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2016 (4) TMI 216 - MADRAS HIGH COURT

2016 (4) TMI 216 - MADRAS HIGH COURT - TMI - Deduction u/s. 54F - Tribunal was right in allowing assessee claim for deduction u/s. 54F especially when assessee owned two properties on the date of transfer of original assets and income from two properties were chargeable to tax under the head income from house property - Held that:- It is not a case of the Department that the case of the assessee would fall under any one of the three sub-clauses of clause (a) together with clause (b). The case of .....

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e which has to be treated under the head "income from house property". Therefore, the Revenue cannot take above all the terminology use in clause (b) under the proviso. This is a mistake into which the Revenue has fallen to treat the case of the assessee as falling within the purview of the proviso.

The facts of the case as narrated in the order of assessment would show that the assessee did not own more than one residential house other than the new asset on the date of transfer of th .....

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f applying clause (b) of the proviso independent of the clause (a) of the proviso did not arise. - Decided in favour of the assessee - Tax Case Appeal No.54 of 2016 - Dated:- 8-2-2016 - Mr. V.RAMASUBRAMANIAN and Mr. N.KIRUBAKARAN, JJ. For The Appellant : Mr.M.Swaminathan, Standing Counsel For The Respondent : Dr.Anita Sumanth JUDGMENT V.RAMASUBRAMANIAN, J The Revenue has come up with the above appeal, raising the following two substantial questions of law:- "1. Whether on the facts and circ .....

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Swaminathan, learned Standing Counsel for the Department and Dr.Anita Sumanth, learned counsel appearing for the respondent/assessee. 3. The Respondent/Assessee filed his Return of Income on 4.11.2009 for the Assessment Year 2009-10. The case was selected for scrutiny and notice was issued. 4. It was found that the assessee made cash deposits of ₹ 66,50,000/- at Indian Bank at various dates. When questioned, the assessee explained that the cash represented the sale proceeds of a land owned .....

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Act. 6. The assessee filed an appeal to the Commissioner of Income Tax (Appeals). The appeal was dismissed, forcing the assessee to file a further appeal before the Income Tax Appellate Tribunal. By an order dated 11.6.2013, the Tribunal allowed the appeal of the assessee on the ground that Section 22 uses only the expression "building", without qualifying it with an adjective "residential". The Tribunal in support of the said consideration, relied upon a decision of the Sup .....

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is covered by the proviso to Section 54F of the Act, the assessee is not entitled to the benefit of the substantive part of sub-section (1) of Section 54F. 9. Under the substantive part of Section 54F(1), the capital gain arising from the transfer of any long term capital asset, not being a residential house, shall not be subjected to the taxation provisions, if the assessee had within the period of one year before or two years after the date on which the transfer took place, purchased a residen .....

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transaction. There is also no dispute about the fact that within a period of two years after the date on which the sale of Neelankarai property took place, the assessee purchased a residential house in Kodaikanal. Therefore, all the three conditions stipulated in sub-section (1) of Section 54F, is satisfied in the case on hand. 11. But according to the Revenue, the case of the assessee would fall within the proviso to Section 54F and hence the benefit is not available to him. To appreciate the .....

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e date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the c .....

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es any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property .] Explanation.-For the pu .....

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n "and". 13. In other words, to attract the proviso under Section 54F(1), the conditions stipulated in clause (a)(i) together with clause (b) should be satisfied. Alternatively the contingency stipulated in clause (a)(ii) together with clause (b) should be satisfied or at least the contingency stipulated in clause (a)(iii) together with clause (b) should be satisfied. 14. It is not a case of the Department that the case of the assessee would fall under any one of the three sub-clauses .....

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