Smt. Nimmagadda Sridevi, Hyderabad V. DCIT, Circle -3(3), Hyderabad

ITA 183/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1316 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Capital asset; Tangible material
• Section: 54F; 133A; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 183/HYD/2012 ASSESSMENT YEAR 2008-09 SMT. NIMMAGADDA SRIDEVI SECUNDERABAD PAN: ACTPN4924B VS. THE DCIT CIRCLE-3(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI K.A. SAI PRASAD RESPONDENT BY: SMT. VIDISHA KALRA DATE OF HEARING: 20.12.2012 DATE OF PRONOUNCEMENT: 22.02.2013 O R D E R O R D E R O R D E R O R D E R PER CHANDRA POOJARI, AM: PER CHANDRA POOJARI, AM: PER CHANDRA POOJARI, AM: PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV, HYDERABAD DATED 25.11.2011 FOR AS SESSMENT YEAR 2008-09. 2. THE ASSESSEE RAISED THE GROUND WITH REGARD TO NON- GRANTING OF DEDUCTION U/S. 54F OF THE INCOME-TAX AC T, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DIRECTOR IN M/S. VEEN PROMOTERS PVT. LTD. THERE WAS A SURVE Y U/S. 133A OF THE ACT ON 14.7.2009 IN THE CASE OF M/S. VEEN PR OMOTERS PVT. LTD. THE ASSESSEE FILED RETURN OF INCOME FOR THE A .Y. 2008-09 ON 31.7.2009 DECLARING TOTAL INCOME AT RS. 24,99,28 9 AFTER CLAIMING DEDUCTION U/S. 54F AT RS. 5,30,04,081 HAS INVESTED IN H. NO. C-10, AFCHS, SAINIKPURI, SECUNDERABAD ACCORD ING TO WHICH THE INVESTMENT WAS MADE DURING THE PERIOD FRO M AUGUST, 2007 TO JULY, 2008. IT IS ALSO ON RECORD THAT THE ASSESSEE SOLD PROPERTY BEARING NO. 986 ROAD NO. 50, JUBILEE HILLS IN THE FINANCIAL YEAR 2007-08 VIDE SALE DOCUMENT NO. 2739/ 2007 AND 2741/2007 DATED 26.7.2007 FOR A GROSS CONSIDERATION OF RS. IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 2 4,32,00,000 AS AGAINST SUB-REGISTRAR VALUE OF RS. 5 ,04,92,000. ACCORDING TO THE ASSESSING OFFICER, AS THE ASSESSEE SOLD THE PROPERTY ON 26.7.2007 AND THE NEW INVESTMENT MADE B Y THE ASSESSEE IS BEFORE 31.3.2007. IN OTHER WORDS, THE CONSTRUCTION OF HOUSE WAS SUBSTANTIALLY COMPLETED BY 31.3.2007 I .E., BEFORE THE SALE OF CAPITAL ASSET WHICH LED TO CAPITAL GAIN . AS SUCH THE CONDITION LAID DOWN U/S. 54F OF THE ACT WAS NOT FUL FILLED. BEING SO, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 54F AND THE SAME WAS DENIED. THE ASSESSEE WENT IN APPEAL BEFOR E THE CIT(A). 4. IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE STA RTED HOUSE CONSTRUCTION IN PLOT NO. C-10, AFCHS, SAINIKP URI, SECUNDERABAD IN THE FINANCIAL YEAR 2005-06 VIDE CON STRUCTION AGREEMENT WITH SUGUNI CONSTRUCTIONS PVT. LTD. ON 21 .12.2005. AS PER THE AGREEMENT, THE CONSTRUCTION WAS TO BE CO MPLETED AND THE HOUSE HAS TO BE HANDED OVER TO THE ASSESSEE UND ER HABITABLE CONDITION ON OR BEFORE 20.3.2007. IT WAS ALSO NOTICED BY THE CIT(A) THAT AS PER BALANCE SHEET AS ON 31.3. 2007 THE VALUE OF CONSTRUCTION WAS AT RS. 4,52,40,382. ACCO RDINGLY, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER DENYING DEDUCTION U/S. 54F OF THE ACT. AGAINST THIS, THE A SSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR SUBMITTED THAT THE ENTIRE CONSTRUCTI ON OF THE HOUSE BUILDING WAS NOT AT ALL COMPLETED BY MARC H, 2007. THE CONSTRUCTION WAS IN PROGRESS FROM THE DATE OF T HE CONSTRUCTION AGREEMENT WITH SUGUNI CONSTRUCTION PVT . LTD. FROM 21.12.2005. ALL THE PAYMENT TO M/S. SUGUNI CONSTRU CTION PVT. LTD. WAS MADE BY CHEQUE. THE HOUSE WAS FINALLY COM PLETED IN OCTOBER, 2009 AND THE ASSESSEE OCCUPIED THE HOUSE I N NOVEMBER, 2009. THE ASSESSEE IS NOT HAVING ANY OTH ER RESIDENTIAL HOUSE. THE MUNICIPAL TAX ASSESSMENT WA S COMPLETED BY GHMC IN NOVEMBER, 2009. HE DREW OUR A TTENTION TO THE COPIES OF BALANCE SHEET FOR THE A.YS. 2007-0 8 TO 2009- IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 3 10. HE SUBMITTED THAT THE CONSTRUCTION WAS SHOWN I N THE BALANCE SHEET AS UNDER CONSTRUCTION. HE SUBMITTED THAT AS SEEN FROM THE BALANCE SHEET UP TO 31.3.2007, INVEST MENT IN HOUSE BUILDING WAS AT RS. 4.80 CRORES. THEREAFTER, YEAR BY YEAR THE ASSESSEE MADE FURTHER INVESTMENT. THUS, UP TO OCTOBER, 2009 THE TOTAL INVESTMENT ON THE PROPERTY AT C-10, AFCHS, SAINIKPURI, SECUNDERABAD WORKS OUT AT RS. 13,63,22, 640. 6. ACCORDING TO HIM ALL DETAILS WERE FURNISHED TO THE ASSESSING OFFICER. IN SPITE OF THIS, THE LOWER AUT HORITIES REJECTED THE CLAIM OF THE ASSESSEE HOLDING THAT THE INVESTME NT IN HOUSE WAS MADE BEFORE THE SALE OF PROPERTY. HE SUBMITTED THAT OUT OF THE TOTAL INVESTMENT, INVESTMENT IN THE HOUSE AFTER THE DATE OF TRANSFER OF ORIGINAL ASSETS IS RS. 5,24,69,141 AND BEFORE THE DATE OF FILING OF RETURN OF INCOME FOR THE ASSESSME NT YEAR UNDER CONSIDERATION U/S. 139 OF THE ACT. ACCORDING TO TH E ASSESSEE'S COUNSEL THIS AMOUNT HAS TO BE CONSIDERED AS ELIGIBL E FOR DEDUCTION U/S. 54F OF THE ACT. HE ALSO FILED COPY OF MUNICIPAL ASSESSMENT DATED 7.2.2009 AS AN EVIDENCE TO SHOW TH E COMPLETION OF CONSTRUCTION IN THE A.Y. 2009-10. 7. THE LEARNED DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT NONE OF THE ABOVE CO NTENTIONS COULD EVER BE ESTABLISHED WITH VALID AND NECESSARY EVIDEN CE AT ANY STAGE. THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY CONFI RMATION FROM M/S. SUGUNI CONSTRUCTIONS P LTD. AS TO WORK UP TO WHICH STAGE WAS DONE BY THEM AND WHETHER OR NOT THE CONSTRUCTION COULD BE C OMPLETED BY THEM BY THE DATE STIPULATED IN THE AGREEMENT OF CONSTRUC TION. IN FACT, THE PRESENT CONTENTION OF THE ASSESSEE THAT ONLY PART W ORK WAS GIVEN TO THEM IS NOT SUPPORTED BY THE TERMS OF THE AGREEMENT ITSELF. FURTHER, THE CLAIM OF GETTING THE WORK DONE ON HER OWN AS ALSO N OT BEEN SUBSTANTIATED BY GIVING ANY DETAILS OR EVIDENCES RE GARDING CONSTRUCTION, PURCHASE OF MATERIALS, ENGAGING OF LABOUR ETC. IN F ACT, THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY CONTEMPORANEOUS EVIDEN CE REGARDING THE ALLEGED CONSTRUCTION OUT OF THE SALE PROCEEDS OF TH E ORIGINAL ASSET. IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 4 8. THE DR SUBMITTED THAT A SUBSTANTIAL AMOUNT HAD ALRE ADY BEEN ADMITTEDLY SPENT BY THE ASSESSEE BEFORE 31.2.2007 A ND IT CAN BE REASONABLY CONCLUDED THAT SUCH HUGE INVESTMENT WOUL D HAVE INDEED RESULTED IN A HABITABLE STRUCTURE, WHICH CAN BE IND EED CALLED A RESIDENTIAL HOUSE. THEREFORE, IT IS CLEAR THAT ON T HE DATE OF SALE OF THE ORIGINAL ASSET UNDER DISCUSSION, THE ASSESSEE WAS A LREADY HAVING ONE RESIDENTIAL HOUSE OF HER OWN. IN FACT, EVEN IF CERT AIN ADDITIONS WERE MADE TO THE SAME, IT CANNOT BE SAID THAT A NEW RESI DENTIAL HOUSE WAS CONSTRUCTED BY THE ASSESSEE OUT OF THE SALE PROCEED S OF THE PRESENT ORIGINAL ASSET. THE CASE LAWS RELIED UPON BY THE A SSESSING OFFICER DULY SUPPORT HIS CONCLUSION THAT THE ASSESSEE CANNOT BE SAID TO HAVE CONSTRUCTED A NEW RESIDENTIAL HOUSE OR PURCHASED A NEW ONE OUT OF THE SALE PROCEEDS OF THE ORIGINAL ASSET, AS THE ADDITIO NAL EXPENDITURE IN THE OLD HOUSE CAN AT BEST BE CALLED ADDITIONS TO AN EXI STING HOUSE AND NOT CONSTRUCTION OF A NEW RESIDENTIAL HOUSE ALTOGETHER. SHE RELIED ON THE JUDGEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT V S. V. PRADEEP KUMAR (290 ITR 90) WHEREIN HELD THAT THE BURDEN IS ON THE ASSESSEE TO PROVE THAT HE HAS ACTUALLY CONSTRUCTED A NEW RESIDE NTIAL HOUSE FOR THE PURPOSE OF EXEMPTION U/ S. 54 OF THE IT ACT. IN FAC T, LIKE THE SAID CASE, IN THE PRESENT CASE ALSO THERE IS NO TANGIBLE MATERIAL EVEN TO INFER THAT A NEW RESIDENTIAL HOUSE WAS CONSTRUCTED. ADDITIONS / MODIFICATIONS TO AN EXISTING HOUSE DO NOT AMOUNT TO REAL CONSTRUCTION A S CONTEMPLATED U/S. 54 F. THE HONBLE HIGH COURT HAVE ALSO OBSERVED TH AT A MERE EXTENSION OF THE EXISTING BUILDING WILL NOT GIVE BE NEFIT TO THE ASSESSEE AS CONTEMPLATED U/S. 54F OF THE ACT. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE CRUX OF THE ARGUMENT OF THE ASSESSE E'S COUNSEL IS THAT THE CONSTRUCTION WAS FINALLY COMPLETED AFTE R THE DATE OF SALE OF EXISTING CAPITAL ASSET AND AT THE TIME OF S ALE OF THE CAPITAL ASSET I.E., BUILDING NO. 986, ROAD NO. 50, JUBILEE HILLS, HYDERABAD, THE CONSTRUCTION ON PLOT NO. C-10, AFCHS , SAINIKPURI, SECUNDERABAD WAS IN PROGRESS. IT IS AL SO RECORDED THAT FOR A.Y. 2007-08 (AS ON 31.3.2007) THE CONSTRU CTION COST IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 5 WAS INCURRED AT RS. 4,52,40,382. THEREAFTER, THE A SSESSEE FURTHER INCURRED EXPENDITURE TOWARDS CONSTRUCTION A ND TILL OCTOBER, 2009 TOTAL CONSTRUCTION COST WAS RS. 13,63 ,22,640. REGARDING THIS CONSTRUCTION COST THE ASSESSEE FILED PAPER BOOK IN THE FORM OF THE BALANCE SHEET AS ON 31.3.2007 AN D 31.3.2008 AND ALSO CONSTRUCTION ACCOUNT FROM 1.8.2007 TO 31.7 .2008 IN PAGE NOS. 9 TO 22. THERE IS NO ALLEGATION AGAINST THE ASSESSEE THAT THE ASSESSEE OWNING ANY OTHER RESIDENTIAL BUIL DING THOUGH THE ASSESSEE HAVING CERTAIN OTHER COMMERCIAL BUILDI NGS FROM WHERE THE ASSESSEE IS DERIVING RENTAL INCOME. NOW THE QUESTION BEFORE US IS WHETHER THE COST OF CONSTRUCTION INCUR RED BY THE ASSESSEE AFTER THE SALE OF CAPITAL ASSET, THOUGH TH E CONSTRUCTION COMMENCED BEFORE THE SALE AND THE CONSTRUCTION COMP LETED WITHIN TWO YEARS FROM THE SALE OF CAPITAL ASSET IS ENTITLED FOR DEDUCTION U/S. 54F OF THE IT ACT. IN THIS CONNECTI ON IT IS APPROPRIATE TO CONSIDER THE RATIO LAID DOWN BY KARN ATAKA HIGH COURT IN THE CASE OF CIT V. J.R. SUBRAHMANYA BHATT (165 ITR 571) WHEREIN HELD THAT IF THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED OR HAS WITHIN A PERIOD OF TWO YEARS AFTER THE DATE OF TRANSFER CONSTRUCTED THE NEW RESIDENTIAL HOUSE, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT, THOUGH THE ASSESSEE HAS COMMENCED CONSTRUCTION BEFORE THE SALE BUT COMP LETED THE CONSTRUCTION WITHIN TWO YEARS AFTER THE SALE. THE COMMENCE- MENT OF CONSTRUCTION PRIOR TO THE SALE OF CAPITAL A SSET IS IMMATERIAL AND THE ASSESSEE IS ENTITLED FOR DEDUCTI ON U/S. 54 OF THE ACT. 10. THE RELEVANT PROVISIONS OF SECTION 54F READ AS UNDE R: '54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDU AL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FRO M THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERR ED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON W HICH IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 6 THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESID ENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACC ORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, - (A)______ (B)______ 11. A BARE LOOK TO THE ABOVE PROVISIONS SHOWS THAT THE ABOVE PROVISIONS ARE INCENTIVE PROVISIONS INTENDED TO AUG MENT THE INVESTMENT IN RESIDENTIAL HOUSES. -IT IS THE SETTLED LEGAL POS ITION THAT INCENTIVE PROVISIONS SHOULD BE CONSTRUED LIBERALLY IN SUCH A MANNER THAT OBJECT OF THE STATUTE IS FULFILLED RATHER THAN THE MANNER WHI CH MAY FRUSTRATE THE OBJECT. REFERENCE CAN BE MADE TO THE FOLLOWING OBSE RVATIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LT D., 196 ITR 188: 'THE PROVISION IN A TAXING STATUTE GRANTING INCENTI VES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUE D LIBERALLY; AND SINCE THE PROVISION FOR PROMOTING EC ONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, RESTRICTION S ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISIONS AND NOT TO FRUSTRATE IT.' 12. AT THIS STAGE, IT WOULD ALSO BE USEFUL TO REFER TO THE BOARD'S CIRCULAR NO. 471 DATED 15.10.1986, WHICH READS AS U NDER: '1. CAPITAL GAINS TAX - WHETHER INVESTMENT IN A FLA T UNDER THE SELF-FINANCING SCHEME OF THE DELHI DEVELOPMENT AUTHORITY WOULD BE CONSTRUCTION FOR PURPOSE OF SECT IONS 54 AND 54F OF THE INCOME TAX ACT, 1961. - SECTION 5 4 AND 54F OF THE INCOME-TAX ACT, 1961, PROVIDE THAT CAPIT AL GAINS ARISING ON TRANSFER OF A LONG-TERM CAPITAL AS SET SHALL NOT BE CHARGED TO TAX TO THE EXTENT SPECIFIED THERE IN, WHERE THE AMOUNT OF CAPITAL GAIN IS INVESTED IN A RESIDENTIAL HOUSE. IN THE CASE OF PURCHASE OF A HOU SE, THE BENEFIT IS AVAILABLE IF THE INVESTMENT IS MADE WITH IN A PERIOD OF ONE YEAR BEFORE OR AFTER THE DATE ON WHIC H THE TRANSFER TOOK PLACE AND IN CASE OF CONSTRUCTION OF HOUSE, THE BENEFIT IS AVAILABLE IF THE INVESTMENT IS MADE WITHIN THREE YEARS FROM THE DATE OF TRANSFER. 2. THE BOARD HAD OCCASION TO EXAMINE AS TO WHETHER THE ACQUISITION OF A FLAT BY AN ALLOTTEE UNDER THE SELF -FINANCING IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 7 SCHEME OF THE DELHI DEVELOPMENT AUTHORITY AMOUNTS T O PURCHASE OR IS CONSTRUCTION BY THE D.D.A. OF BEHALF OF THE ALLOTTEE. UNDER THE SELF-FINANCING SCHEME OF THE DE LHI DEVELOPMENT AUTHORITY, THE ALLOTMENT LETTER IS ISSU ED ON PAYMENT OF THE FIRST INSTALMENT OF THE COST OF CONS TRUCTION. THE ALLOTMENT IS FINAL UNLESS IT IS CANCELLED OR TH E ALLOTTEE WITHDRAWS FROM THE SCHEME. THE ALLOTMENT IS CANCELL ED ONLY UNDER EXCEPTION CIRCUMSTANCES. THE ALLOTTEE GE TS TITLE TO THE PROPERTY ON THE ISSUANCE OF THE ALLOTM ENT LETTER AND THE PAYMENT OF INSTALMENTS IS ONLY A FOLLOW-UP ACTION AND TAKING THE DELIVERY OF POSSESSION IS ONLY A FOR MALITY. IF THERE IS A FAILURE ON THE PART OF D.D.A. TO DELIVER THE POSSESSION OF THE FLAT AFTER COMPLETING THE CONSTRU CTION, THE REMEDY FOR THE ALLOTTEE IS TO FILE A SUIT FOR R ECOVERY OF POSSESSION. 3. THE BOARD HAVE BEEN ADVISED THAT UNDER THE ABOVE CIRCUMSTANCES, THE INFERENCE THAT CAN BE DRAWN IS T HAT THE D.D.A. TAKES UP THE CONSTRUCTION WORK ON BEHALF OF THE ALLOTTEE AND THAT THE TRANSACTION INVOLVED IS NOT A SALE. UNDER THE SCHEME, THE TENTATIVE COST OF CONSTRUCTIO N IS ALREADY DETERMINED AND THE D.D.A. FACILITATES THE P AYMENT OF THE COST OF CONSTRUCTION IN INSTALMENTS SUBJECT TO THE CONDITION THAT THE ALLOTTEE HAS TO BEAR THE INCREAS E, IF ANY, IN THE COST OF CONSTRUCTION. THEREFORE, FOR THE PUR POSE OF CAPITAL GAINS TAX, THE COST OF THE NEW ASSET IS THE TENTATIVE COST OF CONSTRUCTION AND THE FACT THAT THE AMOUNT W AS ALLOWED TO BE PAID IN INSTALMENTS DOES NOT AFFECT T HE LEGAL POSITION STATED ABOVE. IN VIEW OF THESE FACTS, IT H AS BEEN DECIDED THAT CASES OF ALLOTMENT OF FLATS UNDER THE SELF- FINANCING SCHEME OF THE DELHI DEVELOPMENT AUTHORITY SHALL BE TREATED AS CASES OF CONSTRUCTION FOR THE P URPOSE OF CAPITAL GAINS.' 13. THE ABOVE CIRCULAR CLEARLY SHOWS THAT OBJECT OF SEC TIONS 54 AND 54F WAS TO AUGMENT THE INVESTMENT IN RESIDENTIAL AC COMMODATION. CONSIDERING THE SAID OBJECT, THE BOARD TOOK THE VIE W THAT PAYMENT TO DELHI DEVELOPMENT AUTHORITY, UNDER SELF FINANCING S CHEME, AMOUNTED TO INVESTMENT IN CONSTRUCTION OF RESIDENTIAL HOUSE EVEN THOUGH THE ASSESSEE HIMSELF HAD NOT CONSTRUCTED THE HOUSE. IN VIEW OF THE SAME, IN OUR OPINION, THE LEARNED CIT (A) WAS NOT JUSTIFI ED IN APPLYING STRICT RULE OF INTERPRETATION. 14. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT INVESTMENT IN RESIDENTIAL HOUSE WHICH WOULD HAVE TA KEN PLACE AFTER THE SALE OF EXISTING CAPITAL ASSET IS TO BE CONSIDERED FOR DEDUCTION U/S. 54F IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 8 OF THE ACT AS THE INVESTMENT IN RESIDENTIAL HOUSE W OULD NOT ONLY INCLUDE THE COST OF PURCHASE OF THE HOUSE BUT ALSO THE COST INCURRED IN MAKING THE HOUSE HABITABLE AND AN INHABITABLE PREMISES, IN OUR OPINION, CANNOT BE EQUATED WITH A RESIDENTIAL HOUSE. IF A PERSON C ANNOT LIVE IN THE PREMISES, THEN SUCH PREMISES CANNOT BE CONSIDERED A S A RESIDENTIAL HOUSE. IN CASE OF SEMI FINISHED HOUSE, THE ASSESSE E WILL HAVE TO INVEST HUGE MONEY ON FINISHING THE HOUSE TO MAKE IT HABITA BLE. THEREFORE, IN OUR VIEW, THE INVESTMENT IN A HOUSE WOULD BE COMPLE TE ONLY WHEN SUCH HOUSE BECOMES HABITABLE. THIS VIEW OF OURS IS SUPP ORTED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF SALEEM FAZELBHOY V. DCIT (106 ITD 167) (MUM) AND MRS. SONIA GULATI VS. ITO (115 TAXMAN 232 ) (MUM). 15. FURTHER IN THE CASE OF CHANDRU L. RAHEJA V. ITO (27 ITD 551) (MUM) WHEREIN HELD THAT WHEN THE ASSESSEE HAD ALREADY PURCHASED LAND, STARTED CONSTRUCTION OF A BUILDING THEN ONLY THAT PART OF THE INVESTMENT IN NEW HOUSE THAT WAS MADE O UT OF THE SALE PROCEEDS RECEIVED AFTER THE TRANSFER OF THE OL D HOUSE WOULD QUALIFY FOR EXEMPTION U/S. 54 OF THE ACT. 16. SIMILARLY, IN THE CASE OF SMT. SHANTABEN P. GANDHI V. CIT (129 ITR 218) (GUJ) HELD THAT WHERE THE CONSTRUCTIO N OF NEW RESIDENTIAL PROPERTY IS COMPLETED BEFORE THE DATE O F TRANSFER OF THE EXISTING PROPERTY, THE ASSESSEE IS NOT ENTITLED TO RELIEF U/S. 54 IN RESPECT OF CAPITAL GAIN RECEIVED ON SALE OF E XISTING PROPERTY. 17. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT W HATEVER INVESTMENT MADE BY THE ASSESSEE IN CONSTRUCTION OF NEW PROPERTY WITHIN THE PERIOD STIPULATED U/S. 54F AFTE R THE SALE OF EXISTING PROPERTY THE ASSESSEE IS ENTITLED FOR DEDU CTION U/S. 54F OF THE ACT. IN OTHER WORDS, THE INVESTMENT IN NEW PROPERTY MADE BY THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT TO THE EXTENT MADE BEFORE THE SALE OF PROPERTY. ON LY THAT PORTION OF INVESTMENT MADE IN THE NEW PROPERTY IN ACCORDANC E WITH SECTION 54F OF THE ACT IS ENTITLED FOR DEDUCTION U/ S. 54F OF THE IT A NO. 183/HYD/2013 NIMMAGADDA SRIDEVI ================= 9 ACT. ACCORDINGLY, WE DIRECT THE ASSESSEE TO FURNIS H THE DETAILS OF INVESTMENT MADE BY THE ASSESSEE IN THE CONSTRUCT ION OF NEW RESIDENTIAL BUILDING AFTER THE SALE OF EXISTING PRO PERTY BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S. 139(1) OF THE ACT. THE ASSESSING OFFICER SHALL CONSIDER THAT INVESTMENT MA DE BY THE ASSESSEE IN THE CONSTRUCTION OF NEW PROPERTY AFTER THE SALE OF EXISTING PROPERTY IN TERMS OF SECTION 54F OF THE AC T. ACCORDINGLY, THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF QUANTIFICATION OF DEDUCTION U/S. 54F OF THE ACT. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2013. SD/ SD/ SD/ SD/- -- - ( (( (ASHA VIJAYARAGHAVAN ASHA VIJAYARAGHAVAN ASHA VIJAYARAGHAVAN ASHA VIJAYARAGHAVAN) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER SD/ SD/ SD/ SD/- -- - (CHANDRA POOJARI) (CHANDRA POOJARI) (CHANDRA POOJARI) (CHANDRA POOJARI) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 22 ND FEBRUARY, 2013 TPRAO COPY FORWARDED TO: 1. SMT. NIMMAGADDA SRIDEVI, C/O. M/S. CH. PARTHASARATH Y & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD-20. 2. THE DCIT, CIRCLE-3(3), HYDERABAD. 3. THE CIT(A)-IV, HYDERABAD. 4. THE CIT-III, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD.