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TMI Blog2016 (12) TMI 1735X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent : Shri Durai Pandian, JCIT ORDER PER G. PAVAN KUMAR, JUDICIAL MEMBER: The assessee has filed appeal against the order of the Commissioner of Income Tax (Appeals) - 13, ITA No. 305 CIT(A) -13/2014-15 dated 30.03.2016 passed u/s. 143(3) and 250 of the Income Tax Act. 2. The Assessee has raised the following grounds: 2.1 The CIT(A) erred in confirming the order passed by the Assessing Officer, relating to the computation of Long Term Capital Gains arising on the sale of property of the appellant, and situate at No. 137, Sundar Nagar, New Delhi. 2.2 The CIT(A) erred in merely following the order passed by the Assessing Officer without adducing any reasons of his own, about the computation of the Long Term Capital Gains arising to the appellant. 2.3 The CIT(A) should have held that the order was only a repetition of the Assessing Officer's order and that there was no reasoning of his own to confirm such computation. 2.4 The CIT(A) should have held that the stress, in section 54(1) of the Income Tax Act, 1961, and the Circular No. 667 dated 18.10.1993 issued by the Central Board of Direct Taxes, was only on the word Completed and this can have rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the new building was COMPLETED within the stipulated time, the exemption u/s. 54 of the Act should be granted. 2.13 The CIT(A) erred in holding that the facts involved in this case were not applicable to the facts of the appellant's case, while as a matter of fact, the facts in the two cases were similar. 2.14 The CIT(A) should have held that the appellant was entitled to a deduction, from the computation of Long Term Capital Gains, of the entire cost of construction of the new building, especially since that will be the only manner in which the provisions of section 54 of the Act could be given effect to. 3. The Brief facts that the assessee is an individual and filed Return of income for the said assessment year on 20.06.2010 declaring total income of ₹ 12,20,97,560/- and the Return of income was processed u/s. 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) of the Act was issued and in compliance Ld. AR appeared from time to time and the case was discussed. The Assessing Officer on perusal of the financial statements and submissions of the assessee found that the assessee has sold Residential House Property a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) If the amount of the capital gains 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 or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. and CBDT Circular No. 667 dated 18.10.1993. The Assessing Officer in applying the provisions and CBDT Circular, the assessee should have purchased the residential property one year prior to date of sale of the property or two years after the sale of old property or within 3 years constructed a residential property. The Ld. AR has submitted that the construction was made as per the provisions of law and exemption u/s. 54 of the Act should be allowed. The Assessing Officer elaborately discussed on facts and law in the Assessment Order and found that the assessee after purchase of property has demolished and constructed new residential house and the total cost of construction worked out to ₹ 2,77,39,045/-. Where, the Ld. AR arguments that land purchased on 14.05.2007 should be part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) and prayed for dismissing the appeal. 6. We heard the rival submissions, perused the material on record and judicial decisions. The Ld. AR contention is that the assessee has purchased land in the year May 2007 and constructed new residential house property on said land in Jan, 2010 and claimed entire cost of property including land as the exemption u/s. 54 of the Act. The assessee has purchased the land in the year 2007 and the provisions u/s. 54 allow exemption in respect of purchase of property one year before the date of transfer of original asset. We have gone through the written submissions filed by the assessee. The fact remains that there is no dispute on the sale of the property and construction to the residential property under the provisions of section 54 of the Act. The assessee has to complied condition of construction of property within 3 years from the date of sale of property. The Ld. AR relied on the decision of Bangalore Tribunal in the case of Sri R.M.M. Athreya Vs. Income Tax Officer, in ITA No. 467/Bang/2013, where the Tribunal considered the facts in respect of flat and allotment letter in respect of booking of flat with Delhi Development Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- ( a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; ( b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [ Provided that nothing contained in this sub-section shall apply where- ( a) the assessee,- ( i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or ( ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or ( iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and ( b) the income from such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of Commissioner of Income Tax (Appeals) and dismiss the ground of the Revenue. Where the assessee has not deposited capital gains in the capital gains account scheme and was utilised for construction of the property within the three years after the date of transfer of original asset and satisfied the provisions of section 54F of the Act. 8. In the present case, considering the Apparent facts, material on record and judicial decisions and the written submission, we are of the opinion that the assessee is entitled for cost of construction in respect of Residential property, even though the assessee has not invested in capital gain accounts scheme but complied the main condition, of the provisions of the section 54(i) of the Act. Accordingly, we remit the disputed issue to the file of the Assessing Officer to consider the deduction u/s. 54 of the Act for construction cost incurred by the assessee as above and Assessing Officer should provide adequate opportunity to the assessee to substantiate their cost of construction before passing the order on merits. Accordingly, the appeal is allowed for statistical purpose. 9. In the result, the appeal filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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