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Mr. Ajit Dayal Lalvani Versus Dy. CIT 7 (2) Mumbai

Deduction u/s.54 or 54F - Held that:- In view of the said circumstances for the purpose of deduction u/s.54 or 54F of the Act, the land appurtenant on constructed house is liable to be considered for exemption. Therefore, in view of the said circumstances the purchase value of the house to the tune of ₹ 30,29,296/- is liable to be considered to the extent of the share of the assessee, therefore, we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to reassess .....

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ter referred to as the CIT(A) ] relevant to the A.Y.2005-06. 2. The assessee has raised the following grounds:- Assessee by: Shri Girish M. Balekundri Department by: Ms. Arju Garodia 1. The Assessing Officer as well as honorable commissioner appeal erred in considering the value of House property as ₹ 6,51,000/- against the actual consideration of ₹ 32,41,046/- which is against the facts and circumstances of the case and against the Income Tax Act Circular No.667, dated 18.10.1993 sp .....

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asset. It has been represented to the Board that the cost of construction of the residential house should be taken to include the cost of the plot as, in a situation of purchase of any house property, the consideration paid generally includes the consideration for the plot also. ii. The Board has examined the issue whether, in cases where the residential house is constructed within the specified period, the cost of such residential house can be taken to include the cost of the plot also. The Boa .....

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n of plot and also the construction thereon, are completed within the period specified in these sections. 2. Section 54 specifies the house property :- As per Income Tax Act house property consist of house and land appurtenant there to, and being a residential house, the income of which is chargeable under the head income from house property. 3. The Assessing Officer as well as commissioner of appeal erred by not considering the section 27(1) of income tax act and disallowed investment in house .....

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d to the extent of 2/3rd of the amount. 4. The Assessing Officer as well as commissioner of appeal erred in considering ₹ 3.2 lacs as deemed dividend against the facts circumstances and the provisions of section 2(22)(e) and point no.(ii) any advance or loan made to a shareholder (or the said concern) by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company. The company derive its income from investments therefore .....

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e appeal should be heard and decided on merit, therefore, we allowed the application for delay. 4. The brief facts of the case are that the assessee filed the return of income on 28.10.2005 declaring total income to the tune of ₹ 6,16,602/-. The return was accompanied by computation of total income, balance-sheet, profit & loss account, audit report u/s.44A of the Income Tax Act, 1961 ( in short the Act ) in from no. 3CB and 3CD, etc. Thereafter the notices u/s.143(2) and 142(1) of the .....

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; Co. because the nature of the credit of ₹ 17,00,000/- was shown by the assessee. As per the agreement dated 18.08.2005 the purchase price relates to the purchase of open land and pricing relating to the house property is ₹ 6,51,786/-. The purchases is in the name of the assessee, his wife and son and the Assessing Officer delete the 1/3rd cost price of the house property for the for deduction u/s. 54F of the Act. Feeling aggrieved the assessee has filed the appeal before the CIT(A) .....

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r as well as the CIT(A) treated the construction cost for the purpose of section 54 and 54F of the Act. It is not in dispute that the assessee purchased the land appurtenant to the constructed house in sum of cost of ₹ 23,77,500/- and construction cost was of ₹ 6,51,786/- and total amount is to the tune of ₹ 30,29,296/-. The CIT(A) has considered the 1/3rd amount of the construction to the tune of ₹ 6,51,786/- i.e.1,81,760/- for the deduction u/s.54 of the Act being the a .....

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ruction for the purpose of deduction u/s.54F of the Act to the extent of his 1/3rd shares to the tune of ₹ 6,59,786/- i.e. ₹ 1,81,760/- 6. Now the circular No. 667, dated 18.10.1993 is quite clear and is reproduced as under:- i. Section 54 and 54F provide for a deduction in cases where an Assessee has, within a period of one year before or two years after the date on which the transfer of a capital asset takes place, purchases, or has within a period of three years after the date on .....

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