TMI Blog2010 (7) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... on claimed - AO directed to allow the claim of the assessee in respect of the benefit of exemption claimed under s. 54F of the Act – in favor of assessee - IT APPEAL NO. 392 (CHD.) OF 2010 - - - Dated:- 28-7-2010 - G.S. PANNU AND MS.SUSHMA CHOWLA, JJ. M.S. Vohra for the Appellant . S.S. Kemwal for the Respondent. ORDER Ms. Sushma Chowla, Judicial Member - The appeal by the assessee is against the order of CIT(A), Chandigarh, dt. 18th Feb., 2010 relating to asst. yr. 2007-08 against the order passed under s. 143(3) of the IT Act. 2. The assessee has raised the following grounds of appeal : "(1) That on the facts and in the circumstances of the case the learned CIT(A), Chandigarh has erred in confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of capital asset, the assessee was not entitled to benefit of exemption under s. 54F of the IT Act. The AO further observed that under s. 54F of the IT Act, the assessee is required to complete the construction of the house within a period of three years from the date of transfer of the original asset and as the assessee has failed to do so, she is not eligible for any deduction under s. 54F of the Act. 4. Before the CIT(A) the submission of the learned counsel was that the language of s. 54F(1) of the Act uses the word "constructed" and not "complete". Reliance was placed on the CBDT Circular No. 667, dt. 18th Oct., 1993 [(1993) 115 CTR (St) 1 ], which says cost of the land is an integral part of cost of residential house, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Departmental Representative for the Revenue placed reliance on the order of the CIT(A) and pointed out that in the case laws relied upon by the assessee the completion certificate had been received and hence, the allowance of the exemption claimed. 6. We have heard the rival contentions and perused the record. The issue arising before us is in connection with the exemption claimed under s. 54F of the Act. The assessee in the year under consideration had sold agricultural land for Rs. 1.50 crores against which it had claimed exemption under s. 54F of the Act amounting to Rs. 1.41 crores. The assessee had purchased a residential plot in South City, Gurgaon out of the sale consideration which was claimed as investment under s. 54F of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with in accordance with the following provisions of this section, that is to say,- ( i ) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under s. 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil ; or ( ii ) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of house, there is no provision to withhold or withdraw the deduction on the ground that the residential house, sought to be constructed is not complete. Reading the provisions of ss. 54(1) and 54(2) of the Act it was held by the Tribunal as under : "It is not correct to interpret beneficial provision of s. 54 in the manner as done by the Revenue authorities. The claim cannot be denied on the ground that construction of the house started by the assessee was not complete within the stipulated period of 3 years and some work was carried out thereafter. In terms of sub-s. (2) of s. 54, the assessee was entitled to the amount appropriated by him, out of the capital gain for construction of residential house till the due date of filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view thereof, the benefit of exemption claimed under s. 54F of the Act was rejected by the authorities below. However, following the ratio laid down by the Hon'ble Madhya Pradesh High Court in the case of Smt. Shashi Varma ( supra ), we find that there is no merit in the plea of the authorities in denying the exemption under s. 54F of the Act on the ground that the construction of the house has not been completed. The requirement of ss. 54 and 54F of the Act is for the assessee to have either purchased a residential house being a new asset within the stipulated period or construct a residential house within a period of three years from the date of transfer. The section does not prescribe the completion of the construction of the resid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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