ITAT affirms CIT(A)'s decision on section 54F exemption, one unit only, dismissing revenue's appeal.

The ITAT upheld the CIT(A)'s decision to allow exemption u/s 54F for one residential unit and dismissed the revenue's appeal. The ITAT concluded that the exemption under sections 54 and 54F was intended for investment in one single residential house only, directing the AO to allow the exemption in respect of one residential unit.

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Issues:
1. Validity of reassessment and chargeability of capital gains
2. Claim of exemption u/s 54F for entire capital gains

Analysis:

Issue 1: Validity of reassessment and chargeability of capital gains
The appeal was filed by the revenue against the order of the Ld. Commissioner of Income-Tax (Appeals) for the assessment year 2008-09. The assessee entered into a joint development agreement with a builder, but claimed that no transfer took place during the relevant assessment year. The Assessing Officer (AO) issued a notice u/s 148, and after multiple correspondences, completed the assessment determining a taxable income. The assessee challenged the assessment order before the CIT(A), raising objections to the reassessment and chargeability of capital gains. The CIT(A) allowed exemption u/s 54F for one residential unit based on the development agreement. The revenue contended that since the assessee did not make any claim before the AO, she could not claim the benefit at the appellate stage. However, the ITAT held that the CIT(A) had the power to entertain the claim of deductions/exemptions based on facts existing at the time of assessment. The ITAT upheld the CIT(A)'s decision to allow the exemption u/s 54F for one residential unit.

Issue 2: Claim of exemption u/s 54F for entire capital gains
The assessee claimed to have converted the entire first floor into one residential unit for self-occupation. The CIT(A) relied on a special bench decision and allowed the exemption u/s 54F for a single residential unit. The ITAT analyzed the legislative intent behind the use of the words "a" and "any" in relevant sections and concluded that the exemption under sections 54 and 54F was intended for investment in one single residential house only. The CIT(A) directed the AO to allow the exemption in respect of one residential unit. The ITAT upheld the CIT(A)'s decision, stating that the order did not require any interference, and dismissed the revenue's appeal.

In conclusion, the ITAT upheld the CIT(A)'s decision to allow exemption u/s 54F for one residential unit and dismissed the revenue's appeal.

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