Case Law Details
ITAT Ahemdabad has held in the case DCIT Vs. Shri Radhakant M. Tripathy that The very fact that the legislature has allowed investment in new property one year prior to the date of transfer establishes in no uncertain terms that it need not be the sale consideration out of which the investment should be made for qualifying for the said deduction u/s.54F of the Act.
Facts of the case
During the course of assessment proceedings, A.O. noticed that Assessee had sold a plot of land situated at Jayendra Park Housing Society on 26.03.2007 for Rs. 60 lac. Out of the capital gain earned of Rs. 44,99,597/- on sale of the aforesaid land, Assessee had claimed deduction under section 54F for an amount of Rs. 27,02,268/-on account of investment in construction of new residential property being purchase of land and construction of house. On the basis of details furnished, A.O. also noticed that Assessee had made aggregate payment of Rs. 34.50 lacs towards made investment in new residential property from 27.03.2006 to 24.06.2007, A.O. noticed that Assessee had started construction of new residential property before the date of transfer of aforesaid land (i.e. 26.03.2007) and that the payment of Rs. 17.5 lacs towards the purchaser on new property was made before the date of transfer of property on which capital gain was claimed. Thus according to the A.O., the amount invested prior to the date of sale of original asset was not eligible for deduction under section 54F and therefore the amount invested in purchase of new property was disallowed and added back to the total taxable capital gain. A.O. was further of the view that Assessee was eligible for deduction under 54F only for the balance of Rs. 17.50 lacs. He accordingly computed the deduction under section 54F at Rs. 13,31,552/- and the balance claim of deduction of Rs. 13,70,715/- was disallowed. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A).
Decision of CIT (Appeal)
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Sir, This judgment is very interesting. u/s.54F first option is purchase a residential house within one year prior(meaning may be generally sale consideration or sale deed is effected after some time so the earnest money received is generally invested that amount should have invested more over word is purchase of residential house and not construct. second purchase within two years means if any flat ECT ARE UNDER CONSTRUCTION RESIDENTIAL UNIT IS PURCHASED THEN GENERALLY TWO YEARS TIME IS REQUIRED FOR SUCH CASES AND IF SELF CONSTRUCTION IS CARRIED IT NORMALLY TAKES THREE YEARS SANCTION OF MAP PURHASE OF PLOT SO TO COVER SUCH CASES THIRD OPTION MAY.DIFFERANCE IN PURCHASE OF RESIDENTIAL UNIT AND CONSTRUCTION IS VERY THIN AS PER SC. WHICH IS FAVERABLE TO ASSESSEE IS TAKEN HENCE PURCHASE OF RES.UNIT SHOULD INCLUDE A CONSTRUCTION OR PURCHASE OF PLOT ETC…….PLEASE CLEARIFY
Sir, This judgment is very interesting. u/s.54F first option is purchase a residential house within one year prior(meaning may be generally sale consideration or sale deed is effected after some time so the earnest money received is generally invested that amount should have invested more over word is purchase of residential house and not construct. second purchase within two years means if any flat ECT ARE UNDER CONSTRUCTION RESIDENTIAL UNIT IS PURCHASED THEN GENERALLY TWO YEARS TIME IS REQUIRED FOR SUCH CASES AND IF SELF CONSTRUCTION IS CARRIED IT NORMALLY TAKES THREE YEARS SANCTION OF MAP PURHASE OF PLOT SO TO COVER SUCH CASES THIRD OPTION MAY.DIFFERANCE IN PURCHASE OF RESIDENTIAL UNIT AND CONSTRUCTION IS VERY THIN AS PER SC. WHICH IS FAVERABLE TO ASSESSEE IS TAKEN HENCE PURCHASE OF RES.UNIT SHOULD INCLUDE A CONSTRUCTION OR PURCHASE OF PLOT ETC…….PLEASE CLEARIFY