2021 (12) TMI 932 - AT - Income Tax

Tribunal allows multiple residential flats for Section 54F exemption

The tribunal upheld the CIT(A)'s decision, allowing the assessee's claim under Section 54F of the Income Tax Act for multiple residential flats received ... Claim of section 54F deduction - CIT(A) directing the Assessing Officer to consider residential flats received as consideration as part of reinvestment for the purpose of Section 54F, when the assessee received multiple flats located on different floors separated by different blocks of a gated community / apartment complex - HELD THAT:- This tribunal’s recent common order in Revenue’s appeals in CIT Vs. Vittal Krishna, Conjeevaram [2013 (8) TMI 757 - ITAT HYDERABAD], CIT Vs. Syed Ali Adil [2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT], CIT Vs. Anand Basappa [2008 (10) TMI 99 - KARNATAKA HIGH COURT], CIT Vs. Gita Duggal [2013 (3) TMI 101 - DELHI HIGH COURT], Arun K. Thiagarajn Vs. CIT [2020 (6) TMI 513 - KARNATAKA HIGH COURT], CIT Vs. Gumanmal Jain [2017 (3) TMI 394 - MADRAS HIGH COURT], Tilokchand and Sons [2019 (4) TMI 713 - MADRAS HIGH COURT] to uphold the latter’s claim of section 54F deduction involving other family members. - Decided against revenue. Issues Involved:1. Validity of the CIT(A)'s direction to allow the assessee's claim under Section 54F of the Income Tax Act.2. Consideration of multiple residential flats received as part of reinvestment for Section 54F.3. Applicability of the decision in the case of Sri Syed Ali Adil.4. Interpretation of 'a residential house' under Section 54F before and after the amendment by Finance Act, 2014.Issue-wise Detailed Analysis:1. Validity of the CIT(A)'s direction to allow the assessee's claim under Section 54F of the Income Tax Act:The Revenue challenged the CIT(A)'s order directing the Assessing Officer (AO) to allow the assessee's claim under Section 54F. The CIT(A) had accepted the assessee's claim for exemption under Section 54F, which pertains to the reinvestment of capital gains in residential property. The CIT(A) referred to a similar case involving another family member, Muralidher Rao Vaddepalli, where the exemption was allowed. The CIT(A) concluded that the appellant’s case was identical, and thus, the exemption under Section 54F should be granted.2. Consideration of multiple residential flats received as part of reinvestment for Section 54F:The CIT(A) directed the AO to consider multiple residential flats received by the assessee as part of reinvestment for the purpose of Section 54F. The CIT(A) relied on several judicial precedents, including the jurisdictional High Court's decision in CIT vs. Syed Ali Adil, which held that exemption under Section 54F should be allowed even if the residential house consists of multiple units. The CIT(A) also noted that an amendment to Section 54F by the Finance Act, 2014, effective from 01.04.2015, clarified that the term 'a residential house' meant 'one residential house,' indicating that prior to this amendment, the section did not restrict the investment to only one residential house.3. Applicability of the decision in the case of Sri Syed Ali Adil:The Revenue argued that the CIT(A) erred in relying on the decision of the Hon'ble AP High Court in the case of Sri Syed Ali Adil, claiming that the facts of the present case were distinguishable. However, the CIT(A) found that the principles laid down in Syed Ali Adil's case were applicable, as it established that exemption under Section 54F could be claimed for multiple residential units. The CIT(A) supported this position by referencing other judicial decisions that upheld similar interpretations.4. Interpretation of 'a residential house' under Section 54F before and after the amendment by Finance Act, 2014:The CIT(A) addressed the legislative intent behind the amendment to Section 54F by the Finance Act, 2014, which substituted 'a residential house' with 'one residential house in India' effective from 01.04.2015. The CIT(A) interpreted that prior to this amendment, the law did not restrict the exemption to a single residential house. Therefore, the assessee was entitled to claim exemption for multiple residential flats received as part of the reinvestment.Conclusion:The tribunal upheld the CIT(A)'s findings, affirming that the assessee was eligible for exemption under Section 54F for multiple residential flats. The tribunal cited its recent order and several judicial precedents to maintain judicial consistency and dismissed the Revenue's appeal. The order was pronounced in the Open Court on 29th November, 2021.