In the instant case, the assessee has purchased the new residential house at Pune in July 2008 in dilapidated condition and immediately there-after undertaken extensive civil, plumbing, electrical & painting works to make it habitable, which tantamount to construction within the meaning of section 54 of the Act , hence , the assessee cannot be denied the benefit under section 54 of the Act merely on the ground that the assessee has purchased the new residential house and therefore benefit as available to construction of the new residential house cannot be extended to the assessee simultaneously . Perusal of section 54 of the Act will reveal that no such restrictions are placed in the provisions of section 54 of the Act that purchase of new residential house is mutually exclusive to the construction of new residential house , provided other conditions as stipulated under section 54 of the Act are fulfilled. Rather, in the instant case starting from the purchase of new residential house at Pune in July 2008 in dilapidated condition by the assessee was immediately followed by extensive civil, plumbing, electrical and painting works undertaken by the assessee which started immediately after purchase of the house in July 2008 and continued till January 2009 which tantamount to construction of the said residential house by spending Rs. 14.26 lacs, to make the said new residential house habitable with amenities fit for living of the assessee for residential purposes . Section 54 of the Act does not stipulate any condition that if the new residential house is purchased by the tax-payer, then benefit associated with construction of the said new residential house cannot be extended simultaneously rather both purchase and construction of the same new residential house can co-exist, provided other conditions as stipulated under section 54 of the Act are complied with. For example, the tax-payer can purchase an residential house with one floor and later construct two more floor’s on the same residential house and in this situation benefit under section 54 of the Act cannot be denied to the tax-payer merely on the ground that the tax-payer has purchased the residential house and hence now benefits for construction of the same residential house property are, therefore, denied. Our above view is fortified by the judgment of Hon’ble Calcutta High Court in the case of B.B. Sarkar (supra).
Similarly, section 54 of the Act does not impose any conditions or restrictions as to what constitute ‘habitable’ to get the benefit of deduction under section 54 of the Act. The word ‘habitable’ is highly subjective and has to be understood and interpreted in the context of the socio-economic status and standing of the tax-payer in the society. Section 54 of the Act only provides that the tax- payer has to purchase or construct a new residential house. One tax-payer can purchase or construct new residential house property for say even Rs.10 lacs and another tax-payer can purchase or construct new residential house property for say Rs. 500 lacs, depending upon their socio-economic status and standing in the society . In the above cases, there will be substantial and significant difference in the quality of construction material used and amenities required by both the tax-payer’s to make the house ‘habitable’ fit for living for their residential purposes, but both the tax-payer’s will be entitled for deduction under section 54 of the Act provided other conditions as stipulated under section 54 of the Act are fulfilled as section 54 of the Act does not stipulate any such restrictive conditions as to the ceiling on amount per-se of investment in purchase and /or construction of new residential house property which is rather linked to long term capital gain earned by the assessee on sale or transfer of residential house property , or as to type of residential house properties or quality of construction or amenities required by the tax-payer to make the house ‘habitable’ which would entitled the tax- payer for claiming the benefit under section 54 of the Act . The tax-payer keeping in view his socio-economic position and status in the society has to define as to what is ‘habitable’ residential house required to make the house fit for living/abode for the tax-payer for his residential purposes. Revenue cannot deny the benefit under section 54 of the Act on the ground that expensive marble floorings or tiles are used in place of ordinary flooring or tiles etc. or a high quality expensive construction material is used by the tax-payer or more amenities are required by the tax-payer to make the house ‘habitable’ and more so when section 54 of the Act itself does not stipulate any such restrictive conditions, thus, benefit under section 54 of the Act cannot be denied to the tax-payer on these grounds as statute does not provide for such conditions/ restrictions. Of course, the items of comfort purchased or installed in the new residential house so purchased or constructed by the tax-payer such as consumer electronic and entertainment equipments, air-conditioning equipments, furniture, beddings, electrical and other equipments etc. per-se does not fit into the definition of purchase or construction of the residential house entitling these items to the benefits under section 54 of the Act as these are items of comfort and are not part of the purchase or construction cost of new residential house property within the meaning of section 54 of the Act and hence, benefits under section 54 of the Act cannot be allowed for these items of comfort so purchased/installed by the tax-payer in the new residential house so purchased or constructed. If the tax-payer is allowed to purchase or construct the residential house without any ceilings as to the amount of investment under section 54 of the Act, then merely because the tax-payer has purchased a residential house and thereafter followed it with alterations, additions and modifications carried out to construct the said purchased residential house to make it habitable for the tax-payer, benefits cannot be denied by the Revenue under section 54 of the Act. It will be like treating equals as un-equals and treating un-equals as equals which is not permissible.
We have also carefully perused the invoices of contractors submitted by the assessee in paper book filed with the Tribunal and we have found that the expenditure incurred by the assessee are towards the extensive civil, plumbing , electrical and painting works including new flooring , tiles , fittings in the new residential house property purchased by the assessee in Pune in July 2008 and are not towards purchase or installation of items of comfort such as air-conditioners, consumer electronics and entertainment equipments, electrical and other equipments, furniture etc. We have also seen the photographs of the new residential house at Pune when it was purchased by the assessee in July 2008 which is also placed in paper book which clearly reflects that the said house was not in the habitable conditions and was in dilapidated condition when it was purchased by the assessee in July 2008, which is also corroborated by the clause 8(ix) in the purchase agreement dated 23-7-2008 entered into by the assessee for acquiring the new residential house property at Pune in July 2008. Thus based on the peculiar facts and circumstances of this case and on the basis of our discussion and reasoning above, we hold that the assessee is entitled for claim of benefit under section 54 of the Act of expenditure of Rs. 14,26,705 incurred by the assessee to make the said new residential house purchased by the assessee at Pune in July 2008 ‘habitable’ fit for living for residential purposes by the assessee.