The AO in the reassessment proceedings in [2019] 14 ITR (Trib)-OL 672 (ITAT[Jai]) while evaluating a transaction for capital gains tax held that no expenditure could be considered for exemption under section 54F which was incurred after the date of purchase. In this case the assessee purchased a row house constructed up to ground floor without plaster work, flooring, windows, gates, chowkhats, light and water fittings and others connections etc so that he incurred such additional costs to make the house habitable. Allowing such additional expenditure as qualifying for 54F rebate the bench held that it is expected of the AO to examine the state of the condition of the house purchased by the assessee and to further examine whether post purchase expenditure was incurred to make the house habitable or just to make the house more comfortable.
Often one ends up making immediate modifications to the acquired property say for instance new flooring or new set of fittings which may not fit into the qualifying expenditure for exemption.