Saturday, February 15, 2014

Amount of investment and not extent of construction is relevant to compute relief under sec. 54F

Section 54F relief was available if sale consideration was invested in purchase of residential building as per provisions; in such a case extent of construction of residential building was irrelevant.
The High Court held in favour of assessee as under:
1)  What the law (i.e., section 54F) contemplates is, after selling the property, if the assessee invests the sale consideration in purchase of a residential property, he is entitled to exemption under section 54F;
2)  What should be the extent of construction of residential building, what facilities should be provided in such constructions to be eligible for the exemption, have not been set out in the Act;
3)  The Authorities have ensure, whether what is purchased is a residential construction or not?;
4)  If the material on record showed that prior to the sale, the vendor lived there and had sold the site along with the residential construction, merely because the property was not suitable to the assessee and construction materials were kept there, would not be a valid grounds to deny exemption under section 54F;

5) Thus, assessee was entitled to avail of relief under section 54F – CIT v. Dr. R. Balaji [2014] 41 411 (Karnataka)