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2022 (7) TMI 894 - AT - Income TaxDenial of exemption u/s 54 - A.O. held that the assessee has not made any investment in residential property for claiming exemption u/s 54 - HELD THAT:- The assessee has made advances to the developer, which has culminated in a purchase of a new residential house, sourced by the developer to fulfill his obligation of providing a residential house, which is also evidenced by the recitals in the sale deed, wherein he has affirmed the receipt of the advance and also paid for the new asset. The reliance placed by the assessee on the decision in the case of Sambandam Uday Kumar [2012 (3) TMI 80 - KARNATAKA HIGH COURT] of the Jurisdictional High Court, is also relevant to facts of instant case. The Hon’ble jurisdictional High Court had held that amounts paid within the period of three years, would be eligible to the claim of deduction u/s 54 though the house was not registered within the period of three years or two years, considering the fact that the payment for the new asset was paid off within the specified time. It is also pretend to place reliance on the judgment in CIT Vs. Shakuntala Devi [2016 (10) TMI 60 - KARNATAKA HIGH COURT], which has held that the investment in property if made within the time specified, the registration of the property though entered into beyond the period of three years. the assessee would be eligible for the claim of deduction u/s 54. As utilisation of the capital gains within the time specified would entitle the assessee to the claim of deduction under section 54 of the Act, notwithstanding the fact that the new asset was registered beyond the period specified under the I.T.Act, which according to the assessee was beyond her control and was to be liberally construed. It is held by various Hon’ble Courts that application of beneficial provisions must be liberal to accommodate the rules laid down broadly to verify compliance and must not be interpreted literally, unlike charging sections which are to be construed strictly. In support of this proposition, we place reliance on the judgments of Bajaj Tempo Ltd. [1992 (4) TMI 4 - SUPREME COURT] and CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. [1992 (4) TMI 3 - SUPREME COURT] As observed by us that the bonafides of the assessee cannot be doubted, since the assessee has made deposits into the capital gains scheme immediately and thereupon made payments to the developer to acquire the new house property. The assessee was also prevented by reasonable cause since the funds had already been utilized and was forced to acquire an asset due to the reason beyond her control. The section 54 being benevolent in nature, it should be liberal in interpreting the provisions of section 54 considering the fact that the new house was eventually acquired, out of the same capital gains utilized, which has been brought on record and not in dispute. For the aforesaid reasoning, we hold that the assessee is entitled to the claim of deduction and direct the A.O. to allow the claim u/s 54 to the said extent. Since we have held that the assessee is entitled to exemption u/s 54 of the I.T.Act in the peculiar set of facts, we do not deem it appropriate to adjudicate other grounds raised by the assessee in this appeal.
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