S.54 Date of commencement of construction not material for claiming deduction

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IN THE ITAT AHMEDABAD BENCH ‘C’

Assistant Commissioner of Income-tax, Circle – 7

v.

Subhash Sevaram Bhavnani

IT APPEAL NO. 928 (AHD.) OF 2012

[ASSESSMENT YEAR 2008-09]

JUNE 29, 2012

Assessee sold his residential house on consideration of sum of Rs. 35,00,000/- on 03.11.2007 and has spent a sum of Rs. 30,44,695/- on purchase of plot and on construction of a residential house thereon. The construction of this residential house was completed in the month of March, 2008. Since the construction was completed within three years of transfer of capital asset, the ratio as laid down in the case of Subramaniya Bhat (supra) is applicable to the facts of this case as it has been clearly held in that case that for claiming deduction u/s 54, the construction of the house should be completed within the prescribed time limit and date of commencement of construction is not material for claiming deduction.

We further find that reliance placed by the A.O. on the decision of jurisdictional High Court in the case of Smt. Shantaben P. Gandhi (supra) was misplaced because the facts in that case are different from the facts of this case. In that case the construction of residential house was completed before the transfer of the capital asset and accordingly, the Hon’ble Gujarat High Court held that conditions, as laid down u/s 54 was not fulfilled while in the instant case construction of the residential house was completed after the transfer of capital asset. Therefore, the ratio as laid down in the case of Smt. Shantaben P. Gandhi (supra) is not applicable to the facts of this case.