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2022 (7) TMI 742 - AT - Income TaxExemption u/s. 54 - denial of claim on the ground that the assessee has commenced the construction of the residential house property before the sale of long term capital asset - HELD THAT:- We find merit in the argument of the Ld. AR that the cost of land even though purchased prior to the date of sale of residential house on 28/2/2015, shall be allowed as a deduction U/s. 54. Date of completion of the construction should be within the period as specified U/s. 54 of the Act and the commencement of construction is not the criteria as mentioned in section 54 of the Act It is not disputed by the Revenue that the new residential house has been constructed within the time stipulated in section 54(1) of the said Act. It is the cost of the new residential house and not just the cost of construction of the new residential house which is to be allowed as deduction. In view of the above by respectfully following the ratio laid down in the case of C. Aryama Sundaram [2018 (8) TMI 864 - MADRAS HIGH COURT] where the cost of new residential house which should necessarily include the cost of land, cost of materials used in the construction, the cost of labour and other relatable cost of construction of the residential house has to be considered for the purpose of deduction U/s. 54 of the Act. We therefore direct the Ld. AO to consider the cost of land purchased by the assessee while computing the deduction U/s. 54 of the Act and we allow the appeal of the assessee.
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