Deduction u/s 54F available on residential house irrespective of size of house used as residence or by whom it is being resided

Brief of the Case

ITAT Jaipur held In the case of Seema Singh Beniwal vs. DCIT that there is no restriction that what percentage of the size of flat should be used for residential purposes under the Income Tax Act. It is clarified by the CBDT that purchase of plot of land is a part of residential house for claiming of deduction U/s 54F. The revenue itself has admitted that it is a habitable as a servant quarter, which in other words, was habitable for human being either servant or master or any employee.

Facts of the Case

The assessee is a Director of M/s Oriental Autotech Pvt. Ltd from which she has received remuneration. The assessee had also shown interest income from banks and on loans advanced to private parties. The assessee had also declared income of Rs. 18,736/- u/s 44AF.The assessee had filed her return for A.Y. 2008-09 on 31/3/2009 declaring total income of Rs. 5,91,910/-, which was subsequently revised on 31/3/2010 declaring total income of Rs. 5,66,910/-.The case was scrutinized u/s 143(3). The assessee did not file the return in terms of provisions of Section 139(1) and therefore revised return filed by her cannot be accepted by the Assessing Officer.

The assessee had also not shown the income under the head long term capital gain in her original return of income, which had been claimed as exempt u/s 54/54EC . The assessee had also not mentioned any details in respect of sale of immovable properties in the original return of income. In the revised return of income, she had shown to have sold two flats for Rs. 22,38,000/- and Rs. 19,51,000/- totaling Rs. 41,89,000/-. The assessee had shown the cost of acquisition at Rs. 3,58,886/- and resultant, long term capital gain was shown at Rs. 38,30,114/-. This income had been claimed exempt in terms of provisions of Section 54 by way of investment of Rs. 12,22,900/- in purchase of house property and an amount of Rs. 30.00 lacs were deposited in capital gain account scheme. The Assessing Officer found assessee’s claim was not eligible u/s 54F by observing that one house was not a finished house, other on the ground that the assessee had purchased land and constructed a small room on it. The Assessing Officer has not considered this investment as residential house Accordingly, AO rejected the claim u/s 54 of the assessee and make addition on account of capital gain.

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