Case Law Details
ACIT Vs Shri Dilip Ranjrekar (ITAT Bangalore)
It was held that despite the non completion of the construction of the new property by the builder, the assessee would be entitled to the benefit of exemption u/s 54 of the Act.
We have heard the rival contentions and perused and carefully considered the material on record. It is apparent from the facts of the case as mentioned (along with copies of corroborative documentary evidence) and discussed above from para 7.1 to 4.4.3 of this order (Supra) that the non completion of the construction the flat by the builder within the stipulated period is beyond the control of the assessee. In our considered opinion, in view of the decision of the Hon’ble Jurisdictional High Court in the case of Smt. B.S. Shantakumari (Supra) and Sambandam Udaykumar (Supra) the assessee cannot be denied exemption u/s 54 of the Act to the extent of investment in the new property, even though the construction of the new asset is not completed within the eligible period of 3 years for the date of sale/transfer of the original asset. With respect to the amount invested in construction of the new property before the date of transfer of the original asset, it is well settled law that the amount invested within one year before the date of transfer of the original asset is to be allowed exemption u/s 54 of the Act. From the details of investments for purchase of the new asset as submitted by the assessee, it is stated that the assessee has only invested an amount of Rs. 2,26,82,097/- towards construction of the property. The AO is therefore directed to restrict the exemption allowable to the assessee to the actual amount spent on construction after due verification. We hold and direct accordingly.
No Income Tax Exemption for PF interest on accumulated balance after retirement
The exemption u/s 10(12) of the Act is limited to the accumulated balance due and payable to an employee up-to the date of retirement/end of employment. In this view of the matter, we are of the considered opinion that the accumulated interest of Rs.44,07,195/- post-retirement of the assessee on 1/4/2002 is not eligible for exemption u/s 10(12) of the Act. We therefore hold that the AO was right in holding that the said interest was exigible to tax in the assessee’s hands. However, since the assessee is following mercantile system of accounting and to bring to tax the correct income in the hands relevant period of accrual, we direct the AO to bring this amount of accrued interest of Rs.44,07,195/- on P.F balance for the period 1/4/2002 to 11/4/2011 to tax in the assessee’s hands in the respective asst. years in which the interest accrued, as per the working in the table in page 15 of the order of assessment,
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