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2018 (4) TMI 438 - AT - Income TaxSection 54/54F - exemption eligibility - LTCG - investment in residential property out of amount received from sale of basement - The stand of the Assessing Officer was that the basement does not fall within the purview of “Residential Flat” as envisaged u/s 54 of the Act. Thus, the same not being in the nature of capital asset, the gain arising therefrom should be taxed. - Held that:- If the two units are conjoint together and to make it habitable (situated on the same floor) it will satisfy the provision and exemption u/s 54F will be available to the assessee. However, in the present appeal before us it is an admitted fact that the basement is part and parcel of the same building, therefore, we cannot do any violence to the section and the provision has to be read as it is. There is nothing in the section which requires that the residential house should be built in a particular manner. A person may construct a house according to his plans and requirements. Most of the houses are constructed according to the needs and requirements and even compulsions. For instance, a person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out or even the other family members can be adjusted and they can remain mutually supportive. In the instant case the basement is part and parcel of the same building / residential house. Considering all the assessee is entitled for exemption u/s 54 / 54F of the Act, therefore, we find no infirmity in the order of the ld. First Appellate Authority, therefore, it is affirmed. - Decided against revenue
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