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Case Law Details

Case Name : Tarun Jalali Vs DDIT (ITAT Delhi)
Appeal Number : ITA No. 2376/Del/2014
Date of Judgement/Order : 12/02/2018
Related Assessment Year : 2009-10
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Tarun Jalali Vs DDIT (ITAT Delhi)

Where construction of house was commenced even before the date of transfer of original asset, but it was completed within three years after the date of transfer, deduction under section 54F was admissible.

Sub-section 4 of section 54F prescribes appropriation of sale consideration of original asset towards provision of new asset made within one year before the date of transfer of original asset, two years from the date of transfer or construction of new in-house property, within three years from the date of transfer of original receipt but the Act does not prescribe any condition as to the date of commencement of construction of house property which may be commenced even before the date of transfer of original receipt. Similarly, the Hon’ble Karnataka High Court in the case of Commissioner of Income Tax vs J.R. Subramanya Bhat reported in 165 ITR 571 (Kar.) had expressed similar view and had held that investment made towards construction of house property prior to the date of transfer should also be eligible as deduction for the purpose of section 54 of the Act. Accordingly, respectfully following the ratio laid down by the Hon’ble Delhi High Court and the Hon’ble Karnataka High Court as aforementioned, we are of the view that provisions of section 54F do not prescribe any condition as to the date of commencement of construction of new house property, meaning thereby that the construction of house property may be commenced even before the date of transfer of original asset. However, it should be completed within three years after the date of transfer of original asset. On the facts of this case, we find that the construction of house property had been completed within three years from the date of transfer and accordingly, we are of the view that the assessee is eligible for exemption u/s 54F in respect of the two disputed amounts viz. Rs. 12 lakh paid on 20.06.2008 and Rs. 14,91,697 paid on 22.08.2008 which were expended prior to the date of transfer of original asset.

FULL TEXT OF THE ITAT JUDGMENT

This appeal has been preferred by the assessee against the order dated 27.02.2014 passed by the Ld. Commissioner of Income Tax(A)-XXIX, New Delhi for assessment year 2009-10.

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