2023 (5) TMI 1006 - AT - Income Tax

Assessee denied tax exemption under Section 54F for owning multiple houses.

The Tribunal allowed the Revenue's appeal, denying the assessee exemption under Section 54F of the Income Tax Act due to owning multiple residential ... Benefit of exemption u/s. 54F - Purchase of second residential house - assessee already owns one residential house in USA - Period of limitation for investment in the property within a period of three as mandated in section 54F - HELD THAT:- From the plain reading of the provisos (a) & (b) to section 54F it is clear that if the assessee owns more than one residential house other than the new asset on the date of transfer of original asset, the benefit of deduction u/s. 54F cannot be availed by the assessee. The Act is also silent on the fact whether the property should be situated in India or outside India. The submission of the DR also holds merit on the ground that the assessee is a co-owner of the property situated in USA which was evidenced by the property record details submitted by the Ld. DR. There is also merit in the argument of DR that the assessee habitually resides in the property situated in USA and has disclosed the address of that property in the assessee’s Passport. Contention of the Ld. AR that the property at USA is a Farm House cannot be accepted. Since the assessee owned one more residential house at the time of transfer of original asset, the assessee is not entitled to claim the benefit of deduction u/s. 54F of the Act. Hence, the Ground No.1 raised by the Revenue is allowed. Issues involved:The appeal filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-10, Hyderabad in ITA No. 0042/CIT(A)-10/2016-17/CIT(A), Hyd- 10/10040/2017-18, dated 23/01/2019 arising out of the order passed U/s. 143(3) r.w.s 147 of the Income Tax Act, 1961 [the Act] for the AY 2011-12.Issue 1 - Claim of Exemption U/s. 54F of the Act:The assessee, a resident of USA, sold certain immovable properties during the assessment year 2011-12 and claimed exemption U/s. 54F of the Act. The Ld. AO made additions including disallowance of exemption U/s. 54F. The assessee appealed before the Ld. CIT(A) who allowed the appeal. The Revenue appealed before the Tribunal challenging the allowance of exemption U/s. 54F.Details: The Revenue contended that the assessee owns a residential house in USA, making them ineligible for exemption U/s. 54F. The Ld. Authorized Representative argued that the property owned is a Farm House, not a residential house, and substantial investment was made for the property under exemption U/s. 54F. The Tribunal noted the provisions of section 54F, stating that if the assessee owns more than one residential house at the time of transfer of the original asset, the benefit of deduction U/s. 54F cannot be availed. Considering evidence presented by the Revenue, the Tribunal upheld the Revenue's appeal, denying the exemption U/s. 54F to the assessee.Issue 2 & 3 - Investment Period for Exemption U/s. 54F:The Revenue raised grounds questioning the investment period for exemption U/s. 54F, arguing that the investment should be made within the stipulated time frame. However, as the Tribunal denied the exemption based on the ownership of multiple residential houses, the adjudication of these grounds became irrelevant and were dismissed.Details: The Tribunal dismissed grounds 2 & 3 raised by the Revenue, as the denial of exemption U/s. 54F based on the ownership of more than one residential house made the discussion on the investment period inconsequential. The Tribunal allowed the appeal of the Revenue based on the ineligibility of the assessee to claim exemption U/s. 54F.In conclusion, the Tribunal allowed the appeal of the Revenue, denying the exemption U/s. 54F to the assessee due to the ownership of multiple residential houses, as per the provisions of the Income Tax Act, 1961.