2013 (8) TMI 477 - AT - Income Tax

Exemption u/s 54F - Sale consideration - purchase of five flats - claim of deduction as one house property - Held that - None of the authorities below has doubted the eligibility of the assessee for claiming an exemption under section 54F of the Act. Their only qualm is that assessee had preferred such claim for all the five flats whereas according to them, such exemption could only be founded to a single flat - A residential house in the context could not be construed as a singular - It is not necessary that all residential units should have a single door number allotted to it - However, this alone was not the reason why assessee was held to be eligible for claiming of exemption under section 54F of the Act - Following decision of CIT v. Smt. K.G. Rukminiamma 2010 (8) TMI 482 - Karnataka High Court and Dr. Smt. P.K. Vasanthi Rangarajan v. CIT 2012 (7) TMI 563 - MADRAS HIGH COURT - assessee was eligible for claiming exemption under section 54F of the Act on the five flats received by her in lieu of the land she had parted with. - Decided in favour of assessee.

Summary

Issues:
1. Dispute over sale price for calculating capital gains.
2. Restriction of exemption claim under section 54F to a single flat.

Issue 1: Dispute over sale price for calculating capital gains
The appellant disputed the sale price adopted by the Assessing Officer, claiming it was lower than the actual value of the flats she was entitled to receive. The Assessing Officer based the sale value on the total construction cost provided by the developer, leading to a higher figure than the one considered by the appellant. The CIT(A) upheld the Assessing Officer's decision, adjusting the sale consideration to a value between the figures proposed by the appellant and the Assessing Officer. The appellant argued that the entire value of the five flats should be exempt under section 54F, but the CIT(A) disagreed, citing a distinction between deductions under section 54 and section 54F. The appellant contended that a previous High Court decision supported her claim for exemption on all five flats.

Issue 2: Restriction of exemption claim under section 54F to a single flat
The appellant's representative acknowledged the correctness of adjusting the sale consideration based on construction costs but challenged the restriction of the exemption claim to one flat. Citing a High Court decision, the representative argued that the appellant should be allowed to claim exemption on all five flats received in exchange for the land. The Departmental Representative opposed this, emphasizing the difference between the case at hand, where the five flats had distinct door numbers, and the precedent where four flats were considered one unit. The Tribunal analyzed the provisions of section 54F, emphasizing that owning more than one residential house on the date of transfer would only disqualify the claim if another house was acquired within a year before the transfer. Referring to judicial interpretations, the Tribunal concluded that the appellant was eligible to claim exemption under section 54F on all five flats received.

In conclusion, the Tribunal allowed the appellant's appeal partially, affirming the adjustment of sale consideration while permitting the exemption claim on all five flats.