Arun K Thiagarajan Vs CIT (Karnataka High Court)
The case of Arun K Thiagarajan vs. CIT came before the Karnataka High Court to address a question of law regarding the interpretation of Section 54 of the Income Tax Act, 1961. The core issue was whether a taxpayer could claim an exemption under this section for capital gains by purchasing more than one residential property.
Factual Background
The assessee, Arun K Thiagarajan, sold a residential property in Chennai for ₹2,68,89,375 in October 2002. He then purchased two residential properties in Bangalore, one in Koramangala and the other in Domlur, in September and October 2002, respectively. In his income tax return for the Assessment Year 2003-04, he claimed a long-term capital gains deduction under Section 54 for the investment made in both properties.
The Assessing Officer (AO) disallowed this claim, arguing that the exemption was only applicable to one residential house. The AO limited the deduction to the property with the higher value (the Koramangala property). The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) both upheld the AO’s decision to deny the exemption for the second property, relying on the precedent from the case of ITO vs. SMT. H.V. Rajlakshmi. The ITAT, however, did direct a re-computation of the property’s value based on other factors.
Comments are closed.