Bela Sahni Vs DCIT (ITAT Delhi)
The Delhi ITAT allowed the appeal of the assessee and deleted disallowance of ₹91.48 lakh made towards exemption claimed u/s 54 in respect of investment in a second residential property. The assessee had invested capital gains arising from sale of ancestral property in two residential properties at Noida, including a property at Jaypee Greens Wishtown Klassic. The Assessing Officer denied exemption relating to the second property by applying the amendment introduced by the Finance Act, 2014 restricting deduction to “one residential house in India”.
The Tribunal held that the amendment effective from 01.04.2015 was prospective and could not be applied to AY 2013-14. Relying heavily on the Delhi High Court ruling in CIT vs. Gita Duggal and the Bombay High Court ruling in Krishnagopal B. Nangpal vs. DCIT, the ITAT reiterated that prior to the amendment, the expression “a residential house” in section 54 had to be interpreted liberally and could include multiple residential units. The Bench observed that taxation statutes must be interpreted in accordance with the law prevailing during the relevant assessment year and the subsequent restrictive amendment could not retrospectively curtail exemption otherwise available under the unamended provision. Accordingly, the Tribunal directed deletion of the entire disallowance and allowed exemption u/s 54 for the second residential house as well.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal is directed against the order dated 16.12.2024 of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as the “CIT (A)/NFAC”] passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the disallowance of Rs.91,48,775/- on account of deduction claimed u/s 54F of the Act, by the Assessing Officer was confirmed and appeal was partly allowed by deleting the disallowance of Rs.22,00,000/- in respect of installation charges, commission/broker charges, civil work done by the assessee in the new residential house.
