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2019 (2) TMI 1059 - AT - Income TaxComputation of capital gain on sale of a property - holding period - whether the gain on sale of the RR Property which was obtained originally on 22.03.2001 on lease from the society which was subsequently conveyed absolutely by the society to the Assessee by a registered sale deed dated 31.08.2014 can be said to be a LTCG? - Held that:- It is not in dispute that the Assessee paid cost of the site as early as 22.3.2001 and was in possession of the property as lessee cum Agreement holder with right to obtain conveyance of absolute interest over the land that was leased. The expression “held by the Assessee” in the context of Sec.2(42A) of the Act, is rather ambiguous, in the sense that it does not speak of the date of vesting of legal title to the property. Even the provisions of sec.2(47)(v) & (vi) of the Act which defines what is “transfer” for the purpose of the Act, considers possessory rights as akin to legal title. It is therefore necessary to look into the policy and object of the provisions giving exemption from levy of tax on capital gain. In the present case, as we have already seen, the Assessee had paid the entire consideration for the site originally allotted as early as in the year 2001. The Assessee had performed its part of the contract with the society. Therefore the claim of the Assessee that it held the property from 22.3.2001 has to be accepted, keeping in mind the policy and object of the provisions giving exemption from levy of tax on capital gain. We are of the view that the capital gain in question in the present case has to be treated as LTCG as claimed by the Assessee Computation of capital gain and deduction u/s. 54F in respect of another property sold by the assessee during the relevant previous year - Held that:- 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. It is quite common to find such arrangements, particularly post-retirement. 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. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. The physical structuring of the new residential house, whether it is lateral or vertical, cannot come in the way of considering the building as a residential house. The fact that the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction u/s 54/54F. It is neither expressly nor by necessary implication prohibited. We are therefore of the view that the Assessee was entitled to claim deduction u/s.54F. Whether the deduction u/s.54F has to be restricted to only 1/3rd of the cost of acquisition of the new asset for the reason that the Assessee purchased the property along with the name of his wife and son shown as purchaser in the document under which the property was purchased? - Held that:- As decided in DIRECTOR OF INCOME-TAX. INTERNATIONAL TAXATION. BANGALORE VERSUS MRS. JENNIFER BHIDE [2011 (9) TMI 161 - KARNATAKA HIGH COURT] entire consideration had flow from Assessee and no consideration had flown from her husband. Merely because the husband’s name is also mentioned in the purchase document, the Assessee could not be denied the benefit of deduction. AO allowed deduction u/s.54EC only to the extent of 50% on the reasoning that deduction will be allowed only to the extent of investment made in the name of the Assessee - the entire consideration had flow from Assessee and no consideration had flown from her husband. Merely because the husband’s name is also mentioned in the purchase document, the Assessee could not be denied the benefit of deduction. Assessee should be entitled to the benefit of deduction u/s.54F of the Act, to the whole extent of investment in purchase of new asset, even though the property has been purchased in the joint names of Assessee, his wife and son - Decided in favour of assessee.
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