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TMI Blog2020 (2) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... plated in section 54F. She has sold long term asset and which gave rise to long term capital gain. She has purchased a new residential house in India. Only objection raised by the AO is that she was having more than one residential house other than the new asset on the date of transfer of original asset. In other words, in the opinion of the AO, her case falls within the ambit of sub-clause (a)(i) of proviso of section 54F. In the sale deed flat at Bafna Tower, Indore has been termed as residential house, but ceased to be a residential property because commercial activities are going on in this property. All flat owners have let out their properties; that being so, no one can use it for residential purpose. This fact ought to have been examined by the AO before disbelieving. If this property is excluded from residential house, then the assessee would be having only 90% in a flat no.281, Kalpataru Heights, Mumbai. Apart from this, the assessee was not having any residential house in this accounting year, and therefore her case would fall within the ambit of clause (a)(i) of the proviso appended to section 54F. It is also pertinent to observe that object of Section 54F is go gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scrutinized by issuance of notice under section 143(2) upto 31.9.2010. Thus, before the search, the time limit to issue notice under section 143(2) for passing a regular assessment order under section 143(3) had already expired. On the strength of this, ld.counsel for the assessee submitted that the AO has disallowed claim of the assessee for grant exemption under section 54F, and such exemption has been denied without relying upon any material unearthed during the course of search, therefore, his order qua this issue is not sustainable. In support of his contentions, he relied upon a large number of decisions viz. i) Pr.CIT Vs. Desai Construction P.Ltd., 387 ITR 552 (Guj); ii) Pr.CIT Vs. Devangi, 394 ITR 184 (Guj) iii) Priya Holding P.Ltd. Vs. ACIT, 90 taxmann.com 408 (Guj); 6. On the other hand, the ld.CIT-DR took us through statement of the assessee recorded during the course of search. He made reference to question no.9 and its reply. Under question no.9, the assessee was asked to give details of movable and immovable properties held by her, and her family members, and also source thereof. In response to this question, assessee disclosed that she owned two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or *** *** *** 10. There is no dispute with regard to fulfillment of other conditions by the assessee as contemplated in section 54F. She has sold long term asset and which gave rise to long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Residential 11. The ld.counsel for the assessee submitted that a perusal of the above would indicate that at the relevant time only two properties are relevant which are shown at serial no.2 and 4. As far property-1 is concerned, it was already sold in the Asstt.Year 2007-08. Other one is gifted in the Asstt.Year 2004-05. All other properties have been acquired after the end of the accounting year relevant to the present assessment year. According to him, sub-clause (1)of clause (a) of the proviso appended to section 54F authorise the assessee to claim for exemption under section 54F if she owns one residential house, other than a new asset on the date of transfer of capital asset. In other words, this proviso disentitle benefit of section 54F only in a case where the assessee owns more than one residential house, other than the new asset on the date of transfer of original asset. Meaning thereby, if an assessee was having two residential houses already, when she purchased new house by utilizing long term capital gain, then she will not be entitled to claim exemption under section 54 of the Act. 12. The ld.DR on the other hand contended that Flat at I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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