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TMI Blog2017 (9) TMI 1949X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the residential house purchased as the exemption under section 54F can be claimed only for either 'purchase' or 'construction' of a residential house and not for 'purchase & further construction/alteration' of a residential house. 3. The Ld.CIT(A) erred in placing reliance on the decision in the case of Mr. Saleem Fazelbhoy v. DCIT in ITA No.2012(MUM) of 2003 dtd. 29.06.2006 as the same is distinguishable because in that case the residential house purchased was not in a habitable condition, hence the assessee had to spend amount in order to make it habitable while in the present case of the assessee, the earlier owner of the property had constructed the residential property in the year 2008-09 and sold the same to the assessee in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /alteraticn and expansion after the 'purchase'. 6. The Ld. CIT(A) erred in allowing the claim of the assessee u/s 54F to the extent of Rs. 55,89,182/- expended after the purchase of the new asset for the purpose of renovation and expansion because as per sub-section (4) to section 54F, the amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset before the date of furnishing the return of income u/s 139, shall be deposited by him in an account of any scheme framed in this behalf and the amount already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset, while in the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter the assessee purchased new property consisting of both land and building located at No.733, I Block, 6" cross, Valagerhalli Extension, Jnanabharathi Layout, Bengaluru 560 059 on 01.07.2010, for a sale consideration of Rs. 75,75,475/-. The break-up of the said amount is as under : Registration .. Rs. 40,00,000 Stamp duty - Rs. 3,09,100 Paid to contractor Addition/alteration .. Rs. 32,50,000 Cost of construction of 3" floor - Rs. 23,00,000 Thus the assessee has utilised the entire amount for construction of new house within the provisions of Section 54F of the Act. The AO was not convinced with the submission made by the assessee and had made the addition of Rs. 55,89,182/-. Feeling aggrieved, the assessee filed an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 54F. Capital gain on transfer of certain. capital assets not to be charged in case of investment in residential house.-(1) Where, in the case of an assessee being an individual, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as 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 cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not changed under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (5), of sub-section (/), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted only to actual purchase and if any addition, alteration or demolition of the property is carried out by the assessee for the purposes of reconstruction after the demolition and for making it convenient for his use, then the cost incurred by the assessee for that purpose would not be eligible for deduction u/s.54F, is against the very purpose of providing this deduction in the statute book. Our reading of the provision makes it abundantly clear that the purchase do not include a purchase which is not a purchase of an asset which is not incapable of being used by the assessee. The assets for the purpose of Section of 54F should be an asset purchased by the assesse and if an assessee incurs a cost for making it useful and conve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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