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TMI Blog2023 (5) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... 54F and making an enhancement of Rs. 1,73,65,056/- on the ground that possession of flat was not given to the assessee, because: 1.1. The necessary ingredient u/s 54F is reinvestment by way of purchase construction or purchase and construction but not possession. 1.2. The rights accrued to the Assessee when the Purchase Agreement & Construction Agreement were executed and registered. 1.3. The delay in handing over the possession was not in the control of the Assessee. 1.4. No tax liability accrues to the assessee in the year under consideration, as the sale proceeds were duly deposited in the Capital Gains Scheme, irrespective of any other fact. 2. Because having regard to the facts and circumstances of the case, the Ld. CIT(A) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 54F, had been examined in detail and duly allowed. However, only the indexed cost of acquisition of Rs. 10,25,801/- & the expense of Rs. 2,83,473/- was disallowed. 6. For the sake of ready reference, the findings of the AO (Para 5, Page 2 of the Assessment Order) is reproduced as under: "5. The record of the A.Y. 2015-16 was received in this office from ITO, ward 45(3), New Delhi which received the records from ITO, Ward-44(1), New Delhi. Record was perused thoroughly but no aforesaid documents were found. So, in the absence of any explanation/ supporting evidence, in view of the provisions of the provisions of the act, this amount of Rs. 10,25,801/- and Rs. 2,83,473/- (Rs. 13,09,274/-) are not allowed as transfer exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction made by the assessee. It is no manner relaxes the three year timeline provided under section 54F for cases where there was no deposit in the CG Account Scheme. In the appellants case the capital gains has not been appropriated towards the acquisition of a residential house by wav of purchase and neither has the amount been deposited in a designated account to be utilized for construction. The construction time line has not been met and therefore deduction under section 54F is not eligible. As a result the income from capital gains is enhanced to an extent of Rs. 1,73,65,056/- due to the said deduction under section 54F not being eligible to the appellant." 9. Aggrieved by the action of the Ld. CIT(A), wherein the ld. CIT(A) enhanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. However, following the ratio laid down by the Madhya Pradesh High Court in the case of Smt. Shashi Varma v. CIT [1997] 224 ITR 106. It was found that there was no merit in the plea of the authorities in denying the exemption under section 54F on the ground that the construction of the house had not been completed. The requirement of sections 54 and 54F is for the assessee to have either purchased a residential house being a new asset within the stipulated period or construct a residential house within a period of three years from the date of transfer. The section does not prescribe the completion of the construction of the residential house and the thrust is on the investment of the net consideration received on sale of original asset an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la vs. ITO [2017] 83 taxmann.com 49 It was held that completion of the construction or possession of the residential house is not material if assessee has invested the substantial part of the money for acquisition or construction of residential house. In such a case deduction u/s 54 or 54F cannot be denied. * Pr. CIT vs. C. Gopalaswamy [2016] 384 ITR 307 (Karn) It was held that where the assessee has entered into an agreement with a builder and invested the capital gain for purchase of a residential unit, he is entitled to deduction u/s. 54 irrespective of the fact that builder has not completed the construction or has not yet handed over the flat. 14. Thus, we hold that the ld. CIT(A) erred in disallowing the claim by making factual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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