Sec. 54F of Income Tax Act, 1961— Exemption —Assessee is eligible for deduction under section 54F in the facts of the present case because this is a case of purchase of new residential house and not a case of construction of a new house

Facts: Assessee filed his Return of Income declaring an income of Rs. 1,78, 97,540. During the Financial Year 2015-16 the assessee sold his residential site for Rs. 1,31,67,000, 130000 equity shares of Ficus Pax Limited for Rs. 2,40,50,000 and claimed the benefit of exemption u/s 54F against the purchase of a villa on 16-07-2015 for Rs. 1,48,49,300. AO denied the exemption claimed by assessee. CIT(A) appeal also denied the claim of assessee on the ground that it is a case of construction of residential property and since the construction was before the date of sale of old assets on which capital gain has arisen, deduction is not allowable under section 54F. Being aggrieved, assessee went on appeal before Tribunal.

Held, that it is a case of purchase of residential house property which was purchased on 16.07.2015 as noted by learned CIT(A) and the date of sale / transfer of the capital asset on which the capital gain has arisen is 28.08.2015 / 30.09.2015 and therefore, the purchase of residential house is within the period of one year before the date of transfer and therefore, deduction under section 54F is allowable.It is already held that the assessee is eligible for deduction under section 54F in the facts of the present case because this is a case of purchase of new residential house and not a case of construction of a new house but regarding the quantum of deduction allowable to the assessee under section 54F, we restore the matter to the file of CIT(A) for a fresh decision by way of speaking and reasoned order as per law, after providing adequate opportunity of being heard to both sides. - BHARTUR RAMASWAMY VIJAYENDRA V/s ASSTT. CIT - [2020] 26 ITCD Online 063 (ITAT-BANGALORE)