Vipul Kamal Prakash Sud Vs PCIT (ITAT Ahmedabad)
One Residential House Sold Floor-wise Still One Asset – AO Examined 54 Claim in Detail – ITAT Says 263 Not Permissible
Assessee filed return declaring total income of ₹3,03,58,490. During assessment u/s 143(3), AO examined the capital gain arising from sale of Assessee’s ½ share in a residential house sold for ₹8.59 crore. Assessee invested the entire Long-Term Capital Gain of ₹5.56 crore in a new residential property & claimed deduction u/s 54, which AO accepted after calling for & examining details. Assessment was completed accepting the returned income.
PCIT invoked revision u/s 263 alleging that the claim u/s 54 was wrongly allowed since basement portion, which formed part of the sale, could not be treated as a residential house due to lack of amenities. He held that AO had not verified the nature of the basement & set aside the assessment directing fresh examination of deduction u/s 54.
Before Tribunal, Assessee clarified that he had sold his entire ½ share of the whole residential building (basement + ground + first + second + third floor), not the basement alone. The total sale consideration of ₹8.59 crore represented one single house property, merely sold floor-wise to different buyers. The capital gain was computed on the entire house, & the deduction u/s 54 was also claimed on the entire gain, not separately on the basement. Therefore, PCIT’s assumption that exemption was claimed only on basement was factually incorrect. It was further shown that AO had already examined this issue during scrutiny, & Assessee’s detailed submission dated 07.07.2022 was on record.
