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TMI Blog2012 (8) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of CBDT Circular No. 667 dated 18.10.93 which is not applicable on the facts of the case. 3. The brief facts of the case are that return declaring total income of Rs. 12,19,721/-was filed by assessee. During the year the assessee declared long term capital gain and claimed exemption under section 54F, which was disallowed by AO with the following observations :- "During the course of assessment proceedings it was found that assessee has declared Income from long term capital gain amounting to 9,66,3857 by claiming exemption u/s 54. During the year under consideration for claiming exemption u/s 54 the assessee has invested 12050000/- for purchase of land toward Deepak Nagar Yogna property. For claiming exemption assessee has purchased property from Sh. Ram Rishpal Agarwal and Sh. Beni Gopal Agarwal S/o Sh. Madan Gopal Agarwal R/s Ganeri Wala Bhawan Naya Bazar, Ajmer. The assessee has made agreement for purchase of the property from the above two parties the details of properties as per agreement is as under:- In view of the detail mentioned above it is seen that as per agreement the assessee has purchased agriculture land for claiming exemption u/s 54 of the IT Act. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has purchased land in Deepak Nagar Yojna and agreement was executed for the purchase of property and was submitted before ld. A.O. There was some dispute and matter was sub judice but possession was taken immediately. That it is nowhere necessary that invested for construction house is to be made in non-agriculture land as per section 54 of the I.T. Act. Even farm house is considered as residential house. Section 54(F) Subject to the provisions of sub-section (4), where in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (here after in this section referred to as the original asset), and the assessee has within a period of one year before (two years) after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house. It was held in the matter of Additional Commissioner of Income-tax v. Narendra Mohan Uniyal [2009] 34 SOT 152 (Delhi) that the exemption under s. 54F is allowable in respect of the amount invested in the construction of a residential house-There is no rider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 775 (SC) and CIT PR.L. Sood (201) 165 CTR (Delhi) 458 [2000] 245 JTR 727 (Delhi) relied on. It was also held in Commissioner of Income-tax v. Smt Kanta Devi Saraf [2002] 172 CTR (Cal.) 322 : [2002] 254 JTR 317 (Cal.) : [2002] 125 Taxman 215 that exemption under Section 54F Purchase of house property vis-a-vis utilization of sale proceeds. Before insertion of sub. (4) in 54F, the requirement for claiming the benefit of exemption was that the assessee should purchase a residential house within a period of two years, from the date of sale of the original asset or Construct a residential house within 3 years from the said date. There was no further requirement that the sale proceeds should be utilized by the assessee within the stipulated period. Assessee sold shares for Rs. 30,32,500 and purchased a residential house on the next day for Rs. 25 lakhs by paying Rs. 5 Lakhs to the sellers remaining amount was payable subsequently stamp paper for Rs. 5 lakhs also purchased for execution of sale deed. Total investment for purchase of residential house thus came to Rs. 30 Lakhs - Tribunal was therefore right in allowing the benefit of s. 54F. Similar views were expressed in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Co. [2003] 259 ITR 724/128 Taxman 777 (Raj.) and in case of Addl. CIT v. Narendra Mohan Uniyal [2009] 34 SOT 152 (Delhi) and in case of Shyam Sunder Mukhija v. ITO [1991] 38 ITD 125 (JP) held that assessee is eligible for exemption under section 54F. The finding of ld. CIT(A) have been recorded in para 3.7 are as under :- "3.7 When the present case is examined in view of this legal position, it is found that AO disallowed exemption u/s 54F on the ground that land purchased by appellant was Agricultural land and moreover the property was not registered in his name. However in view of above-mentioned decisions, I hold that deduction u/s 54F cannot be disallowed on the ground that Land purchased is Agricultural and not Registered in the name of buyer. The only conditions for claiming exemptions u/s 54F are as follows: a. The asset transferred is long term capital asset, not being a residential house. b. Residential house is purchased within one year before or two years after the date of transfer of the original asset. c. Construction is completed within three years from the date of transfer. Thus there is no prohibition regarding construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l at Deepak Nagar Yodna property. This land was purchased consisting of 3300 sq. yards which is a part of agricultural land. The rate of land was Rs. 4550/- per sq. yard. Rs. 10,00,000/- was given in advance on 19.11.2007. An agreement was entered, copy of the same was filed before the AO. The remaining amount was paid on a later stage. The assessee claimed exemption under section 54F stating that the amount in question has been invested for purchase of land for constructing the house. However, AO did not accept the contention of the assessee on two grounds i.e. firstly, the land in question purchased through an agreement and the agreement has not been registered; secondly, it was opined by AO that the plot in question is an agricultural land and on purchase of agricultural land, deduction under section 54F cannot be allowed. However, the ld. CIT(A) considered the fact that there is no bar to purchase agricultural land on which house was to be constructed. The fact is that subject to provisions of sub-section (4) of section 54F, where, in the case of an assessee being an individual or a Hindu Undivided Family, the capital gain arises from the transfer of any long-term capital asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the valuation of the construction is Rs. 16,29,600/-. It means, the exemption claimed by assessee which was at Rs. 1,20,50,000/- only. This consideration was paid for the purchase of plot and Rs. 16,29,600/- was also invested in construction of house of which the assessee has not claimed any deduction for the reason known to him. However, it is seen that house was constructed and, therefore, ld. CIT(A) has allowed the exemption to the assessee to the tune of Rs. 1,20,50,000/-. Since all the conditions for claiming exemption under section 54F have been found satisfied, therefore, in our view, it will be futile exercise if the matter is sent back to the file of AO. All the details are placed on record from which it is established that assessee purchased a plot of land and then constructed the house on it. The house constructed on agricultural land or on other land does not matter, but the fact that house should be constructed and from the report it is very much clear that a residential house was constructed as this fact has been mentioned by valuer in para 14 of his valuation report. In view of these facts and circumstances, we hold that ld. CIT(A) was justified in allowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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