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2022 (5) TMI 545 - AT - Income TaxExemption u/s 54 - assessee purchases of two flats for exemption - scope of amendment u/s 54 - whether exemption under section 54 of the Act is available for two flats (houses) in case registration of sale deed is done in AY 2015-16, whereas the amendment in section 54 of the Act was announced in July, 2015 and the sale deed of the property purchased was done in Month of May, 2015, before amendment in section 54 - HELD THAT:- We note that flats were purchased by the assessee in assessment year 2014-15 however the sale deed was executed in assessment year 2015-16. Since the assessee has purchased these two flats in assessment year 2014-15 therefore, as per the provisions of section 54 of the Act, the assessee is entitled to claim the deduction. Before amendment in section 54 of the Act, even though section 54 mentions that proceeds should be invested in "a residential house", it being a beneficial provision, it should be construed liberally and the deduction cannot be restricted to only one residential house and it should be extended to the purchase of two adjacent residential flats. Therefore, the term “a residential house” used to interpret prior to assessment year 2015-16, ‘as more than ‘one residential house’. In the assessee`s case under consideration we note that assessee purchased two flats (house) in A.Y. 2014-15 when the amendment was not in force, therefore assessee is eligible for deduction under section 54 of the Act, for second house also. We note that above section 54 clearly says: “the assessee has within a period of one year before” can purchase the house. In the instant case the amendment in section 54 of the Act was announced in July, 2015 whereas sale deed of the property purchased was done in Month of May, 2015, that is, before amendment in section 54 of the Act. Hence, based on this factual position, the assessee is eligible to claim deduction under section 54 of the Act, on two flats (two houses). Thus assessee is eligible for deduction u/s 54 of the Act, when a residential property is purchased one year before or two years after the date of transfer so the amendment is not applicable, as the assessee purchased two flats in assessment year 2014-15 when the amendment was not in force. - Decided in favour of assessee.
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