The assessee, Dr. Devika Gunasheela is an individual. She is a doctor by profession. The property measuring 3600 sq.ft. belonged to one Mr. M. Gunasheela, having obtained the same under partition deed between his brothers and his father. Mr. M. Gunasheela died intestate leaving behind his wife Dr. Sulochana Gunasheela and two daughters Dr. N. Madhavi Gunasheela & Dr. Devika Gunasheela, who the assessee in this appeal as legal heirs entitled to succeed to one-third share each of the property.
Dr. Sulochana Gunasheela, the mother of the assessee, through a registered release deed, released her one third share of right and title in the property in favour of her two daughters Dr. Madhavi N. Gunasheela and Dr. Devika Gunasheela.
Thus, the assessee and Dr. Madhavi N. Gunasheela became the owner of half share each of the property. The assessee and her sister Dr. Madhavi N. Gunasheela sold the property for a sale consideration of Rs.3,02,40,000. The assessee received a sum of Rs.1,51,20,000 as her share in the sale consideration for sale of half share of right title and interest over the property.
The dispute in this appeal is with regard to computation of Long term Capital Gain and allowing exemption under section 54F of the Income Tax Act, 1961 to the assessee.
The assessee claimed exemption under section 54F instead of section 54 of the Act. Deduction under section 54F of the Act is available on sale of any capital asset other than residential house.
The assessee’s request for allowing claim of exemption under section 54F of the Act was denied by the AO for the reason that the assessee owned more than one residential house other than the new asset on the date of the transfer of the original asset.
On an appeal to the CIT(A), the claim for deduction was denied for the reason that the Assessee owned more than one residential house, other than the new asset, i.e. the Assessee owned three residential houses and that as per the requirements of Section 54F of the Act, if the Assessee owns more than one residential house, other than the new asset, then the exemption will not be allowed.
The Assessee pointed out that out of the three properties listed by the CIT(A) in the impugned order, two properties were only vacant land not residential house and that that received in respect of the two properties, these were claimed to be vacant land only and the rent received from letting out these two properties were only rent for lease of land and not land together with building.
The two-member bench of Tribunal headed by the Vice President N.V. Vasudevan held that the assessee did not own more than one residential house, other than the new asset on the date of transfer of the original asset.
Therefore, the tribunal allowed the deduction under section 54F of the Act to the assessee.Subscribe Taxscan AdFree to view the Judgment