Case summary, Income Tax

Capital gain exemption to be given to more than one house, when HUF property is sold

The Delhi bench of ITAT has held in the case of Ravi Jain vs ACIT that when an HUF’s residential house is sold, the capital gain can be invested for the purchase of more than one residential house and the benefit of exemption cannot be denied under s. 54(1) of the IT Act.

Assessee’s Arguments:

The assessee contended that the explanation used in the section 54 F of “a residential house” should be understood in the sense that the building should be residential in nature and “a” should not be understood to indicate a single number. As long as the assessee had acquired a building consisting of several units which could be conveniently and independently used as an independent residence, the requirement of section should be taken to have been satisfied.

Tribunal Holding:

The Tribunal while confirming the order of ld. CIT(A), agreed with the contention of the assessee, and held that the assessee would be eligible for deduction u/s. 54F on the purchased plots and constructed residential dwellings on those plots. It also held that since the amount had been utilized for the construction of the house, the amount would be eligible for deduction u/s 54F in accordance with law.

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Also Read: Income from House Property: 4 Questions and their Answers

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