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2022 (5) TMI 1383 - AT - Income TaxLTCG - Period of holding of asset - deduction u/s 54 - HELD THAT:- Assessing Officer has rightly brought to tax gains on the sale of land as long term capital gain as the land was purchased in financial year 2006-07(ay: 2007-08) which was sold in financial year 2013-14(ay:2014-15) on which the Assessing Officer has rightly allowed the deduction u/s. 54 - So far as the residential building/house constructed on the said land is concerned, it was constructed in ay: 2014-15 on the aforesaid land, and the residential house was sold in ay: 2014-15 itself, the residential house was held for less than thirty six months, it is to be classified as short term capital asset and the gains arising therefrom shall be short term capital gains. The plain language of Section 54 clearly stipulate that deduction u/s 54 shall be allowed only on long term capital gains arising from sale of residential property, and the said deduction can no stretch of imagination be allowed on the short term capital gains - CIT(A) has rightly affirmed the assessment order passed by the AO, by relying upon the decisions of Hon’ble High Court, as are mentioned in its appellate order. It is also undisputed that the property which was sold was an residential house property. The apportionment to be done between land and building was required to be done, as land is long term capital asset in the instant case, while constructed residential house was held for not more than thirty six months. Further, the asset sold is composite being land and residential house constructed by the assessee, and hence for granting deduction u/s 54 of the 1961 Act, it is to be considered that the property sold was residential, and hence benefit u/s 54 will be available while reckoning the entitlement of the assessee for benefit u/s 54, while it is different matter, the same shall be restricted to long term capital gains arising on sale of land being long term capital asset for computing eligibility of deduction u/s 54 and its computation thereof, as the residential building/house constructed on the said land cannot be considered for grant of deduction u/s 54, being a short term. capital asset. Thus, this appeal filed by the assessee lacks merit. - Decided against assessee.
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