Case Law Details
Shri Shivakumar Kheny (HUF) Vs (ITAT Bangalore)
The Assessee took land on lease for a period of 20 years under a lease deed dated 14.3.2013 and constructed a residential house on such land. The amount of capital gain to the extent it was so utilized was claimed as deduction u/s.54 of the Act. As per the lease dated 14.03.2013, the Assessee entitled to construct a building after reimbursing a sum of Rs.4.9 Lakhs already spent by the lessor. The Lease period was for 20 Years. As per clause 10, the ownership and title to the residential building (except the land) would vest in the Assessee for the period of lease and thereafter the title in the building will vest with the lessor.
The Assessing Officer denied exemption U/s 54 of the Act on the ground that since the Assessee was not owner of the land, the condition laid down in Sec.54 of the Act for claiming deduction was not satisfied. taking the stand that such dichotomy in ownership is not acceptable. According to the AO, the Assessee had only a leasehold interest over the land on which building was constructed. He was of the view that the Assessee did not have any right to alienate the superstructure.
ITAT held that Since the words used in Sec.54 of the Act in so far as it relates to the first limb are “purchase” of a new asset, there was scope for examining regarding ownership of the new asset purchased, but such conditions cannot be extended to a case of deduction u/s.54 claimed on the basis of the second limb viz., construction of new asset i.e., one residential house in India. The requirement of Sec.54 of the Act in the second limb is that capital gain should be used in construction of residential house and nothing more. The Assessee in the present case is the owner of the superstructure constructed by utilizing the capital gain and this is clear from clause-10 of the lease deed by which the land over which the construction has been put up was given on lease to the Assessee. Therefore, the deduction u/s.54 of the Act ought to be allowed to the Assessee as claimed by the Assessee.
FULL TEXT OF THE ITAT JUDGEMENT
Please become a Premium member. If you are already a Premium member, login here to access the full content.
