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TMI Blog2018 (11) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... time of execution of the agreement. Thus, from the aforesaid facts available on record, prima–facie, it appears that the housing loan taken by the assessee was not utilised for purchase of the new house. On a plain interpretation of section 54(1) of the Act, it has to be concluded that if the assessee purchases a new house property one year before or two years after the date of transfer of original asset, it is entitled to claim deduction under section 54 of the Act irrespective of the fact whether money invested in purchase of new house property is out of the sale consideration received from transfer of original asset or not. The conditions of sub–section (2) of section 54 of the Act comes into play only in a situation where the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gain at ₹ 55,82,426. However, she claimed deduction of the capital gain under section 54 of the Act towards investment made of ₹ 98,90,358, in purchase of a new flat. After calling for necessary details and examining them, the Assessing Officer noted that the investment of ₹ 98,90,358, made in purchase of new house included housing loan of ₹ 50 lakh availed from Citi Bank. Therefore, he called upon the assessee to explain why the housing loan of ₹ 50 lakh invested in purchase of new house should not be excluded from the deduction claimed under section 54 of the Act. Objecting to the proposed disallowance, though, the assessee submitted that the housing loan was not utilised for purchase of the new house, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing payment of ₹ 75 lakh from sale proceed of the original asset. Thus, the learned Authorised Representative submitted, the housing loan taken from Citi Bank cannot be linked to the purchase of new house. Without prejudice to the aforesaid submission, the learned Authorised Representative submitted, even utilisation of housing loan in purchase of new house will not disentitle the assessee from claiming deduction under section 54 of the Act, as the only condition for availing deduction under section 54 of the Act is, purchase of new house has to be made within the stipulated period irrespective of the source of fund utilised in purchase of house. In this context, he relied upon the decision of the Tribunal, Mumbai Bench, in ACIT v/s D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the vendors before or at the time of execution of the agreement. Thus, from the aforesaid facts available on record, prima facie, it appears that the housing loan taken by the assessee was not utilised for purchase of the new house. 7. Even, assuming that the housing loan was utilised for the purpose of purchase of new house property, it needs to be examined whether by the reason of utilisation of housing loan in purchase of new house property, the assessee will not be eligible to claim deduction under section 54 of the Act. For this purpose, it is necessary to look into the provision of section 54 of the Act. On a careful reading of the aforesaid provision as a whole and more particularly sub section (1) of section 54 of the Act, it b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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