November 2018

Sections 45 and 54(1) Capital gain Exemption u/s. 54 Construction of residential house within stipulated time Exemption in respect of cost of new residential house Scope of section 54 Does not exclude cost of land from cost of residential house

K. B. BHUJLE
Advocate

13. C. Aryama Sundaram vs. CIT; 407 ITR 1 (Mad) :

Date of order: 6th August, 2018

A. Y. 2010-11

 

Sections 45 and 54(1) Capital gain Exemption u/s. 54    Construction of residential house within stipulated time Exemption in respect of cost of new residential house Scope of section 54 Does not exclude cost of land from cost of residential house

 

The assessee had sold a residential house property on 15/01/2010 for a total consideration of Rs. 12,50,00,000/- and the total long term capital gains was Rs. 10,47,95,925/. On 14/05/2007, the assessee had purchased a property with a superstructure thereon for a total consideration of Rs. 15,96,46,446/- and after demolishing the existing structure, the assessee constructed a residential house at a cost of Rs. 18,73,85,491/-. For the A. Y. 2010-11, the assessee had claimed the entire long term capital gains as exempt from tax u/s. 54 of Act. The Assessing Officer held that only that part of the construction expenditure that was incurred after the sale of the original asset was eligible for exemption u/s. 54 and based on records held that the cost of construction incurred after the sale of the original asset was Rs. 1,14,81,067/- and accordingly allowed exemption of the same amount.

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