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TMI Blog2020 (1) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... ested full sale consideration, and over and above that, some more money and total investment is at 64.74 lakhs. Hon ble High Court of Madhya Pradesh in the case of Smt. Shashi Varma [ 1996 (3) TMI 65 - MADHYA PRADESH HIGH COURT] has held that while allowing exemption u/s 54 of the Act, investment for acquisition of flat under the Scheme of DDA, where first instalment was paid, was much more than the capital gains, deduction is to be allowed as section 54 does not require that the construction of new house should necessarily be completed within two years where substantial investment is made in construction of house. Requirement of section 54 of the Act is for the assessee to have either purchased a residential house, being a new asset, withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against the order of the Commissioner of Income Tax [Appeals] - 16, New Delhi dated 19.03.2019 pertaining to Assessment Year 2013-14. 2. The sum and substance of the grievance of the assessee is that the CIT(A) erred in confirming the assessment thereby denying benefit of section 54 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short]. 3. Representative of both the sides were heard at length. Case records carefully perused. 4. Facts emanating from the assessment order show that the assessee filed his return of income on 28.09.2013 declaring total income of ₹ 8.90 lakhs. Return was selected for scrutiny assessment through CASS and, accordingly, statutory notices were issued and served upon the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred towards completion of sold property amounting to ₹ 21.73 lakhs which was indexed at ₹ 43.50 lakhs. 8. The assessee furnished a documentary evidence in the form of a document from the Stamp Duty Valuation Authority showing the minimum cost of construction effective from 01.04.2002 which was ₹ 8000/- per sq. metre. Not satisfied with this evidence, the Assessing Officer again asked the assessee to substantiate the claim for cost of construction /improvement with supporting evidences. 9. On receiving no plausible reply, the Assessing Officer computed the capital gain from transfer of the property as under: "In such circumstances cost of construction/ improvement claimed by the assessee in his computation of capital g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 535/- 10. Proceeding further, the Assessing Officer sought explanation from the assessee for claim of exemption u/s 54 of the Act. 11. In his reply, the assessee submitted that he has purchased a property for ₹ 53 lakhs. Copy of purchase deed was furnished. The Assessing Officer, not convinced, further asked the assessee to justify its claim of exemption u/s 54 of the Act. The assessee replied that construction is going on, on the said plot. Accordingly, an Inspector was deputed by the Assessing Officer for physical verification and in his report, the Inspector submitted that construction is still going on and is not yet completed. 12. The Assessing Officer was of the firm belief that since the property was sold on 07.05.2012, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in purchase of land within the specified period. The Assessing Officer did not allow exemption to the assessee on the ground that residential house was not constructed within three years of sale of house property and even at the end of the stipulated period of three years, the house was incomplete. 18. In our understanding of the law, when question of allowance of benefit of section 54 is required to be considered, it is envisaged in the statutory provision that the house to be constructed at that stage might be under construction and capital gain at that time not only appropriated or utilised. It is, therefore, not correct to insist that the assessee should establish that residential house is complete and then ask for benefit u/s 54 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, all that is required for the assessee to avail exemption contained in the section is to utilise the amount of capital gain for purchase and acquisition of new asset. 23. Since the assessee has claimed that he has invested ₹ 64,74,946/-, which is higher than the amount of capital gain computed by the Assessing Officer, the assessee is very much eligible for claim of exemption u/s 54 of the Act. 24. However, since no documentary evidences have been furnished and only a claim has been made, we deem it fit to restore the issue to the file of the Assessing Officer. The assessee is directed to demonstrate that he has already invested ₹ 64,74,946/- towards construction of house and the Assessing Officer is directed to examine t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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