Anu Gera Vs ITO (ITAT Delhi)
ITAT Delhi held that benefit of exemption under section 54 of the Income Tax Act available even if capital gain is invested in purchasing more than one residential houses within stipulated time limit.
Facts- The return of the assessee was processed u/s 143(1) of the Income Tax Act, 1961. The assessment proceedings have been initiated against the assessee and the claim of exemption u/s 54 of the Act has been denied by the AO.
AO denied the exemption mainly observing that the assessee is entitled for exemption u/s 54 in respect of a residential house property purchased against long term capital gain on sale of a long term capital asset being a residential property. In this case, the assessee has purchased three properties, the exemption u/s 54 of 1.T. Act is allowed in respect of a residential property in view of provisions of section 54 and not against all the tree properties.
Conclusion-In the case of Tilokchand & Sons vs. ITO, the Hon’ble Madras High Court has held that where the assessee HUF sold its residential house and invested capital gain in purchasing more than one residential houses within stipulated time limit assessee would be entitled to benefit of exemption u/s 54 of the I.T. Act.
Hon’ble Karnataka High Court in the case of CIT vs. Khoobchand M. Makhija, held that acquisition of more than one residential house by assessee out of capital gains would not dis-entitle assessee from availing benefit conferred u/s 54 of the Act.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal is filed by the assessee against the order dated 27.12.2016 of the ld. Commissioner of Income Tax (Appeals)-10 [(hereinafter referred to CIT (Appeals)] New Delhi, for assessment year 2009-10.
2. The assessee in the appeal has raised the following substantive grounds of appeal:-
“1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding “short term capital gain” arose on sale of residential property no G 27 Ground floor, Kalka Ji, Delhi instead of “Long term capital gain” as claimed by the Appellant.
2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding Rs.3,44,000 as cost of acquisition instead of cost of acquisition of Rs.16,75,000 claimed by the Appellant in computing capital gain on sale of residential property no G 27 Ground floor, Kalka Ji, Delhi.
3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding Rs.2,06,000 as cost of acquisition instead of cost of acquisition Rs.6,70,000 claimed by the Appellant in computing long term capital gain on sale of residential property no G 27 basement, Kalka Ji, Delhi.”
3. Brief facts of the case are that the assessee filed return declaring total income of Rs. 5,38,341/-, the assessee had shown income from business of Rs. 5,42,500/-, income from other sources of Rs. 1,450/- and LTCG of Rs. 29,28,945/- which was claimed as exempt income by the assessee u/s 54 of the Act. The return was processed u/s 143(1) of the Income Tax Act, 1961. The assessment proceedings have been initiated against the assessee and the claim of exemption u/s 54 of the Act has been denied by the AO in following manners:-
“6.2.3. Claim of exemption u/s 54 of 1.T. Act
The assessee has purchased three new properties as detailed below:
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