Section 234b

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PUNIT KUMAR BHANSALI (Querist)
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02 January 2012 sir,a LTCG has been arisen to an assesse. he has filed his income claiming deduction u/s 54 that he will construct residential prop and godowns. but the assesse constructed godowns and due to paucity of funds could not construct residential prop. so the AO has disallowed and levied a penalty u/s 234b. sir the period of 3 years has expired 27-07-2008 to 28-07-2011. and by the end of this period he had constructed godwans..sir what is the solution to this answer me suuporetd with a case law for ref...please sie ...sir please give me a circular relating to this issusse as early as possible

CS, Deepak Pratap Singh

CS, Deepak Pratap Singh (Expert)
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02 January 2012 Dear friend, according to the provisions of Section 54 of the Income Tax Act, 1961 the property to be purchase must be residential property and same should be purchased within a period of three years from the date of sale.Now in your case the A.O. is right to disallow the investment.