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TMI Blog2014 (1) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of investment in the house property - The use of words ‘purchased or construed’ does not mean that the property can either be purchased or constructed and not a combination of both the actions - A property may have been purchased as a readymade unit but that does not restricts the buyer from incurring any bonafide construction expenditure on improvisation or supplementary work - As long as the assessee has incurred the bonafide construction expenditure, even after purchasing the unit, the additional expenses so incurred would be eligible for qualifying investment under Section 54 - as the relevant factual verifications have not been carried out by any of the authorities below – it would be fit and proper to restore the matter to the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant material facts are like this. The assessee before us is a retired salaried employee. During the relevant previous year, the assesse sold his house property at 5, Government Servants Society, Ahmedabad for a consideration of Rs 1,50,86,452, and, after deducting indexed cost of acquisition which worked out to Rs 52,09,597 from sale proceeds, the assessee earned capital gains of Rs 98,76,855. Thereafter the assesse purchased another property at 20, Golden Tulip Co operative Housing Society, Ahmedabad for Rs 71,94,570, and claimed to have spent on another Rs 15,48,773 on its improvement. However, in the course of the assessment proceedings, the Assessing Officer took the stand that the cost of improvement is to be allowed as a deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be believed that the entire expenditure of Rs 15,48,773 was made to make the new house property inhabitable. Learned CIT(A) thus upheld the action of the Assessing Officer and declined to interfere in the matter. The assessee is not satisfied and is in further appeal before us. 4. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case in the light of applicable legal position. 5. We have noticed that while the authorities below have laid lot of emphasis on the fact that as the original house property was sold by the assessee in August 2006, it cannot be believed that new house property was not habitable till September 2007. This observations proceeds on the assumption th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then , instead of the capital gain being charged to income - tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, (i) If the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricts the buyer from incurring any bonafide construction expenditure on improvisation or supplementary work. Accordingly, in our considered view, as long as the assessee has incurred the bonafide construction expenditure, even after purchasing the unit, the additional expenses so incurred would be eligible for qualifying investment under Section 54. However, as the relevant factual verifications have not been carried out by any of the authorities below, we deem it fit and proper to restore the matter to the file of the Assessing Officer for fresh adjudication in the light of our above observations, in accordance with the law and by way of a speaking order, after giving yet another opportunity of hearing to the assessee. We order so. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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