Kesavan Vanithamani Vs ITO (ITAT Chennai)
Section 54F deduction allowed – Commercial tannery not a residential house; Protective LTCG addition deleted – ITAT Chennai
In Kesavan Vanithamani vs ITO (A.Ys. 2017-18 & 2018-19), the dispute arose from taxation of capital gains on transfer of land under a joint development agreement and denial of exemption u/s 54F. The AO taxed entire capital gain in A.Y. 2017-18 and denied deduction holding that the assessee owned more than one house property.
The ITAT noted that the assessee owned one residential house and one tannery building, which was a commercial property. Merely because rental income from the tannery was offered under the head “Income from House Property” does not make it a residential house. Relying on Madras High Court ruling in I. Ifthiquar Ashiq, the Tribunal held that deduction u/s 54F cannot be denied unless the assessee owns more than one residential property on the date of transfer .
The Tribunal upheld CIT(A)’s finding that capital gains were correctly offered partly in A.Y. 2017-18 and balance in A.Y. 2018-19 based on timing of possession and consideration. Consequently, deduction u/s 54F was directed to be allowed and protective addition made in A.Y. 2018-19 was deleted as academic. Both appeals of the assessee were allowed
FULL TEXT OF THE ORDER OF ITAT CHENNAI
