2019 (6) TMI 345 - AT - Income Tax

Exemption u/s. 54F - LTCG on sale of jewellery - investment of full sale consideration received on the sale of jewellery in the purchase of the plot of land - certificate of construction issued by Municipal Corporation, Moradabad submitted afterwards - HELD THAT - There is no dispute that the assessee has invested the full sale consideration received on the sale of jewellery in the purchase of the plot of land. It is also not in dispute that before the lower authorities the assessee could not adduce any evidence. The certificate from municipal corporation, Moradabad has been furnished for the first time. In the interest of justice restore this issue to the files of the Assessing Officer. The Assessing Officer is directed to verify the certificate of construction issued by Municipal Corporation, Moradabad and decide the issue afresh as per provisions of law, keeping in mind that the cost of investment in land is also part of cost of construction of the residential house to avail the exemption u/s. 54 F Act. Needless to mention the Assessing Officer shall give a reasonable opportunity of being heard to the assessee - Decided in favour of assessee allowed for statistical purpose.

Summary

Issues Involved:
Claim of exemption u/s. 54F of the Act for long term capital gain on sale of jewellery.

Analysis:
The appeal was filed against the Commissioner of Income Tax [Appeals] order confirming the addition made by the Assessing Officer on account of long term capital gain on the sale of jewellery. The assessee sold 22 carat jewellery for &8377; 10 lacs, resulting in a long term capital gain of &8377; 4,88,902. The claim of exemption u/s. 54F was denied by the Assessing Officer, stating that the assessee had only purchased land and not a residential house. The CIT(A) dismissed the appeal, citing lack of evidence of construction/completion of a house to prove the bona fide intention of construction as required by section 54F.

The counsel for the assessee argued that the cost of investment in land should also be eligible for the benefit of section 54F. They presented a completion certificate issued by Nagar Nigam Moradabad, confirming the completion of building construction within the stipulated period of three years from the sale of jewellery. The DR supported the CIT(A)'s findings, questioning the timing of presenting the certificate.

Upon careful consideration, the Tribunal noted that the assessee had invested the full sale consideration in the purchase of land, and the certificate from the municipal corporation was presented for the first time. In the interest of justice, the issue was restored to the files of the Assessing Officer for verification of the construction certificate and a fresh decision in accordance with the law. The Assessing Officer was directed to consider that the cost of investment in land is part of the cost of construction for availing the exemption u/s. 54F. The assessee was to be given a reasonable opportunity to be heard.

As a result, the appeal filed by the assessee was treated as allowed for statistical purposes, with the order pronounced in the open court on 21.05.2019.