TMI Blog2016 (8) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... poses 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 - Decided in favour of assessee - ITA No. 1876/Hyd/2014, 1335/Hyd/2015 - - - Dated:- 17-6-2016 - SHRI J. SUDHAKARA REDDY, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER For The Assessee : Shri G. Kalyandas, AR For The Revenue : Shri M. Sitaram, DR ORDER PER J. SUDHAKARA REDDY, A.M. : These two appeals are filed by the assessee are directed against the orders of the Commissioner of Income Tax (Appeals)- IV 6, Hyderabad, dated 22-10-2014 21-09-2015 for the AY. 2010-11. We first take up the quantum appeal in ITA No. 1876/Hyd/2014. 2. The assessee is an individual and filed his return of income for the AY. 2010-11 on 29-09-2011 declaring income of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 has himself computed Long Term Capital Gains on sale of residential property at Hyderguda at ₹ 19,27,719/- and on sale of land at Banjara Hills ₹ 48,06,904/- but denied the deduction u/s. 54 of the Act on the ground that : a. The investment of the property took place prior to the date of sale of the asset-in-question; and b. Construction of the residential house property is not completed and that the denial of deduction on these grounds is bad in law He relied on the follow case law for the proposition that: a. The construction can commence prior to the date of the sale of the asset; and b. It is sufficient if the amount of capital gains on transfer of the long term capital asset is invested in the residential house, for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: 4. Having regard to the rival contentions and material on record, we find that in the case of the assessee, the assessee has utilised the entire capital gains within the period of one year but due to certain circumstances beyond the control of the assessee, the construction of the house could not be completed within the specified period. The facts and circumstances before us are similar to the case before the Coordinate Bench of this Tribunal in the case of Narasimha Raju Rudra Raju vs. ACIT (supra) wherein the Tribunal has held as under : 11. . . We agree with the contention of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are, accordingly, allowed and the judgment of the High Court is set aside. 4.2. Since the facts in the present case are on record and it is not disputed by the authorities below that the assessee has invested the amount of capital gain for construction of a residential house within the specified period, we do not see any reason to interfere with the order of the Ld. CIT(A) which is inconsonance with the precedents on the issue . As in this case also, the assessee has utilized the entire capital gain within the stipulated time for the purpose of construction of the property, the propositions laid down in the above referred case law apply on all fours to the facts on hand. Similarly, the finding of the AO is that the assessee has started investing in the house property, prior to the transfer of the capital assets and hence he is not eligible for claim of deduction U/s. 54. We find that Hon ble Allahabad High Court in the case of CIT Vs. H.K. Kapoor [234 ITR 753] (supra) at para 7 8 held as follow: 7. The question for consideration is whether exemption on capital gains could be refused to the assessee simply on the ground that the construction of the Surya Nagar, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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