2020 (5) TMI 433 - AT - Income Tax

Exemption u/s.54F - AO found that since the assessee purchased the property by means of two registered sale deed, the property relating to second registered document may not be appurtenant to the building which was purchased through the original registered sale deed - HELD THAT - The assessee has purchased the entire property within a span of 13 days in the month of February, 2015. An harmonious reading of the agreement for sale of the property and the registered sale deed clearly indicates that the assessee intended to purchase the entire property including the vacant land from the vendor Shri R. Selva Kumar. Two registered sale deeds were executed. There can be various reasons for executing the two sale deeds. One of the reason presumably as rightly submitted by the assessee that the vendor might have insisted for execution of two sale deeds in order to avoid deduction of tax at source. Whatever may be the reason the existing residential building as well as the vacant land adjacent to are appurtenant to each other. This Tribunal is of the considered opinion that the vacant site purchased by the assessee which is adjacent to the residential house is necessary for convenient enjoyment of the building. Therefore for all practical purpose, the vacant site adjacent to the existing building which was purchased by the assessee through the second sale deed also has to be construed as land appurtenant to the residential house. Hence the assessee is eligible for exemption u/s.54 - Appeal filed by the assessee stands allowed.

Summary

Issues involved:
Exemption claimed under Section 54F of the Income Tax Act, 1961 for the assessment year 2015-16.

Analysis:

Issue 1: Exemption claimed under Section 54F of the Income Tax Act, 1961
The appellant's appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the exemption claimed under Section 54F of the Income Tax Act, 1961. The appellant, through their representative, argued that the return was selected for scrutiny to verify the sale of property and that the sale consideration received was utilized for purchasing a new asset. It was highlighted that although two sale deeds were executed, the intention was to purchase the entire property, including the land appurtenant to the building. The Assessing Officer raised concerns about the second registered sale deed and its relation to the property purchased through the original deed. The appellant contended that the vacant site purchased adjacent to the residential house was necessary for convenient enjoyment of the building, thus making them eligible for the exemption under Section 54F. The Tribunal agreed with the appellant's argument, stating that the vacant site was appurtenant to the residential house, and directed the Assessing Officer to allow the claim of the assessee under Section 54F of the Act. The appeal was allowed, setting aside the orders of the authorities below.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the exemption claimed under Section 54F of the Income Tax Act, 1961 for the assessment year 2015-16.