Section 54F exemption denied for mere expansion of an existing house, not construction of a new residential unit.

Deduction under section 54F was unavailable where the assessee merely modified or expanded an existing residential house instead of constructing a new residential house. The provision applies to investment in construction of a house, not to renovation or addition to an existing structure. A self-contained additional floor may qualify if it amounts to construction of a distinct residential unit, but a mere increase in the plinth area of the existing house is insufficient. On the facts stated, the investment was only in modification of the existing house, so the exemption was not admissible.

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Issues: Whether deduction under section 54F of the Income-tax Act is available where the assessee invests in modification or expansion of an existing residential house instead of constructing a new residential house.

Analysis: The assessee had added built-up area to an existing house but had not constructed a separate apartment or a new house. Section 54F grants exemption for investment in the construction of a house, and not for renovation or modification of an existing house. Even though construction of a self-contained additional floor could qualify, a mere addition to the plinth area of an existing house is not sufficient to attract the exemption.

Conclusion: Deduction under section 54F was not admissible, as the investment was only in modification of an existing house and not in construction of a new residential house.

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