Case Law Details
Arunava Bhattacharjee Vs ACIT (ITAT Kolkata)
Introduction: The recent case of Arunava Bhattacharjee Vs ACIT before the ITAT Kolkata dealt with an important interpretation of the Income Tax Act pertaining to the claim of deductions under Section 54F. The court clarified that if an assessee owns more than one residential house, they are not eligible for this deduction.
Analysis: The appellant, Arunava Bhattacharjee, had sold a guest house and computed a long-term capital gain from this sale. The assessee claimed a deduction under Sections 54 and 54F of the Act. However, the Principal Commissioner of Income Tax (PCIT) noticed that the appellant owned more than one residential house other than the new asset, making him ineligible to claim deductions under Section 54F. The assessee argued that they were eligible for deductions under Section 54, not Section 54F, as the former doesn’t restrict deductions based on the number of houses owned.
The counsel for the assessee pointed out the disparity in conditions between Sections 54 and 54F, noting that the ownership restriction in Section 54F did not apply to Section 54. The ITAT Kolkata agreed with this line of argument, indicating that the PCIT had wrongly applied the conditions of Section 54F to the case, instead of Section 54.
Conclusion: The ITAT Kolkata’s decision clarifies that the conditions of Section 54F, particularly the restriction on owning more than one residential house, do not apply to deductions claimed under Section 54. This ruling emphasizes the need for careful interpretation of tax law provisions and asserts the difference in conditions for claiming deductions under different sections of the Income Tax Act. It serves as a crucial precedent for future cases involving similar disputes.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
When section 54 does not stipulate any such restriction of owning more than one residential house at the time of transfer of the original asset , it is surprising and disheartening to note that the PCIT did not accept the claim of the assessee and to add fuel to the fire both the assessing officer and the CIT (Appeals) did not accept the claim. In my opinion, this is a case where action needs to be taken against the PCIT, assessing officer and CIT (Appeals) by the CBDT, if it is considered that responsibility is to be fixed on the erring officers. Nowadays this type of irresponsible orders have become the order of the day as there is absolutely no control and supervision by the higher authorities. Hope that this comment reaches the eyes and ears of CBDT .