Omkar Chadha Vs ITO (ITAT Delhi)
The issue under consideration is whether the investment made in two different properties out of the capital gains is eligible for deduction u/s 54F?
ITAT states that there has been an amendment in the provisions of the Act wherein “a residential house” has been amended as “one residential house” and argued that this amendment is clarificatory in nature, hence the case laws mentioned are no more applicable to the instant case. Relying on the judgment of the Hon’ble Jurisdictional High Court in the case of CIT Vs Rajendera Kumar, the ld. DR argued that any amendment which was introduced to rationalized and clear the existing ambiguity and doubts are to be treated as retrospective in nature. In the instant case, the issue is different from what has been examined in the case laws cited by the ld. Counsel of the assessee. In all the situations, the Courts upheld the deduction in the situations where the multiple units were either adjacent or on the same floor or on the different floors or multiple units in the same residential complex owing to division of property. Whereas in the instant case, there was no such division of property among the members and the investments are at different locations one being the investment in residential property at Jungpura of Rs.24,20,000/- and the other being at Ansal properties in NCR. No case law has been brought to our notice wherein two distinctly placed properties have been allowed for claim of deduction u/s 54F. Keeping in view, the geographical distances, the investment in two differently placed properties cannot be termed to be “a residential house” even after resorting to liberal interpretation of “a residential unit”. All the case laws relied by the counsel are found to be factually different from the instant case. Hence, keeping in view, the provisions of Section 54F, the amendments, the ratio of judgments, the AO was justified in restricting the assessee’s claim exemption under section 54F to investment in one residential property only.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-18, New Delhi dated 05.12.2016.
2. Following grounds have been raised by the assessee:
“1. Confirming the following additions made by the Assessing Officer:
a. Rs.17,29,976/- on account of capital gains;
b. Rs.50,000/- on account of disallowance of business loss.
2. Enhancing the income from capital gains by Rs.73,18,424/-.”
3. Brief facts of the case are that the assessee sold a land that he inherited with stated consideration in the sale deed at Rs. 78.75 lakh, the circle rate being Rs. 118.55 lakh, on which the appellant has made claim of exemption on account of two assets under section 54F, which is dispute before us.
4. The relevant facts related to these transactions are:
(1) The land was purchased by the father of the appellant in 1965 – 66 per Rs. 3800/-and subsequently inherited by the appellant.
(2) The land was sold on 02.12.11 to one Mr. Anuj Kumar for a sale consideration of Rs. 78.75 lakh as per the sale deed.
(3) The minimum value as per the circle rate was Rs. 1,18,55,480/- (and the stamp duty of Rs. 7.2 lakh thereon was paid by the buyer), taken at Rs. 1.20 crore.
(4) The appellant thereafter entered into an agreement for purchase of a flat with the builder M/s Ansal housing and construction, and the booking amount was paid on 20/1/2012.
(5) The total consideration for purchase of this flat was Rs. 65,41,210/-
(6) The appellant made payments from time to time and deposited Rs. 890760/- in Capital Gains Account Scheme for balance payment.
(7) The appellant also is claimed to have constructed new residential house over and above the existing residential property of the appellant at JungPura extension, spending in the process Rs. 24.2 lakh for additional construction of area 40 m2. In this backdrop, the appellant has made the computation of capital gains and the claim of exemption under section 54F as under:
