2017 (2) TMI 1358

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....d in reopening the assessment under section 147 without any fresh information on a reappraisal of the same evidence on change of opinion and is contrary to law laid down by the Apex Court in the case of Kelvinator. 3. The reopening under section 148 is also bad in law for not furnishing reasons recorded under section 148(2) as requested by the appellant. 4. The learned Assessing Officer has erred in holding that borrowed monies invested in residential house does not qualify for exemption under section 54. 5. Without prejudice to the Ground No. 4, the learned Assessing Officer should have accepted the claim under section 54 on the short ground that the investment as required under section 54 is out of sale proceeds of the old house only. ....

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.... of the existing residential property. The Assessing Officer has denied the claim of deduction under Section 54 on the ground that the assessee has utilized the loan taken from BHW Housing Finance Ltd. of Rs. 56 lakhs. Thus the Assessing Officer was of the view that Section 54 does not mention that the exemption should be given on loan for the purchase of new property. He has held that the investment should be made from capital gain arising from transfer. Aggrieved by the action of the Assessing Officer, the assessee filed appeal before the CIT (Appeals) but could not succeed. 6. Before the Tribunal, the learned Authorised Representative of the assessee has submitted that the assessee has purchased a new house that was under construction f....

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....e the very object of this incentive of providing deduction under sub-section (1) of Section 54 as under : "54. (1) 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 of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (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 within a period of three years after that date constructed, one residential hous....

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....iod of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date of construction of a residential house then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the provisions of the Act. Thus the deduction under Section 54 is available even when the assessee has purchased residential house prior to the date of transfer of the existing residential house. Which means that at the time of purchase of new house prior to the sale of the existing house the capital gain is not required to be invested as it is not arisen and available with the assessee on ....