ITO Vs Rasiklal N. Satra (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in the case of Income Tax Officer (ITO) versus Rasiklal N. Satra, dismissed an appeal filed by the Revenue, upholding the assessee’s claim for exemption under Section 54F of the Income Tax Act, 1961. The core of the dispute revolved around the interpretation of “ownership of a residential house” in the context of co-owned property for the purpose of claiming capital gains exemption.
Background of the Case
The assessee, Rasiklal N. Satra, reported a capital gain of Rs. 6,68,698/- from the sale of shares. To avail tax benefits, he claimed exemption under Section 54F of the Income Tax Act, which permits exemption on long-term capital gains if the net consideration is invested in the purchase or construction of a new residential house within a specified period. Mr. Satra stated that he had invested the gains in acquiring residential flats located in Vashi, Navi Mumbai.
During the assessment proceedings, the Assessing Officer (AO) identified that Mr. Satra was a co-owner of an existing flat situated in Sion (West), Mumbai. This discovery prompted the AO to question the assessee’s eligibility for the Section 54F exemption, as the provision typically applies when the assessee does not own more than one residential house, other than the new asset, on the date of transfer of the original asset.
