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The Commissioner of Income Tax and The Income Tax Officer Bangalore Versus Smt. B.S. Shanthakumari

2015 (8) TMI 274 - KARNATAKA HIGH COURT

Exemption from capital gains u/s 54F - assessee had not completed the construction of the house within three years - ITAT allowed claim - Held that:- The words used in Section 54F are 'purchased' or 'constructed' and held that the condition precedent for claiming benefit under such provision is the capital gain realized from sale of a Long Term capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. It ha .....

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was on the verge of completion by producing photographs and this aspect, though not noticed in detail, same came to be noticed by the Tribunal to reject the appeal of Revenue. It was also noticed by the Tribunal that construction of the building having been completed and same having been occupied by the assessee, is also a factor to dismiss the appeal of the revenue. See Commissioner of Income-tax Versus Sambandam Udaykumar [2012 (3) TMI 80 - KARNATAKA HIGH COURT ] - Decided in favour of assess .....

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during the year previous to assessment year, sold property situated at Dr.Shivaram Karanth Nagar under a sale deed dated 06.10.2008 and capital gain on sale of said property was invested by the assessee by purchasing a residential site at Nagarbhavi, II Stage on 13.10.2008. The assessee claimed deduction under Section 54F of the Income Tax Act, 1961 (for short 'Act') which came to be disallowed by the assessing officer vide assessment order dated 18.11.2011, on the ground that the asses .....

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essee having not complied with rigour of Section 54F of the Act whereunder the word used is 'constructed' and assessee has not placed any material on record to show that he had commenced the construction and completed the same within three years from date of sale of her property and as such assessee would not be entitled to the benefit of long term capital gains flowing from Section 54F of the Act. 4. We have heard Sri.K V Aravind, learned Panel Counsel for appellant-revenue and perused .....

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t of Section 54F and contends that facts of present case differ from the case of Sambandam Udaykumar's case relied upon by the Tribunal, since in the instant case construction had not been completed within three (3) years as indicated in Section 54F. Hence, he would contend that substantial question of law as framed in the appeal memorandum be formulated, adjudicated and answered in favour of the revenue. 6. Having heard the learned Counsel appearing for the revenue and on perusal of the rec .....

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he course of assessment proceedings issued summons under Section 131 of the Act to the assessee to verify as to whether the assessee had invested the capital gains in the construction of the residential house. Pursuant to the same, the husband of the assessee appeared and answered the query raised by the assessing officer. To a pointed question No.3 put to the husband of the assessee by the Assessing Officer as to whether he has constructed the residential house within a period of three years, h .....

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ced the photographs of the residential building which was under construction to demonstrate and establish that the consideration received on transfer has been invested by her in purchasing the residential plot and it is under construction. Appellate Commissioner taking note of principles enunciated by this Court while interpreting Section 54F of the Act in Sambandam Udaykumar's case, whereunder it came to be held that said provision has to be construed liberally for achieving the purpose for .....

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tion of a residential house in the plot so acquired. A bare perusal of said provision does not even remotely suggest that it intends to convey that such construction should be completed in all respects in three (3) years and/or make it habitable. The essence of said provision is to ensure that assessee who received capital gains would invest same by constructing a residential house and once it is established that consideration so received on transfer of his Long Term capital asset has invested i .....

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quot;. In fact, appellate Commissioner has not only taken note of the judgment of the co-ordinate bench of this Court in Sambandam's case referred to supra, but had also taken note of the judgment of High Court of Madras in the case of CIT v. Sardarmal Kothari reported in [2008] 302 ITR 286, which was on similar facts as obtained in Sambandam Udaykumar's case and as such in the instant case, Appellate Commissioner allowed assessee's appeal noting that the appeal filed by the revenue .....

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been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. It has also been held that if the assessee has invested money in constructing the residential house, merely because the construction was not complete in all respects or such building is yet to be completed fully or the building not being in a fit condition for being occupied, would by itself not be a ground for the assessee to be denied the benefit under Section 54F of the A .....

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