9911796707
TMI Blog2010 (3) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly revised on a total income of ₹ 18,29,960/-. During the course of assessment it was interalia observed by the AO that the assessee has disclosed an amount of ₹ 1,81,660/- being taxable capital gain on sale of flat and plot as under :- Capital gain on sale of flat at Altamount Road Rs.1,37,11,000 Capital gain on sale of plot at Rajkot ₹ 2,51,063 Rs.1,39,62,063 Less: Invested in flat at Bandra Rs.1,37,80,405 Taxable capital gain ₹ 1,81,660 On examination, it was further observed by the AO that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special purposes . It is therefore clear from the wording used that money has to be used for purchase of a new house and the intention of Legislature is very clear in this regard. Only then can the assessee claim deduction u/s.54. Besides assessee cannot isolate sec.54(1) from sec.54(2), because the opening words of sec.54(1) is subject to provisions of sub-section 2 . Assessee cannot adopt an interpretation which is beneficial to him by selective usage of clauses. In view of what is stated above I hold that assessee has not utilized the entire gains accrued on transfer of original asset for purchase of a new asset. The capital gains chargeable to tax is worked out as under :- Total capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, whether the ld. CIT(A) was correct in holding that the appellant is not entitled to claim exemption/deduction for capital gain under section 54 of the Income tax Act, 1961(sic) on the ground that the new flat was purchased out of borrowed funds and not out of the sale proceeds of the flat sold. 2. On the facts and circumstances pf the case, whether the ld. CIT(A) was justified in enhancing the amount of taxable capital gain from ₹ 1,66,660/- to ₹ 1,39,62,063/-. 5. At the time of hearing the ld. Counsel for the assessee submits that the issue is covered in favour of the assessee by the order of the Tribunal in ACIT vs. Dr. P.S. Pasricha in ITA No.6808/Mum/2003 for Assessment Year 2001-02 dated 11.1.2008, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repaid the bank loan of ₹ 1,65,837/- from 01.04.2006 till 31.10.2006 i.e. due date of filing of return. However , the AO was of the view that the assessee has not utilised the entire capital gains accrued on transfer of original asset for purchase of a new asset and hence, he worked out long term capital gains at ₹ 50,94,237/-. On appeal, the ld. CIT(A) observed that the purchase of new house is prior to sale of old property and it has been acquired out of borrowed funds, the sale proceeds have been utilised for repayment of loan and hence, the appellant is not entitled to exemption claimed u/s.54 at all. 8. In ACIT vs. Dr. P.S. Pasricha (supra) the facts of the case are that the assessee has acquired a residential flat in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 54 of the Act, we find that assessee has initially utilized the sale proceeds on sale of its residential flat in commercial properties and later on he purchased two residential flats within a period specified in sub section(2) of section 54 of the Act, and these facts are not disputed by the Revenue. The Revenue s main dispute is that the sale proceeds were utilized for purchase of a commercial property and residential house was purchased out of the funds obtained from different sources, as such, the identity of heads has been changed. We do not find much force in this argument as the requirement of section 54 is that the assessee should acquire a residential house within the period of one year before or two years after the date on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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