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TMI Blog2022 (12) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial plots which he claims where made with intention to construct house thereon. The two residential properties sold had given rise to capital gains of Rs. 1,62,76,703/- for which exemption was claimed u/s 54 of the Act on the plea that amount was invested in three properties. First property bearing no. C8-37, Sector-84 B.P.T.P. Parkland (residential plot) second property known as B-39, sector-84, B.P.T.P. parkland (residential plot) and third property is known as fourth floor Piyush Global Heights, Faridabad (office space). Ld. AO in order to verify the claim of exemption, deputed inspector to conduct enquiry on the spot which was conducted on 05.12.2017 and it was reported in respect of residential plots that no construction was carried out till date and the plots were vacant. Accordingly, Ld. AO was of the view that assessee has not fulfilled the conditions laid down u/s 54 of the Act and the exempt income of Rs. 1,62,76,703/- u/s 54 was added to the income of assessee. 4. Ld. CIT(A) was apprised that construction on the said plots could not be carried out due to reasons beyond the control of assessee as the developer M/s. B.P.T.P. did not handover the possession of the plot t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of exemption claimed could not be made as the amount was invested by the assessee in purchase of plots on which construction was to be made within three years from the date of sale of the long term capital asset and assessee could not construct residential house on those plots for the reasons beyond the control of the assessee and disallowance on these facts was not permissible in law. 5. That under the facts and circumstances of the case, Ld. CIT(A) has erred in law as much as in factas he has failed to appreciate that Ld AO has committed an error in relying upon the report of the inspector which was never confronted to the assessee and the disallowance is based upon show cause notice dated 21-11-2017 which is earlier to submission of the report by the inspector. Therefore, the addition made is in violation of principles of natural justice. 6. That under the facts and circumstance of the case, Ld. CIT(A) has erred in law as much as in fact in upholding the disallowance and also in not appreciating the contention of the assessee that according to the decision of Hon'ble Delhi High Court in the case of CIT vs Kuldip Singh 226 Taxmann 103(Del.) the disallowance only to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper to take possession without the approval of zonal plan which will not make the investment in plot as being debarred from claiming the exemption as the construction is permissible up to the period of three years from the date of transfer of Long-term Capital Asset. It was submitted that after the developer got approved zonal plan, the assessee obtained physical possession of the plot vide letter dated 18.08.2022 and before that the assessee also got approved the construction plan by making application with competent authority. These relevant papers of possession dated 18.08.2022 and the approval of construction plan were submitted at this stage. It was also submitted that in the light of clause (i) of sub section (1) of Section 54 of the Act, the amount invested in the new asset within specified period is eligible to get benefit of Section 54, irrespective of the fact that whether or not the assessee was able to complete / start the construction of house being new asset. 7.3 Ld. AR also referred to proviso to section 2 of section 54 of the Act and contended that this provision provides that if whole or part of the amount deposited in capital gain scheme is not utilized for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive relief in the matter of payment of tax on the long-term capital gain. The Bench is of considered opinion that the liberal interpretation of beneficial provisions cannot be stretched to the extent that provisions look superfluous in the statue. 10.1 The Bangalore Bench has held that in the case of Estate of Late Dr Zakaulla Masood v. Income Tax Officer, Ward 1(5)(4), Bangalore [2020] 122 taxmann.com 214 (Bangalore - Trib.) that absence of an Occupation Certificate is not a ground to deny the claim of the assessee for deduction u/s. 54 of the Act, if other evidence filed by the assessee sufficiently, demonstrates that the assessee has constructed a residential house within the period stipulated by law. 10.2 Hon'ble Karnataka High Court in the case of CIT v. Smt. B.S. Shanthakumari [2015] 60 taxmann.com 74/233 Taxman 347 held that completion of construction within three years was not mandatory and was necessary that the construction should be commenced. 10.3 In the case of Bhavna Cuccria v. Income-tax Officer, Ward 4 (1), Chandigarh [2017] 82 taxmann.com 306 (Chandigarh - Trib.) the Chandigarh Bench of ITAT has held that "It has been decided in the number of cases that for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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