TaxTMI 
TaxTMI 
2010 (3) TMI 1116
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....declaring total income of Rs. 16,28,370/- which was subsequently revised on a total income of Rs. 18,29,960/-. During the course of assessment it was interalia observed by the AO that the assessee has disclosed an amount of Rs. 1,81,660/- being taxable capital gain on sale of flat and plot as under :- Capital gain on sale of flat at Altamount Road Rs.1,37,11,000 Capital gain on sale of plot at Rajkot Rs. 2,51,063 Rs.1,39,62,063 Less: Invested in flat at Bandra Rs.1,37,80,405 Taxable capital gain Rs. 1,81,660 On examination, it was further observed by the AO that the assessee has acquired a new residential house with the help of borrowed funds from Punjab National Bank. However, the funds rec....
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....ouse and the intention of Legislature is very clear in this regard. Only then can the assessee claim deduction u/s.54. Besides assessee cannot isolate sec.54(1) from sec.54(2), because the opening words of sec.54(1) is "subject to provisions of sub-section 2". Assessee cannot adopt an interpretation which is beneficial to him by selective usage of clauses. In view of what is stated above I hold that assessee has not utilized the entire gains accrued on transfer of original asset for purchase of a new asset. The capital gains chargeable to tax is worked out as under :- Total capital gains as per return of income .... Rs.1,39,62,063 Less: Utilised for purchase of property as per para 10 .... Rs. 82,22,826 ....
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.... 2. On the facts and circumstances pf the case, whether the ld. CIT(A) was justified in enhancing the amount of taxable capital gain from Rs. 1,66,660/- to Rs. 1,39,62,063/-." 5. At the time of hearing the ld. Counsel for the assessee submits that the issue is covered in favour of the assessee by the order of the Tribunal in ACIT vs. Dr. P.S. Pasricha in ITA No.6808/Mum/2003 for Assessment Year 2001-02 dated 11.1.2008, upheld by the Hon'ble Jurisdictional High Court in CIT vs. Dr. P.S. Pasricha in Income tax Appeal No.1825 of 2009 dated 7.10.2009. He also placed on record the copy of the aforesaid order/judgment. 6. On the other hand the ld. DR supports the order of the AO and the ld. CIT(A). 7. We have carefully considered t....
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....e ld. CIT(A) observed that the purchase of new house is prior to sale of old property and it has been acquired out of borrowed funds, the sale proceeds have been utilised for repayment of loan and hence, the appellant is not entitled to exemption claimed u/s.54 at all. 8. In ACIT vs. Dr. P.S. Pasricha (supra) the facts of the case are that the assessee has acquired a residential flat in the building known as "Dilwara" at Cooperage, Mumbai at cost of Rs. 3,22,464/-. The said property was sold during the year for a total consideration of Rs. 1,40,00,000/-. After claiming deductions for expenses incurred for sale and cost, long term capital gains was worked out by the assessee at Rs. 1,24,02,738/-. The assessee claimed an exemption under se....
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....or purchase of a commercial property and residential house was purchased out of the funds obtained from different sources, as such, the identity of heads has been changed. We do not find much force in this argument as the requirement of section 54 is that the assessee should acquire a residential house within the period of one year before or two years after the date on which transfer took place. Nowhere, it has been mentioned that the same funds must be utilized for the purchase of another residential house. The requirement of the law is that, the assessee should purchase a residential house within the specified period and source of funds is quite irrelevant. For the sake of reference, we extract the provisions of section 54 as under :.........