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TMI Blog2013 (11) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of construction of a residential house has been held to be an investment satisfying the conditions of section 54F of the Act. Though there cannot be any dispute with regard to the above said proposition of law, the assessee is required to prove the actual date of investment and the amount invested towards purchase/construction of the residential house with supporting evidence. - Matter restored back for reconsideration - Decided in favour of assessee. - IT Appeal No. 234 (Hyd.) of 2012 - - - Dated:- 26-4-2013 - CHANDRA POOJARI AND SHRI SAKTIJIT DEY , JJ. For the Appellant : Shesha Giri Rao. For the Respondent : Smt. Amisha S. Gupt. ORDER:- PER : Saktijit Dey This appeal filed by the assessee is directed against the order dated 24-11-2011 of CIT(A)-III, Hyderabad passed in appeal No.0164/CIT(A)-III/10-11 pertaining to the assessment year 2008-09. 2. The assessee has filed the appeal on the following grounds of appeal: 1. The order of the learned CIT(A) is erroneous both on facts and in law. 2. The learned CIT(A) erred in confirming the action of the Assessing Officer in rejecting the claim for deduction u/s 54F of the IT Act. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not commenced on the date of said agreement and that the same would be completed within a period of 36 months from the date of agreement, with a grace period of 6 months. With the said observations and stating that the period of 3 years from the date of sale of that property made on 29/10/2007, expired on 29/10/10, by which date the assessee had neither purchased any residential house nor has completed construction of any residential house as stipulated in section 54F of the Act, the Assessing Officer held that the assessee is not eligible for deduction u/s 54F Act. Accordingly, the entire amount of Rs. 58,90,114/- computed by the assessee was taxed under the head long term capital gains. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A) challenging the denial of deduction u/s 54F of the Act. 6. Before the CIT(A), the AR of the assessee filed written submissions wherein it was stated that the assessee had entered in to an agreement with Dhatri Constructions Pvt. Ltd. on 19/03/2009 for sale of an undivided land and also entered into a construction agreement on the same day. It was further stated that the entire amount was paid and the sale deed was execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted before us that the assessee has invested an amount of Rs. 64.00 lakhs towards purchase of a plot and construction of a residential house over that plot. In this connection, he referred to two separate agreements entered with M/s Dhatri Constructions Pvt. Ltd. on 19/03/2008. The learned AR submitted that the assessee having invested the aforesaid amount within the stipulated period u/s 54F of the Act, he is entitled for exemption u/s 54F of the Act. It was further submitted by the learned AR that the assessee finally purchased a flat vide registered sale deed dated 18/01/2010. He further submitted that the provision contained u/s 54F being a beneficial provision for promoting the construction of residential house it has to be construed liberally. It was further submitted that once the assessee makes investment towards purchase or construction of a residential house exemption u/s 54F cannot be denied on the ground that it has not been constructed within the stipulated period. In support of such contention, the learned AR relied upon a judgment dated 12/02/2012 of the Hon'ble Karnataka High Court in the case of CIT v. Sambandam Udaykumar in IT Appeal No. 175 of 2012. Specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards sale consideration of plot No. 40, in Survey No. 18/P, admeasuring 279.55 sq.yards with built up area of 2500 to 2700 sft. situated at Bandlaguda village, Rajendra Nagar Mandal and Municipality, RR Dt. Clause (1) of the agreement of sale states that the aforesaid sale consideration of Rs. 52 lakhs comprises of Rs. 7 lakhs towards plot and the balance amount of Rs. 45 lakhs towards the construction of the house. Clause (2) of the agreement reveals that the entire amount of Rs. 52 lakhs was paid by the assessee to M/s Dhatri Constructions Pvt. Ltd. through cheque bearing Nos. 118744, 118748, 118749, dated 08/01/2008, 13/03/2008, 14/03/2008 drawn on SBH, Banjara Hills, Hyderabad. On the very same day i.e. on 19/03/2008, the assessee entered into another agreement with M/s Dhatri Constructions Pvt. Ltd. for construction of a residential house over the said plot for a total consideration of Rs. 45 lakhs. However, as it appears, this agreement ultimately were not acted upon and the assessee on 18/01/2010 entered into another agreement of sale with M/s Fima Properties Pvt. Ltd. and M/s Dhatri Constructions Pvt. Ltd. for purchase of flat admeasuring 2528 sft. in Block B Tower 12 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuted a registered sale deed for purchase of residential flat no. 1203 in Fima Hilltop building for a consideration of Rs. 40 lakhs but since the flat was under construction on the date of execution of sale deed wherein it was further stipulated that the possession of that premises can be given within a period of 36 months, he held that it cannot be construed that the assessee has purchased or constructed the residential house within the stipulated period as mentioned in section 54F of the IT Act. We agree with the contention of the learned AR that provision contained u/s 54F being a beneficial provision has to be construed liberally. In various judicial precedents as also in the decision cited before us by the learned AR, it has been held that the condition precedent for claiming benefit u/s 54F is the capital gain realized from the sale of capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. If the assessee has invested the money in construction of residential house merely because the construction was not complete in all respects and it was not in a fit condition to be occupied within t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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