ITAT Allows 1.3 Cr Capital Gain Exemption u/s 54 on Sale of 2 Houses to Buy Joint Property: Read to Know More

ITAT Allows 1.3 Cr Capital Gain Exemption u/s 54 on Sale of 2 Houses to Buy Joint Property: Read to Know More

Smt. Tejal Kaushal Shah, an individual, filed her return of income for AY 2012–13, declaring total income of Rs. 5,46,104. Her case was scrutinised under Sections 143(2) and 142(1) of the Income Tax Act, 1961.

Assessing Officer Disallowed exemption under Section 54 of Rs. 1,30,30,729 for capital gains arising from the sale of residential property.

The ld. AO rejected the claim of exemption u/s. 54 of the Act amounting to Rs. 1,30,30,729 in the assessee’s case for the reason that the exemption u/s. 54 has been claimed both by the assessee and her husband separately for contributing to the purchase of a new residential house, and further, the ld. AO held that the new property has been purchased by transferring two residential houses, which violates the condition of Section 54 of the Act. Further, the ld. AO has stated that the assessee’s husband’s name is mentioned as the ‘First Owner’ in the purchase agreement of the old property which was sold by the assessee in which the assessee’s name is mentioned only as the ‘Second Owner’ for which the assessee contends to be an error crept in the registered agreement. The ld. AO further held that the assessee has failed to furnish documentary evidence such as ba ank statement,t to show that the payment for purchase of old property was made by the assessee and not her husband and has also failed to furnish copy of purchase and sale agreement of the old property to establish the mode of payment.

Further, the ld. AO also made an addition of Rs. 10,43,158 on the annual let out value of the office premises located at Juhu lane u/s. 23(1) of the Act after considering the fair rental value of office located in the neighborhood as available in the website www.magicbricks.com.

These additions were upheld by the first appellate authority.