Wednesday, August 23, 2017

Sec. 54F relief allowable even when multiple flats are sold to purchase one big flat: ITAT

Facts:

a) Assessee had sold 5 house properties during the years 2009-10 to 2011-12 and invested sale consideration in construction of another property, i.e., Mehandi Farms. He claimed deduction under section 54F for investment in Mehandi Farms against the capital gain on sale of house properties.

b) Assessing Officer held that assessee had already availed deduction under section 54F for investment in construction of Mehandi Farms in the year 2009-10 and therefore, he couldn’t be allowed deduction in construction of the same residential property for capital gain arising in succeeding years.

c) On appeal, CIT(A) allowed section 54F relief to assessee. Aggrieved-revenue filed the instant appeal before the Tribunal.

Tribunal held in favour of assessee as under:

1) Section 54F provides that any capital gain arising from the sale of any long term capital asset shall be exempt from tax if the entire sales proceeds is invested in:

i) Purchase of one residential property within 1 year before the date of sale or 2 years after the due date of transfer of the property sold or

ii) Construction of a residential house property within a period of 3 years from the 2) Construction of the house property at Mehandi Farms was not completed and therefore same couldn’t be termed as another residential property for disqualification for deduction under section 54F.

3) There is also no bar in the section 54F for claiming deduction for second time or third time for the same property if the cost of the property is equivalent to or more than the amount of capital gain.

4) In the given case, total capital gain in all the three years 2009-10 to 2011-12 was less than the cost of construction of new residential property. Therefore, assessee was eligible for the deduction under section 54F. [2017] 84 taxmann.com 141 (Delhi - Trib.)
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