TaxTMI 
TaxTMI 
2023 (12) TMI 699
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....l." 3. Brief facts of the case that the assessee is engaged in the business of Hotel and Resort as proprietor of M/s Ashwariya Restors. The assessee e-filed its return of income on 31.03.2014 declaring total income of Rs. 8,56,670/-. After processing u/s 143(1) of the Income Tax Act, 1961, the case was selected for scrutiny through CASS accordingly notice u/s 143(2) of the act dated 02.09.2014 was issued and duly served to the assessee. The assessee earned long term capital gain of Rs. 65,06,891/- and claimed exemption u/s 54F of the Act as he invested net consideration towards investment in the purchase/construction two residential houses. The assessee furnished these information in the ITR and furnished supporting documents during the course of assessment proceedings and in due appreciation of flats and law in force, it has been allowed by the Assessing Officer while completing the assessment u/s 143(3) of the Act dated 19.01.2016. The ld. AO has issued notice u/s 154 of the Act dated 25.04.2016 proposing rectification of mistake allegedly apparent from the record with respect to allowability of exemption u/s 54F restricting to Rs. 44,51,997/- on the basis of fact and provisio....
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.... reiterated in para 2 above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below:- "The appellant is an individual regularly assessed to tax derives income from business as an hotelier. It is evident from the attached computation sheet & ITR of AY 2013-14 that LTCG of Rs. 6506891/ has been claimed exemption u/s 54F as he invested net consideration towards investment in the purchase/construction two residential houses. The appellant explained the allowability of exemption on facts and law in assessment proceedings with supporting documents/papers: • Claimed exemption in the computation sheet with relevant details. Pg No 3. • On dated 24/11/2015 in response to questionnaire given on 16/11/2015 in personal hearing. Pg No. 6 & 8 to 45. • On 11/01/2016 vide page no 46 to 50. In appreciation of facts and due application of mind, exemption claimed u/s 54F has been allowed while completing the assessment u/s 143 (3) of the Act vide order dated 15.01.2016 at Pg No 51-53. Subsequently, the then Ld. AO issued notice u/s 154 dated 25/04/2....
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....im of exemption relates to two residential houses & not three i.e. at Shobhagpura at Rs 42 lac and at Bhuvana Rs. 2345406/- & not commercial. (Pg No 3, 33 & 34 with break up, 46-51) 2. Provision of section 54F in force up-to AY 14-15 entitle the assessee to claim exemption, if the assessee 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 construct, "a" residential house. The term "constructed, a residential house" means one house or as many houses for and up to AY 2014-15 thus has been dealt by the apex court in several cases about the term "a residential house" does not construe as meaning singular but being a indefinite article, the said expression should be read in consonance with the other words "buildings and lands" and therefore "a residential house" permits use of plural by virtue of section 13 (2) of general clauses act. The appellant has thus rightly claimed exemption u/s 54F for the investment in two residential houses within frame of section 54F. Case laws relied by the appellant has been wrongly interpreted. These are reiterated with ....
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....gal; (2013) 257 CTR (Del) 208 Interpreted by Ld. CIT(Appeal) Gist of judgment Remarks Para 4.2.2 at pg 11 of the order "We do not think that the fact that the of residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly prohibited." Para 8 of the order at pg No. 68-69 of PB With due regards, it has been wrongly distinguished by Ld. CIT(A) 2. Smt. Hansabaisanghvi v/s ITO ; (2004) 89 ITD (Hyd) 239 Para 4.2.3 at pg 12 of the order He assessee utilized the sale proceeds on of the sale of plot of land, for the purchase of a house bearing municipal No. 19-5-9/97(54B MIGH), Bahadurpura Colony, Hyderabad on 1-7-1998 for a consideration of Rs. 3,95,000. The vendor of this house purchased it from the A.P. Housing Board, vide sale deed dated 2-3-1988.When it was bought from the A.P. Housing Board, it consisted of only ground floor. Subsequently, first floor was put up thereon. The assessee purchased this first floor of the building on 15-7-1998. Thus, the ground floor of the building, with built up area of 1750 sq. ft. along with 50% undivided sh....
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....tiples and so as to avoid paying tax under Section 45 of the Act. Para 4 to 18 of the order at Pg No. 84-87 of PB No adverse inference is drawn by Ld. CIT(A) Reliance further placed on the following case laws: [2020) 114 taxmann.com 508 (A'bad-T); Mohd. Sultanali Pradhan v/s DCIT Section 54F of the Income-tax Act, 1961 Capital gains Exemption of, in case of investment in residential house (Purchase of two adjoining flats) Assessment year 2015- 2016 During relevant year, assessee claimed exemption under section 54F on long-term capital gain invested in two bungalows which were adjacent to each other and used as one residential unit Assessing Officer disallowed same on ground that assessee could have claimed exemption under section 54F with respect to investment in one bungalow only However, under provisions of section 54F. no definition/clarification about area of residential property, has been provided, hence, one assessee can buy huge bungalow/property say thousand square meters and can claim deduction subject to conditions Whether therefore, assessee could not have been deprived of benefit conferred under statute merely on reasoning that there....
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.... CIT(A) order be sustained. 7. We have heard rival contentions and perused the materials available on record. The dispute under this appeal is the claim of exemption u/s 54F of the Act claimed by the assessee. The claim is duly reflected in the return of income filed by the assessee (APB 1 to 3). In the original assessment proceedings, the issue related to the claim made u/s 54F was raised vide order sheet entry dated 16.11.2015 a reply to this order sheet entry filed on 24.11.2015 (APB 7&8). Considering all these evidences placed on record, we are of the view that the claim of the assessee was very well considered in the proceedings u/s 143(3) completed on 15.01.2016. Thereafter invoking the provisions of section 154 of the Act to reconsider the claim of section 54F of the Act vide order passed u/s 154 of the Act dated 13.06.2018 is bad in law Thus, based on these conspectus of the case we are of the considered view that the action of the Assessing Officer passing an order u/s 154 of the Act is incorrect and bad in law. The provision of section 154 as reproduced here in below does not permit to do so:- "Rectification of mistake. 154. (1) With a view to rectify....