TMI Blog2013 (11) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... s not produced any documentary 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: In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l house, the AO issued summons, u/s 131 of the I.T. Act, 1961, to the assessee on 11.11.2011 posting the case on 14.11,2011. In response to the summons, assessee s husband Shri N Chandrappa, appeared on behalf of the assessee. His statement was recorded on 18.11.11. The relevant portion of the question and answer 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction started before 05.10.2011, but could not be completed. The evidence regarding the progress of construction (in the form of photographs) at the time when the proceedings were pending before the CIT(A) were also furnished. The assessee pointed out that to claim deduction u/s. 54F of the Act, it is not a condition that the construction of the house 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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done, electricity, water and sanitary connections have been given, wood used is teak in respect of doors and windows. The assessee has been put in possession of the property and he is in occupation. Therefore, the assessee has invested the sale consideration in acquiring a residential premises and has taken possession of the residential building and is living in the 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 ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stage of purchasing the plot of land on which construction was put up by the Assessee, the entire capital gain had been invested. The intention of the assessee was to construct a residential house and in this regard, we find that the assessee had applied for a sanction of the building plan and got sanction of the building plan as early as on 02.06.2010. The construction, however, could not be completed by the assessee, 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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