2021 (2) TMI 1004 - AT - Income Tax

Exemption u/s 54 - purchase of house by assessee i.e. residential house - capital gains arising out of sale of flat invested in the flat situated at Crescent Bay apartments at Parel, Mumbai - assessee had made part payment of for Crescent Bay Flat, Mumbai and has deposited part amount in the Capital Gain Account Scheme for the A. Y 2013-14 - Assessing Officer restricted the claim to the extent as invested in purchase of flat at Nirala Nagar, Lucknow - HELD THAT - Property at Lucknow was purchased vide agreement executed by assessee on 29.07.2013, which is later date. Original purchase was of residential flat in Crescent Bay apartments at Parel, Mumbai. It is a fact that the assessee has kept the money either in capital gain account scheme or made part payment for purchase of residential flat in Crescent Bay apartments at Parel, Mumbai and this has a direct nexus that the consideration received from sale of residential property was invested in purchase of this property. Hence, it is the choice of the assessee to claim exemption on one flat and CIT(A) rightly restricted the same to the investment made in purchase of residential flat at Crescent Bay apartments at Parel, Mumbai. The CIT(A) s direction to the Assessing Officer is perfectly within the provisions of law. We find no infirmity in the order of CIT(A) and hence, the same is confirmed.- Decided against revenue.

Summary

Issues:
- Allowance of exemption under section 54 of the Income Tax Act for capital gains arising from the sale of a flat invested in Crescent Bay apartments at Parel, Mumbai.

Detailed Analysis:
1. The appeal by the revenue challenges the order of the Commissioner of Income Tax (Appeals) regarding the allowance of exemption under section 54 of the Income Tax Act for capital gains from the sale of a flat in Crescent Bay apartments at Parel, Mumbai. The assessment for the year 2013-14 was framed by the ACIT Circle-35(1), Mumbai under section 143(3) of the Act.

2. The primary issue in this case is the interpretation and application of section 54 of the Act concerning the eligibility for exemption on the capital gains arising from the sale of a property. The revenue contends that only a specific amount is eligible for exemption under section 54, based on the investments made by the assessee in different properties and accounts.

3. The facts reveal that the assessee sold a property and claimed to have invested in a residential flat at Crescent Bay apartments in Mumbai. The Assessing Officer allowed exemption under section 54 for investments in a property at Lucknow but did not consider the investment in the Crescent Bay property. The dispute arose from the differing interpretations of the provisions of section 54 and the adequacy of investments made by the assessee.

4. The CIT(A) considered the submissions and evidence provided by the assessee, acknowledging the investments made in the Crescent Bay property. The CIT(A) allowed the claim for exemption under section 54 for the investments made in the flat at Crescent Bay apartments, Mumbai, as it fulfilled the necessary conditions for exemption. The CIT(A) directed the Assessing Officer to recompute the long-term capital gains after considering the investment in the Crescent Bay property.

5. The Tribunal, after hearing the contentions of both parties, examined the facts and circumstances of the case. It noted the undisputed sale of the property and the investments made by the assessee in the Crescent Bay property. The Tribunal affirmed the CIT(A)'s decision to allow exemption under section 54 for the investments in the Crescent Bay property, as it was a valid investment fulfilling the statutory requirements. The Tribunal found no error in the CIT(A)'s order and upheld the decision.

6. Consequently, the Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s order to allow exemption under section 54 for the investments made in the residential flat at Crescent Bay apartments, Parel, Mumbai. The decision was pronounced in the open court on 11.01.2021.