TaxTMI 
TaxTMI 
2017 (4) TMI 117
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....ed Selective Scrutiny) and accordingly, notices under sections 143(2) & 142(1) were issued. In response to the notices, the Authorized Representative of the assessee appeared from time to time and produced relevant information as called for. 3. During the course of assessment proceedings, the Assessing Officer noticed from the statement of computation of total income that the assessee had admitted long term capital gain of Rs. 1,80,66,004/- from sale of two sites admeasuring 283.33 sq. yds and 1247.50 sq.yds at Madhavadhara on 12/11/2009 and 29/03/2010 respectively and claimed exemption under section 54 towards reinvestment in a residential house for Rs. 1,71,56,598/- and arrived at net long term capital gain of Rs. 9,09,406/-. The Assessing Officer, on examination of the information filed during the course of assessment, noted that the assessee was not entitled to exemption under section 54 of the Act, but squarely entitled to similar exemption under section 54F of the Act, towards reinvestment of sale consideration for construction of residential house property. The Assessing Officer further noted that even the exemption allowable under section 54F is analysed to be not admiss....
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.... in respect of investment made in construction before the date of transfer of original asset. Accordingly, recomputed long term capital gain from the sale of two sites at Rs. 1,47,14,369/-. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). Before the Commissioner of Income Tax (Appeals), the assessee reiterated the submissions made before the Assessing Officer. The assessee further submitted that the provisions of section 54F of the Act, do not have any stipulation as to the date of commencement of construction of house property. The Act only prescribes the date of completion of construction of house property which says that the new house property should be constructed within three years after date of transfer of original asset. The assessee further submitted that the Assessing Officer wrongly relied upon the ratio of the Hon'ble Gujarat High Court in the case of Shantaben P. Gandhi ((supra), as the facts of the case before the Hon'ble High Court are entirely different from the facts of the present case. It was submitted that in the case of Shantaben P. Gandhi (supra), the entire construction was compl....
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....xisting property and such exemption is not available when the new construction is made or commenced before the transfer or sale of the existing property or house. The Commissioner of Income Tax (Appeals) erred in holding that there is no prescription under the Act that the construction should have commenced after the date of transfer. The Commissioner of Income Tax (Appeals) erred in holding that the assessee cannot be denied benefit of section 54F because of the reason that construction of house had commenced before the sale of capital asset, but fact is that the provisions of section 54F clearly states that construction of house should be completed within three years after the date of transfer which means that the construction of house property should invariably commenced on or after the date of transfer of original asset. 9. On the other hand, the Authorized Representative of the assessee strongly supported the order of the Commissioner of Income Tax (Appeals). The Authorized Representative of the assessee submitted that there is no condition as to date of commencement of construction in the provision of section 54/54F and the said section stipulates that the construction of ....
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....es has held that the Act does not prescribed any condition as to the date of commencement of construction of new house property and only condition is that construction of house property should be completed within three years from the date of transfer of original asset. The date of commencement of construction is irrelevant and the construction may be commenced even before the date of transfer of original asset. A similar view has been expressed by the Hon'ble Delhi High Court, in the case of Bharathi Mishra (supra), wherein the Hon'ble High Court observed that sub-section (4) of section 54F prescribes appropriation of sale consideration of original asset towards purchase of new asset made within one year before the date of transfer of original asset, two years from the date of transfer or construction of new house property, within three years from the date of transfer of original asset. The Act does not prescribe any condition as to the date of commencement of construction of house property which may even commenced before the date of transfer of original asset. The Hon'ble Karnataka High Court in the case of J.R. Subrahmanya Bhat (supra), has also expressed similar view....
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....re of the considered view that the assessee is eligible to claim exemption u/s 54 of the Act, even though the construction of the new residential house was commenced prior to the date of transfer of original asset. In the present case on hand, on perusal of the facts available on record, we find that the assessee has commenced construction of new house property in the month of November, 2004 and completed construction in the month of March, 2007. The transfer of asset has been taken place in the month of January, 2007. The construction of new house property has been completed within 3 years from the date of transfer of asset. Therefore, the assessee is eligible for exemption u/s 54 of the Act." 13. In this view of the matter and also respectfully following the ratio laid down by the Hon'ble Karnataka High Court and also by following the decision of the Coordinate Bench ITAT Visakhapatnam, we are of the view that the provisions of section 54F does not prescribe any condition as to the date of commencement of construction of new house property. The construction of house property may be commenced before the date of transfer of original asset, however it should be completed with....