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TMI Blog2012 (11) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... bed 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 X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer. Against this the assessee is in appeal before us. 5. We have heard both the sides and perused the material available on record. We have carefully gone through the judgements relied on by the assessee's counsel in the following cases: i. Smt. Rajneet Sandhu v. Dy. CIT [2012] 49 SOT 7/[2011] 16 taxmann.com 210 (Chd.) (URO) ii. Satish Chandra Gupta v. Assessing Officer [1995] 54 ITD 508 (Delhi) iii. CIT v. Sardarmal Kothari [2008] 302 ITR 286 (Mad.) iv. Jyoti Pat Ram v. ITO [2005] 92 ITD 423 (Luck.) v. Saleem Fazelbhoy v. Dy. CIT [2007] 106 ITD 167 (Mum.) vi. Gowrishanker Gupta v. Asstt. CIT [2008] 22 SOT 141 (Hyd.) vii. Mrs. Sonia Gulati v. ITO [2001] 115 Taxman 232 (Mum.) (Mag.) viii. Mrs. Meera Jacob v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45:" 8. By a plain reading of the above section it is evident that for claiming exemption u/s. 54F the following conditions are to be fulfilled: (a) The assessee should be an individual or HUF; (b) Capital gain should arise from transfer of long term capital gain; (c) The assessee within a period of one year prior to or two years after the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilder may provide semi-finished house or complete house depending upon the price agreed to between the parties. In case of semi-finished house, the purchaser will have to invest on flooring, wooden work, sanitary work, etc., to make it habitable. Therefore, the investment in house would be complete only when such house becomes habitable. Expenditure incurred on making the house habitable should be considered as investment in purchase of the house subject to the condition that payment was made during the period specified in s. 54F. There is distinction between expenditure incurred on making the house habitable and the expenditure on renovation. One may visualize a situation where assessee may buy a habitable house but the assessee may like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de addition to the plinth area which was in the form of modification of an existing house, she was not entitled to deduction claimed under section 54F of the Income-tax Act, 1961. 12. In the case of Jyoti Pat Ram (supra) it was held that the term remodelling and renovation sufficient referred to new construction also and, therefore, the assessee has to be held to have made investment in construction of residential house within the stipulated time. In principle, it is entitled for exemption u/s. 54F. 13. In the case of K.P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13 (SC) it was held as under: 'A statutory provision most be co construed, if possible, that absurdity and mischief may be avoided. Where the plain literal interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities denied the claim of the assessee u/s. 54F of the Act. Before us, the assessee made a similar plea. The plea of the assessee is that she has given advance for purchase of flat to M/s. Sabari Constructions. Further the assessee filed a letter dated 20.12.2005 stating that the assessee has paid Rs. 2.5 lakhs by cash on 14.10.2005 and by cheque dated 9.12.2005 Rs. 25 lakhs towards purchase of flat in No. 501, Anand Plaza, situated at 6-1-1063/C, Lakdikapool, Hyderabad. Considering this plea of the assessee, we direct the Assessing Officer 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 (supra). 17. Since w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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