Houseboat purchased for using as Residential House not eligible for Capital Gain Exemption: ITAT [Read Order]

Houseboat - Capital Gain - ITAT

The Income Tax Appellate Tribunal (ITAT), Rajkot has held that a houseboat purchased for use as a residential house by the assessee is not eligible for capital gain exemption under section 54 of the Income Tax Act.

The assessee, who made an investment towards the purchase of houseboat was aggrieved by the order of the Assessing Authority who disallowed the exemption claim under the Act alleging that houseboat is not a residential property within the meaning of section 54 of the Act.

It was contended by the assessee that he was having exclusive possession of the houseboat and shall use the houseboat as the residential purpose and was the full owner and use as per his own choice.

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On the first appeal, the CIT(A) has confirmed the action of the AO by observing that in Srinagar houseboats are ordinarily used for catering to tourist and there has been never instances for the houseboat as used as a residential house. The first appellate authority further asked how the assessee can purchase a property in Jammu & Kashmir?

The Tribunal, while dismissing the second appeal filed by the assessee, observed that the assessee has not produced the registered sale deed for purchase of houseboat, therefore it cannot be said that the assessee has purchased a residential house.

“Further, there is a ban in the purchase of immovable property as well as a boat by the non-sate subject of the J & K State. Therefore, the assessee is not legally entitled to purchase houseboat, which is movable property but held to be land by J & K Land Revenue Act, 1939. Hence, the same cannot be equated with the residential house which is immovable property. Therefore, in these circumstances and considering the letter of the Assistant Commissioner (C), Government of Jammu & Kashmir dated 05.07.2013 we are inclined to hold the findings of the Lower Authorities are correct, accordingly this ground of assessee is dismissed,” the Tribunal said.

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