TaxTMI 
TaxTMI 
2006 (4) TMI 99
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....III(4) on June 22, 1985. They sold a house property at No. 40, Moore Street, Madras-1, which was jointly owned by them and each claimed exemption under section 54F in respect of 50 per cent. share of capital gain of Rs. 8,25,957 in the original returns which were filed on September 12, 1986, declaring their intention to construct a residential house within the specified period of three years i.e., before June 21, 1988. The assessments were completed under section 143(1)(a). Later on, they filed revised returns admitting taxable capital gains of Rs. 1,63,487/-, each claiming partial exemption under section 54F for the reason that they invested the capital gains in the new residential houses to an extent of Rs. 7,65,470/- only. The assessments were reopened under section 148 in both cases and reassessments were completed on March 30, 1990, under section 143(3) read with section 147, taxing the entire capital gains of Rs. 8,25,957/- on the basis of the materials collected by the Assessing Officer. Aggrieved by the order of the Assessing Officer, the assessees filed appeals before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) dismissed the ....
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....te of construction of two individual property started from 15-4-1988 15-4-1988 (4) Date of payment made to contractor 10-6-1988 and 20-6-1988 10-6-1988 and 20-6-1988 (5) Date of completion of construction by contractor 20-6-1988 20-6-1988 (6) Date of inspection by the valuer to the two separate buildings 29-6-1988 29-6-1988 (7) Date of cost of construction and valuation report 30-6-1988 30-6-1988 6. Section 54F deals with capital gain on transfer of certain capital assets not to be charged in the case of investment in residential house. The section reads as follows: "54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.- (l) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has wit....
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....as below: "Actually the assessees applied to the Corporation of Madras vide their letter dated December 23, 1989. Along with this letter, they enclosed photostat copy of the sale deed, copy of property transfer issued by the Corporation, seven copies of the demolition plan, seven copies of construction plan and indemnity bond and affidavit. In one blue print, the plan of the proposed new construction of 5085 sq.ft. was exhibited. The said building was proposed to be constructed in ground floor as well as first floor. In this plan, the architect Savitha Chowdhry put the date as December 4, 1989. In another blue print the building to be demolished was shown. The total area to be demolished was shown at 1852 sq. ft. In the said blue print, the architect Savitha Chowdhry put the date as October 17, 1989. In the said blue print for which demolition was applied for, the old building as it existed as per the sale deed dated March 9, 1988, was shown. The actual claim of these assessees is that Shri Pradeep Kumar had undertaken some new construction by way of extension to the old existing building both in the ground floor and in the first floor. This can be seen at pages 71 and 71A....
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....truction of residential house. The said construction must be a real one. It should not be a symbolic construction. Further it is seen from the finding of the Tribunal that the assessee Sri Pradeep Kumar had undertaken an extension work in the old building in the ground floor and first floor. From the above finding it is clear that there is no residential house and it is only an extension of the old building. A mere extension of the existing building will not give benefit to the assessee as contemplated under section 54F of the Act. In the case of Sri Praveen Kumar, it was stated by the Tribunal that he had constructed a small building measuring 382 sq.ft. by demolishing the existing A.C.C. roofed outhouse of 324 sq.ft. We have already noted that there is no acceptable proof for such construction. Mere construction by way of extension of the old existing house would not mean constructing a residential house as contemplated under section 54F of the Act. The argument of counsel for the assessees about the construction of residential houses is not based on any valid material and is not entitled to the benefit of section 54F of the Act. Also, there is no evidence or contemporaneous docu....
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....inding of the Tribunal is not based on any evidence. The order of the Tribunal is perverse and it is patently erroneous and unreasonable, because it has overlooked the materials produced by the Assessing Officer and in the absence of any material, the Tribunal had come to an erroneous conclusion, and hence the court can interfere under reference. The documents relied on by the assessees before the Tribunal were mere letters addressed by Y. R. Srinivasan, who is the architect. The said architect had given a quotation and bill dated June 27, 1988, and his acknowledgment of the receipt of a sum of Rs. 75,000/- from each of these two assessees, which are not sufficient to prove that there were construction of residential houses. The said documents and other evidence were produced first time before the Income-tax Appellate Tribunal. But the Revenue had relied on the inspection report and also verified with the Madras Corporation and further they have taken photographs of the place and all these documents reveal that there were only an extension of the old building. Further learned counsel submitted that section 54F is a beneficial provision and the same should be construed liberally. Fo....