Capital Gain Exemption u/s 54F allowable If Property in Question Found to be Commercial Nature: ITAT [Read Order]

Capital Gain Exemption - ITAT - taxscan

The Income Tax Appellate Tribunal ‘B’ Bench, Chennai, has while allowing an appeal filed by the Revenue, held that capital gain exemption u/s 54F is allowable only if the property in question is found to be of commercial nature.

The aforesaid observation was made by the tribunal when an appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) 14, Chennai, on 23.01.2020, with regard to the assessment year 2015-16.

The grounds of the appeal raised being that the order of the  CIT(A)  deleting the addition by the Assessing Officer towards the withdrawal of exemption claimed under section 54F, is contrary to the law, facts, and circumstances of the present case, the tribunal allowing the Revenue’s appeal  as well as the Cross Objections filed by the assessee, observed as follows :

“we are of the considered opinion that the issue needs to go back to the Assessing Officer for further verification to ascertain the nature of the property and ownership of the property.

In fact, the assessee, through his Cross Objection has raised a ground that the Assessing Officer has not given sufficient time to justify his case with necessary evidences.

Hence, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to cause necessary inquiries on the additional evidences filed by the assessee to ascertain the nature of the property. And in case, the Assessing Officer finds that the property is accounted for in the books of firm M/s. S.P. Hospital as a commercial property and that the same is being used for the purpose of the aforesaid hospital, then the Assessing Officer is directed to allow deduction under section 54F of the Act.

As a result, the appeal filed by the Revenue and the Cross Objections filed by the assessee is allowed for statistical purposes. “

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