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TMI Blog2013 (11) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... in new property made by the assessee is not entitled for deduction u/s. 54F of the Act to the extent made before the sale of property. Only that portion of investment made in the new property in accordance with section 54F of the Act is entitled for deduction u/s. 54F of the Act. Accordingly, we direct the assessee to furnish the details of investment made by the assessee in the construction of new residential building after the sale of existing property before the due date of filing of return of income u/s. 139(1) of the Act. The Assessing Officer shall consider that investment made by the assessee in the construction of new property after the sale of existing property in terms of section 54F of the Act. Accordingly, the issue is remitted back to the file of the Assessing Officer for the purpose of quantification of deduction u/s. 54F of the Act - Decided in partly favour of assessee for statistical purposes. - ITA No. 183/Hyd/2012 - - - Dated:- 22-2-2013 - CHANDRA POOJARI AND ASHA VIJAYARAGHAVAN, JJ. For the Appellant : K.A. Sai Prasad. For the Respondent : Smt. Vidisha Kalra. ORDER:- PER : Chandra Poojari This appeal by the assessee is directed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction Pvt. Ltd. from 21.12.2005. All the payment to M/s. Suguni Construction Pvt. Ltd. was made by cheque. The house was finally completed in October, 2009 and the assessee occupied the house in November, 2009. The assessee is not having any other residential house. The municipal tax assessment was completed by GHMC in November, 2009. He drew our attention to the copies of Balance Sheet for the A.Ys. 2007-08 to 2009-10. 10. He submitted that the construction was shown in the Balance Sheet as under construction. He submitted that as seen from the Balance Sheet up to 31.3.2007, investment in house building was at Rs. 4.80 crore. Thereafter, year by year the assessee made further investment. Thus, up to October, 2009 the total investment on the property at C-10, AFCHS, Sainikpuri, Secunderabad works out at Rs. 13,63,22,640. 6. According to him all details were furnished to the Assessing Officer. In spite of this, the lower authorities rejected the claim of the assessee holding that the investment in house was made before the sale of property. He submitted that out of the total investment, investment in the house after the date of transfer of original assets is Rs. 5,24,69,141 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ep Kumar (290 ITR 90) wherein held that the burden is on the assessee to prove that he has actually constructed a new residential house for the purpose of exemption u/ s. 54 of the IT Act. In fact, like the said case, in the present case also there is no tangible material even to infer that a new residential house was constructed. Additions / modifications to an existing house do not amount to real construction as contemplated u/s. 54 F. The Hon'ble High Court have also observed that a mere extension of the existing building will not give benefit to the assessee as contemplated u/s. 54F of the Act. 9. We have heard both the parties and perused the material on record. The crux of the argument of the assessee's counsel is that the construction was finally completed after the date of sale of existing capital asset and at the time of sale of the capital asset i.e., building No. 986, Road No. 50, Jubilee Hills, Hyderabad, the construction on plot No. C-10, AFCHS, Sainikpuri, Secunderabad was in progress. It is also recorded that for A.Y. 2007-08 (as on 31.3.2007) the construction cost was incurred at Rs. 4,52,40,382. Thereafter, the assessee further incurred expenditure towards constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incentive provisions intended to augment the investment in residential houses. -It is the settled legal position that incentive provisions should be construed liberally in such a manner that object of the statute is fulfilled rather than the manner which may frustrate the object. Reference can be made to the following observations of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. 196 ITR 188: "The provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since the provision for promoting economic growth has to be interpreted liberally, restrictions on it too has to be construed so as to advance the objective of the provisions and not to frustrate it." 12. At this stage, it would also be useful to refer to the Board's Circular No. 471 dated 15.10.1986, which reads as under: "1. Capital gains tax - Whether investment in a flat under the self-financing Scheme of the Delhi Development Authority would be construction for purpose of Sections 54 and 54F of the Income-tax Act, 1961. - Section 54 and 54F of the Income-tax Act, 1961, provide that capital gains arising on transfer of a long-term capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 54 and 54F was to augment the investment in residential accommodation. Considering the said object, the Board took the view that payment to Delhi Development Authority, under self-financing scheme, amounted to investment in construction of residential house even though the assessee himself had not constructed the house. In view of the same, in our opinion, the Learned CIT (A) was not justified in applying strict rule of interpretation. 14. In view of the above discussion, we are of the view that investment in residential house which would have taken place after the sale of existing capital asset is to be considered for deduction u/s. 54F of the Act as the investment in residential house would not only include the cost of purchase of the house but also the cost incurred in making the house habitable and an inhabitable premises, in our opinion, cannot be equated with a residential house. If a person cannot live in the premises, then such premises cannot be considered as a residential house. In case of semi-finished house, the assessee will have to invest huge money on finishing the house to make it habitable. Therefore, in our view, the investment in a house would be complete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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