TMI Blog2016 (12) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... . 54F nowhere envisages that the sale consideration received by the assessee from the original capital asset mandatorily should to be utilized for the purchase or construction of the new house property. The simple requirement is to invest in an asset within the stipulated time. In this case, the assessee has invested within the stipulated time. Therefore, we hold that the assessee is entitled for the deduction u/s 54F of the Act.- Decided in favour of assessee - I.T.A.No. 2132/Mds/2016 - - - Dated:- 10-11-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri R. M. Narayanan, CA For The Respondent : Shri A.V. Sreekanth, JCIT ORDER PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-2, Chennai, dated 15.6.2016 for assessment year 2013-14. 2. All the grounds of appeal are relating to the disallowance of claim made by the assessee u/s 54F of the Income-tax Act, 1961[in short the Act ]. 3. During the previous year relevant to the assessment year 2013-14, the assessee sold a vacant land at Bangalore ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is entitled for the claim of deduction u/s 54F of the Act. The ld. AR further submitted that though the assessee alongwith her son and daughter-in-law borrowed money from the State Bank of India over and above the sum of ₹ 56,54,000/-, the same should not come on in the way of income tax Department for allowing the deduction u/s 54F of the Act. The only requirement of sec. 54F is that the new asset required to be acquired within two years but not the source of investment. The assessee is free to invest from the sale proceeds his own source of income and also from borrowed funds. The Assessing Officer s observation that the balance has been funded out of bank loan and the bank loan was given only based on the credentials of the assessee s son Shri Aneesh Sivakumar and daughter-in-law Smt Neha Bhujang and their capacity to repay the loan should not become a ground for disallowing the claim of the assessee. For granting deduction u/s 54F, the Assessing Officer has to rely on the main object of sec. 54F which is to encourage housing and assessee has duly complied with by purchasing a new house property. The assessee also relied on the jurisdictional High Court s judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n new property as per the plain language and intention of the section. Section 54F allows deduction for investment in new property even one year before the sale of the old property giving rise to capital gains. If the Assessing Officer were to insist that only the sale consideration has to be utilised in purchase of new property, then the said provision will get defeated. Hence, any assumption by the Assessing Officer as to any such precondition is not contemplated by the provision. Section 54F is clear, unambiguous and plain. It is only a mere presumption and assumption of the Revenue. It is a well-settled principle that taxing statute shall have to be interpreted on the basis of the language. Section 54F encourages investment in residential house and the same is required to be interpreted in such a manner as not to nullify the object . 7. The Delhi High Court in CIT vs. Ravindra Kumar Arora (ITA No. 1106 of 2011) held that Section 54F mandates that the house should be purchased by the taxpayer and it does not stipulate that the house should be purchased in the name of the taxpayer only. Objective of section 54F of the Act and the like provision such as section 54 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .9.2012 for a consideration of ₹ 90 lakhs and acquired a new flat 3B, 101 Kalpataru Aura, LalBahadur Shastri Marg, Ghatkopar, Mumbai, for a consideration of ₹ 1,44,59,800/- alongwith her son Shri Aneesh Sivakumar and daughter-in-law Smt Neha Bhujang. From the sale proceeds of ₹ 90 lakhs, the assessee has invested ₹ 56,54,000/- and the balance amount was funded from State Bank of India loan. The property was acquired jointly in the names of assessee and her son and daughter-in-law. The property was acquired within two years from the sale of the impugned asset. The property was acquired before filing the return of income and claimed capital gains deduction u/s 54F of the Act. The total cost of the new asset was partly funded from the capital gains and partly from the bank loan. As per section 54F of the Act, the source of investment is not a factor for determining the deduction u/s 54F. For ready reference, sec. 54F is reproduced below: 54F. (1) 21 [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er took place. In this case, the fact that the assessee has purchased the new asset within the stipulated time period under the act was not disputed by the Assessing Officer. The assessee relied on the judgment of Jurisdictional High Court in the case of R. Srinivasan ( cited supra) and other Hon ble Courts which support the assessee s contention. 11. The issue regarding whether the investment in a capital asset is required to be sourced from the capital gain or not has been considered by the Hon'ble P H High Court in the case of Kapil Kumar Agarwal (supra) relied upon by the assessee. The High Court has held that sec. 54F nowhere envisages that the sale consideration received by the assessee from the original capital asset mandatorily should to be utilized for the purchase or construction of the new house property. The simple requirement is to invest in an asset within the stipulated time. In this case, the assessee has invested within the stipulated time. Therefore, we hold that the assessee is entitled for the deduction u/s 54F of the Act. Accordingly, we set aside the orders of the lower authorities and the addition made by the Assessing Officer is deleted. 12. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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