Section 54F relief for structural improvement of an existing home allowed on substantial compliance and genuine construction evidence.

Deduction under section 54F was treated as available where capital gains were invested in construction and structural improvement of an existing residential house, including additional rooms and allied civil works, rather than only in purchase of a new house. The provision was applied liberally as a beneficial relief, and the work was found to go beyond routine repairs because it involved substantive construction supported by engineer certification and evidence. The absence of any rebuttal by the Revenue to the genuineness of the expenditure, and the fact that a prior claim had been made for purchase of the same property, did not by itself bar relief for later investment in further construction. Substantial compliance with the investment condition was sufficient.

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Issues: Whether deduction under section 54F was admissible where the capital gain was utilised for construction and structural improvement of an existing residential house, including additional rooms and allied civil works, instead of purchase of a wholly new house.

Analysis: The provision is beneficial in nature and must be construed liberally to advance its object. The works undertaken were not confined to routine repairs; they included structural additions and other construction activities, supported by an engineer's certificate and related evidence. The Revenue did not disprove the genuineness of the expenditure. The fact that deduction under the same provision had been claimed in an earlier year for purchase of the residential property did not, by itself, bar relief for subsequent capital gain invested in further construction and improvement of that property. Substantial compliance with the requirement of investment in construction of a residential house satisfies the statutory condition.

Conclusion: Deduction under section 54F was allowable and the disallowance of the capital gain exemption was unsustainable.

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