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2019 (4) TMI 1016 - AT - Income TaxExemption u/s 54F - construction of new residential house, having not been completed within the stipulated period and the assessee having not got the possession of the said new house, the requirement for claiming exemption under section 54F was not satisfied - HELD THAT - CIT(Appeals), found that the entire amount was invested by the assessee in purchase of a new residential house within the stipulated period and the assessee, therefore, had satisfied the requirement for claiming exempt ion under section 54F. MRS. HILLA JB. WADIA 1993 (3) TMI 7 - BOMBAY HIGH COURT wherein it was held that the only requirement for claiming exemption under section 54F is to make the investment in purchase of a residential house within the stipulated period and there is no requirement that the construction of new house should be completed within that period and the assessee gets possession of the said flat. The reason given by the Assessing Officer for denying the claim of the assessee for benefit under section 54F was that two separate flats were purchased by the assessee having separate entrance and the same being incapable of joining together could not be treated as one residential house for claiming exemption under section 54F. As rightly contended by the assessee, this issue also now stands covered in favour of the assessee by the decision of the Hon ble Karnataka High Court in the case of CIT vs- Smt. K. G. Rukminiamma 2010 (8) TMI 482 - KARNATAKA HIGH COURT and CIT vs. - Syed Ali Adil 2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT wherein it was held that the expression a residential house used in section 54 necessarily has to include buildings or land appurtenant thereto and it cannot be construed as one residential house. As further held in the said judicial pronouncements, section 54 only requires that property purchased by the assessee out of sale proceeds should be of residential nature and the fact that residential house consisted of several independent units could not be an impediment for granting relief under the said section, even if such independent units were situated side by side on different floors and were purchased under separate sale deeds. Keeping in view the legal position emanating from these judicial pronouncements, we are of the view that the assessee is entitled for exemption under section 54F - Decided in favour of assessee.
Issues Involved:
1. Interpretation of section 54F of the Income Tax Act regarding deduction for a residential house. 2. Determining if the purchase of two residential houses is allowable under section 54F. 3. Analysis of the Assessing Officer's findings against the claim for exemption under section 54F. 4. Evaluation of the order passed by the ld. CIT(Appeals) in relation to the assessee's claim for exemption under section 54F. Analysis: Issue 1: Interpretation of section 54F The appeal raised the question of whether the phrase "a residential house" in section 54F refers to one or more than one residential house independently located in the same building. The Assessing Officer disallowed the exemption under section 54F, citing that the two flats purchased by the assessee did not meet the criteria of one residential house. However, the ld. CIT(Appeals) allowed the claim based on the submission that the investment was made within the stipulated period, relying on judicial precedents. The Tribunal upheld the decision, emphasizing that the requirement was to invest in a residential house within the period, not necessarily complete its construction or take possession. Issue 2: Purchase of Two Residential Houses The Assessing Officer contended that the assessee purchased two separate flats, which could not be treated as one residential house for claiming benefits under section 54F. The ld. CIT(Appeals) disagreed, stating that the term "a residential house" should not be construed as singular, supported by legal judgments. The Tribunal concurred, citing rulings that the property purchased should be of a residential nature, even if consisting of multiple independent units, as long as they are part of the same residential complex. Issue 3: Findings of the Assessing Officer The Assessing Officer disallowed the claim under section 54F, emphasizing the failure to purchase a new flat within the stipulated period and the separate nature of the two flats purchased. The ld. CIT(Appeals) overturned this decision, highlighting that the investment was made within the timeframe required by the provision. The Tribunal upheld this decision, stating that the legal position supported the assessee's entitlement to exemption under section 54F. Issue 4: Order of the ld. CIT(Appeals) The ld. CIT(Appeals) allowed the claim for exemption under section 54F, considering the assessee's compliance with the investment requirement within the specified period. The Tribunal supported this decision, noting that the legal interpretations and precedents favored the assessee's eligibility for the exemption. The appeal by the Revenue was dismissed, affirming the decision of the ld. CIT(Appeals. In conclusion, the Tribunal upheld the decision of the ld. CIT(Appeals), ruling in favor of the assessee regarding the claim for exemption under section 54F, based on the interpretation of the provisions and relevant legal precedents.
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