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TMI Blog2018 (12) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased a residential house other than the "new asset" within a period of one year after the original asset. He ought to have considered that proviso to section 54F also permits ownership of one residential house, other than the new asset on the date of transfer of original asset. The appellant was having only one residential house (1/2 portion) on 12.9.2012 i.e. the date on which plot was sold hence the appellant was eligible for exemption u/s 54F of the Act to the extent of investment made for purchase of atleast one of the "new asset". Rejection of exemption claimed u/s 54F of the Act is wholly unjustified, improper, bad in law and deserves to be quashed. 2. The appellant further craves leave to add, alter, and/or to amend the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and registration cost of Rs. 1,56,170/- totaling to Rs. 21,56,170/-. During the course of proceedings, the assessee was show caused as to why the exemption claimed u/s 54F of the Act should not be denied as the assessee is the owner of one more residential house situated at Bhakta Prahlada Nagar, Indore. The A.O. therefore not accepting the explanation of the assessee declined to allow claim of deduction u/s 54F of the Act in respect of the house purchased at Rs. 1.10 crores. 3. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions dismissed the appeal. Now the assessee is in further appeal. The only effective ground in this appeal is against rejecting the claim of deduction made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat under the facts of the present case the deduction u/s 54F of the Act would not be applicable as on the date of claim of deduction. The assessee had two residential houses excluding the residential house on the purchase of which deduction is claimed by the assessee. 5. We have heard the rival submissions, perused the material available on records and gone through the orders of the authorities below. The only question is to be adjudicated in this appeal is whether the assessee is eligible for deduction u/s 54F of the Act. The relevant provision of section 54F of the Act speaks as under: "[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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"]" 6. From the aforesaid it is clear that application of section 54F(1) of the Act is barred in the following situations: a. The assessee,-- iv. Owns more than one residential house, other than new asset, on the date of transfer of the original asset; or v. Purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or vi. 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 hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer of the original asset i.e. on 16.7.2012 and 12.9.2012, the assessee was only owner of half portion of the house, which was in joint ownership. Therefore, the A.O. was not correct to decline benefit of section 54F(1) of the Act on this basis. However, Ld. CIT(A declined benefit of section 54F(1) of the Act on the basis that subsequent to transfer of original assets, the assessee had purchased two new assets. It is clearly contrary to the proviso (a)(ii) to section 54(F)(1) of the Act. Since the Ld. CIT(A) rejected the claim on the ground other than the ground taken by the A.O., he ought to have given a specific notice to the assessee in this regard. Therefore, considering the totality of the facts and case laws relied by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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