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Facts
The assessee claimed exemption under Section 54F for the purchase of a residential house in CDA, Cuttack, after selling a land. The exemption was denied by the AO because the assessee owned more than two residential houses at the time of purchase. The assessee argued that one of the properties was commercial and thus did not count as a residential house for the purpose of the section.
Held
The Tribunal considered the rival submissions and perused the facts. It was found that the property purchased in CDA, Cuttack was indeed a residential house. The second property, at Janpath, Bhubaneswar, was admitted to be commercial, as evidenced by rental income and corporation tax paid. The Tribunal held that the assessee should not own more than one residential house other than the new asset on the date of transfer of the original asset.
Key Issues
Whether the assessee is entitled to deduction under Section 54F when they owned a commercial property in addition to one residential house at the time of purchasing the new residential house.
Sections Cited
54F
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
(नििाारण वर्ा / Assessment Year : 2018-2019) Pravanshu Samantaray, Vs ITO, Ward-1(1), Cuttack C/o : Adikanda Samantaray, At: Rajabagicha,PO Telenga Bazar Dist : Cuttack-753009 PAN No. : ACXPS 7565 D (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. नििााररती की ओर से /Assessee by : Shri P.K.Mishra, Sr. DR राजस्व की ओर से /Revenue by : Shri Vijay Singh, Sr. DR सुनवाई की तारीख / Date of Hearing : 24/09/2025 घोषणा की तारीख/Date of Pronouncement : 24/09/2025 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of Ld.CIT(A), National Faceless Appeal Centre(NFAC), Delhi, dated 29/04/2025, for the assessment year 2018-2019.
It was submitted by the ld. AR that the assesee owned one residential house representing a flat in Bhubaneswar where the assesee is staying. The assesee is also deriving rental income from a commercial property jointly owned by the assesee and his brothers and sisters. It was the submission that the commercial property was received by the assesee on the demise of his father. It was the submission that the said commercial property was a joint owned property with the brothers and sisters of the assesee. It was the submission that the assesee also owned a piece of land in Trisulia, Cuttack. It was the submission that the assessee sold the said land for a consideration of Rs.80,48,000/- and had invested the sale proceeds in the acquisition of a residential house in CDA, Cuttack. It was the submission that the assesee had claimed exemption u/s.54F of the Act in respect of the said investment in the house property purchased by the assesee during the impugned assessment year in CDA Cuttack. It was the submission that the said exemption u/s.54F of the Act was denied by the AO on account of that the assesee owned more than two residential house when the residential house in CDA Cuttack was acquired. It was the submission that the fact remains that the assesee had owned one residential house being flat in Acrux Neon, Rudrapur, Bhubaneswar and a share in the commercial property at Janpath, Bhubaneswar. It was the submission that the AO when examined the return of the assesee found that the assesee was showing rental income under the head income from house property and had taken assumption that the commercial property is a residential property. It was the submission that the assesee did not have more than two houses when he acquired the house at CDA, Cuttack, therefore, the assesee was entitled to the benefit of deduction u/s.54F of the Act in respect of residential house purchased by the assesee in CDA, Cuttack.
In reply, ld. Sr. DR vehemently supported the order of the ld. CIT(A) and ld. AO. It was the submission that all details have not been produced before the AO and ld. CIT(A). It was the further submission that there is no evidence that the commercial property was not being as a residential property.
We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the property purchased by the assesee in CDA, Cuttack clearly shows that the same is a residential house. The allotment letters specifically shows Plot No.6B/925/1 with building under “B” category in Sector 9 of Bidanasi Project Area. Therefore, the claim of the AO that the assesee has not purchased a residential house no more survives.
Now, coming to the issue of deduction u/s.54A of the Act, the facts clearly shows that the assesee owns one residential house representing a flat in Acrux Neon, Rudrapur, Bhubaneswar. Second property is admittedly a commercial property which is evident from the fact that the rent is received from Central Bank of India of Rs.12,38,000/- and Amber, Janpath, Bhubaneswar at Rs.24 lakhs. The corporation tax also shows for per year tax at Rs.4,92,660/-, which admittedly is not for a residential property but for a commercial property. A perusal of the provisions of Section 54F of the Act clearly shows that the assesee should not own more than one residential house other than the new assets on the date of transfer of the original asset. The words used is “residential house”, admittedly, the property at Janpath, Bhubaneswar is not a residential house but is a commercial property. Therefore, we are of the view that the assesee is entitled to the benefit of deduction u/s.54F of the Act. In these circumstances, the AO is directed to grant the assesee benefit of Section