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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE – VIRTUAL COURT
Before: SHRI R.S. SYAL
आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT(A) on 24-09-2020 in relation to the assessment year 2015-16. 2. The only issue raised in this appeal is against the denial of exemption u/s.54F of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in respect of the second unit of the house purchased by the assessee. 3. Succinctly, the facts of the case are that the assessee transferred certain property resulting into long term capital gain of Rs.34,04,962/-. The assessee invested sale
Ms. Anita Mahindrakumar Oberai consideration into purchase of two Flats, numbering, 1101 and 1102 at Malad, Mumbai with total consideration of Rs.1.26 crore. Exemption u/s.54F was claimed for the said two flats.
The AO held that the exemption was available only in respect of one flat. He, therefore, reduced the amount of exemption by Rs.11,79,975/- anent to the second flat. The ld. CIT(A) echoed the assessment order on this point, against which the assessee has come up in appeal before the Tribunal.
I have heard both the sides and perused the relevant material on record. There is no dispute on any other aspect of the computation of long term capital gain, except the denial of exemption u/s.54F in respect of one property only on the ground that the exemption was available only for one residential unit and not the two residential units purchased by the assessee. It is also not in challenge that the assessee purchased two flats, numbering, 1101 and 1102 at Malad, Mumbai, which shows that these were adjacent flats, which the assessee claimed to have purchased for use in a consolidated manner as one residential house. Section 54F of the Act, prior to substitution by the Finance Act No.2 of 2014 w.e.f. 01-04-2015, stated that the exemption will be available
Ms. Anita Mahindrakumar Oberai where the assessee has “constructed, a residential house”.
Various judicial forums, taking into consideration the relevant provisions of the General Clauses Act, interpreted this provision as conferring benefit on more than one flats by holding that singular included plural. The Finance Act, 2014 substituted the relevant part of the provision by inserting the words: “constructed, one residential house” in place of “constructed, a residential house”. The effect of the amendment is that now exemption is available only in respect of one residential house.
Adverting to the facts of the extant case, I find that the assessee purchased two flats to be used as a single dwelling unit. Since these two units are adjacent to each other and meant for use as a single property, mandate of the substituted provision, being, one residential house, is still also satisfied.
The view point of the ld. CIT(A) that the amendment carried out to section 54F w.e.f. 01-04-2015 has changed the legal position, is albeit factually correct, but, in the given facts, even the amended provision comes to the rescue of the assessee inasmuch as the assessee acquired one residential house only comprising of two flats. In view of the foregoing reasons, I
Ms. Anita Mahindrakumar Oberai am satisfied that the assessee deserves exemption u/s.54F on second unit as well. I order accordingly. The impugned order is set-aside to this extent.
In the result, the appeal is allowed. Order pronounced in the Open Court on 01st February, 2022.
Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT पुणे Pune; �दनांक Dated : 01st February, 2022 Satish
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order is forwarded to :