9911796707
Advanced Search 
TMI Blog2022 (7) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case are that the assessee is a civil contractor filed his return of income for the AY 2015-16 declaring total income of Rs. 62,08,350/-. Subsequently, the case was selected for scrutiny through CASS and notice U/s. 143(2) was issued on 20/09/2016. The AO concluded the assessment U/s. 143(3) of the Act assessing the total income of Rs. 1,32,02,792/-by disallowing the deduction u/s 54 of the Act. Aggrieved by the order of the Ld. AO, assessee filed an appeal before the Ld. CIT(A)-1, Visakhapatnam. The Ld. CIT(A) confirmed the addition made by the AO and dismissed the appeal. Aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us. 3. The only issue raised by the assessee is denial of exemption of Rs. 32,57,272/- U/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse at Rs. 32,74,325/- for FY 2013-14, Rs. 93,53,354/- for FY 2014-15 and Rs. 27,00,000/- for FY 2015-16. It is observed from the orders of the Revenue Authorities that the assessee was allowed an deduction of Rs. 34,62,612/- out of Rs. 67,19,884/- claimed by the assessee on the ground that the cost of construction prior to date of sale is not eligible for deduction U/s. 54 of the Act. However the Ld. AR relied on the Board Circular No.667, dated 18/10/1993 which is reproduced below: "Whether, in cases where the residential house is constructed within the specified period, the cost of such residential house can be taken to include the cost of the plot also. 1. Section 54 and 54F provide for a deduction in cases where an assessee has, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the period as specified U/s. 54 of the Act and the commencement of construction is not the criteria as mentioned in section 54 of the Act. Section 54(1) is extracted below for reference: 54. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in the case of C. Aryama Sundaram vs. CIT (supra). The Ld. AR invited our attention to paras 22 and 23 of the judgment of the Hon'ble Madras High Court wherein it is held as under: "22. It is axiomatic that section 54(1) of the Act does not contemplate that the same money received from the sale of residential house should be used in the acquisition of new residential house. Had it been the intention of the Legislature that the very same money that had been received as consideration for transfer of a residential house should be used for acquisition of the new asset, section 54(1) would not have allowed adjustment and/or exemption in respect of property purchased one year prior to the transfer, which gave rise to the capital gain or may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the cost of the new residential house and not just the cost of construction of the new residential house which is to be allowed as deduction. In view of the above by respectfully following the ratio laid down in the case of C. Aryama Sundaram vs. CIT (supra) where the cost of new residential house which should necessarily include the cost of land, cost of materials used in the construction, the cost of labour and other relatable cost of construction of the residential house has to be considered for the purpose of deduction U/s. 54 of the Act. We therefore direct the Ld. AO to consider the cost of land purchased by the assessee while computing the deduction U/s. 54 of the Act and we allow the appeal of the assessee. 8. In the result, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
