2015 (2) TMI 149 - AT - Income Tax

Exemption under section 54F denied - Held that - The claim of the assessee is that the house was habitable and there is no material evidence brought on record by the lower authorities to controvert the averments of the assessee or to disbelieve the assessee's claim. At this point of time i.e. 5 years after the construction in 2009, it would not be possible to verify the condition of the building or whether it was inhabitable at that point in time. On the basis of the material on record, we are satisfied that the assessee has fulfilled the conditions for grant of exemption under section 54 of the Act. Incoming to this finding, we draw support from the decision of the co-ordinate bench of this Tribunal in the case of M.A. Patel (2012 (9) TMI 360 - ITAT, BANGALORE) relied on by the learned Authorised Representative wherein on similar facts the Tribunal held that the assessee would be entitled to exemption under section 54 of the Act. Following the aforesaid decision of the co-ordinate benches of this Tribunal (supra), we direct the Assessing Officer to allow the assessee exemption claimed under section 54 of the Act. - Decided in favour of assessee.

Summary

Issues:
- Denial of exemption under section 54F of the Income Tax Act, 1961.

Analysis:
The case involved an appeal against the order of the Commissioner of Income Tax (Appeals) regarding the denial of exemption under section 54F of the Income Tax Act for Assessment Year 2008-09. The assessee, a medical practitioner, had declared total income of Rs. 27,22,500, but the assessment determined the income at Rs. 1,03,25,814 by rejecting the claim for exemption. The assessee had sold a site and purchased a residential property, claiming exemption under section 54F instead of section 54. The Assessing Officer disallowed the claim, which was upheld by the CIT (Appeals).

The Tribunal analyzed the evidence presented by the assessee, including the sale deed, property tax receipts, and other documents. It was noted that the purchased property included a 200 sq. ft. RCC house with civic amenities, contradicting the Assessing Officer's claim that it was a vacant site. The Tribunal found that the property was habitable at the time of purchase, and the conditions for exemption under section 54F were met. The Tribunal referred to a previous decision in a similar case and directed that the exemption claimed by the assessee be allowed.

The Tribunal disagreed with the Assessing Officer's reliance on local enquiries and photographs taken years after the purchase, as they did not override the facts recorded in official documents. The Tribunal also distinguished a cited case where the building was deemed uninhabitable, emphasizing that section 54F does not specify the quality or income-generating status of the residential house. Additionally, a decision cited by the Departmental Representative was deemed inapplicable as it pertained to a different section of the Act and lacked similarity to the current case's facts.

Ultimately, the Tribunal found the evidence provided by the assessee sufficient to establish the existence of a residential house on the purchased property, fulfilling the conditions for exemption under section 54F. Relying on a precedent, the Tribunal allowed the assessee's appeal, directing that the exemption be granted. The decision was pronounced in open court on 05.10.2012.