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Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI
Before: SHRI N.R.S.GANESAN & SHRI ABRAHAM P. GEORGE]
पीलाथ" क" ओर से/ Appellant by : Shri D.Anand, Advocate ""यथ" क" ओर से /Respondent by : Shri V.M.Mahidar, JCIT सुनवाई क" तारीख/Date of Hearing : 18.12.2018 घोषणा क" तारीख /Date of Pronouncement : 19.12.2018 आदेश आदेश / O R D E R आदेश आदेश PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: Assessee in this appeal, which is directed against an order dated 26.06.2018 of Commissioner of Income Tax (Appeals)-7, Chennai, is aggrieved on her claim for deduction under section 54 of the Income tax Act, 1961 (in short ‘the Act’) being denied considering it to be not eligible for such claim.
Learned Counsel for the assessee submitted that assessee had sold a property bearing no.C-3/2, Bharathidasan Colony, K.K.Nagar, Chennai :- 2 -: for a consideration of ₹35,00,000/-on 12.03.2014. As per Learned AR, the said flat was purchased by the assessee on 22.07.2004 for a price of ₹6,50,000/-. According to the Learned AR, assessee had claimed deduction under section 54 of the Act, on the capital gains, for an investment made in construction of residential flat at a property at 435, Mint Street, Chennai-79. As per the Learned AR, assessee had entered into construction agreement dated 28.03.2014 with a building contractor and paid ₹18,00,000/- and ₹11.25 lakhs towards construction cost.
Contention of the Learned AR was that lower authorities did not allow the claim of the assessee taking a view that the claim was on improvement.
According to the Learned AR, it was true that property wherein construction was done by the assessee was purchased by it on 29.07.2002 along with building thereon. However, according to him, the said building was demolished and deduction claimed under section 54 of the Act was on the new construction. Contention of the Learned AR was that learned CIT(A) also declined to consider the claim of the assessee taking a view that assessee was only claiming the cost of improvement of the property, whereas deduction was available only for investment in a new residential house. Further contention of the learned AR was that assessee has produced before the learned CIT(A), an approved plan for demolition and reconstruction of the building at Mint Street. As per the Learned AR, the said plan which had received approval from the :- 3 -: competent authority on 14.03.2012 clearly indicated that earlier building was demolished and new construction put up, and thus, according to the learned AR, assessee was entitled for claim of deduction under section 54 of the Act.
Per contra, Learned DR, submitted that assessee did not produce any evidence before the lower authorities to prove that there was a new construction of residential house. As per the learned DR, it was only an improvement of the existing building and therefore the assessee was not eligible for claiming deduction under section 54 of the Act.
We have heard the rival contentions. Plan showing proposed demolition and reconstruction of the building at No.Old No.198, New No.435, Mint Street, George Town, Chennai-79 which has been placed on record by the learned AR, shows that approval from the competent authority was received on 14.03.2012. No doubt, if the assessee had done only an improvement to an existing house, she would not be eligible for deduction under section 54 of the Act. However, where assessee had already demolished the existing construction and built a new residential house, she will be entitled to deduction under section 54 of the Act. We are of the opinion that the lower authorities did not go into this aspect. In the circumstances, the matter requires a revisit by the :- 4 -:
Assessing Officer. We set aside the orders of the lower authorities and remit the issue regarding eligibility of the assessee for deduction under section 54 of the Act back to the file of the Assessing Officer for consideration afresh in accordance with law.
The appeal of the assessee is allowed for statistical purposes.