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TMI Blog2011 (5) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... tently illegal, bad in law, arbitrary and devoid of merits the same may please be vacated and it may please be held that the long term capital gains on sale of land by the appellant to M/s. Magarpatta Township Development & Construction Ltd., work out to Rs. 14,23,976 after allowing the deduction of Rs. 63,00,552 under section 54F of the Act as claimed by the appellant." 2. The brief facts of the case are that for the year under consideration, the assessee derived income from capital gain on transfer of ancestral agricultural land on 31-3-2005 to Magarpatta Township Construction and Development Co. (hereinafter referred to as "MTCDC"). The assessee claimed deduction under section 54F of the Act amounting to Rs. 63,00,552 from the capital gains on the ground that the assessee has invested the sale proceeds in a residential house. The computation of net capital gains of Rs. 14,23,975 offered to tax after considering the deduction under section 54F of the Act is given on page 2 of the CIT(A)'s order which is reproduced as under: "The income from capital gain was out of sale of ancestral property situated at Hadapsar Pune which was sold to Builder i.e. Magarpatta Township Constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 23 and 24 as discussed in preceding paragraph. Secondly, section 54F of the Act only specifies that the assessee should construct a residential house within a period of 3 years and that condition is also fulfilled as the assessee received the possession of the new house on 31-3-2008 i.e. within three years from the date of transfer i.e. 31-3-2005. Thirdly, section 54F of the Act only states that the capital gains should be invested in a new house. The assessee wanted to construct a spacious house with a garden and therefore, he has purchased the total plot of 17,336 sq.ft. and the bungalow area is about 4000 sq.ft. It was unjustified to hold that the other plots do not qualify for the deduction under section 54F of the Act. The CIT(A) failed to appreciate that all these plot Nos. 37 to 43 are adjacent to each other and combined together and practically one residential unit for the assessee irrespective of different numbers. Thus, the new residential unit consisted of all these plots and the bungalow. There is no restriction provided in section 54F of the Act about the size of the new residential unit or the area of the new residential unit. Hence, the Assessing Officer and the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulated period as envisaged in the provisions of section 54F of the Act, deduction should be allowed to the assessee even though the construction has not completed and possession is not given to the assessee. In the present case, the possession of the newly constructed bungalow by the MTCDC was given on 31-3-2008 itself as per the possession letter discussed above and placed on page 28 of the paper book and even otherwise the entire purchase price of the newly constructed property was paid by the assessee to MTCDC on 31-3-2005 itself on the date of transfer of agricultural land the assessee has substantial domain over the new residential house and thus the deduction under section 54F of the Act is allowable. 6. On the other hand, the learned DR heavily relied on the decision of the CIT(A). He drew our attention to various relevant portion of the CIT(A)'s order. According to the learned DR, the assessee transferred capital asset in question on 31-3-2005 and the capital gain arising thereon has to be utilized in the construction of residential house within the stipulated period under the provisions of section 54F of the Act. The sale proceeds on transfer of capital asset was retai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee received the amount, the provision of depositing in the above said manner would have arisen but in this case the amount receivable from the ancestral agricultural land transferred in question has never been received by the assessee at any point of time and on the date of transfer it has been appropriated towards purchase of a bungalow on plot No. 37 and adjacent vacant plot Nos. 38 to 43. The provisions of section 54F read as under: "The amount of net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139 shall be deposited by him before furnishing such returns (such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139) in an account in any such bank of institution as may be specified in, and utilized in accordance with, any scheme in this behalf and such return shall be accompa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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