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TMI Blog2017 (2) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... of the house one year prior to the sale of existing asset cannot be allowed under Section 54(1) - the authorities below have committed a serious error in not allowing the deduction u/s 54 on the ground that the assessee has availed the loan for purchase of new house. Even otherwise when the total investment is much more than the loan as well as the capital gain then the capital gain is treated to be invested in purchase of new house. Hence the claim of the assessee under Section 54 is allowed. - Decided in favour of assessee. - IT Appeal No. 2150 (Bang.) of 2016 - - - Dated:- 28-2-2017 - Vijay Pal Rao, Judicial Member S.R. Venu, CA for the Appellant. AR. V. Sreenivasan, JCIT (DR) for the Respondent. ORDER 1. This app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 7. The assessment passed under section 143(3) read with section 147 is bad in law as it is passed without any notice under section 143(2) of the Act. 8. For the above and any other ground that may be urged during hearing it is prayed that this appeal may be allowed in the interest of equity and justice. 3. Ground No.1 is general in nature and do not require any specific adjudication. 4. Ground Nos.2, 3 and 7 are regarding validity of reopening. At the time of hearing, the learned Authorised Representative has stated at Bar that the assessee does not press the Ground Nos.2, 3 7 and the same are accordingly dismissed. 5. Ground Nos.4 to 6 are regarding disallowance of deduction under Section 54 of the Income-tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount is excluded, the rest of the investment has been made by the assessee from the amount including the capital gain of ₹ 5,69,181. The learned Authorised Representative has contended that ignoring the loan amount the balance amount of investment has to be considered for deduction under Section 54 of the Act and therefore the authorities below are not justified in denying the claim of deduction under Section 54 of the Act. 7. On the other hand, the learned Departmental Representative relied upon the orders of the authorities below and submitted that the Assessing Officer as well as CIT (Appeals) has duly anlaysed the facts under Section 54 and it was held that if the investment in the new asset is not made from the capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only the amount of investment which is relevant. If the view taken by the authorities below is accepted then the purchase of the house one year prior to the sale of existing asset cannot be allowed under Section 54(1) of the Act. In view of the facts and circumstances of the case, I am of the considered opinion that the authorities below have committed a serious error in not allowing the deduction under Section 54 on the ground that the assessee has availed the loan for purchase of new house. Even otherwise when the total investment is much more than the loan as well as the capital gain then the capital gain is treated to be invested in purchase of new house. Hence the claim of the assessee under Section 54 is allowed. 10. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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