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2023 (4) TMI 461 - AT - Income TaxExemption u/s 54F - investment made in residential house - two residential flats - Whether CIT(A) has erred in granting exemption u/sec 54F of the Act in respect of two residential flats irrespective of amendment which has come into effect from 01.04.2015 and is applicable to the assessee for investment in one residential house in India? - HELD THAT - Assessee has invested in one residential property. AR has substantiated with the copy of structural plan and the society letter dated 8-04-2019 that it is only one residential unit. Whereas, the provisions of sec 54F of the Act are beneficial provisions and are to be construed liberally. DR could not controvert the finding of the CIT(A) with new cogent material information or evidence and the CIT(A) has passed a reasoned and logical order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.
Issues Involved:
1. Deduction under Section 54F for Long Term Capital Gains (LTCG) invested in two residential flats. 2. Interpretation of the amendment to Section 54F effective from 01.04.2015. 3. Consideration of two separate flats as a single residential house. 4. Reliance on judicial decisions made prior to the amendment of Section 54F. Issue-wise Detailed Analysis: 1. Deduction under Section 54F for Long Term Capital Gains (LTCG) invested in two residential flats: The revenue contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in allowing the deduction under Section 54F for LTCG invested in two different residential flats. The Assessing Officer (A.O.) found that the assessee utilized the capital gains for the purchase of two adjacent flats and restricted the exemption to one residential house as per the amendment effective from 01.04.2015. The CIT(A) observed that the residential property should be treated as one residential house and allowed the exemption under Section 54F, considering judicial decisions supporting this view. 2. Interpretation of the amendment to Section 54F effective from 01.04.2015: The revenue argued that the amendment to Section 54F, which replaced "a residential house" with "one residential house in India," restricts the exemption to a single residential house. The A.O. applied this amendment and limited the exemption to one flat. However, the CIT(A) and the Tribunal found that the assessee purchased the property as a single unit despite being two flats, thus qualifying for the exemption under Section 54F. 3. Consideration of two separate flats as a single residential house: The revenue's stance was that the two flats should not be considered a single residential house due to separate sale deeds, different carpet areas, and separate share certificates. The CIT(A) and the Tribunal, however, noted that the flats had one common entrance, one kitchen, one electricity meter, and one gas connection, effectively constituting a single residential unit. The Tribunal upheld the CIT(A)'s decision, emphasizing that the flats were treated as one residential property by the assessee. 4. Reliance on judicial decisions made prior to the amendment of Section 54F: The revenue criticized the CIT(A) for relying on judicial decisions made before the amendment to Section 54F. The CIT(A) referenced cases such as Sanjay B Pahariya vs ACIT, Deepak S Bheda vs ACIT, and Sudha Gurtoo vs ACIT, which supported the view that adjacent flats could be considered a single residential unit. The Tribunal found these decisions applicable and noted that the amendment did not alter the fundamental interpretation that adjacent flats could constitute a single residential property. Conclusion: The Tribunal upheld the CIT(A)'s decision, affirming that the assessee was entitled to the deduction under Section 54F for the investment in the two adjacent flats treated as one residential house. The Tribunal dismissed the revenue's appeal, emphasizing that the provisions of Section 54F are beneficial and should be construed liberally. The Tribunal found no infirmity in the CIT(A)'s order and concluded that the assessee's investment qualified for the exemption under Section 54F.
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