Assessee qualifies for tax exemption under Section 54F for new house purchase, successful appeal removes Assessing Officer's addition.

The Tribunal determined that the assessee qualified for exemption under Section 54F of the Income Tax Act as he did not own more than one residential house at the time of the original asset transfer. The investment in a new residential house was deemed compliant with Section 54F requirements, entitling the assessee to the exemption for long-term capital gains. Consequently, the appeal was successful, and the Assessing Officer's addition was entirely removed.

---

---

Issues Involved:
1. Eligibility for exemption under Section 54F of the Income Tax Act, 1961.
2. Ownership status of the properties at the time of transfer of the original asset.
3. Compliance with the conditions prescribed under Section 54F regarding investment in a new residential house.

Detailed Analysis:

1. Eligibility for Exemption under Section 54F:
The primary issue was whether the assessee was eligible for exemption under Section 54F of the Income Tax Act, 1961. The assessee claimed exemption for the long-term capital gain (LTCG) earned from the sale of land, asserting that the amount was invested in a new residential house. The Assessing Officer and the Commissioner of Income Tax (Appeals) [CIT(A)] denied the exemption, arguing that the assessee owned more than one residential house at the time of the transfer of the original asset, which disqualified him from claiming the exemption under Section 54F.

2. Ownership Status of the Properties:
The assessee contended that he did not own more than one residential house on the date of the transfer of the original asset (05/06/2008). The properties in question were:
- A self-occupied house at S-225, Mahaveer Nagar, Jaipur.
- A business office at Heritage City, Gurgaon, with a 50% share.
- Bookings of flats at ATS-Noida and ATS-Chandigarh, which were not yet possessed or owned by the assessee.
- A new residential house booked at Emaar-MGF, Gurgaon, after the date of transfer.

The Tribunal found that the assessee did not possess ownership or title of the flats at ATS-Noida and ATS-Chandigarh on the relevant date, as these were merely bookings and not completed residential houses. Thus, the assessee owned only one residential house on the date of transfer, fulfilling the condition under Section 54F.

3. Compliance with Section 54F Conditions:
The Tribunal examined whether the assessee had complied with the conditions of Section 54F regarding the investment in a new residential house. The assessee had invested Rs. 89.66 lakhs in a residential flat at Emaar-MGF, Gurgaon, and deposited Rs. 40 lakhs in a Capital Gain Account Scheme. The Tribunal noted that the investment in the new residential house was made within the stipulated period, and the payment to the builder was considered sufficient compliance for claiming exemption under Section 54F, as clarified by CBDT Circulars No. 471 and 672.

Conclusion:
The Tribunal concluded that:
- The assessee did not own more than one residential house on the date of transfer of the original asset.
- The investment in the new residential house was made in compliance with the provisions of Section 54F.
- The assessee was entitled to the exemption under Section 54F for the LTCG of Rs. 2,04,37,654/-.

The appeal of the assessee was allowed, and the entire addition made by the Assessing Officer was deleted.

---