INCOME TAX ACT, 1961

Section 54F

Capital Gain - Exemption under section 54F - Assessee purchased the property by means of two sale deed -

Assessee had sold a property and purchased a residential house by means of two registered documents claiming exemption under section 54F. Sale consideration received by the assessee by sale of property to the extent of Rs. 79,97,500 was utilized for purchasing the new asset. AO found that since assessee purchased the property by means of two registered sale deed, property relating to second registered document might not be appurtenant to building which was purchased through the original registered sale deed. Merely because two sale deeds were executed at the insistence of the vendor probably with an intention to avoid deduction of tax, land portion relating to second document could not be construed to be a land not appurtenant to the building. Held: A harmonious reading of agreement for sale of the property and registered sale deed clearly indicates that assessee intended to purchase the entire property including the vacant land from the vendor. There can be various reasons for executing the two sale deeds. One of the reasons presumably as rightly submitted by assessee that vendor might have insisted for execution of two sale deeds in order to avoid deduction of tax at source. Vacant site purchased by assessee which was adjacent to residential house was necessary for convenient enjoyment of the building. Vacant site adjacent to existing building which was purchased by assessee through the second sale deed also had to be construed as land appurtenant to residential house and hence eligible for exemption under section 54F.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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