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TMI Blog2022 (7) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... merit that the assessee is not eligible for deduction under Section 54F of the Act since the said issue was not involved for consideration on merit in the year under appeal, i.e. AY 2016-17. We find merit in this contention of assessee and since the learned DR has also not raised any objection in this regard, we modify the impugned order of the learned CIT(A) and direct the Assessing Officer to decide the issue relating to the assessee s claim for deduction under Section 54F of the Act afresh on merit in AY 2018-19 after giving the assessee an opportunity to establish his case that the investment was made by him in purchase of one residential unit and not two residential units as alleged by the Assessing Officer. Appeal of the assessee is treated as partly allowed. - ITA No. 611/Ahd/2019 - - - Dated:- 13-7-2022 - Shri P.M. Jagtap, Vice-President And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri D.K. Parikh, AR For the Revenue : Shri Abhimanyu Singh Yadav, Sr. DR ORDER PER P.M. JAGTAP, VICE-PRESIDENT: This appeal filed by the assessee is directed against the order of learned Commissioner of Income-tax (Appeals)-13, Ahmedabad ( CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itachi Hirel Ele. Private Ltd for a total consideration of Rs.2,56,76,800/- and after claiming deduction on account of indexed cost of acquisition of said shares amounted to Rs.4,54,602/-, the Long Term Capital Gain was arrived at Rs.2,52,22,198/-. In the return of income filed for the year under consideration, deductions of Rs.50 lakhs and Rs.2,02,22,198/- were claimed by the assessee under Section 54EC and 54F of the Act respectively and accordingly the Long Term Capital Gain at Rs. Nil was declared. The return filed by the assessee was selected for scrutiny for examining the deductions claimed by the assessee under Section 54EC and 54F of the Act. On examination, the Assessing Officer found that the deduction under Section 54F was claimed by the assessee on account of investments made in the purchase of the following two residential flats:- Date of purchase Cost of purchase including stamp duty and regn charges Area Address Party from whom purchased 20.07.2017 Rs.60,91,059 21.09 Sq. Mtr Flat No.601, B-Wing, Palm Spring, Palm Court Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s two different units. (vi) BEST electric and water supply meter are also independent. 5. For the reasons given above, the Assessing Officer held that the investment made by the assessee in purchase of two residential flats during the FY 2017-18 by withdrawing from the Capital Gain Account was liable to be treated as income of the assessee for AY 2018-19 in view of the provisions of Section 54F(1) of the Act. 6. The order passed by the Assessing Officer under Section 143(3) of the Act dated 28.11.2018 holding that deduction claimed by the assessee under Section 54F of the Act for the year under consideration was liable to be withdrawn and the income to that extent was taxable in the hands of the assessee for AY 2018-19 when the amount kept in capital gain account was withdrawn and utilized for making investment in purchase of two residential units was challenged by the assessee in an appeal before the learned CIT(A) and the submissions made before the Assessing Officer were reiterated on behalf of the assessee before the learned CIT(A) in support of his case that both the residential flats were joined - making it one residential unit - by the seller before the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd contravened the provisions of section 54F(1) of the Act which limits investment in one residential units. Accordingly deduction of Rs.2,02,22,198/- claimed on account of investment in capital gain scheme was required to be treated as income of A.Y. 2018-19. He allowed deduction in current year because, appellant has made investment in capital gain saving scheme in current year but held that as appellant has violated provisions of section 54F by investing in two flats separately, such deduction is required to be taxed as income in A.Y. 2018-19 as per provisions of section 54F of the Act. 5.3 The appellant, on the other hand, argued that the amendment brought by Finance Act 2014 only clarified that the investment in the residential house which would qualify for deduction u/s 54F of the Act has to be necessarily located in India. The investment made by the appellant in new residential house is located in India and therefore, appellant is eligible to claim deduction u/s 54F even after applying the amended provisions of the Act. 5.4 On overall consideration of facts it is observed that during the year under consideration, the appellant has sold shares and relevant amount ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is available if the investment is made in one residential house situated in India. It is further proposed to amend the aforesaid sub-section (1) of section 54F so as to provide that the exemption is available if the investment is made in one residential house situated in India. These amendments will take effect from 1st April, 2015 and will accordingly apply in relation to assessment year 2015-16 and subsequent assessment years. The following are the relevant amended provisions: 54F(1) [Subject to the provisions of sub-section (4), where, in case of an assessee being an individual or a Hindu undivided Family], the capital gain arises from the transfer of any long-term capital asset, not being as residential house (hereinafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date (constructed, one residential house in India) (hereinafter in this section referred to as new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas case of appellant falls within second restriction, as discussed herein above. 5.6 In the present case, while passing the assessment order, the AO has observed that appellant has purchased two housing units separately, deeds are executed separately, no evidence in form of sanction of BMC for amalgamation of these two fiats into a single residential unit has been submitted by assessee, in the record of housing society as well as flat no 601 and 602 have been recorded as independent units of two different owners, BMC is also charging the taxes as two different units, BEST electric and water supply meter are also independent and he came to conclusion that both units being unit 601 and 602 are two different units which cannot be considered as one unit as per amendment brought by Finance Act 2014 from 01/04/2015. The appellant has not rebutted any such argument in appellate proceedings, considering these facts, AO has held that as investments in two flats are made in AY 2018-19, Appellate is required to offer income in said assessment year. Considering these facts, AO is directed to take appropriate action in AY 2018-19 and determine income in said year as per directions abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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