Case Law Details
Smt. Rajneet Sandhu vs. DCIT (2010) 133 TTJ 0064 (Chandigarh): In this case the construction of the house was not completed within the prescribed period. It was held that section 54F does not prescribe that the residential house should be completed within the prescribed period and benefit under s. 54F was allowed. It was held that thrust was on investment and not on completion.
The brief facts of the case are that during the year under consideration the assessee had sold her agriculture land at village Bihsanpura, District Mohali for 1.50 crore on 17.4.2006. The assessee had claimed deduction u/s 54F of the I.T. Act amounting to Rs.1,4156,332/-. The assessee had claimed to have purchased the residential plot No.K-96, South City-1, Gurgaon, out of the said sale consideration. In the return of income it was claimed by the assessee that the construction of the house would start immediately after sanction of housing loan and the house would be completed in financial year 2007-08. During the course of assessment proceedings, the Assessing Officer asked the assessee to furnish the details of housing loan availed and also the details of construction made on the plot and completion thereof. The Assessing Officer noted from the details furnished by the assessee that the construction of the house has not been completed. A certificate issued by M/ Artisans was furnished on record by the assessee which confirmed that the construction work was in progress and as on 25.3.2009, it had reached the Ground floor roof level and the subsequent work was in progress. The Assessing Officer was of the view that as the construction of the house was not complete and three years had lapsed since the sale of capital asset, the assessee was not entitled to benefit of exemption u/s 54F of the I.T.Act. The Assessing Officer further observed that u/s 54F of the I.T. Act, the assessee is required to complete the construction of the house within a period of three years from the date of transfer of the original asset and as the assessee has failed to do so; she is not eligible for any deduction u/s 54F of the Act.
Held by CIT (A)
Before the CIT (A) the submission of the learned counsel was that the language of section 54F(1) of the Act uses the word “constructed” and not “complete ”.Reliance was placed on the CBDT Circular No.667 dated 10.1993, which says cost of the land is an integral part of cost of residential house, whether purchased or built. The CIT(A) upheld the order of Assessing Officer. Reliance placed by the assessee on Mrs.Seetha Subramanian vs. ACIT, 56 TTJ (Mad) 417 was held to be distinguishable as the house was more or less complete except some finishing work in the facts of the case before Madras Bench of Tribunal.
Held by ITAT
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IMPROMPTU
The view taken, though not for the first time is, to the effect that the prescribed time limit of 2 / 3 years ‘FOR’ ‘purchase’ / ‘construction’ of a new asset is not to be construed strictly or rigidly, or interpreted in a narrow sense. That is the right or better view should necessary regard be had to the setting /the whole context, with adequate emphasis / stress placed on the crucial word “FOR”. Even if considered from a different angle, constructing and completing a new independent house, or purchasing a Flat/Apartment, within time as planned, is not left to the investor- taxpayer; but is subject to or circumscribed by several ifs and buts, mostly resting with the promoter/seller.
As per the scheme of the enactment itself, – in particular, in section 54 OR section 154 / 155 of IT Act, there is no provision hence by necessary implication not envisaged/intended to tax the amount of capital gains or to the extent it has been ‘utilised’ for the purchase or construction. A close reading and understanding of sub-section (2) rw the Proviso thereto lends support.
In the context, it may be noted,, the recent SC judgment in Sanjeev Lal v CIT is a case on the point, to support the identical proposition that section 54 requires to be interpreted by adopting a common sense reasoning, founded on principles of natural justice and a liberal judicial approach. This aspect has been briefly touched upon in the published article, -(2014) 226 Taxman 143- 150/151.
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