The Income Tax Appellate Tribunal (ITAT), Pune Bench has held that amendment to section 54F (1) applicable from 1.4.2015 onwards and grants capital gain deduction for the purchase of multiple residential units.
The appellant, Arunkumar Purshotamlal Khanna claimed reinvestment of his long-term capital under Section 54F in respect of the purchase of twin residential units and the renovation, etc.
On perusal of the assessment records PCIT initiated revision under section 263 alleging that the assessee has made incorrect claim u/s 54F of the Act, in respect of the cost of acquisition of dwelling units two in place of one. The aggrieved appellant filed an appeal before ITAT.
The counsel for the revenue submitted that the legislature has amended the clinching statutory expression “a residential house” in section 54F(1) by substituting the same with “one residential house in India” only. And hence the claim of the appellant will not sustain.
The Coram of Mr. S. S. Godara, Judicial Member, and Dr. Dipak P. Ripote, Accountant Member observed that the appellant purchased the twin residential units in the year 2014 itself whereas the clinching amendment to section 54F (1) is applicable with prospective effect from 1.4.2015 only. Hence, “a residential house” for section 54F (1) deduction can indeed cover multiple units in the same or different towers or residential blocks; as the case may be.
The Tribunal has held that “we take into account all these facts as well as various judicial precedents quoted hereinabove to hold that the learned PCIT has erred in treating the assessee’s reinvestment of capital gains in purchase of these two flats totaling to Rs.5,30,60,200/- as wrongly allowed u/s 54F in the Assessing Officer’s regular assessment”.
Mr. Nikhil S. Pathak and Mr. Naveen Gupta appeared on behalf of the appellant and revenue respectively.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
