Law: Income Tax Act, 1961

Section: 54F,271(1)(c)

Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house (Ownership of more than one house) - Assessment year 2007-08 - Assessee filed its return claiming deduction under section 54F - AO denied exemption on ground that assessee already owned two residential properties - It was found that at time of sale of asset, assessee was only a co-owner holding 15 per cent share in one residential property apart from owning another residential house - Further, said house was in fact purchased within time allowed under section 54F was supported by documents placed on record by assessee - Whether on facts, assessee duly satisfied conditions prescribed under section 54F and, thus, his claim for deduction was to be allowed - Held, yes [Paras 18 and 20] [In favour of assessee] FACTS â–  For the relevant year, assessee claimed deduction under section 54F against long term capital gain arising from sale of shares. â–  The Assessing Officer found that on the date of sale of shares assessee had already owned two residential houses and, thus, assessee's claim for deduction under section 54F could not be allowed. â–  In order to arrive at aforesaid conclusion, the Assessing Officer rejected assessee's contention that on the date of sale of shares, he did not own two residential house properties rather he was only a 15 per cent co-owner in one of said properties. â–  The Commissioner found that assessee had paid sale consideration of residential house property as on 10-4-2007 in order to get complete ownership which was within time limit prescribed by section 54F. â–  He thus allowed assessee's claim for deduction under section 54F. â–  The Tribunal upheld the order of the Commissioner (Appeals). â–  On revenue's appeal: HELD â–  It has been factually found by the Commissioner (Appeals) and concurred with by the ITAT that the shares were held for more than 12 months and it was therefore long term capital asset. The fact of purchase of shares by the assessee on 25-10-2005 and their sale to 'F' on 8-11-2006 have been sufficiently proved by the assessee by producing the requisite evidence.…

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