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2012 (7) TMI 718 - AT - Income TaxDeduction / exemption u/s 54 or 54F - recognition of partition of HUF - conditions regarding transfer of capital asset by an Individual or a HUF - held that:- it is established that all the parties mentioned in the sale deed had become joint owners of the residential property. - There is no prohibition for oral partitions in the eye of law and they are valid. - the members of the HUFS were holding the property as co-owners in their individual capacity and not in the status of HUF. - AO has erred to hold that the conditions regarding transfer of residential building and land appurtenant thereto prescribed in section 54 of the Act in order to avail exemption is not fulfilled. - Decided in favor of assessee. Large portion of area being land - Whether the asset was residential house with land appurtenant thereto or predominantly land - held that:- Though the Government had allotted 3.85 Acres of land to the assessee’s Great Grand Father, the land falls in the residential zone wherein construction is possible for a restricted area of residential building. The assessee’s Great Grand Father had utilized the entire permissible area available for construction, for constructing the residential house. In such circumstances, it is obvious that the nomenclature of the asset predominantly falls in the category of residential building though large extend of the premises consist of land. - Decided in favor of assessee. The earnest effort taken up by the co-owners and the probable joint developers to convert the property into a commercial property cannot be construed to hold that the property is converted as a commercial property.
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