ACIT Vs Himanshu Garg (ITAT Delhi)
In the case of ACIT vs. Himanshu Garg, adjudicated by the ITAT Delhi, the central issue revolved around the eligibility of exemption under Section 54F of the Income Tax Act, 1961. This provision allows individuals or Hindu Undivided Families (HUFs) to claim exemption from long-term capital gains tax if the gains are reinvested in a new residential property within a stipulated period. The controversy arose over whether a property with a covered area of 500 square feet on agricultural land qualified as a “residential house” under Section 54F.
Factual Background and Arguments:
Property Purchase and Claim: Himanshu Garg had sold certain properties, realizing long-term capital gains of Rs. 1,84,23,729. He subsequently invested in a property described as agricultural land with a constructed area of 500 square feet, costing Rs. 5,41,36,367. The assessee claimed exemption under Section 54F based on this investment.
Assessing Officer’s View: The Assessing Officer (AO) disallowed the exemption, arguing that a property primarily used for a concrete brick manufacturing unit (M/s Surabh Ferrocon) could not be considered residential. The AO also highlighted that the registration documents categorized the property as agricultural land, and the local authorities confirmed its use for industrial purposes.
