TaxTMI 
TaxTMI 
2020 (3) TMI 1226
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.... CBDT circular No. 667 dated 18.10.1993 which states that the aggregate cost to qualify as a deduction u/s. 54F only if the net proceeds of sale are invested inn the construction of the new asset. 3 For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A), in so far as it relates to the above grounds may be reversed and that of the Assessing Officer be restored. 4 The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal. ITA No.1070/B/2019 (A's Appeal) 1 That the order of learned Commissioner of Income-tax (Appeals) is bad in so far it is prejudicial to the interests of the appellant and erroneous in law and against the facts and circumstances of the case. 2 That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in not allowing the cost of land of Rs. 6,77,14,490 as exemption u/s. 54F of the Act on the ground that the land was purchased prior to the date of sale of original asset. Additional Ground 3 That the learned Commissioner of Income-Tax (Appeals) er....
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....ect of the same, called for remand report from Ld. AO. In remand report Ld. AO was of the opinion that, it is necessary that house should have been constructed within a period of 3 years from the date of transfer of capital asset and as assessee has not satisfied the requirements u/s. 54F was to be denied. 7. Ld. CIT(A) however held that, assessee was entitled to cost of construction to be exempt u/s. 54 of the Act, as assessee commenced the construction of house prior to the date of transfer of original asset, in lieu of Circular No. 667 dated 18/10/1993 issued by CBDT. Aggrieved by order of Ld. CIT(A), both revenue as well as assessee are in appeal before us now. Assessee raised following Additional Grounds: 1 That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in not considering the total cost of construction of Rs. 6,63,64,068 incurred for allowing exemption u/s. 54F of the Act. 2 That the learned lower authorities erred in law and on facts in not providing the additional deduction of Rs. 2,79,64,068/- being the construction cost incurred after filling the return of income and before expiry of three years from the date of s....
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....apital gains in the same proportion as the amount spent on construction of the new residential house without considering the amount spent on land to the net consideration received on sale of two parcels of land. Ld. AR further submitted that, on the balance amount of capital gains, that is Rs. 3,98,70,817/- benefit u/s. 54F was not claimed and it was offered to tax. 12. Ld. AR now submitted that, for purpose of section 54F(1), cost incurred up to the date of completion of construction of the house should be taken into account. In support Ld. AR placed reliance on decision of this Tribunal in case of DCIT vs. Shobha Developers in ITA No. 1410/Bang/2013. Ld. AR placed reliance on decision of Hon'ble Karnataka High Court in case of CIT vs Jay Subramanya Bhat reported in 165 ITR 571 and CIT vs Ramachandra Rao reported in 277 CTR 522 in support of his contentions. It is submitted that, Hon'ble Court in these decisions answered question in favour of assessee that; Where assessee invests entire sale consideration and construction of residential house within 3 years from the date of transfer can he be denied exemption under section 54F of on the ground that he did not deposit the said a....
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....om the date of sale of original assets land should be considered while computing exemption under section 54F even though assessee failed to claim it in the return of income; 16. Insofar as issues No.1 and 2 noted hereinabove is concerned, exemption under section 54F on utilisation of capital gain for purchase of residential house or construction of a residential house is as per subsection 1. Subsection 2 provide the mechanism of the capital gain was not appropriated by the assessee towards purchase of new asset within one year before or 2 years after the date on which the transfer took place or has within period of 3 years after the date constructed a residential house being the new asset Section 54F of the act is a beneficial provision of promoting the construction of residential house. Therefore the provision has to be construed liberally for achieving the purpose for which it was incorporated in the statute. The words used in this section are "purchased" or "constructed". For such purpose, capital gain realised should have been invested in a residential house. On a liberal interpretation, the condition preceded and for claiming benefit under the provision is that capita....