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S. 54F Exemption not available for addition / Modification / Extension made to existing house

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HIGH COURT OF KERALA

Pushpa

Versus

Income tax Officer

IT APPEAL NOS. 30 & 32 OF 2012

AUGUST  22, 2012

JUDGMENT

Thottathil B. Radhakrishnan, J.

The short issue raised by the assessee in these two appeals is as to whether the refusal of claim for exemption under s. 54F of the IT Act is sustainable. The learned counsel appearing for the appellant making reference to P. Ramanatha Aiyar’s The Law Lexicon points out that the word ‘building’ has to be understood depending upon the circumstances. What is a ‘building’ must always be a question, of degree, and circumstances. Its ordinary and usual meaning is, a block of brick or stone work, covered in by a roof. That entry in the Law Lexicon is made with reference to M.R Moir v. Williams [1892] I QB 264. Referring to the Law Lexicon, we find that the term ‘building’ has been considered in the context of different statutes in relation to different types of structures. With that, reference is made to the decision of this Court in Mrs. Meera Jacob v. ITO [2009] 313 ITR 41l (Ker.). The learned counsel for the Revenue also pointed out CIT v. Pradeep Kumar [2007] 290 ITR 90.

2. In the case in hand, in our view, no substantial question of law arises calling for interference at the instance of the assessee. Sec. 54F provides that capital gains on transfer of capital assets shall not be charged in cases of investment in residential house. The section pointedly says that such eligibility would be available if the assessee has, within the period prescribed, constructed, a residential house. For the purpose of that section, the residential house so constructed is referred to as new asset. The object sought to be achieved by that provision is to exclude capital gains on transfers of certain capital assets from being charged provided the new asset is a residential house. Obviously, a new house is not something which is either an extension or addition made to an existing structure. As noted by this Court in Mrs. Meera Jacob (supra), the exemption is available only when the investment is in the construction of a house and not for investment in modification or renovation. The Bench also held that it is the conceded position that the assessee has not constructed any separate apartment or house. Sec. 54F does not provide for exemption on investment in renovation or modification of an existing ‘ house and what gains exemption is only construction of a house. Of course, the observation in that judgment that even addition of a floor of a self-contained type to the existing house would have qualified for exemption, is not a statement as to law, to be noted as a precedent because that case was not one such.

3. ‘Reverting to the case in hand, the Tribunal adverted to the entire materials and has categorically found that there is nothing on record to show that the capital gains was actually utilized for the construction of ‘ a new house. The copy of the approved plan dt. 28th June, 2000 from the Trivandrum Corporation placed before the Tribunal pertains only to roof changing (sunshade projection) and for construction/extension of/to the first floor. The sanction bears a condition to the effect that the house shall consist of a single residential unit. On the said set of facts and materials, we do not find any question of law arising for decision. The provisions of s. 54F of the IT Act have been appropriately applied. With these, we do not find any legal infirmity in the decision of the Tribunal.

In the result, these appeals fail. They are accordingly dismissed. No costs.

Sandeep Kanoi

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