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2021 (9) TMI 159 - AT - Income TaxDeduction u/s 54 - Proportionate deduction - Denial of deduction as capital gains arising out of sale of original asset was not deposited in the Capital Gain Deposit Account - Assessee had claimed exemption for having invested the capital gains in the new residential house - HELD THAT:- Though assessee purchased the residential site and incurred the expenditure the assessee failed to deposit the balance amount in the account notified by the Central Govt within extended period due to litigation, hence the assessee is not entitled for deduction to the extent of balance amount which was not invested under an account notified by the Central Govt. Deduction under this section is restricted to proportionate amount invested in purchase of new residential site for the purpose of construction of new residential house after sale of the original asset and also amount invested in construction of property. The intention of legislature was that either the assessee has to purchase or construct new residential house out of net sale consideration received by sale of original asset or deposit the same in the account notified by the Central Govt. u/s. 54 - If the assessee failed to do so, he is liable for capital gain on the transfer of capital asset. In the present case, the assessee purchased the residential site and used portion of net sale consideration for construction of new house and not appropriated the balance sale consideration either in investment in construction of residential house or deposit into account notified by the Central Govt. to avail exemption u/s. 54. Hence the assessee is entitled for deduction only to the extent of amount used for purchase of residential site only - Decided partly in favour of assessee.
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