TaxTMI 
TaxTMI 
2014 (1) TMI 883
X X X X Extracts X X X X
X X X X Extracts X X X X
....that there is a mistake ap parent from the record in not referring to various evidencerelied upon by the assessee in support of the case that the house was made inhabitable from September 2007", and, accordingly, the order, so far as it pertained to the quantum addition, was recalled. It is in this backdrop that we have come to be in sesin of the matter. 2. The quantum appeal, i.e. recalled appeal, is directed against the order dated 26 th February 2010, passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 207-08. The short issue that we are required to adjudicate in this appeal is whether or not the learned CIT(A) was justified in upholding in denial of exemp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee has purchased a ready made property, that since the assessee had sold his house in August 2006, whereas the new property was purchased in May 2006, these facts donot indicate that the house was not in a livable condition at the point of time of purchase. The Assessing Officer further noted that the expenses were claimed to have been incurred by the assessee till 31 st March 2007, i.e. much after purchasing the house. On the strength of these observations, the Assessing Officer rejected assessee's claim for the cost of improvement in the new house property being taken into account for computation of Section 54 benefit. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) noted that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or inconsistencies in this material. In this view of the matter, the very foundation of assumption by the authorities below to the effect that the new house property was habitable, at the point of time when it was purchased, is unsustainable. It is also important to bear in mind the fact that merely because a person has moved into the new property does not mean that the construction work is complete. One can, after all, move in a new property even when work is partly complete, and it does happen in the real life. We also find that Section 54(1) of the Act, provides that , " subject to the provisions of sub-section (2), where in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eriod of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. "In our considered view, the cost of purchases does include any capital expenditure incurred on the assesse on such property to make it liveable. As long as the costs are of such a nature as would be includible in the cost of construction in the normal course, even if the assessee has bought a readymade unit and incurred those costs after so purchasing the readymade unit - as per his taste and requirements, the costs so incurred will form integral part of the qualifying amount of investment in the house property. The use of words 'purchased or construed' does not mean that the property can either be purchase....