Assessee wins appeal for tax exemption on multiple properties under Section 54F

The Tribunal allowed the appeal of the assessee, ruling that the assessee is eligible for the claimed exemption under Section 54F of the Income-tax Act. The Tribunal held that the assessee's investment in multiple residential units, joint ownership of the new residential property, and pre-existing ownership of an inherited residential property did not disqualify her from claiming the exemption. The Tribunal directed the Assessing Officer to allow the exemption, setting aside the orders of the lower authorities.

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Issues Involved:
1. Computation of capital gain.
2. Exemption claimed under Section 54F of the Income-tax Act, 1961.
3. Ownership and investment in multiple residential units.
4. Joint ownership of the new residential property.
5. Pre-existing ownership of inherited residential property.

Detailed Analysis:

1. Computation of Capital Gain:
The primary issue in this appeal concerns the computation of capital gain arising from the sale of two commercial properties by the assessee, which were sold for a total consideration of Rs. 90,00,000/-. The properties were sold on 07.05.2010 and 28.10.2010 for Rs. 51,00,000/- and Rs. 39,00,000/- respectively. The assessee invested the entire sale consideration in two residential flats.

2. Exemption Claimed under Section 54F of the Income-tax Act, 1961:
The assessee claimed exemption under Section 54F of the Income-tax Act, 1961, which allows for exemption of capital gains if the sale proceeds are invested in a residential house. The key contention was whether the purchase of two residential flats qualifies for this exemption. The Tribunal referred to the amendment in Section 54F by the Finance (No.2) Act, 2014, effective from 01.04.2015, which specifies "one residential house." However, for the assessment year 2011-12, the Tribunal held that the amendment does not apply, and based on the Madras High Court judgment in CIT v. V.R. Karpagam, the assessee is eligible for exemption even if the investment is in multiple residential units.

3. Ownership and Investment in Multiple Residential Units:
The Assessing Officer initially rejected the exemption claim on the grounds that the assessee purchased more than one residential house. The Tribunal, however, clarified that the amendment specifying "one residential house" was not applicable for the assessment year in question. Thus, the investment in multiple residential units did not disqualify the assessee from claiming the exemption.

4. Joint Ownership of the New Residential Property:
Another objection raised was that the new residential properties were purchased in the joint names of the assessee and her daughter. The Tribunal referred to the Delhi High Court judgment in CIT v. Kamal Wahal, which held that purchasing a house in joint names does not disqualify the assessee from claiming exemption under Section 54F, provided the investment is made for the benefit of the assessee. The Tribunal found this applicable and overruled the Assessing Officer's objection.

5. Pre-existing Ownership of Inherited Residential Property:
The Assessing Officer contended that the assessee was not eligible for exemption as she owned another residential property inherited from her father. The Tribunal examined the proviso to Section 54F, which disallows exemption if the assessee owns more than one residential house other than the new asset on the date of transfer. It was found that the assessee only owned one inherited property and no other residential house. Therefore, the Tribunal concluded that the proviso did not apply in this case, allowing the exemption.

Conclusion:
The Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to allow the exemption under Section 54F of the Act. The appeal of the assessee was allowed, and it was pronounced that the assessee is eligible for the claimed exemption.

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