Case Law Details
Paramjit Kaur Vs. Income Tax Officer (ITAT Chandigarh)
As per section 54 of the Act a time period of three years was given for completion of construction of the house but at the same time, section 54 did not place any bar on the commencement of construction. Therefore, the fact that the assessee commenced construction of house prior to the sale of the original asset would not affect its claim of deduction under section 54 of the Act.
Hon’ble Delhi High Court in the case of Bharati Mishra (supra) has categorically held that the condition stipulated by section 54F which is identical to that in section 54 of constructing a residential house within three years for the purpose of claiming deduction does not stipulate that the construction must have taken place after the date of sale of original or old asset.
Similarly, the Hon’ble Allahabad High Court m the case of H.K. Kapoor (supra) has also reiterated the said proposition stating that the exemption of capital gain under section 54 of the Act can be allowed notwithstanding the fact that the construction of the new house had begun before the sale of the old house agreeing with the proposition laid down by the Hon’ble Karnataka High Court in the case of J.R. Subramanya Bhatt .
The learned Departmental Representative has not brought any contrary decision to our notice in this regard, nor brought to our notice any distinguishing facts in the present case so as to distinguish the case law relied upon by the learned counsel for assessee. In view of the same, we hold that the investment made by the assessee in the construction of the house prior to the sale of the original asset is also eligible for deduction under section 54 of the Act. Thus, we hold that the assessee is entitled to claim deduction under section 54 of the Act of Rs. 18,52,650 and Rs. 25,40,389 invested in the construction of new asset prior to the sale of original asset.
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