Builder constructed flat on assessee's behalf nt diff. from self construction.
Builder constructed flat on assessee's behalf nt diff. from self construction.
Assessee sold property & had long-term capital gain of Rs.2.29 cr. He invested it & claimed as deduction u/s 54F (of Income Tax Act, 1961). AO disallowed it u/s 54F (of Income Tax Act, 1961) on ground, construct'n of new house was not completed within 3 yrs. CIT(A) affirmed it. On appeal ITAT held, newly constructed flat by a builder on assessee's behalf is in no way different from a house constructed. If only advance is given, benefit still will be available for exemption u/s 54F (of Income Tax Act, 1961) to assessee.-000107
Facts in Brief
1. The assessee sold property on 12-9-2008 and had long-term capital gain of Rs. 2.29 crores.
2. He invested part of sale consideration in a residential flat promoted by a builder and said amount was claimed as deduction under section 54F (of Income Tax Act, 1961).
3. The Assessing Officer disallowed deduction under section 54F (of Income Tax Act, 1961) on ground that construction of a new house was not completed within 3 years.
4. The Commissioner (Appeals) dismissed the assessee's appeal holding that investment/purchase made was not completed within 2 years from date of sale of property and further there was total uncertainity about completion of construction of flat.
On appeal ITAT held as under:
The following are factors which distinguished a house construction as against flat booked with the construction company in the context of exemption under section 54F (of Income Tax Act, 1961):
(a) Real estate prices have soared up and, therefore, very few individual house are being constructed.
(b) Exemption is available in case of purchase of a flat within two years.
(c) It has been held by co-ordinate Benches that if consideration received on transfer has been invested either in purchasing a residential house or in constructing a residential house, even though the transactions are not complete in all respects and as required under the law, it would not disentitle the assessee from availing benefit under section 54F (of Income Tax Act, 1961).
(d) Section 54F (of Income Tax Act, 1961) is a benevolent provision.
5. A flat which is newly constructed by a builder on behalf of the assessee is in no way different from a house constructed. Section 54F (of Income Tax Act, 1961) being a beneficial provision has to be interpreted so as to give the benefit of residential unit, viz., flat instead of house in the present state of affairs. Further even if only advance is given, the benefit still will be available for exemption under section 54F (of Income Tax Act, 1961).
6. The assessee will get the benefit under section 54F (of Income Tax Act, 1961) for payment made till 12-9-2011.
Case Reference-Pradeep Kumar Chowdhry v. Deputy Commissioner of Income-tax, Circle-1 (1), Hyderabad
IN THE ITAT HYDERABAD BENCH 'A'
×
