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TMI Blog2013 (11) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... ry evidence to show that there was a construction of new house building. 4) The Ld. CIT(A) has further erred in concluding that a site purchase and obtaining plan for construction of new house is enough for the assessee to claim relief u/s 54F ignoring the very intended and legislated provisions of the said section." 3. The assessee is an individual. During the previous year, the assessee sold property bearing No.1355 in the layout formed by Ministry of Communication Employees' Co-operative Housing Society Ltd. at Dr. Shivaram Karanth Nagar, Bangalore on 06.10.2008. The capital gain on sale of the aforesaid property was invested by the assessee in purchasing another house site on 13.10.2008 at Site No.108, Nagarabhavi II Stage, I Block Extension, Bangalore measuring 2400 sq.ft. The Assessee claimed deduction u/s.54F of the Act on the capital gain on sale of the Shivaram Kant Nagar property. The revised computation of capital gains filed by the Assessee and considered by the AO in the order of assessment was follows: Sale of Property ₹ 50,00,000 Less: Indexed cost of acquisition 2,75,000 x 480 582 ₹ 3,33,437 ₹ 46,66,562 Less: Investment on the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swer is reproduced as under:- Q.No.2 Please furnish the details of income of your wife? Ans: My wife was deriving income from house property during the P.Y 2008-09 to the extent of ₹ 2,16,000/- and interest income of ₹ 60,250/-. During F.Y 2008- 09, she sold one residential vacant site No.1355 in a layout formed by the Ministry of Communications Employees' Housing Society Ltd., at Yelahanka Hobli, Bangalore North Taluk, presently named as Dr. Shivaram Karanth Nagar, Bangalore, measuring East to West 60 feet and North to South 40 feet for a consideration of ₹ 49/50 lacs and the registered value is ₹ 28,80,000/- whereas I have taken the actual sale consideration for calculation of LTCG. This property was purchased on 31.07.2004 for a consideration of ₹ 2,52,000/- and claimed cost inflation index of ₹ 3,33,437/- and claimed exemption u/s 54F to the tune of ₹ 46,66,562/- . This amount was invested in purchase of another site at No.108, in layout formed by Bangalore Development Authority, situated at Nagarabhavi 2nd Stage, 1st Block Extension, Bangalore, measuring East to West: 60 feet, North to South: 40 feet. Q.No.3. You have given an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been completed within the stipulated period of three years and that if it is proved that the consideration received on transfer of the asset giving rise to capital gains had been invested in the construction of residential house, the assessee is entitled to benefit of section 54F of the Act, though the construction is not complete in all respects. In support of the stand taken by the assessee, reliance was placed on the decision of the Hon'ble Karnataka High Court in the case of CIT v. Sambandam Udaykumar, 251 CTR 317 (Karn.), wherein the Hon'ble High Court had taken the following view:- " Section 54F of the Act is a beneficial provision of promoting the construction of residential house. Therefore, the said provision has to be construed liberally for achieving the purpose for which it was incorporated in the statute. The intention of the Legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement of law. The words used in the section are 'purchased' or 'constructed'. For such purpose, the capital gain realized should have been invested in a residential house. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said premises. The object of enacting section 54 of the Act i.e., to encourage investment in a residential building is completely fulfilled. In that view of the matter, the Tribunal was justified in extending the benefit of section 54F of the Act to the assessee and the said order does not suffer from any infirmity which calls for interference." 8. The CIT(Appeals) after considering the decision of the Hon'ble Karnataka High Court referred to above, observed as follows:- "3.5 In this regard, the Hon'ble High Court of Karnataka has quoted with approval the decision of the Hon'ble High Court of Madras in the case of CIT v. Sadarmal Kothari (302 ITR 286) on similar set of facts, which has also been affirmed by the Hon'ble Supreme Court by dismissing the departmental appeal against the said judgement at the stage of preliminary hearing in CC.Nos.3Y53-3954/2009 dated 6.4.2009. 3.6 The facts in the appellant's case under consideration are substantially the same as those in the case of CIT V. Sri Sambandam Udaykumar (supra). Therefore, respectfully following the judgement of the jurisdictional High Court in the said case, I hold that, though the residential building of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, though construction had been started. The Hon'ble Karnataka High Court, in the decision rendered in the case of Sambandam Udaykumar (supra), had taken a view that under the provisions of section 54F of the Act, the condition precedent was that the capital gain realized from sale of capital asset should have been parted by the assessee and invested in constructing a residential house. If the money is invested in constructing the residential house, merely because the construction was not complete in all respects and was not in a condition to be occupied within the stipulated period, that cannot be a ground for rejecting the benefit of deduction u/s. 54F to the assessee. The Hon'ble Court observed that the essence of the provisions of section 54F is whether the assessee who received the capital gain has invested in the house. Once if it is demonstrated that the consideration received on transfer has been invested in construction of the residential house, then though the construction is not complete in all respects and as required under law, the assessee should be given the benefit of section 54F. A reading of the aforesaid decision of the Hon'ble Karnataka High Court would show th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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