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TMI Blog2016 (8) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for the AY. 2010-11 on 29-09-2011 declaring income of Rs. 3,26,653/-. The Assessing Officer (AO) vide his order dt. 28-03- 2013 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act), determined the total income at Rs. 73,01,276/- inter alia computing Long Term Capital Gains at Rs. 67,34,623/- and Short Term Capital Gains at Rs. 2,40,000/-. He denied the claim of the assessee for deduction u/s. 54 of the Act. On appeal, the first appellate authority upheld the order of the Ld. AO. Further aggrieved, the assessee is before us with the following grounds: "1. That the order of the Ld. Commissioner of Income Tax (Appeals) is contrary, to and the fact. 2. That the Authorities below grossly erred in holding that the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to file additional grounds and prays that investment of long term capital gains within the prescribed period in construction of flat be deducted from the computation of capital gains". 3. The Ld. Counsel for the assessee Shri G. Kalyandas submitted that though a number of grounds have been raised disputing the factual findings of the AO, including the reliance by the AO on Google earth pictures, to come to a conclusion as to whether, the building of the assessee was completed in all aspects or not, he would restrict his arguments to the legal issues, without prejudice to the other grounds of appeal which are factual, that the assessee is eligible for deduction u/s. 54 of the Act. The sum and substance of his submissions is that, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ularisation under the Building Regularisation Scheme (BRS) to the State Government and that the regularisation was done only on 19-10-2009. He pointed out that the Ld. Counsel for the assessee has not disputed the factual findings of the AO on all these aspects, which are listed out at Page No. 2 & 3 of the assessment order. On the plea of the assessee for beneficial interpretation of an incentive provision, he submitted that on a plain reading of the section, it is clear that the assessee is not entitled for exemption u/s. 54, for the reason that the construction of the house property was not completed within the stipulated time. He argued that, when the provisions of the statute are un-ambiguous, the question of beneficial interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AR that provision contained u/s 54F being a benef icial provision has to be construed liberally. In various judicial precedents as also in the decision cited before us by the learned AR, it has been held that the condition precedent for claiming benef it u/s 54F is the capital gain realized from the sale of capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. If the assessee has invested the money in construction of residential house merely because the construction was not complete in all respects and it was not in a f it condition to be occupied within the period stipulated that would not disentitle the assessee from claiming the benef it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the transfer takes place. Further, the High Court has missed the key words "not utilized" in sub-section (2) which would show that it is enough that the capital gain made by the assessee should only be "utilized" by him in the assessment year in question for all or any of the purposes aforesaid, that is towards purchase and acquisition of plant and machinery, and land and building. Advances paid for the purpose of purchase and/or acquisition of the aforesaid assets would certainly amount to utilization by the assessee of the capital gains made by him for the purpose of purchasing and/or acquiring the aforesaid assets. We find therefore that on this ground also, the assessee is liable to succeed. The appeals are, accordingly, allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of the new building was in March, 1977, although the commencement of construction started in 1976. On these facts, the Karnataka High Court held that it was immaterial that the construction of the new building was started before the sale of the old building. We fully agree with the view taken by the Karnataka High Court. The Appellate Tribunal was right in holding that capital gains arising from the sale of Golf Link house to the extent it got invested in the construction of the Surya Nagar house, will be exempted under Section 54 of the Act. 8. Coming to question No. 3, it will suffice to say that it is misconceived. The Tribunal did not record any finding that the assessee did not invest the capital gains in the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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