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Sri Rakesh Kommuri Versus The Income Tax Officer, Ward-6 (3) , Hyderabad

2016 (8) TMI 597 - ITAT HYDERABAD

Deduction u/s. 54 - whether the claim for the exemption u/s. 54 can be denied for the reason that the construction of the house was not completed within the stipulated period or for the reason that the construction of the house started prior to the transfer of the capital asset? - Held that:- Hon’ble Supreme Court in the case of Fibre Boards (P.) Ltd., vs. CIT [2015 (8) TMI 482 - SUPREME COURT ] under sub-section (1), the assessee is given a period of three years after the date on which the tran .....

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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 - Decided in favour of assessee - ITA No. 1876/Hyd/2014, 1335/Hyd/2015 - .....

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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 total income at ₹ 73,01,276/- inter alia computing Long Term Capital Gains at ₹ 67,34,623/- and Short Term Capital Gains at ₹ 2,40,000/-. He denied the claim of the assessee for deduction u/s. 54 of the Act. On appeal, the first ap .....

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tax based on google earth images, as such images show top terrace and not construction of flat made under the floor. 4. That the Authorities below misconceived the facts about construction of flats based on the approval under BRS Scheme in October 2009. Without prejudice to the above, the appellant contends. 5. That the appellant invested long term capital gains, ₹ 19.28 lakhs on sale of flat at Sai Tirumala Towers and Cost Inflation Index Value ₹ 45.51 lakhs of undivided share of l .....

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f land, constituting Long Term Capital Gains, in the construction of Residential flat in 3rd floor while determining Capital Gains. 8. The appellant contends that adverse observations made by the authorities below, are not correct and are contrary to the facts on record and law. 9. The Appellant craves leave 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. Th .....

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he 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 .....

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abad order dt. 20-01-2016; ii. CIT Vs. Sambandham Udaykumar in IT Appeal No. 175/2012; judgment dt. 12-02-2012 of Karnataka High Court. iii. Narasimha Raju Rudra Raju Vs. Asst. Commissioner of Income Tax (2013) [143 ITD 586] (Hyderabad); iv. CIT Vs. H.K. Kapoor [234 ITR 753] (Allahabad); v. CIT Vs. Late N. Kasi Viswanathan [2008] [305 ITR 371 (Mad); 4. Ld. DR on the other hand submitted that, the construction of the house on which deduction is claimed u/s. 54 is not completed and this fact canno .....

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ng 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 does not arise. In reply, the Ld. Counsel for the assessee pointed out that BRS falls within the impugned assessment year. 5. After hearing the rival contentions, we find that there is no dispute .....

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This Bench of the Tribunal in the case of ITO Vs. Mr. Narayana Rao in ITA No. 1528/Hyd/2014 & C.O. No. 12/Hyd/2015 (supra) considered an identical situation. At para 4 to 4.2, the ITAT 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 no .....

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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 .....

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ruction of a residential house has been held to be an investment satisfying the conditions of section 54F of the Act. Though there cannot be any dispute with regard to the above said proposition of law, the assessee is required to prove the actual date of investment and the amount invested towards purchase/construction of the residential house with supporting evidence. … 4.1. The Hon ble Supreme Court in the case of Fibre Boards (P.) Ltd., vs. CIT (2015) 376 ITR 596 (SC) has held as under .....

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, plant, land and building within the same assessment year 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 ac .....

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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 tha .....

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ale of the golf Link house. Similar question came up for consideration before the Karnataka High Court in the case of CIT Vs. J.R. Subramanya Bhat [1987] 165 ITR 571. In the case before the Karnataka High Court, the date of the sale of the old building was February 9, 1977. The completion of the construction 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 .....

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