Shri Sudershan Goyal, Ludhiana V. ITO, Ludhiana

ITA 831/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9143 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 20-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Keywords: Capital asset
• Section: 54F; 27; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 831/CHD/2015 ASSESSMENT YEAR: 2009-10 SHRI SUDERSHAN GOYAL, VS THE ITO, M/S GOPAL DASS HARI CHAND, WARD-III(3), LALU MAL STREET, UDHAM SINGH NAGAR, LUDHIANA. CIVIL LINES, LUDHIANA. PAN: ADKPG3709K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SI NGH RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 10.08.2016 DATE OF PRONOUNCEMENT : 30.08.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 28.09.20 15 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1. THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING INVO CATION OF PROVISO TO SECTION 54(2) OF THE INCOME TAX ACT, 1961 WHILE SUSTAINING ADDITION OF RS. RS. 24,74,000/- REPRESENTING LONG TERM CAPITAL GAIN. 2. THAT WHILE UPHOLDING ADDITION OF RS. 24,74,000/ - THE LD. CIT (A) DID NOT APPRECIATE THAT NO CAPITAL GAINS WERE ASSESSABLE TO TAX AS THE APPE LLANT HAD COMPLIED WITH THE CONDITIONS PREREQUISITE AS PROVIDED UNDER SECTION 5 4(1) WITHIN THE PERIOD STIPULATED HAVING CONSTRUCTED RESIDENTIAL HOUSE WITHIN THE PER IOD AS STIPULATED. 3. THAT THE LD. CIT(A) WHILE SUSTAINING ADDITION O F RS. 24,74,000/- ON ACCOUNT OF CAPITAL GAINS FAILED TO APPRECIATE THE TRUE IMPORT OF CAPIT AL GAINS SCHEME 1988 FRAMED BY THE 2 CENTRAL GOVERNMENT FOLLOWING WHICH THE APPELLANT HA D DEPOSITED CAPITAL GAINS BEFORE EXPIRY OF TIME TO FILE THE RETURN OF INCOME . 4 THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT APPREC IATING THAT HAVING MADE A DEPOSIT UNDER CAPITAL GAINS SCHEME, 1988 BEFORE EXPIRY OF T IME TO FILE THE RETURN OF INCOME THE APPELLANT WAS ENTITLED TO EITHER PURCHASE OR CONSTR UCT A RESIDENTIAL HOUSE WITHIN THE PERIOD STIPULATED HAVING BEEN SO MANDATED. 5 THAT WHILE SUSTAINING THE ADDITION OF RS. 24,74, 000/- THE LD. CIT(A) DID NOT APPRECIATE THAT PROVISIONS RELATING TO SECTION 54 OF THE INCOM E TAX ACT, 1961 HAD TO BE CONSTRUED LIBERALLY AS BEING MEANT TO ENCOURAGE CONSTRUCTION OF RESIDENTIAL HOUSES . 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSI DERED MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE SOLD THE PROPERTY IN QUESTION ON 16.02.2006 FOR RS. 42,9 7,500/- ON WHICH ASSESSEE GOT CAPITAL GAINS OF RS. 24,74,00 0/-. THE ASSESSING OFFICER HELD THAT ASSESSEE HAD, INSTE AD OF CONSTRUCTING RESIDENTIAL HOUSE, HAD PURCHASED THE S AME AS WAS EVIDENT FROM THE REGISTRATION DEED DATED 14.01. 2009 FOR RS. 26,09,100/- AND FURTHER THE ASSESSEE HAD SH OWN CONSTRUCTION COST AMOUNTING TO RS. 2,84,506/- FROM THE RESIDENTIAL BUILDING ACCOUNT UPTO 15.02.2009 WHICH WAS INSIGNIFICANT AND IT APPEARED TO THE ASSESSING OFFI CER THAT ASSESSEE HAD CARRIED OUT REPAIR/RENOVATION BY SPEND ING THIS AMOUNT AND THEREFORE, ASSESSEE WAS NOT ENTITLED TO GET BENEFIT OF SECTION 54 OF THE ACT OF RS. 24,74,000/- AND SAME WAS DISALLOWED. THE DEDUCTION CLAIMED UNDER S ECTION 54 OF THE INCOME TAX ACT ADDED TO THE INCOME OF THE ASSESSEE. 3 4. THE ASSESSEE CHALLENGED THE ADDITION AND ASSESSM ENT ORDER BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSIO N OF THE ASSESSEE IS INCORPORATED IN THE ORDER IN WHICH ASSE SSEE REITERATED THE SAME FACTS. THE ASSESSEE EXPLAINED T HAT ASSESSING OFFICER HAS NOT APPRECIATED PROVISIONS OF SECTION 54(2) OF THE INCOME TAX ACT BECAUSE ASSESSEE MADE D EPOSIT IN CAPITAL GAIN B ACCOUNT, THE AMOUNT OF THE CAPI TAL GAIN WITHIN THE PERIOD PRESCRIBED UNDER SECTION 139(1) O F THE ACT. THE ASSESSEE PURCHASED A SEMI CONSTRUCTED PLO T VIDE SALE DEED DATED 14.01.2009 FOR A TOTAL CONSIDERATIO N OF RS. 26,09,100/- WHICH WAS MORE THAN THE CAPITAL GAIN RE QUIRED TO BE INVESTED I.E. RS. 24,74,000/- AND THUS, FULFI LLED THE CONDITION OF SECTION 54 OF THE ACT BECAUSE NET CAPI TAL GAIN WAS INVESTED IN A NEW ASSET. THE ASSESSEE, RIGHT F ROM THE DAY ONE, AFTER DEMOLISHING A PART OF THE NEW ASSET, TOOK UP CONSTRUCTION AS IS MORE THAN THE MANIFEST FROM THE COPY OF ACCOUNT OF RESIDENTIAL BUILDING. THE ASSESSEE FILE D DETAILS OF THE AMOUNT SPENT MORE THAN RS. 4 LACS THEREON WI TH ADDITIONAL AMOUNT AT RS. 3 LACS TOTALING TO RS. 7 L ACS. THE ASSESSEE REFERRED TO CIRCULAR NO. 667 DATED 18.10.1 993 IN WHICH IT IS EXPLAINED THAT IF THE AMOUNT OF CAPITA L GAIN IS APPROPRIATE TOWARDS PURCHASE OF PLOT AND ALSO TOWAR DS CONSTRUCTION OF RESIDENTIAL HOUSE THEREON, THE AGGR EGATE COST SHOULD BE CONSIDERED FOR DETERMINING THE QUANT UM OF DEDUCTION UNDER SECTION 54/54F OF THE ACT. THE AS SESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT OF CONTENT ION THAT THESE PROVISIONS ARE BENEFICIAL IN NATURE, THEREFOR E, SHOULD BE LIBERALLY CONSTRUED FOR ACHIEVING THE PURPOSE FO R WHICH IT 4 WAS INCORPORATED IN THE STATUTE. THE INTENTION OF THE LEGISLATURE WAS TO ENCOURAGE INVESTMENT IN ACQUISIT ION OF A RESIDENTIAL HOUSE AND COMPLETION OR OCCUPATION IS N OT THE REQUIREMENT OF LAW. THE WORDS USED IN THIS SECTION ARE PURCHASE OR CONSTRUCTED. THEREFORE, CLAIM OF T HE ASSESSEE SHOULD NOT BE REJECTED. 4(I) THE LD. CIT(APPEALS), HOWEVER, DID NOT ALLOW CLAIM OF THE ASSESSEE AND HELD THAT PURCHASE OF A HOUSE CANN OT BE TREATED AS PURCHASE OF PLOT AND THAT THE CONTENTION OF THE ASSESSEE THAT SEMI CONSTRUCTED HOUSE WAS PURCHASED WHICH WAS DEMOLISHED AND RE-CONSTRUCTED IS NOT ACCEPTABLE IN THE ABSENCE OF ANY EVIDENCE. THE LD. CIT(APPEALS) ALSO NOTED THAT FINDING OF THE ASSESSING OFFICER IS THAT AMOUN T OF INVESTMENT RS. 7,84,506/- IS INSIGNIFICANT, THEREFO RE, APPEAL OF THE ASSESSEE WAS DISMISSED DENYING EXEMPT ION UNDER SECTION 54 OF THE INCOME TAX ACT. 5. AFTER CONSIDERING RIVAL SUBMISSIONS AND GOING TH ROUGH THE MATERIAL ON RECORD, I AM OF THE VIEW THAT AUTHO RITIES BELOW WERE UNJUSTIFIED IN DENYING BENEFIT TO THE AS SESSEE UNDER SECTION 54 OF THE ACT. 6. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS P.V. NARASIMHAN 181 ITR 101 HELD AS UNDER : IN ORDER TO CLAIM EXEMPTION UNDER SECTION 54 OF TH E INCOME-TAX ACT,1961, TWO CONDITIONS ARE REQUIRED TO BE SATISFIED, NAMELY, (1) THE HOUSE PROPERTY MUST HAVE BEEN USED BY THE ASSESSEE OR A PARENT OF HIS MAINLY FOR THE PURPOSES OF HIS OWN OR THE PARENT'S 5 RESIDENCE DURING THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE , AND (2) THE ASSESSEE MUST HAVE, WITHIN A PERIOD OF ONE YEAR BEFORE OR AFTER SUCH DATE, PURCHASED OR WITHIN A PERIOD OF TWO YEARS AFTER SUCH DATE, CONSTRUCTED A HOUSE PROPERTY FOR THE PURPOSES OF HI S OWN RESIDENCE. WHEN SECTION 54 TALKS OF HOUSE PROPERTY, IT DOES NOT MEAN AN INDEPENDENT AND COMPLETE HOUSE IN THE SENSE IN WHICH THE TERMS USED TO BE UNDERSTOOD ONCE UPON A TIME. HOUSE PROPERTY FOR THE PURPOSES OF SECTION 54 HAS THE SAME MEANING AS THE CONCEPT OF HOUSE PROPERTY UNDER SECTION 22 TO 27 WHICH MAKES IT CLEAR THAT THE EXPRESSION 'HOUSE PROPERTY TAKES INTO ACCOUNT AN INDEPENDENT RESIDENTIAL UNIT. IN FACT, THERE CAN BE NO DOUBT THA T THE SECTION TAKES INTO ACCOUNT ALL INDEPENDENT RESIDENTIAL UNITS, PARTICULARLY IN THESE DAYS, WHEN MULTI-STOREYED FLATS ARE BECOMING THE ORDER OF THE DAY. THE ASSESSEE HAD TWO RESIDENTIAL HOUSES, ONE AT TIRUPPATTUR AND ANOTHER AT MADRAS. THE HOUSE AT TIRUPPATTUR WHICH WAS IN HIS ENJOYMENT FOR RESIDENTIAL PURPOSES WAS SOLD ON MAY 24,1974, AND THE ASSESSEE EARNED A CAPITAL GAIN OF RS. 32,500. THE ASSESSEE PUT UP THE FIRST FLOOR IN THE OTHER HOUSE AT MADRAS AFTER DEMOLISHING THE FIRST FLOOR OF THE OLD STRUCTURE AND CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT. THIS CLAIM WAS DISALLOWED ON THE GROUND THAT THE ASSESSEE HAD CONSTRUCTED ONLY ADDITIONAL ROOMS TO THE EXISTING HOUSE. THE APPELLATE ASSISTANT COMMISSIONER ACCEPTED THE CASE OF THE ASSESSEE THAT THE CONSTRUCTION OF THE FIRST FLOOR COULD BE TAKEN AS CONSTRUCTION OF A UNI T OF HOUSE PROPERTY FOR GRANTING EXEMPTION UNDER SECTION 54. THE TRIBUNAL AGREED WITH THE VIEW OF THE APPELLATE ASSISTANT COMMISSIONER. ON A REFERENCE : 6 HELD, THAT THE ADMITTED POSITION WAS THAT THE ASSESSEE, AFTER DEMOLISHING COMPLETELY THE FIRST FLOOR OF THE EXISTING HOUSE, HAD PUT UP A NEW CONSTRUCTION WITHIN THE PERIOD ALLOWED BY SECTION 54 AND THE ASSESSEE WAS IN ENJOYMENT OF THE ENTIRE PROPERTY. HE WAS, THEREFORE, ENTITLED TO THE EXEMPTION UNDER SECTION 54 OF THE ACT. 6(I) HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CI T V SAMBANDAM UDAYKUMAR 345 ITR 389 HELD AS UNDER : A READING OF SECTION 54F OF THE INCOME-TAX ACT, 196 1, MAKES IT VERY CLEAR THAT IF A CAPITAL GAIN ARISES FROM THE TRANSF ER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE AND TH E ASSESSEE HAS WITHIN THE PERIOD OF ONE YEAR OR TWO YEARS AFTER THE DATE ON W HICH TRANSFER TOOK PLACE PURCHASED OR HAS WITHIN A PERIOD OF THREE YEA RS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE, IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGIN AL ASSET THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT HE CHARGED UNDER SECTIO N 45 OF THE ACT, HOWEVER, IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPIT AL GAIN AS BEARS TO HE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS TH E COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION SHALL NOT BE CHARGED UNDER SECTION 45 OF THE ACT. SECTION 54F OF THE ACT IS A BENEFICIAL PROVISION OF PROMOTING THE CONSTRUCTION OF RESIDENTIAL HOUSE. TH EREFORE, THE PROVISION HAS TO BE CONSTRUED LIBERALLY FOR ACHIE VING THE PURPOSE FOR WHICH IT WAS INCORPORATED IN THE STATUTE. THE INTENTION OF THE LEGISLATURE WAS TO ENCOURAGE INVESTMENTS IN THE ACQ UISITION OF A RESIDENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION OF A RESIDENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT THE REQUIREMENT OF LAW. THE WORDS USED IN TH E SECTION ARE 'PURCHASED' OR 'CONSTRUCTED'. FOR SUCH PURPOSE, THE CAPITAL GAIN REALIZED SHOULD BEEN INVESTED IN A RESIDENTIAL HOUS E. THE CONDITION PRECEDENT FOR CLAIMING THE BENEFIT UNDER THE PROVISION IS THAT CAPITAL GAINS REALIZED FROM SALE OF CAPITAL ASSET SHOULD HAVE BEEN INVESTED EITHER IN PURCHASING A RESIDENTIAL HO USE OR IN CONSTRUCTING 7 AT RESIDENTIAL HOUSE. IF AFTER MAKING THE ENTIRE PA YMENT, MERELY BECAUSE A REGISTERED SALE DEED HAD NOT BEEN EXECUTED AND RE GISTERED IN FAVOUR OF THE ASSESSEE BEFORE THE PERIOD STIPULATED, HE CANNO T BE DENIED THE BENEFIT OF SECTION 54F OF THE ACT. SIMILARLY, IF HE HAS INV ESTED THE MONEY IN CONSTRUCTION OF A RESIDENTIAL HOUSE MERELY BECAUSE THE CONSTRUCTION WAS NOT COMPLETE IN ALL RESPECTS AND IT WAS NOT IN A F IT CONDITION TO BE OCCUPIED WITHIN THE PERIOD STIPULATED, THAT WOULD N OT DISENTITLE THE ASSESSEE FROM CLAIMING THE BENEFIT UNDER SECTION 54 F OF THE ACT. THE ESSENCE OF THE PROVISION IS WHETHER THE ASSESSEE W HO RECEIVED CAPITAL GAINS HAS INVESTED IN A RESIDENTIAL HOUSE. ONCE IT IS DEMONSTRATED THAT THE CONSIDERATION RECEIVED ON TRANSFER HAS BEEN INV ESTED EITHER IN PURCHASING A RESIDENTIAL HOUSE OR IN CONSTRUCTION O F A RESIDENTIAL HOUSE EVEN THOUGH THE TRANSACTIONS ARE NOT COMPLETE IN AL L RESPECTS AS REQUIRED UNDER THE LAW, THAT WOULD NOT DISENTITLE THE ASSESS EE FROM THE BENEFIT. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMEN T YEAR 2006-07 THE ASSESSEE SOLD SHARES IN A COMPANY FOR A CONSIDE RATION OF RS. 4,18,08,725. PART OF THE PROCEEDS OF THE SALE TO T HE EXTENT OF RS. 2,16,61,570 WERE INVESTED IN PURCHASE OF HOUSE PROP ERTY. THE ASSESSEE ACCORDINGLY CLAIMED EXEMPTION UNDER SECTION 54F. TH E ASSESSING OFFICER FOUND THAT THE FLOORING WORK, ELECTRICAL WORK, FITT ING OF DOOR SHUTTERS AND WINDOW SHUTTERS WERE STILL PENDING. THEREFORE, THE ASSESSING AUTHORITY CAME TO THE CONCLUSION THAT THE CONSTRUCTION WAS NO T COMPLETE EVEN AFTER A LAPSE OF THREE YEARS OF TIME FROM THE DATE OF TRA NSFER OF THE SHARES AND HENCE SECTION 54F WAS NOT APPLICABLE. THE TRIBUNAL, HOWEVER HELD THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT UNDER SECT ION 54F. ON APPEAL TO THE HIGH COURT : HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE HAD INVESTED RS. 2,16,61,670 AS ON OCTOBER 31, 2006, WITHIN TWELVE M ONTHS FROM THE DATE OF REALIZATION OF SALE PROCEEDS OF THE SHARES. THE DEVELOPER ACKNOWLEDGING THE AMOUNT HAD GIVEN PARTICULARS OF T HE STAGE OF CONSTRUCTION. ACCORDING TO HIM, ONLY MINOR FITTINGS LIKE WINDOW SHUTTERS AND SOME ELECTRICAL WORK WERE REQUIRED TO BE MADE. THE ASSESSEE HAD PRODUCED BEFORE THE AUTHORITIES THE REGISTERED SALE DEED DATED NOVEMBER 7, 2009, SHOWING THE TRANSFER OF THE PROPERTY IN HI S FAVOUR. THE ASSESSEE HAD BEEN PUT IN POSSESSION OF THE PROPERTY AND HE W AS IN OCCUPATION. THE ASSESSEE HAD INVESTED THE SALE CONSIDERATION IN ACQUIRING RESIDENTIAL 8 PREMISES AND HAD TAKEN POSSESSION OF THE RESIDENTIA L BUILDING AND WAS LIVING IN THE PREMISES. THE TRIBUNAL WAS JUSTIFIED IN EXTENDING THE BENEFIT OF SECTION 54F OF THE ACT TO THE ASSESSEE. 7. HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT V RAJESH KUMAR JALAN 286 ITR 274 DISMISSED DEPARTMENT AL APPEAL IN WHICH THE TRIBUNAL ALLOWED THE APPEAL FIL ED BY THE ASSESSEE HOLDING THAT SECTION 54 OF THE ACT BEING T HE BENEFICIAL PROVISIONS, IT SHOULD BE CONSTRUED LIBER ALLY TO ADVANCE THE OBJECT OF GIVING BENEFIT TO THE ASSESSE E BY EXEMPTING THE CAPITAL GAIN ON THE SALE OF PROPERTY USED FOR RESIDENCE FROM BEING CHARGED TO INCOME TAX AND ALSO THAT SUB-SECTION (2) OF SECTION 54 OF THE ACT, SIMPLY ME NTIONS THAT THE UNUTILIZED PORTION OF THE CAPITAL GAIN ON THE SALE OF PROPERTY USED FOR RESIDENCE COULD BE DEPOSITED BY T HE ASSESSEE BEFORE THE DATE OF FURNISHING RETURN OF IN COME UNDER SECTION 139 OF THE INCOME TAX ACT. 8. THE FACTS AS NOTED ABOVE, ARE NOT IN DISPUTE THA T ASSESSEE SOLD ONE OF THE RESIDENTIAL PROPERTY ON 16 .02.2006 FOR RS. 42,97,500/- ON WHICH ASSESSEE EARNED CAPITA L GAINS OF RS. 24,74,000/-. THE ASSESSEE, INSTEAD OF IMMED IATELY PURCHASING RESIDENTIAL PROPERTY OR RAISING CONSTRUC TION MADE A DEPOSIT OF THE CAPITAL GAIN AMOUNT IN CAPITA L GAIN-B ACCOUNT. THE ASSESSEE LATER ON PURCHASED SEMI CONS TRUCTED PROPERTY ON 14.01.2009 FOR A SUM OF RS. 26,09,100/- AND AFTER DEMOLISHING THE STRUCTURE THEREON, RAISED CER TAIN CONSTRUCTIONS FOR A SUM OF RS. 7,84,506/- WHICH WAS CONSIDERED BY THE LD. CIT(APPEALS) TO BE INSIGNIFIC ANT AND THAT PURCHASE OF HOUSE WAS NOT TREATED AS PURCHASE OF THE 9 PLOT. THEREFORE, CLAIM OF THE ASSESSEE FOR EXEMPTI ON UNDER SECTION 54 OF THE ACT WAS DENIED. THE ASSESSEE CLA IMED BEFORE LD. CIT(APPEALS) THAT THE PROPERTY SO PURCHA SED WAS A SEMI CONSTRUCTED PLOT AND AFTER DEMOLISHING THE P ART OF THE CONSTRUCTION, ASSESSEE RAISED NEW CONSTRUCTION. THE ASSESSEE FILED COPY OF THE SALE DEED IN THE PAPER B OOK WHICH SHOWS THAT ASSESSEE MADE PAYMENT OF SALE CONSIDERATION OF PURCHASE OF PROPERTY FROM NOVEMBER ,2008 TO JANUARY,2009 I.E. PRIOR TO REGISTRATION OF THE S ALE DEED ON 14.01.2009. THE ASSESSEE HAS BEEN CLAIMING SINC E BEGINNING THAT SINCE THE PROPERTY SO PURCHASED WAS SEMI CONSTRUCTED PLOT, THEREFORE, PART OF THE STRUCTURE THEREON WAS DEMOLISHED. THE LD. COUNSEL FOR THE ASSESSEE F ILED COPY OF THE RESIDENTIAL BUILDING ACCOUNT ON RECORD WHICH WAS ALSO FILED BEFORE AUTHORITIES BELOW AND SUBMITTED T HAT DETAILS OF CONSTRUCTION ARE MENTIONED IN THE BOOKS OF ACCOUNT. THE ASSESSEE IN THE RESIDENTIAL BUILDING ACCOUNT HAS SHOWN THAT ON 03.01.2009, ASSESSEE HAS PAID RS. 85,000/- TO ONE OF THE OWNER OF THE PROPERTY UNDER SALE SHRI ARUN NAGPAL AGAINST THE SALE OF BUILDING MATER IAL WHICH WAS LYING IN THE PROPERTY UNDER SALE. RECEIP T TO THAT EFFECT WAS ALSO EXECUTED BY SHRI ARUN NAGAL AND IS PLACED ON RECORD. THIS AMOUNT IS ADDED IN THE RESIDENTIAL BUILDING ACCOUNT. FURTHER, SHRI ARUN NAGPAL HAS ALSO EXECUT ED ANOTHER RECEIPT CONFIRMING THAT THE BUILDING MATERI AL WAS SOLD TO THE ASSESSEE AND THE PROPERTY IN QUESTION W AS PARTIALLY CONSTRUCTED AND INCOMPLETE HOUSE AND HE H AS LIFTED ALL THE DEBRIS FROM THIS PROPERTY AND RECEIV ED 10 PAYMENT OF SALE OF BUILDING MATERIAL. IN THE SAME BUILDING ACCOUNT, ASSESSEE HAS FURTHER SHOWN PAYMENT OF RS. 65,000/- TO SMT. SAKSHI NAGPAL, JOINT OWNER OF THE PROPERTY UNDER SALE AGAINST SALE OF BUILDING MATERIAL LYING IN THE PROPERTY ON 14.01.2009. SMT. SAKSHI NAGPAL ALSO IS SUED A RECEIPT TO THAT EFFECT AND ALSO ISSUED A RECEIPT TH AT SINCE PROPERTY IN SALE WAS PARTIALLY CONSTRUCTED AND INCO MPLETE AND SHE HAS LIFTED ALL DEBRIS FROM THIS PROPERTY AN D SHE HAS RECEIVED THE PAYMENT FROM THE ASSESSEE. 9. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED VARI OUS BILLS TO SHOW THAT FURTHER BUILDING MATERIAL WAS PURCHASE D IN RAISING CONSTRUCTION IN THE PROPERTY UNDER CONSIDER ATION. THE AUTHORITIES BELOW HAVE NOT GIVEN ANY ADVERSE FI NDING AGAINST THE RESIDENTIAL BUILDING ACCOUNT AND RECEIP TS FILED BEFORE THEM. THE RESIDENTIAL BUILDING ACCOUNT IS S UPPORTED BY THE RECEIPTS REFERRED TO BY LD. COUNSEL FOR THE ASSESSEE REFERRED TO ABOVE. THESE FACTS WOULD, THEREFORE, S UPPORT THE CONTENTION OF THE ASSESSEE THAT THE PROPERTY IN REF ERENCE PURCHASED BY ASSESSEE WAS MERELY SEMI CONSTRUCTED P LOT ON WHICH SALE CONSIDERATION WAS PAID TO THE OWNERS PRI OR TO THE EXECUTION OF THE SALE DEED IN FAVOUR OF THE ASS ESSEE. THE OWNERS OF THE PROPERTY ALSO CONFIRMED FACT OF SELLI NG THE BUILDING MATERIAL LYING IN THE PROPERTY FOR CONSIDE RABLE AMOUNT TO THE ASSESSEE AND THEY HAVE ALSO CONFIRMED THAT THEY HAVE LIFTED ALL THE DEBRIS FROM THIS PROPERTY . IT WOULD, THEREFORE, CLEARLY PROVE THE CONTENTION OF THE ASSE SSEE THAT THE ASSESSEE PURCHASED ONLY SEMI CONSTRUCTED PLOT A ND PRIOR TO REGISTRATION OF THE SALE DEED IN HIS FAVOU R, 11 SUBSTANTIAL PAYMENTS WERE MADE TO THE BUYERS AND DU RING THE SAME PERIOD, THE PART CONSTRUCTION RAISED IN TH E PROPERTY IN QUESTION WAS REMOVED BY THE OWNER AND A LL THE DEBRIS HAVE BEEN TAKEN AWAY BY THEM. WHATEVER BUIL DING MATERIAL WAS LYING IN THE PROPERTY BELONGING TO THE OWNERS, HAVE BEEN SOLD TO THE ASSESSEE FOR A SUM OF RS. 85, 000/- AND RS. 65,000/- RESPECTIVELY. THIS FACT WOULD ALS O SUPPORT EXPLANATION OF THE ASSESSEE THAT OWNERS HAVE REMOVE D SOME CONSTRUCTED PORTION IN THE PROPERTY AS THEY WERE AB OUT TO RAISE FRESH CONSTRUCTION IN THE PROPERTY AT THE TIM E OF SALE OF THE PROPERTY TO THE ASSESSEE. 9(I) THERE IS NO DENYING FACT THAT ASSESSEE ALSO RA ISED PART CONSTRUCTION IN THE PROPERTY BY SPENDING THE AMOUNT OF RS. 7.85 LACS IN PROPERTY IN QUESTION WITHIN THE PERIOD PRESCRIBED IN LAW. MAY BE CONSTRUCTION WAS NOT FULL Y COMPLETED, BUT SECTION 54 IS A BENEFICIAL PROVISION PROMOTING THE CONSTRUCTION OF RESIDENTIAL HOUSE. T HEREFORE, THE PROVISION HAS TO BE CONSTRUED LIBERALLY FOR ACH IEVING THE PURPOSE FOR WHICH IT WAS INCORPORATED IN THE STATUT E. THE INTENTION OF THE LEGISLATURE WAS TO ENCOURAGE INVES TMENTS IN ACQUISITION OF RESIDENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT THE REQUIREMENT O F THE LAW. WHEN SECTION 54 TALKS OF HOUSE PROPERTY, IT D OES NOT MEAN AN INDEPENDENT AND COMPLETE HOUSE IN THE SENSE IN WHICH THE TERM USED TO BE UNDERSTOOD ONCE UPON A T IME. THE DECISIONS REFERRED TO ABOVE, THEREFORE, SQUAREL Y APPLY TO THE FACTS OF THE CASE. THEREFORE, MERELY BECAUSE CONSTRUCTION WAS NOT COMPLETE IN ALL RESPECT AND IT WAS NOT 12 IN A FIT CONDITION TO BE OCCUPIED WITHIN THE STIPUL ATED PERIOD, WOULD NOT DISENTITLE THE ASSESSEE FROM CLAI MING THE BENEFIT UNDER SECTION 54 OF THE ACT. THE ABOVE FAC TS, THEREFORE, CLEARLY PROVE THAT ASSESSEE HAD INTENTIO N TO PURCHASE ONLY PLOT BECAUSE OLD STRUCTURE AND DEBRIS WERE REMOVED BY THE OWNER AND ASSESSEE WANTED TO RAISE T HE CONSTRUCTION IN THE PLOT ITSELF WHICH WAS ALSO RAIS ED PARTLY. THE INCOME TAX AUTHORITY SHALL HAVE TO ACT ON HUMAN PROBABILITIES BY CONSIDERING SURROUNDING CIRCUMSTAN CES. 10. I MAY REFER TO BOARDS CIRCULAR NO. 667 DATED 18.10.1993 AS UNDER : 431. WHETHER, IN CASES WHERE THE RESIDENTIAL HOUSE IS CONSTRUCTED WITHIN THE SPECIFIED PERIOD, THE COST OF SUCH RESIDENTIAL HOUS E CAN BE TAKEN TO INCLUDE THE COST OF THE PLOT ALSO 1. SECTIONS 54 AND 54F PROVIDE FOR A DEDUCTION IN C ASES WHERE AN ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER THE DATE ON WHICH THE TRANSFER OF A CAPITAL ASSET TAKES PLACE, PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENT IAL HOUSE. THE QUANTUM OF DEDUCTION IS ITSELF DEPENDENT UPON THE COST OF SUCH NEW ASSET. IT HAS BEEN REPRESENTED TO THE BOARD THAT THE COST OF CONSTRUCT ION OF THE RESIDENTIAL HOUSE SHOULD BE TAKEN TO INCLUDE THE COST OF THE PLOT AS, IN A SITUATION OF PURCHASE OF ANY HOUSE PROPERTY, THE CONSIDERATION PAID GENERALLY IN CLUDES THE CONSIDERATION FOR THE PLOT ALSO. 2. THE BOARD HAS EXAMINED THE ISSUE WHETHER, IN CAS ES WHERE THE RESIDENTIAL HOUSE IS CONSTRUCTED WITHIN THE SPECIFIED PERIOD, T HE COST OF SUCH RESIDENTIAL HOUSE CAN BE TAKEN TO INCLUDE THE COST OF THE PLOT ALSO. THE BOARD ARE OF THE VIEW THAT THE COST OF THE LAND IS AN INTEGRAL PART OF THE COST OF THE RESIDENTIAL HOUSE, WHETHER PURCHASED OR BUILT. ACCORDINGLY, IF THE AMOUNT OF CAPITAL GAIN FOR THE PURPOSES OF SECTION 54, AND THE NET CONSIDERATION FOR THE PURPO SES OF SECTION 54F, IS APPROPRIATED TOWARDS PURCHASE OF A PLOT AND ALSO TOWARDS CONSTRU CTION OF A RESIDENTIAL HOUSE THEREON, THE AGGREGATE COST SHOULD BE CONSIDERED FO R DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 54/54F, PROVIDED THAT THE A CQUISITION OF PLOT AND ALSO THE CONSTRUCTION THEREON, ARE COMPLETED WITHIN THE PERI OD SPECIFIED IN THESE SECTIONS. 13 CIRCULAR : NO. 667, DATED 18-10-1993. 11. IN THIS CIRCULAR, IT IS PROVIDED THAT AGGREGATE COST OF PLOT AND CONSTRUCTION SHOULD BE CONSIDERED FOR DETE RMINING THE QUANTUM OF DEDUCTION UNDER SECTION 54 OF THE AC T. IT WOULD ALSO SUPPORT THE CASE OF THE ASSESSEE FOR CLA IM OF DEDUCTION UNDER SECTION 54 OF THE ACT. THUS, THE A SSESSEE PRODUCED SUFFICIENT AND RELIABLE EVIDENCE ON RECORD TO PROVE THAT PRACTICALLY THE ASSESSEE PURCHASED THE PLOT AN D RAISED CONSTRUCTION THEREON FOR RESIDENTIAL PURPOSES. THE ASSESSEE, THEREFORE, WOULD BE ENTITLED FOR DEDUCTIO N UNDER SECTION 54 OF THE ACT. 12. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE TH E ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 24,74,000/- AS IS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(APPEALS). 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 30 TH AUGUST,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD