2023 (11) TMI 646 - AT - Income Tax

Assessee denied section 54F exemption for owning two residential properties on asset transfer date despite gifting one property to sister

ITAT Cuttack denied exemption under section 54F to assessee who owned two residential properties at the beginning of the transfer date. Though assessee ... Exemption u/s. 54F denied - assessee owned more than one residential house as on the date of transfer of the asset - interpretation of the term “ on the date of transfer” - As per DR when the vacant plot was transferred, the assessee owned more than one residential house and consequently assessee was not entitled to exemption u/s. 54F - HELD THAT:- It is an admitted fact that the assessee has gifted residential house being Plot No.36B, Bharatpur, Bhubaneswar to his sister, Smt. Amitarani Giri, who was already in possession as a tenant of the property. It is also an admitted fact that the assessee was residing at Flat No.1, Maha Maya Enclave, which is a self occupied property. At the beginning of the specified date being 27.12.2014, admittedly, the assessee did hold two residential properties. However, at the end of the specified date, the assessee own only one residential house. A perusal of the proviso to section 54F shows that the wording used is “ on the date of transfer of the original asset”. Though ld AR has been vehement in his argument that the meaning of the term “on the date of transfer” should be considered as the end of the specified date of transfer, we are unable to accede to the arguments because the date of transfer starts at 00 hours and ends at 23.59 hours. On the date means any time during the date and at the beginning of the date of intended transfer of the original asset, the assessee did own more than one residential house. This being so, Assessing Officer and ld CIT(A) is right in denying the assessee the benefit of exemption u/s. 54F of the Act. It must be mentioned here that the interpretation brought out by ld AR itself lead to substantial question of law as to what exactly is the interpretation of the term “ on the date of transfer”. The interpretation given by ld AR though plausible is not acceptable to this Tribunal. Appeal of the assessee stands dismissed. Issues Involved:The appeal concerns the allowance of claim of exemption u/s. 54F of the Act based on the ownership of residential properties by the assessee on the date of transfer of the original asset giving rise to capital gains tax.Details of Judgment:1. The assessee argued that as of the date of transfer, they did not own more than one residential house, thus qualifying for exemption u/s. 54F. The assessee had gifted a property to their sister and utilized the sale proceeds for constructing a new residential building. 2. The Assessing Officer contended that the assessee owned more than one residential house at the time of transfer, citing the sequence of sale and gift deeds. The Hyderabad Bench decision highlighted a case where a gift was considered a tax avoidance tactic, emphasizing the intention behind the transfer.3. The Tribunal ruled that on the specified date of transfer, the assessee did own more than one residential house, as they had gifted a property but continued to reside in it. The interpretation of 'on the date of transfer' was crucial, and the Tribunal upheld the decision to deny the exemption u/s. 54F.4. The Tribunal distinguished previous cases where gifts were made before the transfer date, emphasizing the specific circumstances of each case. The Tribunal found the interpretation proposed by the assessee's representative to be untenable, leading to the dismissal of the appeal.Separate Judgment Delivered:No separate judgment was delivered by the judges.