TMI Blog2018 (8) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gain or may be in the alternative have expressly made the exemption in case of prior purchase, subject to purchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain. It is not a requisite of Section 54 that construction could not have commenced prior to the date of transfer of the asset resulting in capital gain. If the amount of capital gain is greater than the cost of the new house, the difference between the amount of capital gain and the cost of the new asset is to be charged under Section 45 as the income of the previous year. - Decided in favor of assessee. - Tax Case (Appeal) No. 520 of 2017 - - - Dated:- 6-8-2018 - MS. INDIRA BANERJEE, CHIEF JUSTICE And MR.JUSTICE ABDUL QUDDHOSE For Appellant : Mr.R.Balasubramanian for M/s.Maya J Nichane For Respondent : Ms.V.Pushpa for Mr.M.Swaminathan JUDGMENT Ms.Indira Banerjee, Chief Justice This appeal is against an order dated 27.12.2016 of the Income Tax Appellate Tribunal, allowing the appeal being I.T.A.No.1208 /Mds/2015 of the appellant assessee for statistical purpose. 2. The appellant assessee, being an individual and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch, Chennai. By an order dated 27.12.2016, the Income Tax Appellate Tribunal, held that Section 54 of the said Act is a beneficial provision and had to be construed liberally on compliance of the conditions and allowed the appeal of the appellant assessee for statistical purpose. The operative portion of the order reads as follows: 8. In the present case, considering the Apparent facts, material on record and judicial decisions and the written submission, we are of the opinion that the assessee is entitled for cost of construction in respect of Residential property, even though the assessee has not invested in capital gain accounts scheme but complied the main condition, of the provisions of the Section 54(i) of the Act. Accordingly, we remit the disputed issue to the file of the Assessing Officer to consider the deduction u/s. 54 of the Act for construction cost incurred by the assessee as above and Assessing Officer should provide adequate opportunity to the assessee to substantiate their cost of construction before passing the order on merits. Accordingly, the appeal is allowed for statistical purpose. 8. Being aggrieved by the order of the Income Tax Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a well settled principle of construction and interpretation of statutes that statutory provisions should, to the extent feasible, be interpreted and/or construed in accordance with plain meaning of the language used in those provisions. 16. On a plain reading of Section 54(1) of the said Act, the transfer of a long term asset, which would include a residential house, would be chargeable to income tax as a capital gain, except in circumstances specified in the said section. 17. It is not necessary for this Court to go into the question of mode and method of computation of capital gain as there is no dispute in this regard, which requires adjudication in this appeal. 18. The question is, whether any part of the capital gain from transfer of the residential house is exempt from the capital gain tax and if so to what extent? 19. The conditions precedent for exemption of capital gain from being charged to income tax are: (i)The assessee should have purchased a residential house in India either one year before or two years after the date of transfer of the residential house which resulted in capital gain or alternatively constructed a new residential house in India within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain. 23. At the cost of repetition, it it reiterated that exemption of capital gain from being charged to income tax as income of the previous year is attracted when another residential house has been purchased within a period of one year before or two years after the date of transfer or has been constructed within a period of three years after the date of transfer of the residential house. It is not in dispute that the new residential house has been constructed within the time stipulated in Section 54(1) of the said Act. It is not a requisite of Section 54 that construction could not have commenced prior to the date of transfer of the asset resulting in capital gain. If the amount of capital gain is greater than the cost of the new house, the difference between the amount of capital gain and the cost of the new asset is to be charged under Section 45 as the income of the previous year. If the amount of capital gain is equal to or less than the cost of the new residential house, including the land on which the residential house is constructed, the capita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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