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TMI Blog2019 (6) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the prescribed period and not after that and this is not the case of the department that the claim of the assessee is for an extension outside the permitted time limit - none of the objections of CIT(A) is valid and hence, hold that the claim of the assessee for deduction u/s. 54F in respect of the amount incurred by the assessee for construction of 2nd and 3rd floors should also be allowed. In the present case, new house was purchased and the construction of additional floors was on such new house purchased by the assessee and this new house building purchased by the assessee has been accepted as eligible for deduction u/s. 54F. Hence in my considered opinion, this Tribunal order in [ 2009 (5) TMI 563 - ITAT MADRAS-C] is not applicable in the facts of present case - Decided in favour of assessee - ITA No.138/Bang/2019 - - - Dated:- 31-5-2019 - SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER For The Assessee : Shri Murali Krishna, CA For The Revenue : Shri Tshering Ongda, JCIT (DR) ORDER Per Shri A.K. Garodia, Accountant Member This appeal is filed by the assessee and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial shed on 27.08.2014 and on such sale, the assessee earned long term capital gain of ₹ 97,62,280/-. The assessee claimed deduction u/s. 54F of IT Act on entire amount of capital gain of ₹ 97,62,280/-. The amount of this claim for deduction u/s. 54F included two things. First part of the claim of ₹ 69,33,645/- was for the amount invested by the assessee in the purchase of new residential house which included cost of purchase of ₹ 65 Lakhs in the purchase cost + stamp duty of ₹ 3,67,680/- and registration charges of ₹ 65,965/-. To this extent, the AO also accepted that this much capital gain was invested in the acquisition of new house and proportionate deduction was allowed by him to the extent of ₹ 56,01,096/-. The second part of the claim of the assessee included the amount spent by the assessee for the construction of 2nd and 3rd floor on the same property because property purchased by the assessee was consisting of ground floor and first floor only. The amount of investment for such construction was of ₹ 30,62,500/-. In addition to this, the assessee also claimed that ₹ 17,62,878/- was incurred on account of renovation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n same para, it is also observed by Hon ble Calcutta High Court that there is no evidence that two different houses were constructed with two different municipal numbers. He pointed out that it was also observed that if a floor is added to the new house or if it is renovated it remains a house and this will not be two houses. Regarding this objection of ld. CIT(A) that the construction of 2nd and 3rd floor started after a full year, he submitted that reasons for such delay in starting of the construction of 2nd and 3rd floor is already explained by the assessee before the authorities below and in the written submission filed before the Tribunal also, this aspect is explained. He pointed out that it is explained by assessee in the written submissions filed before the Tribunal that the assessee always had the intention to construct 2nd and 3rd floor at the time of purchasing the property. But after the purchase of property, the assessee s younger daughter was pregnant and also his elder daughter s divorce proceedings were ongoing and the assessee himself had serious health issues due to which the construction of 2nd and 3rd floors commenced only in March 2017. He submitted that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement with the AO that the additional second and third floors constitute separate residences. Except to affirm that the entire house property is situated under one survey number, the appellant has also not brought anything on record to show that these additional floors were part of the same house that was originally purchased. Further, the construction of the second and third floors is seen to have commenced only in March 2017, a full year after the new residential house comprising ground and first floors was purchased. If the two additional floors were indeed part of the same residential unit, the construction work should have been carried on at the same time as the civil works/renovation of the ground and first floors was undertaken. The appellant's claim that the expenditure incurred on these floors is to be added to the purchase cost of the new asset cannot be entertained for the reasons discussed above. If it were to be allowed, then the purchase cost of the new asset can be indefinitely increased through extension / additions to the new asset. That is not the purport of section 54F of the Act. 6. Now I reproduce para 6 of the judgment of Hon ble Calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfilment of both the conditions, he would be disentitled to that relief. The mistake seems to be that the authorities below found as if two kinds of relief are contemplated in Section 54. It is the fulfilment of two alternative conditions that is contemplated by Section 54. But, if both the conditions are fulfilled within the time stipulated then, in our opinion, the assessee does not become disentitled to the relief if the other conditions are fulfilled, viz., the house which was transferred was being used as residential house either for himself or by his parents within the period of two years before the transfer. It is in this context that Section 54. would be applicable. On behalf of the revenue it was sought to be urged that what was required to be fulfilled was that the house property was to be used for the residence of the assessee. The revenue is right that it must be a house property. If a floor is constructed to the new house or if it is renovated it remains a house and this will not be two houses. There is no evidence that two different houses were constructed with two different municipal numbers, that is to say, giving two different municipal numbers in respect of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indefinitely increased through extension / additions to the new asset. In this regard, I would like to observe that the addition to the new asset can only be made during the prescribed period and not after that and this is not the case of the department that the claim of the assessee is for an extension outside the permitted time limit. In view of this discussion, it comes out that none of the objections of CIT(A) is valid and hence, by respectfully following the judgment of Hon ble Calcutta High Court, I hold that the claim of the assessee for deduction u/s. 54F in respect of the amount incurred by the assessee for construction of 2nd and 3rd floors should also be allowed. 8. Now I discuss and examine the applicability of the Tribunal order of Chennai Bench of the Tribunal rendered in the case of ACIT Vs. T.N. Gopal (supra). Regarding this Tribunal order, it is seen that in that case, there was no purchase of any new residential house and the assessee merely constructed additional floor on his existing house property. Whereas in the present case, new house was purchased and the construction of additional floors was on such new house purchased by the assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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