2012 (11) TMI 907 - AT - Income Tax

Deduction u/s 54F - investment in old house property - dis-allowance on ground that assessee has not constructed the new residential building within the stipulated time and it is in semi finished condition - Held that - Assessee having constructed the building and invested the capital gain, the assessee is entitled for deduction u/s. 54F if other conditions stipulated in Section 54F are satisfied. Other objection of the AO that the amount of capital gain is invested in capital gain deposit scheme as prescribed u/s 54(2), assessee submitted that the assessee originally given advance to purchase the flat and it was not materialised. The assessee took back the advance and started construction of a building but the assessee s return of income was not accompanied by any evidence in support of this claim. Being so, AO is directed to examine the fact whether the amount so paid is for acquisition of flat or not and decide the issue in the light of the order of Tribunal in the case of Jagan Nath Singh Lodha (2004 (6) TMI 309 - ITAT JODHPUR) - Appeal of the assessee is partly allowed for statistical purposes

Summary

Issues involved: Non-granting of exemption u/s. 54F of the Income-tax Act, 1961.

Detailed Analysis:

1. Facts of the Issue: The appellant sold a portion of property and claimed deduction u/s. 54F on the capital gain. The Assessing Officer disallowed the claim due to pending work on the property and failure to deposit the capital gain in the required scheme.

2. Legal Provisions: Section 54F outlines conditions for exemption, including being an individual/HUF, capital gain from a long-term asset, and investment in a residential property within specified timelines.

3. Judicial Precedents: Various judgments were cited to interpret the scope of investment in a residential property, emphasizing making the house habitable and distinguishing between renovation and habitability.

4. Decision: The tribunal took a liberal view of Section 54F, considering the construction of the building and investment made by the assessee. The Assessing Officer's objection regarding the investment in the capital gain deposit scheme was directed for further examination.

5. Conclusion: The appeal was partly allowed for statistical purposes, and the Stay Application was dismissed as infructuous since the appeal was disposed of. The judgment emphasized the need to interpret tax provisions in a manner that fulfills the legislative intent and benefits the assessee where possible.

By considering the legal provisions, judicial precedents, and specific facts of the case, the tribunal provided a detailed analysis to determine the eligibility of the assessee for exemption u/s. 54F. The judgment highlighted the importance of fulfilling statutory conditions while also adopting a liberal interpretation to ensure the intended benefits reach the taxpayer.