Tribunal remits building purpose decision, multiple flats exemption under section 54F allowed on appeal.

The Tribunal remitted the matter to the Assessing Officer to determine if the building was constructed for residential purposes, emphasizing that multiple flats in a building can still qualify for exemption u/s 54F. The Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to reevaluate the issue after providing a fair hearing to the appellant.

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Issues:
Denial of claim of exemption u/s 54F of the Act.

Analysis:
The appellant filed a return of income for the assessment year 2007-08, declaring long-term capital gains from the sale of two properties and claiming exemption u/s 54F of the Act. The Assessing Officer requested construction details and valuation reports for the newly acquired property. The appellant explained the construction of a residential building with her sister, claiming exemption based on the cost of construction. An Inspector of Income-tax reported that the building was used as a school, not a residential house. Consequently, the Assessing Officer disallowed the exemption. The CIT (A) upheld this decision ex parte, noting the building's commercial use as a school, not for residential purposes.

The appellant contested these findings, arguing that the building was residential, supported by the registered valuer's report and the Inspector's statement that the school started six months after construction completion. The revenue authorities maintained that the building was commercial, not qualifying for exemption u/s 54F. The Tribunal noted that the crucial factor is whether the building was constructed for residential use, regardless of subsequent commercial use. Without the architectural plan, a conclusive decision was challenging. The Tribunal remitted the matter to the Assessing Officer for further investigation to determine if the building was constructed for residential purposes, emphasizing that multiple flats in a building can still qualify for exemption u/s 54F, citing a relevant court decision.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to reevaluate the issue after providing a fair hearing to the appellant.

Judgment:
The Tribunal, after thorough analysis, remitted the matter to the Assessing Officer to determine if the building was constructed for residential purposes, emphasizing that multiple flats in a building can still qualify for exemption u/s 54F.

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