COMMISSIONER OF INCOME TAX-V Vs. SHRI ASHOK KUMAR RALHAN
January, 04th 2014
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ INCOME TAX APPEAL NO. 505/2013
Date of decision: 22nd November, 2013
COMMISSIONER OF INCOME TAX-V
Through Mr. N.P. Sahni, Sr. Standing
Counsel, Mr. P. Roy Chaudhuri & Mr. Nitin
SHRI ASHOK KUMAR RALHAN
Through Mr. Prakash Kumar, Advocate.
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
SANJIV KHANNA, J. (ORAL):
This appeal by the Revenue under Section 260A of the Income
Tax Act, 1961 (Act, for short), deserves dismissal at the admission
2. The Assessing Officer made two additions. Firstly, benefit
under Section 54F of the Act was denied and capital gains of
Rs.51,71, 994/- was brought to tax. The second addition made by the
Assessing Officer of Rs.19,75,410/- under Section 68 of the Act was
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deleted by the CIT(Appeals) recording that the said addition was
entirely unjustified. The Assessing Officer himself in the remand
report accepted the factual position.
3. The assessee, an individual, had sold property No. A-173,
Kaushambi, Ghaziabad on 5th October, 2006 for Rs.45 lacs. Since the
stamp duty was paid on circle rates, the assessee had declared capital
gains of Rs.51,71,994/- as per Section 50C(1). The said sale
consideration has not been disturbed or objected to by the Assessing
4. The Assessee had purchased a fully built up property measuring
275 square yards C-7, Anand Vihar, Delhi for Rs.50 lacs on 21st
December, 2004. The assessee was sanctioned loan of Rs.80,00,000/-
from a nationalised bank on 15th December, 2004 by mortgaging this
5. The Assessing Officer observed that as per Section 54F the
assessee was required to complete construction of a residential house
within three years from the date of the sale of the capital asset. The
Assessing Officer held that there was neither the need for the assessee
to reconstruct nor renovate the purchased property as it was already
fully constructed. He referred to the bills produced by the respondent-
assessee and has recorded that eight bills pertain to period prior to the
date of purchase, i.e., 21st December, 2004. (30th November, 2004 to
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19th December, 2004).
6. The Assessing Officer did not disturb or dispute the quantum of
money spent on construction as declared by the assessee at
Rs.59,98,451/-. The total amount spent on construction itself, as is
noticeable, is substantial and even more than the purchase value as
declared. The loan with mortgage was obtained by the respondent-
assessee a few days before execution of the sale deed.
7. The CIT(Appeals) permitted the assessee to adduce additional
evidence and has referred to the remand reports given by the Assessing
Officer. He specifically recorded the difference in the earlier
construction as per the plan sanctioned by the DDA on 6 th April, 1989
and the new construction. It is evident that the property was initially
constructed way back in 1989. The first appellate authority has
highlighted the new construction, the area constructed and mentioned
the difference between the old and new construction. The appellate
authority has referred to the notice issued by the Assistant Engineer
(Building), Shahdara (South Zone), Municipal Corporation of Delhi
dated 24th August, 2006 mentioning unauthorised construction,
deviations from sanctioned building plans and that the construction
should be demolished. The first appellate authority relied on certificate
issued by the Architect, who had stated that the earlier structure was
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demolished and thereafter, new construction was made on the plot.
After examining the factual matrix, the first appellate authority reached
the conclusion that it was a case of new construction after demolition.
The said factual finding has been affirmed by the tribunal. The word
"construction" in Blacks' Law Dictionary, 6th Edition at page 312 has
been defined to mean to build; erect; put together; make ready for use.
The word "construct" is distinguishable from maintaince, which means
to keep up, to keep from change, to preserve. The word "construction"
for the purpose of Section has to be given realistic, practical and a
pragmatic meaning keeping in mind the object and purpose of the
provision. Section 57F is a beneficial provision as an earlier capital
asset, which is sold, is replaced by a new capital asset in form of a
residential house, which should be purchased or constructed within the
time period stipulated.
8. We need not examine the contention of the Revenue that cases
of renovation or even extension are not covered by the term
"construction" in Section 54F of the Act. The said issue is left open to
be decided in an appropriate case. In the case at hand, we find that the
factual finding recorded by the first appellate authority and affirmed
by the tribunal show that it is a case of "construction" under Section
54F of the Act.
9. Section 54F of the Act requires that construction should be
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carried out within a period of three years from the date of sale of the
capital asset. In the present case, the construction was carried out
within the outer limit of three years. On this aspect, there is no
11. The appeal is accordingly dismissed.
SANJIV KHANNA, J.
SANJEEV SACHDEVA, J.
NOVEMBER 22, 2013
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