Facts
a) Assessee earned capital gain on sale of his tenancy
rights in a residential house property. He invested the sale proceeds to
purchase another house property which was in a dilapidated condition.
b) In order to make the said house fit for residential
purpose, assessee incurred certain expenses on repairs and painting work etc.
Assessee claimed deduction under section 54 in respect of expenses so incurred
to make the new house property habitable.
c) Assessing Officer (AO) contended that only the cost
paid for acquiring new residential house is to be taken for the purposes of
granting benefit under section 54 and not cost incurred towards the improvement
of the same. Thus, the claim of the assessee towards cost of making a new house
property habitable was disallowed.
d) The CIT(A) confirmed the order of the AO. Aggrieved
by the order of the AO, assessee filed the instant appeal before the tribunal.
The tribunal held in favour of assessee as under-
