2019 (4) TMI 1016 - AT - Income Tax

Tribunal allows exemption under section 54F for investment in two residential houses within the same complex

Income Tax Officer, Ward-2 (3), Siliguri Versus Smt. Saroj Rani Gupta C/o. Jugal Kishore Gupta

Income Tax Officer, Ward-2 (3), Siliguri Versus Smt. Saroj Rani Gupta C/o. Jugal Kishore Gupta - TMI Issues Involved:1. Interpretation of section 54F of the Income Tax Act regarding deduction for a residential house.2. Determining if the purchase of two residential houses is allowable under section 54F.3. Analysis of the Assessing Officer's findings against the claim for exemption under section 54F.4. Evaluation of the order passed by the ld. CIT(Appeals) in relation to the assessee's claim for exemption under section 54F.Analysis:Issue 1: Interpretation of section 54FThe appeal raised the question of whether the phrase 'a residential house' in section 54F refers to one or more than one residential house independently located in the same building. The Assessing Officer disallowed the exemption under section 54F, citing that the two flats purchased by the assessee did not meet the criteria of one residential house. However, the ld. CIT(Appeals) allowed the claim based on the submission that the investment was made within the stipulated period, relying on judicial precedents. The Tribunal upheld the decision, emphasizing that the requirement was to invest in a residential house within the period, not necessarily complete its construction or take possession.Issue 2: Purchase of Two Residential HousesThe Assessing Officer contended that the assessee purchased two separate flats, which could not be treated as one residential house for claiming benefits under section 54F. The ld. CIT(Appeals) disagreed, stating that the term 'a residential house' should not be construed as singular, supported by legal judgments. The Tribunal concurred, citing rulings that the property purchased should be of a residential nature, even if consisting of multiple independent units, as long as they are part of the same residential complex.Issue 3: Findings of the Assessing OfficerThe Assessing Officer disallowed the claim under section 54F, emphasizing the failure to purchase a new flat within the stipulated period and the separate nature of the two flats purchased. The ld. CIT(Appeals) overturned this decision, highlighting that the investment was made within the timeframe required by the provision. The Tribunal upheld this decision, stating that the legal position supported the assessee's entitlement to exemption under section 54F.Issue 4: Order of the ld. CIT(Appeals)The ld. CIT(Appeals) allowed the claim for exemption under section 54F, considering the assessee's compliance with the investment requirement within the specified period. The Tribunal supported this decision, noting that the legal interpretations and precedents favored the assessee's eligibility for the exemption. The appeal by the Revenue was dismissed, affirming the decision of the ld. CIT(Appeals.In conclusion, the Tribunal upheld the decision of the ld. CIT(Appeals), ruling in favor of the assessee regarding the claim for exemption under section 54F, based on the interpretation of the provisions and relevant legal precedents.