Jyothi Shetty Vs ACIT (ITAT Bangalore)
One Residential House Can Comprise Several Independent Units: ITAT Bangalore Allows Full Section 54 Exemption
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal has held that a residential house should not necessarily be equated with a single residential unit. Where several units together constitute one residential house and are retained by the assessee as such, exemption under Section 54 cannot be restricted merely because the units have been allotted separate numbers.
The Tribunal also held that where a case was selected for limited scrutiny to examine the deduction or exemption claimed from capital gains, the Assessing Officer could not enlarge the scope of scrutiny and enhance the disclosed sale consideration without obtaining the prescribed approval for conversion of the proceedings into complete scrutiny.
Facts of the case
The assessee, an individual, entered into a development agreement with a builder under which she transferred land and became entitled to receive certain constructed premises. In consideration, the assessee was to receive three flats, including the premises on the fourteenth floor along with basement car parking.
The assessee treated the entire premises bearing Flat No. 1401, measuring approximately 9,500 sq. ft., as one residential house retained by her. At the agreed construction rate of ₹1,700 per sq. ft., she claimed exemption of ₹1,61,50,000 under Section 54.
