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2015 (9) TMI 1178 - ITAT HYDERABAD

2015 (9) TMI 1178 - ITAT HYDERABAD - TMI - Eligibility of deduction u/s 54F - CIT(A) allowed relief - Held that:- This Tribunal in catena of decisions has held that the thrust of the section 54F is on the investment of the net consideration received on the sale of the original asset and start of the construction of a new residential house and does not prescribe completion of construction of the residential house within the period of three years. This view has been held by ‘B’ Bench of the Tribun .....

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said amount has given particulars of the stage of construction. According to him, only minor fittings like window shutters and some electrical work were required to be made. In fact, the report of the inquiry conducted by the Department also discloses the flooring work, electrical work, fitting of door and window shutters were still pending. The assessee has produced before the authorities the registered sale deed dated 7.11.2009 showing the transfer of the property in his favour. The said docu .....

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ment in a residential building is completely fulfilled. Thus justified in extending the benefit of section 54F of the Act to the assessee and the said order does not suffer from any infirmity which calls for interference - Decided in favour of assessee.

Addition of the unexplained investment - CIT (A) held that the addition made by the AO in the hands of the assessee u/s 68 is to be assessed in the hands of the assessee’s wife i.e. Smt. K. Saritha - Held that:- Admittedly the sum of & .....

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wife of the assessee, as rightly held by the CIT (A), the said amount, if at all is to be brought to tax, it can be only in the hands of the assessee’s wife and not in the assessee’s hands. Therefore, we see no reason to interfere with the order of the CIT (A) on this issue as well. - Decided against revenue. - ITA No. 19/Hyd/2013 - Dated:- 23-9-2015 - Smt. P. Madhavi Devi And Shri B. Ramakotaiah, JJ. For the Petitioner : Shri G. Surya Prasad, DR For the Respondent : Shri P. Murali Krishna ORDER .....

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T. Act of ₹ 22.00 lakhs is to be assessed in the hands of the assessee s wife i.e. Smt. K. Saritha. 2. Brief facts of the case are that the assessee, an individual, has filed return of income for the A.Y 2009-10 on 29.09.2009 declaring income of ₹ 13,57,910. During the assessment proceedings u/s 143(3) of the I.T. Act, various details relating to the assessee s computation of income were called for. Assessee filed the required details. The AO observed that in the computation of total .....

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to the same, assessee filed a letter dated 8.11.2011 stating that the assessee has purchased land and the construction of the house was completed in March, 2011 and that the contractor has handed over the house. It was submitted that the total net sale consideration was invested in acquiring the house and due to various issues, the developer has not completed roads, drainage and water connection and hence assessee could not complete the finishing works. From these details furnished by the asses .....

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ed that vide letter dated 23.11.2011, assessee has stated that he has invested cash of ₹ 22.00 lakhs for purchase of plots during the year and furnished the sources for the same. On verification of the details, he observed that the sources claimed by the assessee included a sum of ₹ 22.00 lakhs received from Shri I.V. Satish and the amount offered to tax by the assessee as unexplained investment excluding the above sum is ₹ 38,50,000. Assessee also furnished confirmation letter .....

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n amount of ₹ 1,16,70,680 and the assessee had paid an advance of ₹ 1.00 crore on 29.09.2008. On verification of the bank a/c of Shri I.V. Satish, AO observed that Shri I.V. Satish has withdrawn cash of ₹ 22.00 lakhs on 10.10.2008 out of the same amount received from the assessee. He observed that on the one hand, assessee is claiming that the amount was given to Shri Satish as an investment for construction of new house and on the other hand, the same amount he has claimed as .....

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hs as unexplained investment and brought it to tax. Aggrieved by both the disallowances above, assessee preferred an appeal before the CIT (A). The CIT (A), after considering the assessee s contentions at length, has deleted both the disallowances made by the AO. Aggrieved by the relief given by the CIT (A), Revenue is in appeal before us. 4. Learned DR relied upon the order of the AO, while the learned Counsel for the assessee supported the order of the CIT (A). Assessee has also filed a paperb .....

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struction of a residential house. The only dispute is whether the assessee is eligible for deduction u/s 54F of the I.T. Act, since the house constructed by the assessee is not in a liveable condition by the end of three years from the date of sale of original asset due to lack of road facility, electricity connection and drainage system to the house. We find that this Tribunal in catena of decisions has held that the thrust of the section 54F is on the investment of the net consideration receiv .....

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order which is reproduced hereunder for ready reference: 9. Section 54F of the Act provides for exemption from payment of capital gain on transfer of certain capital assets in case the consideration for transfer is invested in acquiring the residential house. It reads as under: 54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.-(1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individua .....

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alt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net .....

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after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property." Explanation : For the purposes of this section, "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as r .....

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set is not less than the net consideration in respect of the original asset the whole such capital gain shall not be charged under section 45 of the Act. However, if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to be whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration shall not be charged under section 45 of the Act. 11. Section 45 of the Act makes it very .....

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hose cases. Section 54F of the Act is a beneficial provision of promoting the construction of residential house. Therefore, the said provision has to be construed liberally for achieving the purpose for which it was incorporated in the statute. The intention of the Legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement of law. The words used in the section are 'purchased' or 'constructed&# .....

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re the period stipulated, he cannot be denied the benefit of section 54F of the Act. Similarly, if he has invested the money in construction of a residential house, merely because the construction was not complete in all respects and it was not in a fit condition to be occupied within the period stipulated, that would not disentitle the assessee from claiming the benefit under section 54F of the Act. The essence of the said provision is whether the assessee who received capital gains has investe .....

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ld as under: "4. The requirement of the provision is that the assessee, within a period of three years after the date of transfer, has to construct a residential house in order to become eligible for exemption. In the cases on hand, it is not in dispute that the assessees have purchased the lands by investing the capital gain and they have also constructed residential houses. In order to establish the same, the assessees submitted before the CIT(A) several material evidences, viz., invitati .....

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al was dismissed at the stage of preliminary hearing in CC Nos.3953-3954/2009 decided on 6.4.2009. 14. In the instant case, the material on record discloses that the assessee had invested ₹ 2,16,61,670/- as on 31.10.2006 within twelve months from the date of realization of sale proceeds of shares. The developer acknowledging the said amount has given particulars of the stage of construction. According to him, only minor fittings like window shutters and some electrical work were required t .....

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