Assessee gets LTCG deduction under Section 54 as GPA transaction doesn't create property interest or transfer title

ITAT Chennai allowed the assessee's appeal regarding LTCG deduction u/s 54. AO and CIT(A) denied the deduction, arguing the assessee had multiple residential properties through a GPA transaction with a co-parcener. ITAT held that GPA transactions don't convey title or create interest in immovable property, citing SC precedent in Suraj Lamp Industries. Since no consideration was paid to the co-parcener and no possession transferred, it wasn't a valid transfer under law. The actual transaction was between the HUF and three property owners, making the deduction allowable.

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Issues:
Whether delay in filing the appeal should be condoned.
Whether the assessee is entitled to claim deduction under section 54 of the Income Tax Act, 1961.

Analysis:
The appeal was filed with a one-day delay, and the assessee sought condonation of the delay, which was granted by the Appellate Tribunal. The Tribunal found the reasons for the delay to be genuine and accepted the petition for condonation.

The main issue in consideration was whether the assessee could claim deduction under section 54 of the Act. The Assessing Officer disallowed the deduction, stating that the assessee, being a member of HUF, was not eligible due to owning more than one residential property. The ld. CIT(A) upheld this disallowance, citing the son of the assessee as a Co-Parcener.

The assessee argued that the property acquired through a registered GPA did not constitute a transfer under the law, referencing relevant Supreme Court judgments. The ld. DR contended that the assessee was ineligible for the deduction due to owning multiple residential properties.

The Tribunal examined the facts and found that the property acquired by the assessee was one, despite being transferred through two sale deeds. It noted that the son of the assessee, as a Co-Parcener, did not transfer any title or interest in the property to the assessee. Relying on the Supreme Court's decision, the Tribunal held that the assessee was entitled to the deduction under section 54 of the Act.

The Tribunal emphasized that the transaction between the assessee HUF and the son, acting on behalf of the owners, did not constitute a transfer under law. It concluded that the assessee was eligible for the deduction based on the principles established in the Supreme Court judgments cited.

In light of the above analysis, the Tribunal allowed the appeal filed by the assessee, overturning the decision of the ld. CIT(A) and confirming the entitlement of the assessee to the deduction under section 54 of the Act.

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