Shri Sohanlal Mohanlal Bhandari Vs ACIT (ITAT Pune)
Adverting to the facts of the instant case, it is seen from pages 5 and 6 of the impugned order that the assessee acquired land in two parts for construction of a new residential house, viz, the first part of the plot purchased on 11.10.2010 and the second part of the plot purchased in the year 2011/12. The date of certificate for commencement of construction is 26-07-2011. The assessee actually started construction work on 21-04-2012 which went on up to 27-09-2013 and the date of completion of construction as per the certificate is 15-09-2014. The original asset was transferred by the assessee on 11-06-2012. The date of completion of construction, being 15-09-2014 is within a period of three years from the date of transfer of the original asset. In such circumstances, the date of purchase of the first part of the plot on 11.10.2010, which is within the reasonable period as discussed above, constitutes the date of initiation of process of construction, and the deadline for the completion of construction would be 10.6.2015. As the construction actually got concluded latest by 15.9.2014, we hold that the assessee is entitled to exemption u/s 54F with reference to the full amount of Rs.1.12 crore spent on purchase of two parts of land and construction of new residential house thereon. The impugned order is overturned pro tanto.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessees emanates from the order passed by the ld. CIT(A) on 18-10-2016 in relation to the assessment year 2013-14.
2. The only issue argued by the ld. AR is against the denial of exemption u/s.54F of the Income-tax Act, 1961 (hereinafter also called `the Act’) on a sum of Rs.34,83,440/-, being, the amount paid by the assessee for purchase of a part of land on 11-10-2010, on which construction was done.
3. Succinctly, the factual matrix of the case is that the assessee transferred certain plot of land (being, original asset) on 11-06-2012 which resulted into long term capital gain of Rs.97,46,504/-. The assessee claimed exemption u/s.54F of the Act for a sum of Rs.87,73,454/- on proportionate basis towards investment of Rs.1,12,92,650/- on purchase of plot and construction of a new residential house thereon. The Assessing Officer (AO) observed that exemption u/s.54F of the Act was claimed, inter alia, on the total cost of plot amounting to Rs.44,14,840/-. Taking note of the prescription of section 54F, granting exemption on construction of a new residential house within a period of three years from the date of transfer of original asset, the AO held that such purchase of land by the assessee for Rs.44,14,840/-, made prior to the date of the transfer of original asset, could not be considered as qualifying amount. Allowing exemption u/s.54F on the cost of construction incurred by the assessee to the tune of Rs.67,59,973/-, the AO rejected the claim of the assessee for exemption qua purchase of total plot amounting to Rs.44,14,940/-. In holding so, the AO relied on Circular No.667 issued by the CBDT on 18-10-1993. The ld. CIT(A) held that the part of common plot of land purchased by the assessee within one year before the date of transfer of the original asset qualified for exemption u/s.54F. Investment in the part of the common plot made before one year from the date of transfer of the original asset was held to be not eligible for exemption, against which the assessee has come up in appeal before the Tribunal. The factum of filing of any cross appeal by the Revenue has not been brought to our notice by the ld. DR.
4. We have heard both the sides and gone through the relevant material on record. The undisputed position is that the assessee transferred the original asset on 11-06-2012 and purchased a common plot of land for construction of a new residential house thereon, in the following different parts, which for convenience, can be divided into two parts, viz., the first part of the plot purchased on 11.10.2010 and the second part of the plot purchased in the year 2011/12 :
