Thursday, April 27, 2017

Sale proceeds of land appurtenant to residential house is entitled to section 54 relief: ITAT

The issue before the Tribunal was as under:

Whether sale proceeds of land appurtenant to the building areentitled to deduction under section 54?

Tribunal held in favour of assessee as under

1) The land sold by the assessee was forming part of the residence and all the property was duly assessed to house-tax and was self-occupied by the occupants, viz., the assessee and his family members. Under section 54, the legislature has used the expression "being buildings or lands appurtenant thereto and being a residential house’.

2) The Karnataka High Court had examined these expressions while construing the provision of section 54in the case of C.N. Anantharam v. Asstt. CIT [2015] 55 282/230 Taxman 34 (Kar.)and had held that the deduction under section 54 is available even if the land, which is appurtenant to the residential house is sold. It is not necessary that the whole of the residential house should be sold because the legislature
has used the words "or" which is distinctive in nature.

3) In the instant case, it was not the case of Assessing Officer (AO) and CIT(A) that the land was not appurtenant to the residential house. Here assessee had sold only the land appurtenant to the house and not residential house which, according to the Karnataka High Court, was not a requirement under the law and exemption under section 54 was also available to the land which was appurtenant to the house.

4) The sale deed itself showed that the land was part of residential house. Therefore, the exemption claimed under Sec. 54 had to be allowed to assessee. - [2017] 80 223 (Delhi - Trib.)

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