S. 54F Exemption not available for addition / Modification / Extension made to existing house

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HIGH COURT OF KERALA

Pushpa

v.

Income tax Officer

IT APPEAL NOS. 30 & 32 OF 2012

AUGUST 22, 2012

 

Sec. 54F provides that capital gains on transfer of capital assets shall not be charged in cases of investment in residential house. The section pointedly says that such eligibility would be available if the assessee has, within the period prescribed, constructed, a residential house. For the purpose of that section, the residential house so constructed is referred to as new asset. The object sought to be achieved by that provision is to exclude capital gains on transfers of certain capital assets from being charged provided the new asset is a residential house. Obviously, a new house is not something which is either an extension or addition made to an existing structure. As noted by this Court in Mrs. Meera Jacob (supra), the exemption is available only when the investment is in the construction of a house and not for investment in modification or renovation. The Bench also held that it is the conceded position that the assessee has not constructed any separate apartment or house. Sec. 54F does not provide for exemption on investment in renovation or modification of an existing ‘ house and what gains exemption is only construction of a house