Kothari Sanjay Manilal Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that delay in the completion of construction of the house will not be a bar to the assessee for claiming the exemption provided u/s.54F of the Income Tax Act. Accordingly, deduction granted.
Facts- The case of the assessee was selected for limited scrutiny. The assessment was completed under Section 143(3) of the Income tax Act, 1961 by making addition on account of long term capital gain and disallowance of interest expense claimed u/s. 57 of the Act.
First Appellate Authority dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Coordinate Bench of this Tribunal in the case of Kamlesh Chandrakant Patel has held that delay in the completion of construction of the house will not be a bar to the assessee for claiming the exemption provided u/s.54F of the Act.
Held that we are of the considered opinion that the Revenue was not correct in disallowing the claim for deduction u/s.54F of the Act only on the ground that the construction of the house was not completed within the stipulated period of 3 years from the date of transfer of the original asset.
Held that amount was advanced to the societies for purchase of land. Therefore, the interest in respect of these loans to the societies has to be treated as capital expenditure, which was not eligible for deduction u/s.57 of the Act. In view of these facts, the Revenue was correct in disallowing the proportionate interest expenditure. However, certain amount of loan taken from Kothari Finance was repaid during the year. Therefore, the AO was not correct in disallowing the interest on the basis of opening balance.
