The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under Section 54F was allowable to the purchase of undivided share of land.
The assessee Justice N. Kannadasan, filed his return of income for the relevant assessment year 2012-13 on 20.11.2013 and claimed exemption under Section 54F of the Act. The AO during the course of assessment proceedings noticed that the assessee had acquired land from his spouse Smt. S.K.Geetha by way of settlement deed dated 06.04.2011 and sold part of vacant land ad-measuri acquired at Ambattur Industrial Estate.
The assessee claimed exemption u/s.54F of the Act for an amount being investment made in purchase of new residential house at Kalakshetra Colony, Chennai by purchasing residential house from his spouse. The AO examined the claim of assessee in regard to claim of exemption under Section 54F of the Act and held that the assessee was not entitled for the claim of exemption.
Section 54F of the Income Tax Act 1961, deals with tax exemption allowed on the long-term capital gains earned from selling any capital asset other than a house property.
P. Sajit Kumar on behalf of the revenue submitted that, argued that the property purchased by assessee for a consideration from his wife was never registered as sale deed and even after expiry of more than three years the property was in the name of his wife because no pacca sale deed had been registered.
He further submitted that once the assessee was already having one property and purchasing another property on 22.12.2011 was clearly hit by the provisions of section 54F.
S. Sridhar, on behalf of the assessee submitted that the assessee had actually purchased an undivided share of land on 22.12.2011.
The division Bench of Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) upheld the decision of Commissioner of Income Tax Appeal (CIT(A)) and dismissed the appeal filed by the revenue holding that “ The CIT(A) has allowed exemption u/s.54F by noting that the exemption is not hit because the assessee has actually purchased undivided share of land on 22.12.2011.”
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