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TMI Blog2021 (10) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case, the cost of the new asset which ts eligible for exemption under Section 54F(1) would include the cost of land though purchased more than 1 year prior to sale of capital asset"? 2. Whether on the facts and in the circumstances of the case, when the construction cost of residential house is allowed as per the third limb of exemption namely "construction of residential house within 3 years from the date of transfer of capital asset", can the cost of land on which the residential house has been constructed be disallowed applying the first limb of the exemption namely "bought 1 year before the date of transfer of capital asset"? 3. The assessee, an individual, purchased a land on 17.04.2010 and claimed exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer of any long term capital assets construction, one residential house in India (new asset). The said provision being beneficial in nature, the authorities ought to have interpreted the same liberally to achieve the object of which benevolent provision is enacted. 5. Learned counsel for the revenue argued that Section 54F(1) of the Act contemplates that when the assessee has within a period of one year before or two years 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 in India, the benefit of capital gain shall be allowed with in accordance with Section 45 of the Act. Indisputedly, the assessee had purchased the land on 17.04.2010 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new - asset bears to the net consideration, shall not be charged under section 45: 8. In the case of C. Aryama Sundaram, supra, the Hon'ble High Court of Madras while dealing with Section 54 of the Act where the appellant assessee being an individual having sold a residential house property on 15.01.2010 had purchased the property with superstructure thereon and after demolishing the exiting superstructure, constructed a resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction could not have commenced prior to the date of transfer of the asset resulting in capital gain. The condition precedent for adjustment against the cost of new asset is that the new residential house should have been purchased within one year before or two years after the transfer of the residential house, which resulted in the capital gain or alternatively, a new residential house has been constructed in India, within three years from the date of the transfer, which resulted in the capital gain. It has been categorically held that the said Section does not exclude the cost of land from the cost of residential house. It is the cost of the new residential house and not just the cost of construction of the new residential house, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is to be construed liberally in favour of the assessee, as it is for the benefit of the assessee. 12. In yet another coordinate bench decision in the case of Commissioner of Income Tax us. Sambandam Udaykumar reported in (2012) 345 ITR 389, it has been held that the essence of Section 54F is whether the assessee, who received capital gains has invested in a residential house. Even though the construction of a residential house is not complete in all respects, but if it is demonstrated that the same has been invested either in purchasing a residential house or in construction of a residential house, the assessee cannot be disentitled from seeking the benefit. The object of enacting Section 54 of the Act is to encourage investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o one year. In our opinion, this interpretation of the revenue is wholly untenable and would defeat the object and purport of the provision. The Tribunal has failed to appreciate the judgment of C. Aryama Sundaram, supra in a right perspective. 14. It is trite that even if two plausible views are possible, the view beneficial to the assessee has to be applied. On technicalities, the benevolent provision cannot be interpreted to deny the benefit to the assessee. 15. For the reasons discussed above, we pass the following ORDER i) The appeal is allowed. ii) The impugned order dated 21.12.2018 passed in ITA No.453/Bang/2018 by the Income Tax Appellate Tribunal, Bengaluru Bench 'A', Bengaluru, relating to the assessment year 2013- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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