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| The Tax Publishers2020 TaxPub(DT) 2799 (Del-Trib) : (2021) 187 ITD 0283 : (2020) 084 ITR (Trib) 0268 INCOME TAX ACT, 1961
Section 54
Even if two flats are sold in same year, and capital gain of both the flats is invested in one residential house, exemption under section 54 will be available in case of sale of each flat provided the time limit of construction or purchase of the new residential house is fulfilled in case of each flat sold.
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Capital gains - Deduction under section 54 - Allowability - Assessee sold two residential flats by two separate transfer deeds and in turn purchased one residential flat
During year under consideration, assessee sold two residential flats by two separate transfer deeds and in turn purchased one residential flat. Accordingly, he calculated capital gain from the sale of two flats and claimed exemption under section 54 in respect of investment made in new residential flat. AO, however, noted that the exemption under section 54 in respect of the aggregate amount of capital gain and aggregate value of investment in residential value was not found allowable under section 54 because the capital gain in respect of sale of one property could be treated exempt against purchase of one property. Assessee contended that there was no restriction under section 54 that capital gain arising from two residential houses could not be invested in one residential house. Held: There was no restriction under section 54 that capital gain arising from sale of more than one residential house could not be invested in one residential house. Further, it is settled that even if two flats are sold in same year, and capital gain of both the flats is invested in one residential house, exemption under section 54 will be available in case of sale of each flat provided the time limit of construction or purchase of the new residential house is fulfilled in case of each flat sold. In instant case, the flats sold by assessee were modified and converted two units as one residential unit. He further sold both the flats through two separate sale deeds and purchased a residential flat within the permitted time period from the sale of the residential flats. Accordingly, the assessee would be entitled to claim deduction under section 54.
Followed:Dy. CIT, Central Circle-32 v. Ranjit Vithaldas [ITA No. 7443/Mum./2002 vide Order, dated 22-6-2012] : 2012 TaxPub(DT) 2528 (Mum-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
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