INCOME TAX ACT, 1961

Section 54F

Capital gains - Deduction under section 54F - Construction of residential unit within stipulated period -

Assessee sold immovable property comprising of three pieces of land. Later, she purchased the land with AC sheets shed and gave said land for development to M/s. S and claimed exemption under section 54F. AO held that since assessee had purchased the land along with shed on 7-2-2009 and transferred the said land on 29-7-2010, it had violated the provisions of section 54F and accordingly withdrawn the deduction allowed. Held: From combined reading of development agreement, MoU and facts, it was clear that assessee had sold three pieces of land and constructed a residential unit within the time specified in section 54F. The entire transaction was completed within the time allowed under section 54F which clearly reveals that there were no separate transactions. By any stretch of imagination AC shed cannot be stated to be a residential house. Therefore, assessee had sold three pieces of land and constructed a single residential unit and thus, was entitled for deduction under section 54F.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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