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2021 (10) TMI 362 - HC - Income TaxExemption u/s 54F(1) - inclusion of cost of the new residential house or cost of construction of the new residential house - adjustment against the cost of new asset - Whether it would include the cost of land though purchased more than 1 year prior to sale of capital asset? HELD THAT:- In the case of C. Aryama Sundaram [2018 (8) TMI 864 - MADRAS HIGH COURT] condition precedent for adjustment against the cost of new asset is that the new residential house should have been purchased within one year before or two years after the transfer of the residential house, which resulted in the capital gain or alternatively, a new residential house has been constructed in India, within three years from the date of the transfer, which resulted in the capital gain. It has been categorically held that the said Section does not exclude the cost of land from the cost of residential house. It is the cost of the new residential house and not just the cost of construction of the new residential house, which necessarily include the cost of the land, it includes, the cost of the materials used in the construction, the cost of labour and any other cost relatable to the acquisition and/or construction of the residential house. The object of Section 54F is to encourage investment in the residential building and enable the assessee to save tax on capital gains. The aforesaid three limbs of Section 54F(1) being different and distinct, each limb has to be read as a whole separately. The three parts/limbs cannot be intermingled to deny the benefit of 54F(1) to the assessee. The third part/ limb being applicable to the facts of the case and it is not in dispute that the assessee has constructed the residential building within three years from the date of transfer of long standing asset, the benefit flowing from the said Section cannot be denied on the premise that the land was purchased prior to one year. In our opinion, this interpretation of the revenue is wholly untenable and would defeat the object and purport of the provision. The Tribunal has failed to appreciate the judgment of C. Aryama Sundaram, supra in a right perspective. 14. It is trite that even if two plausible views are possible, the view beneficial to the assessee has to be applied. On technicalities, the benevolent provision cannot be interpreted to deny the benefit to the assessee. - Decided in favour of assessee.
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