The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that more than one property under the heads of capital gain would get a deduction Under Section 54 of Income Tax Act 1961.
The fact of the matter is that,Assessee K.Gopalakrishnan is a non-resident and joint owner of a property along with her sister and mother, earning Long-Term Capital Gains from a residential house under a Joint Development Agreement. After the death of the assessee’s father he becomes the co-owner of the property. As per the agreement, the builder agreed to develop the property into a residential complex and agreed to give the owners payment of Rs.225 Lakhs in cash and 2 flats Each.Assessee transferred 50% of his 1/3rd undivided share in favor of the builder M/s Firm Foundations and Housing Ltd.
The Assessing Officer held that the sale consideration would also include proportionate value of proposed flats in the hands of the assessee. But assessee did not agree with that.AO calculated the total sale consideration was computed at Rs.548.30 Lacs.The assessee’s share therein would be Rs.182.76 .After assessee also claimed deduction u/s 54 taxable Long-Term Capital Gains but which was did not allowed the assessing officer against the order of Assessing Officer assessee filed appeal
V. Sreenivasan, Counsel for Revenue, pleaded that deduction under section 54 of Income Tax Act was not to be granted for more than one property.
T.V.Muthu Abirami counsel for assessee contented that assessee received sale consideration of Rs.75 Lacs which was offered to tax. As per the terms of Joint Development Agreement the flat was shared by other co-owners only.He also produced the assessment orders and Income tax Returns of the other co-owners.
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