Section 54F: Vacant land cannot be treated as residential house

Dr. Devika Gunasheela Vs JCIT (ITAT Bangalore)

The only basis on which the assessee was denied the benefit of deduction u/s 54F of the Act was that the assessee owned more than two residential houses, other than the new asset on the date of transfer of the original asset. From the order of assessment passed u/s 147 of the Act for assessment year 2011-12 dated 12.10.2015, it is clear that the Dhobi Ghat, Thalgatpura and Nagadevanahalli properties were in fact not residential houses owned by the assessee and that the assessee had only given the lease of vacant land and obtained rent for land and not for any building. Therefore, it is clear 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, deduction u/s 54F of the Act should be allowed to the assessee. We hold and direct accordingly.

FULL TEXT OF THE ITAT JUDGEMENT

This is an appeal by the assessee against the order dated 11.03.2016 of CIT(A)-2, Bengaluru relating to assessment year 2012-13. The dispute in this appeal is with regard to computation of Long term Capital Gain and allowing exemption u/s 54F of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) to the assessee.

2. The assessee is an individual. She is a doctor by profession. The property measuring 3600 sq.ft. in ward No.49 Gandhi bazar, Bengaluru-4 (hereinafter referred to as “the property”) belonged to one Shri M. Gunasheela, he having obtained the same under partition deed dated 10.09.1970 between his brothers and his father. Shri M. Gunasheela died intestate on 30.11.2004 leaving behind his wife Dr. Sulochana Gunasheela and two daughters Dr. N. Madhavi Gunasheela & Dr. Devika Gunasheela (the assessee in this appeal) as legal heirs entitled to succeed to 1/3^rd share each of the property. On 30.09.2009, Dr. Sulochana Gunasheela, the mother of the assessee, through a registered release deed, released her /3^rd share of right and title in the property in favour of her two daughters Dr. Madhavi N. Gunasheela and Dr. Devika Gunasheela (the assessee in this appeal). Thus, the assessee and Dr. Madhavi N. Gunasheela became owners of 1/2 share each of the property. On 29.09.2011 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 ¹/₂ share of right title and interest over the property.

Please become a Premium member. If you are already a Premium member, login here to access the full content.