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TMI Blog2020 (1) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in law and in the circumstances of the appellant's case, the Ld.CIT(A) has erred in not appreciating the fact that claim u/s.54F made in Return of Income is in accordance with law and further erred in directing A.O. to tax long term capital gain of Rs. 28,93,333/- in A.Y. 2013-14 i.e. the year in which according to CIT(A) appellant has failed to comply with provisions of section 54F of the Act. He ought to have appreciated that LTCG of Rs. 28,93,333/- cannot be taxed either in assessment year in which impugned property is sold or in A.Y. 2013-14. 3. On facts and in law and in the circumstances of the appellant's case, the CIT(A) has erred in sustaining disallowance of expenses of Rs. 2,59,394/- claimed u/s 57 of the Act as the these expenses have a direct nexus with interest income of Rs. 5,79,963/- offered u/s.56 of the Act as "Income from other sources". 4. The appellant craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 2. The interconnected issue raised by the assessee in ground nos. 1 and 2 is that the Ld. CIT(A) erred in denying the exemption u/s 54F of the Act for Rs. 28,93 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee before the Ld. CIT(A) submitted that the assessee has applied for the approval for the commencement of construction with the Municipal Corporation on 03-08-2011. However the municipal corporation granted approval to him on 12-12-2012. Therefore it was not possible to construct the residential house within the remaining period of time. 3.8. However, the Ld. CIT(A) admitted the partial submission of the assessee by observing that the intention of the assessee for the purchase of plot for the purpose of construction of residential house is not in doubt as evident from the documents filed by him. 3.9. However, the construction was completed after the expiry of 3 years specified in section 54F of the Act. Accordingly the Ld. CIT(A) directed the AO that the addition should be made in the year in which the period of 3 years were completed after verifying the return submitted by the assessee for that year. Thus the Ld. CIT(A) deleted the addition made by the AO in the year under consideration. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 4. The learned AR before us filed a paper book running from pages 1 to 102 and submitted that the hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s thus set aside and remitted back to the file of the AO in terms of directions noted above. 12. In the result, appeal of the assessee is allowed for statistical purposes." 6.2 Similarly, we also draw support and guidance from the judgment of Hon'ble Karnataka High Court in the case of CIT Vs. Smt. B.S. Shantha Kumari reported in 233 taxmann 347 wherein it was held as under: "The intention of the legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement of law. The words used in the section are 'purchased' or 'constructed'. For such purpose, the capital gain realized should have been invested in a residential house. The condition precedent for claiming benefit under the said provision is the capital gain realized from sale of capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. If after making the entire payment, merely because a registered sale deed had not been executed and registered in favour of the assessee before the period stipulated, he cannot be denied the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense is also not allowable u/s 14A of the Act. Thus the AO disallowed the interest expenses claimed by the assessee. Aggrieved assessee preferred an appeal before the Ld. CIT(A) and reiterated the submission as made before the AO. 7.5 However, the Ld. CIT-A rejected the contention of the assessee by observing that the assessee failed to establish nexus between the interest expenses and interest income. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 8. The learned AR before us submitted as under: "1. According to CIT(A) order appellant has failed to prove the direct Nexus. Therefore CIT(A) disallowed such expenses. 2. Interest expenses paid to the following parties, details of which are as under(Ref.computation of income P.B. pg no.2) Veer corporation 36000 Veer interational 21,485 Sonal patel trust 1,98,672 Amco bank 3,237 TOTAL 2,59,394 3. P.B. pg no.90, dated 11.09.09 Rs. 13,00,000 have been received from sonal paterl trust & out of these 4 lacs was given to west coast pharma dated 15.09.2009. 4. P.B. pg no.97, dated 19.03.2010, 10,00,000 has been received from veer international & out of that 2 lacs was given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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