2012 (2) TMI 495 - AT - Income Tax

Summary

Issues Involved:
1. Justification of the Commissioner of Income Tax (Appeals) in deleting the disallowance of deduction u/s 54F.
2. Compliance with the time frame specified in section 54F for purchasing new assets.

Summary:

Issue 1: Justification of the Commissioner of Income Tax (Appeals) in deleting the disallowance of deduction u/s 54F

The Revenue appealed against the order of the Commissioner of Income Tax (Appeals), who deleted the disallowance of deduction u/s 54F. The Commissioner found that the appellant took effective steps for acquiring a flat within two years, paying more than 90% of the purchase price within 8 months of selling the old asset. The Commissioner cited a judgment from the MP High Court, which held that substantial investment in construction within the specified period satisfies the requirements of section 54. The Tribunal upheld this view, confirming that substantial investment was made, and thus, the exemption u/s 54F was justified.

Issue 2: Compliance with the time frame specified in section 54F for purchasing new assets

The Assessing Officer contended that the new asset was purchased beyond the prescribed two-year limit. However, the Tribunal noted that the flat was made habitable well before December 2009, with substantial payments made within the required timeframe. The Tribunal referenced the MP High Court's judgment, which stated that substantial investment within two years suffices, even if the construction is not complete. The Tribunal concluded that the assessee's substantial investment and timely actions met the requirements of section 54F, thus dismissing the Revenue's appeal.

Conclusion:

The Tribunal confirmed the Commissioner of Income Tax (Appeals)'s decision, allowing the exemption u/s 54F for the substantial investment made within the specified period, and dismissed the Revenue's appeal.