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2018 (8) TMI 864 - HC - Income TaxExemption/ deduction u/s 54 - Purchase of land with superstructure - After demolishing the existing superstructure, the appellant assessee constructed a residential house - assessee submitted that the new residential property had been constructed within a period of three years from the date of sale of the old property. He argued that construction of a property cannot be done without land underneath it and, therefore, the cost of construction of the property should also include the cost of land. Held that:- It is axiomatic that Section 54(1) of the said Act does not contemplate that the same money received from the sale of a residential house should be used in the acquisition of new residential house. Had it been the intention of the Legislature that the very same money that had been received as consideration for transfer of a residential house should be used for acquisition of the new asset, Section 54(1) would not have allowed adjustment and/or exemption in respect of property purchased one year prior to the transfer, which gave rise to the capital gain or may be in the alternative have expressly made the exemption in case of prior purchase, subject to purchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain. It is not a requisite of Section 54 that construction could not have commenced prior to the date of transfer of the asset resulting in capital gain. If the amount of capital gain is greater than the cost of the new house, the difference between the amount of capital gain and the cost of the new asset is to be charged under Section 45 as the income of the previous year. - Decided in favor of assessee.
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