2022 (10) TMI 940 - AT - Income Tax

Deduction u/s. 54F - Disallowance of claim on the reason as assessee earned only one residential house - scope of Amendment in the provisions of s. 54(1) - HELD THAT - Assessee first of all stated that Plot No.6 at Ganesh Nagar is a vacant plot and not a house. He stated that the entire revenue records proved it that this is a plot, but he stated that the amendment brought in by the Finance (No.2) Act, 2014 in s. 54(1) of the Act by which words a residential house were replaced by one residential house was applicable from A.Y 2014-15 and assessee can claim reinvestment exemption from multiple units. Assessee stated that this issue is decided in the case of CIT vs. Gunmanmal Jain 2017 (3) TMI 394 - MADRAS HIGH COURT wherein it was held that amendment was made to s. 54F of the Act with regard to word a by Finance (No.2) Act, 2014 with effect only from 01.04.2015 withdrawing deduction for more than one flat (residential house). Prior to said amendment, a residential house would multiple flats/residential units. We are of the view that the amendment in the provisions of s. 54(1) replacing the word a residential house by one residential house was brought in Finance (No.2) Act, 2014 w.e.f 01.04.2014 and will apply for A.Y 2015-16. The relevant assessment year before us is 2013-14 and hence, the assessee is eligible for claim of deduction u/s. 54F though there may be multiple units. Accordingly, the appeal of the Revenue is dismissed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal by Revenue.
2. Disallowance of claim of deduction u/s. 54F of the Income Tax Act by CIT(A).
3. Interpretation of the term "one residential house" in relation to reinvestment exemption.

Condonation of Delay:
The appeal by Revenue was initially barred by a 6-day limitation. However, the Revenue filed an affidavit requesting condonation of delay, citing reasonable causes. The Tribunal observed that the delay was minimal, uncontested by the assessee, and thus, decided to condone the delay and admit the appeal for adjudication.

Disallowance of Deduction u/s. 54F:
The main issue in the appeal was the CIT(A)'s deletion of the disallowance of the deduction claimed under section 54F of the Income Tax Act. The Revenue contended that the assessee was not entitled to the deduction as they owned more than one residential house. The Revenue raised specific grounds challenging the CIT(A)'s decision, arguing that the property in question was a residential house and not a vacant land as claimed by the assessee.

Interpretation of "One Residential House":
The Tribunal analyzed the interpretation of the term "one residential house" in the context of reinvestment exemption under section 54F. The assessee argued that an amendment in the Act allowed for reinvestment exemption from multiple units, citing a relevant judgment. The Tribunal agreed with the assessee, stating that the amendment replacing "a residential house" with "one residential house" was applicable from a later assessment year and hence, the assessee was eligible for the deduction under section 54F for the relevant assessment year.

Conclusion:
Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the assessee's claim for deduction under section 54F. As a result, the cross objection by the assessee was considered infructuous and also dismissed. The judgment clarified the interpretation of the term "one residential house" and its application to reinvestment exemptions, providing a favorable decision for the assessee in this case.