DCIT Vs Syama Reddy Mali Reddy (ITAT Hyderabad)
ITAT Hyderabad held that once it is proved that amount is invested towards purchase of new residential property then deduction under section 54F of the Income Tax Act cannot be denied merely because property got registered beyond stipulated period.
Facts- During original assessment, AO declined the assessee’s claim for deduction under Section 54 of the Act on two grounds, viz. the assessee had not purchased the new residential house within two years from the date of transfer of the original asset; and the assessee owned more than one residential house, i.e nine independent residential properties other than the new residential house on the date of transfer of the original asset.
CIT(A) allowed the assessee’s claim for deduction under Section 54F of the Act and directed the A.O. to determine the cost of acquisition of the Bhongir land @ Rs. 75,000/- per acre. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that once it is proved that the assessee had within the prescribed period invested towards purchase of the new residential property, then, despite that the legal title in the said property was not passed or transferred to her within a period of two years from the date of sale of the old property, it would not disentitle her from claiming deduction under Section 54F of the Act. We say so, for the reason that the word ‘purchase’ as used in sub-section (2) of Section 54F is not restricted or confined to a registered sale deed or even to possession, but has a wider connotation.
