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Case Law Details

Case Name : Juveria Begum Vs Income Tax Officer (ITAT Hyderabad)
Appeal Number : ITA No. 2224/Hyd/18
Date of Judgement/Order : 04/09/2020
Related Assessment Year : 2009-10
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Juveria Begum Vs ITO (ITAT Hyderabad)

Section 54F of the Act only mandates that the capital gain should be invested in ‘a residential house’ within the stipulated time by way of purchase or construction. Thus, the amount spent on renovation of such residential house by an assessee according to his requirements is also allowable as exempt u/s.54F of the Act as it would amount to construction of a residential house. The only other requirement is that the construction should be completed within three years from the date of transfer of the original asset. Further, the CIT(A) also agrees that the issue is covered in favour of the assessee by the decisions of the Hon’ble Karnataka and Calcutta High Courts but chooses to follow the decisions against the assessee.

The Hon’ble Bombay High Court in the case of CIT Vs. Godavari Devi Saraf (1978) 113 ITR 589 (Bom) has held that – in the absence of a decision from the jurisdictional High Court, the decision of another High Court which is in favour of the assessee has to be followed. Hence, the order of the CIT(A) is not sustainable and the assessee’s claim of exemption u/s.54F of the Act has to be examined in the light of the details submitted by the assessee and the report of the valuer submitted by the assessee in the absence of sufficient details as the construction was allegedly done in the year 2006.

Therefore, we deem it fit and proper to remit the issue back to the file of AO with a direction to allow the exemption u/s.54F of the Act in respect of the cost of the house, which is already purchased by the assessee on 29-03-2006 and also the amount spent on renovation/re-modification of the house.

FULL TEXT OF THE ITAT JUDGEMENT

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