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| The Tax Publishers2020 TaxPub(DT) 3287 (Del-Trib) INCOME TAX ACT, 1961
Section 54F
Where capital gain realized on sale of a land was invested by assessee in two distinctly identifiable residential properties at separate locations, such properties could not be termed as 'a residential house' and hence, the AO was justified in restricting the assessee's claim exemption under section 54F to investment in one residential property only.
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Capital gains - Deduction under section 54F - Allowability - Investment in two distinctly identifiable residential properties at separate locations
Assessee sold a land and capital gain realized on such sale was invested in purchase of a residential flat and construction of a new residential house over and above his existing residential property. Accordingly, the assessee claimed exemption under section 54F on account investment in said two assets. AO restricted the exemption to investment in the flat only, and denied the exemption in respect of construction in the existing residential property taking a view that the exemption would be limited to investment in one residential property. Further, CIT(A) denied the deduction completely, for violation of requisite conditions stipulated in clause (a)(ii) to section 54F. Held: Assessee cited various cases to justify his claim. On going through such cases, it was found that in all such cases, deduction under section 54F was granted where multiple units were either adjacent or on the same floor or on the different floors or multiple units in the same residential complex owing to division of property. Whereas in instant case, there was no such division of property among the members and the investments were at different locations. Further, no case law had been brought by the assessee to the notice of the Tribunal wherein two distinctly placed properties had been allowed for claim of deduction under section 54F. Keeping in view, the geographical distances, the investment in two distinctly identifiable properties at separate locations could not be termed to be 'a residential house' even after resorting to liberal interpretation of 'a residential unit'. Therefore, the AO was justified in restricting the exemption section 54F to investment in the flat only.
Distinguished:CIT v. Gita Duggal (2013) 257 CTR 208 (Del) : 2013 TaxPub(DT) 0960 (Del-HC) CIT v. Syed Ali Adil (2013) 260 CTR 219 (AP) : 2013 TaxPub(DT) 1290 (AP-HC) CIT v. Sardarmal Kothari & Anr. (2008) 302 ITR 286 (Mad) : 2008 TaxPub(DT) 2081 (Mad-HC) D Anand Basappa. v. ITO (2004) 91 ITD 53 (Bang) : 2004 TaxPub(DT) 1030 (Bang-Trib)
REFERRED :
FAVOUR : Partly in favour of assessee
A.Y. :
INCOME TAX ACT, 1961
Section 37(1)
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