The Tax Publishers2020 TaxPub(DT) 4368 (Bang-Trib)

INCOME TAX ACT, 1961

Section 54F

Once it is demonstrated that consideration received on transfer of capital asset had been invested in or construction of residential house, even though construction is not complete in all respects as required under law, assessee cannot be denied benefit under section 54F.

Capital gains - Exemption under section 54F - Denial on the ground of non-completion of construction of new residential house within stipulated time -

AO disallowed assessee's claim of exemption under section 54F in respect of investment made in residential property by holding that, investment in residential property was made prior to date of sale of original asset, and construction of residential property was not completed within stipulated time. Held: Essence of the purpose of section 54F, is whether, assessee who received capital gain has invested in a house. Once it is demonstrated that consideration received on transfer of capital asset had been invested in or construction of residential house, even though construction is not complete in all respects as required under law, assessee cannot be denied benefit under section 54F. Accordingly, there is no strict requirement regarding completion of construction under section 54F(1) to be entitled for availing of exemption. In the instant case, there was no finding by AO that, delay in construction was attributable to assessee rather, it was beyond control of assessee since construction was carried out by builder. Accordingly, AO was not justified in denying benefit under section 54F.

Followed:CIT v. Sambandam Udaykumar (2012) 251 CTR 371 (Karn) : (2012) 19 Taxmann.com 17 (Karn) : 2012 TaxPub(DT) 1804 (Karn-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16



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