Case Law Details
Moturi Lakshmi Vs. ITO (Madras High Court)
The issue under consideration is whether the advance to the seller of flat prior to the date of sale of old capital asset will be eligible for claiming deduction u/s 54 under capital gains?
High Court states that the entire scheme of Section 54 of the Act was explained and it was held that there was no prohibition for the assessee for putting up construction out of the sale consideration received by such transfer of site, which was owned by him as it was clear from the language of the provision. It was further held that though the original asset was sold much after purchase of vacant site, still the beneficial provision should be extended to the assessee. Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilized for the purchase or construction of a house property. The intention of the Legislature or the purpose with which the said provision has been incorporated in the Act, is also very clear that the assessee should be given some relief. From the above, it is clear that the intention of the Legislature was to either purchase before or after the date of sale and the word ‘purchased’ or ‘constructed’ used in the Notes on Clauses amply makes the intention. In the light of the above discussions, HC hold that the substantial question of law is required to be answered in favour of the assessee.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
This appeal by the assessee filed under Section 260A of the Income Tax Act, 1961 (for short, the Act) is directed against the order dated 15.3.2018 made in ITA.No.234/Chny/2017 on the file of the Income Tax Appellate Tribunal, Chennai ‘D’ Bench (for brevity, the Tribunal) for the assessment year 2013-14.
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