TMI Blog2017 (6) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed funds for construction of new residential property and deduction u/s.54 of the Act denied on the reason that assessee used some fund other than consideration received on transfer of capital asset - on that reason deduction u/s.54 of the Act cannot be denied - we remit the entire issue in dispute with regard to Sec. 54 of the Act to the file of the ld. Assessing Officer with a direction to the ld. Assessing Officer to verify whether assessee has actually made investments in construction of new residential property, though it was not completed and decide thereupon. Enhancement of assessment - unexplained investments - payments was not made with reference to the construction of residential house - HELD THAT:- Whether payments made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gains on transfer of capital assets on ₹ 1,58,48,922/-. The assessee claimed deduction u/s. 54 of the Income Tax Act, 1961 (in short the Act ) towards purchase of property at Madhurapakkam Village, Tambaram Taluk for a consideration of ₹ 68,01,600/- which was denied by the ld. Assessing Officer. 3. Aggrieved, assessee filed an appeal before ld. Commissioner of Income Tax (Appeals). Before ld. Commissioner of Income Tax (Appeals) assessee claimed deduction u/s. 54 of the Act. After perusing the records, the ld. Commissioner of Income Tax (Appeals) denied deduction u/s. 54 of the Act by observing as under:- (1) Appellant had failed to purchase a new house one year prior to the date of transfer of original asset. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements for the period from 08.02.2013 to 31.03.2013 as the said payments were stated to have been paid prior to this period. Coming to the major amount of ₹ 1 crore, stated to have been paid, to Shri T. Sivakumar on 27.03.2013 vide Cheque Nos.848322 to 848325 is also found incorrect. Copy of the bank account of Indian Overseas Bank filed before him which was in the same of Mr. Arumugam M. On perusal of his bank account, it was observed that an amount of ₹ 50 lakhs vide Cheque No.848322 and 848324 was paid to Mr. K. Shanrmugam on 28.03.2013. Further, it was noticed that an amount of ₹ 50 lakhs vide Cheque Nos.848325 and 848324 was raid to Mr. T. Sivakumar on 28.03.2013. These facts clearly establish that assessee has not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led for deduction u/s. 54 of the Act. Now the contention of the ld. Departmental Representative is that assessee has not appropriated towards construction of new residential house as it was not completed. In our opinion as held by Hon ble Karnataka High Court in the case of CIT vs Smt. V.S. Shantha Kumari 126 DTR 436 completion of construction within three years was not mandatory and it was necessary that construction should be commenced, it should be proved by the assessee that construction is for residential house. The Hyderabad Bench of the Tribunal in the case of Muneer Khan vs. ITO, 41 SOT 504, had held that assessee may use borrowed funds for construction of new residential property and deduction u/s.54 of the Act denied on the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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