'ble High Court of Madhya Pradesh in the case of Smt. Shashi Varma [1996 (3) TMI 65 - MADHYA PRADESH HIGH COURT] has held that while allowing exemption u/s 54 of the Act, investment for acquisition of flat under the Scheme of DDA, where first instalment was paid, was much more than the capital gains, deduction is to be allowed as section 54 does not require that the construction of new house should necessarily be completed within two years where substantial investment is made in construction of house. Requirement of section 54 of the Act is for the assessee to have either purchased a residential house, being a new asset, within the stipulated period or construct a residential house within a period of three years from the date of transfer. The section does not prescribe the completion of construction of residential house and the thrust is on the investment of net consideration received on sale of original asset and start of construction of a new residential house. It is clear that for the Assessment Year in question, all that is required for the assessee to avail exemption contained in the section is to utilise the amount of capital gain for purchase and acquisition of new asset. Since the assessee has claimed that he has invested ₹ 64,74,946/-, which is higher than the amount of capital gain computed by the Assessing Officer, the assessee is very much eligible for claim of exemption u/s 54 of the Act. Since no documentary evidences have been furnished and only a claim has been made, we deem it fit to restore the issue to the file of the Assessing Officer. The assessee is directed to demonstrate that he has already invested ₹ 64,74,946/- towards construction of house and the Assessing Officer is directed to examine the documentary evidences and if found correct, allow benefit of section 54 - Decided in favour of assessee for statistical purposes.
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