2014 (1) TMI 298 - AT - Income Tax

Exemption u/s 54F - Held that - A residential plot cannot be included in the definition of a residential house property as it cannot be used for residence. Therefore section 54F was applicable to the appellant s case - A plot in a residential colony can be a residential plot but cannot be said to be a residential house - Property No.805 Barakhamba Road Connaught Place which is let out by the assessee to M/s Privy Consulting Pvt.Ltd. and used for commercial purposes by them cannot be presumed to be a residential house - The Assessing Officer has not given any basis or evidence for treating property No.805 Barakhamba Road Connaught Place to be a residential house - The appellant had only one residential house property - Decided against Revenue.

Summary

Issues involved:
Interpretation of Section 54F for exemption eligibility - whether the property sold qualifies as a residential house, and if the assessee owned more than one residential house at the time of transfer.

Analysis:
The Revenue appealed against the CIT(A)'s order for the AY 2009-10, challenging the application of Section 54F(i) in the case. The Revenue argued that the assessee sold a residential house and hence Section 54F(i) should not apply, especially since the assessee owned more than one residential house at the time of transfer. The Revenue contended that the CIT(A) erred in directing the Assessing Officer to allow exemption under Section 54F(i) to the assessee.

The assessee's counsel countered by stating that the property sold was a residential plot, not a residential house, and thus, Section 54F should apply. Additionally, the assessee's ownership of a business/commercial property at a different location was highlighted to show that the assessee did not own more than one residential house at the time of transfer. The counsel argued for sustaining the CIT(A)'s order and dismissing the Revenue's appeal.

Upon review, the Tribunal found that the Assessing Officer's conclusion that the property at Barakhamba Road was a residential house was unfounded. The Tribunal agreed with the CIT(A) that a plot in a residential colony does not equate to a residential house. Furthermore, the property leased for commercial purposes could not be considered a residential house. As the assessee had only one residential house property at the time of transfer, exemption under Section 54F was deemed applicable. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal affirmed that a residential plot does not qualify as a residential house, and a property used for commercial purposes cannot be considered a residential house. As the assessee did not own more than one residential house at the time of transfer, exemption under Section 54F was rightfully granted. The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order.