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2018 (12) TMI 822 - AT - Income TaxDisallowance of deduction u/s 54F - whether deduction under s.54F is available in respect of capital gains arising from sale of more than one long term capital assets, not being residential house (original asset) against the construction or purchase of one residential house (new asset)? - whether capital gains of multiple years can be claimed against purchase/construction of same new residential house i.e. new asset subject to fulfillment of other conditions? - Held that:- The identical issue of allowability of Section 54F of the Act on sale of multiple assets came up for consideration before the co-ordinate bench in the past. Useful reference can be made to Anagha Ajit Panekar[2006 (6) TMI 256 - ITAT MUMBAI]; Krishnadevi Kejriwal [2010 (6) TMI 769 - ITAT MUMBAI] and ACIT vs. Mahindrakumar Jain [2017 (8) TMI 480 - ITAT DELHI] as quoted in the appellate order of CIT(A). The object of Section 54F is to encourage an assessee to convert any of his long term assets into a residential house subject to the condition that assessee does not own more than one residential house other than the new residential house on the date of transfer of long term asset. The Section, thus, in essence, offers some incentives to a tax payer to change its unproductive assets into a residential house. The action of the assessee is thus in conformity with the object and purpose of Section 54F of the Act. To say that the assessee is entitled for deduction in respect of capital gains arising from sale of only one long term capital asset and conversion thereof in residential property would in effect seriously limit the object and purpose of Section 54F of the Act. If the interpretation of ‘any long term asset’ as suggested by Revenue is read to mean deduction in respect of only one transaction of transfer is endorsed, it will seriously curtail the application of Section 54F of the Act. Such interpretation would lead to absurd results and requires to be shunned. Significantly, we also notice the use of broader expression ‘any’ long term asset in distinction to expression ‘a’ long term asset as used in Section 10(38) of the Act. Thus, the legislative intent when gathered from the distinct language used, it is clear that a narrower interpretation would fail to achieve manifest purpose of the deduction provision. We thus, prefer to avoid a construction which would reduce the legislation to futility and grant broader construction to bring effective result on availability of such deduction. As a corollary, the decision of the co-ordinate bench in favour of the assessee is, in effect, harmonious interpretation of Section 54F of the Act and not necessarily a liberal interpretation of the deduction provision. We are thus of the view that the decision of the Hon’ble Supreme Court in Diipkumar & Co. [2018 (7) TMI 1826 - SUPREME COURT OF INDIA] does not hinder the claim of assessee. - Decided against revenue
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