TaxTMI 
TaxTMI 
2018 (12) TMI 822
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....declaring total income of Rs. 1,17,44,790/-. The return filed was subjected to scrutiny assessment. In the course of assessment proceedings, the AO noticed that the assessee had claimed deduction under s.54F of the Act of Rs. 1,50,94,718/- on sale of plot of land against a new residential house property. It was further noticed that the assessee had already made such claim of deduction on sale of another land in the preceding AY 2011-12 also. The AO accordingly concluded that the assessee could not make claim of double deduction towards investment of sale proceeds arising out in two different assets in two different assessment years against the purchase of same residential property. To arrive at such conclusion, it was observed by the AO that deduction under s.54F of the Act arises from a single asset as the words used are 'original asset' and not 'asset(s)'. It was further observed by the AO that since the purchase as contemplated in Section 54F of the Act could happen only once and that has already happened in the preceding assessment year 2011-12 on 21.01.2011, the benefit towards purchase of new asset cannot be extended to capital gains on sale of another original asset in an....
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....nsideration of Rs. 2,28,41,726 and earned capital gain of Rs. 2,14,19 904. Out of this sale consideration, the appellant decided to invest in a residential house property at bungalow No. 10, Panchshil society, Usmanpura, Ahmedabad for a cost of Rs. 3,78,00,000 and accordingly the appellant paid Rs. 2,10,00,000 vide a Banakhat on 21.01.2011. Thus, the appellant claimed the new investment in residential house property of Rs. 1,96,92,819 (proportionately) under section 54f in A.Y. 2011-12. (b) Subsequently in a succeeding assessment year i.e. in AY:2012-13, the appellant sold another piece of land on 31.03.2012 at survey no.726/4/1 for a consideration of Rs. 2,67,03,250 and earned capital gain of Rs. 2,39,92,739. The appellant ias claimed deduction of Rs. 1,50,94,718 by investing Rs. 1,68,00,000 (3,78,00,000 - 2,10,00,000) in the same residential property being bunglow No. 10, Panchshil society, Usmanpura, Ahmedabad vide a registered sale deed 16.04.2012. (c) The assessing officer has disallowed claim made u/s.54F accounting of Rs. 1,50,94,718/- It is discussed in para 5 of the order. It is observed by AO that deduction under section 54F cannot be made for the same r....
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....ions prescribed under that section. There is not a single condition which has not been fully complied with by the appellant. When the appellant complied all the conditions prescribed under the provisions of the said section, the disallowance of the claim of the appellant is not in accordance with the provisions of the Act, therefore, it is not found justified. The appellant's claim is found as per law, so it is allowable. Hence additions made are deleted. ii) The appellant's case is covered by the order of the Hon'ble ITAT, Mumbai, Bench "C" in the case of Smt. Anagha Ajit Panekar v/s ITO (2006) 9 SOT 685 (Mum.) in ITA No.3810 (Mum.) of 2003 dated June 14, 2006. The said order is reproduced below: "Section 54F of the Income-tax Act, 1961 - Capital Gains - Exemption of, in case of investment in residential house - Assessment year 1997-98 - Whether there is no bar in &* section 54F for claiming deduction second time or third time for same property if cost of residential property is within capital gain arisen to assessee, provided deduction is claimed within time stipulated in section 54F - Held, yes - Assessee earned capital gain on account of sale of sh....
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.... the assessment years, these conditions were satisfied. Therefore, in respect of residential property till cost of purchase of property is exhausted by the claim of the capital gain but remaining in the timeframe stipulated in section 54F, deduction under section cannot be denied. If the assessee falls out of the time-limit in section 54F then probably department can have a case. The Commissioner (Appeals) dismissed the appeal of the assessee by interpreting sub-section (4) by holding that the assessee had not appropriated the sale consideration towards purchase of flat, but the Commissioner (Appeals) had ignored the main provisions of section 54F. Subsection (4) has been inserted with a view to facilitate the assessee to claim the capital gain exemption when the assessee opts for purchase of flat after arising of the capital gain and deposit the sale consideration in the bank account till such appropriation. The assessee cannot be expected to appropriate the sale consideration in respect of the already purchased flat. If such interpretation of the Commissioner (Appeals) was accepted, it would frustrate the object of the provisions of section 54F and lead to absurdity. Therefore, t....
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....apital Gain 2,71,815 92,270 3,83,976 7,48,061 Deduction under section 54F 2,71,815 92,670 3,74,276 7,38,761 4. The issue was carried before CIT(A) in appeal. The contention raised by the assessee before CIT(A) was that all the conditions for claiming deduction under section 54F has been fulfilled by the assessee in all these three assessment years; therefore, deduction under section 54F cannot be denied to the assessee in the relevant assessment year. The conditions to be fulfilled for claiming deduction under section 54F as stated by the assessee are as under : (i) Assessee should be an individual or HUF (ii) Capital gains should arise form Long Term Capital Gain other than residential house. (iii) Assessee has within a period of one year before or within two years after the sale of such long-term capital asset purchased or within three years have constructed a residential house. (iv) The new house purchased is not sold within 3 years from date of purchase/construction. (v) The cost of new residential house is more than the deduction under section 54F shall be proportionate to sale of asset of the cos....
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....authorities below. Undisputed fact as we have stated earlier was that flat was purchased by the assessee on 18-81995 for Rs. 9,00,000 and assessee having capital gain in assessment years 1995-96, 1996-97 and 1997-98 have claimed deduction for all these three years as per chart given above, which shows that in total the assessee has claimed deduction not more than Rs. 9 lakhs. In our consideration, there is no bar in section 54F for claiming deduction for the same property if cost of the flat is within the capital gain arisen to the assessee. In this case, total capital gain arisen to the assesee in all these three years is Rs. 7,48,061 against the cost of flat Rs. 9 lakhs. Now to examine the case of the assessee from the language of section 54, it will be useful to reproduce section 54F as under: "54F. Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereinafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the....
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....lat, but Id. CIT(A) has ignored the main provisions of section 54F. Sub-section (4) has been inserted with a view to facilitate the assessee to claim the capital gain exemption when assessee opts for purchase of flat after arising of the capital gain and deposit the sale consideration in the bank account till such appropriation. The assessee cannot be expected to appropriate the sale consideration in respect of the already purchased flat. If such interpretation of CIT(A) is accepted, it will frustrate the object of the provisions of section 54F and lead to absurdity. Therefore, we set aside the order of the CIT(A) and allow the ground of the assessee. 8. As regards second ground, the Assessing Officer disallowed (sic) the interest of Rs. 25,300 claimed by the assessee against rental income for want of evidence. The ld. CIT(A) also confirmed the same. 9. It was stated before us by the Id. AR that assessee has submitted the confirmation of accounts from the borrower reflecting the payment of interest and ld. AR also referred to the same confirmation appended in the paper book. The ld. Departmental Representative relied on the orders of authorities below. We find fro....
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....tion 54F, deduction; under section cannot be denied. If the assessee falls out of the time-limit in section 54F then probably department can have a case. The Commissioner (Appeals) dismissed the appeal of! the assessee by interpreting sub-section (4) by holding that the assessee had not appropriated the sale consideration towards purchase of flat, but the Commissioner (Appeals) had ignored the main provisions of section 54F. Subsection (4) has been inserted with a view facilitate the assessee to claim the capital gain exemption when the assessee opts for purchase of flat after arising of the capital gain and deposit the sale consideration in the bank account till such appropriation. The assessee cannot be Mrs. Krishnadevi Kejriwal expected to appropriate the sale consideration in respect of the already purchased flat. If such interpretation of the Commissioner (Appeals) was accepted, it would frustrate the object of the provisions of section 54F and lead to absurdity. Therefore, the order of Commissioner (Appeals) was set aside and the assessee was entitled to deduction under section 54F in the assessment year." 14. Accordingly the assessee is entitled to claim deduction u....
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....claimed against purchase/construction of same new residential house i.e. new asset subject to fulfillment of other conditions. The Revenue seeks to deny the deduction on two grounds (i) the expression used in Section 54F(1) is 'transfer of any long term asset', which connotes singularity and (ii) the action of 'purchase' can happen only once. It will be apt to refer to Section 54F(1) of the Act with which we are presently concerned: "54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less t....