| The Tax Publishers2022 TaxPub(DT) 1375 (Chen-Trib) INCOME TAX ACT, 1961
Section 54F
Once it is established that consideration received on transfer of long-term capital asset has been invested in constructing a residential house, it would satisfy the ingredients of section 54F and it is not necessary that assessee need not complete the construction of the house and occupy the same in order to get the benefit under section 54F. Further, prior to amendment to section 54F by Finance (No. 2) Act, 2014 w.e.f 1-4-2015, it is clear that a residential house would include multiple flats/residential units. Hence, AO was not justified in denying assessee's claim of deduction under section 54F alleging that there was delay in completion of construction of residential units and deduction was claimed on multiple properties.
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Capital gains - Deduction under section 54F - Allowability - Delay in completion of construction of residential units--Deduction claimed on multiple properties
AO denied assessee's claim of deduction under section 54F on two counts viz., (i) delay in completion of construction of residential units and (ii) deduction was claimed on multiple properties. On appeal, by following decisions of jurisdictional High Court, CIT(A) held that the assessee was eligible for the deduction under section 54F. Aggrieved, Revenue was in appeal. Held: Section 54F is a beneficial provision, which promotes for construction of residential house. The intention of the Legislature would clearly indicate that it was to encourage investments in acquisition of a residential plot and completion of construction of a residential house in the plot so acquired. A bare perusal of said provision does not even remotely suggest that it intends to convey that such construction should be completed in all respects in three years and/or make it habitable. The essence of said provision is to ensure that the assessee who received the consideration would invest the same by constructing a residential house. Once it is established that consideration so received on transfer of long-term capital asset has been invested in constructing a residential house, it would satisfy the ingredients of section 54F. Further, it is not necessary that assessee need not complete the construction of the house and occupy the same in order to get the benefit under section 54F. Furthermore, amendment to section 54F by Finance (No. 2) Act, 2014 w.e.f 1-4-2015, makes it very clear that benefit of section 54F will be applicable to constructed one residential house in India. However, prior to the said amendment, it is clear that a residential house would include multiple flats/residential units. In instant case, the relevant assessment year being 2012-13, the said amendment would not be applicable to it. Hence, CIT(A) was justified in holding that assessee was eligible for the deduction under section 54F.
Followed:CIT v. V.R. Karpagam (2014) 373 ITR 127 (Mad) : 2014 TaxPub(DT) 4009 (Mad-HC) and CIT v. Smt. K.G. Rukminiamma (2011) 331 ITR 211 (Kar.) : 2011 TaxPub(DT) 0429 (Karn-HC)
REFERRED : CIT v. Smt. V R Karpagam (2014) 373 ITR 127 (Mad) : 2014 TaxPub(DT) 4009 (Mad-HC) and CIT v. Smt. K G Rukminiamma (2011) 331 ITR 211 (Kar.) : 2011 TaxPub(DT) 429 (Karn-HC).
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, CHENNAI BENCH
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