CPT V24P7-Art1 (Content).pmd - Taxmann
CPT V24P7-Art1 (Content).pmd - Taxmann CPT V24P7-Art1 (Content).pmd - Taxmann
682 DECISION Validity of availing twin benefits of sections 54F and 54EC in respect of sale of one long-term capital asset An analysis of Asstt. CIT v. Deepak S. Bheda [2012] 23 taxmann.com 159 (Mum. - Trib.) The appellate Tribunal in Asstt. CIT v. Deepak S. Bheda [2012] 23 taxmann.com 159 (Mum.) has held that on transfer of a long-term capital asset (not being a residential building) the assessee can avail of twin benefits of tax exemptions, viz., under section 54F for the investment in a residential house and by making deposit in the bonds specified under section 54EC. It held that there is no embargo, in law, to restrict the benefit of exemption, limiting it to any one particular section. Another passing reference made in this decision by the Tribunal related to specification of its jurisdiction by stating that it could not enhance the income than what was assessed originally by the Assessing Officer. COMMENTS CA V.K. SUBRAMANI 12345678901234567890123456 12345678901234567890123456 1234567890123456789012345 1234567890123456789012345 The assessee in this case sold his ancestral property for ` 340 lakhs. The entire amount was taken as long-term capital gain, since the cost of acquisition of the ancestral property was taken as ‘nil’. The assessee reinvested August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 62 ` 260 lakhs for purchase of a residential house property and deposited ` 50 lakhs in capital gain bonds of the Rural Electrification Corporation Ltd. The assessee claimed the benefit of exemption under sections 54F and 54EC which the Assessing Officer rejected. In the assessment the exemption was granted only under section 54F and the benefit of section 54EC was denied in toto. Even in respect of the benefit under section 54F, the Assessing Officer held that the assessee had acquired four flats out of which only one flat was eligible for the exemption. The Commissioner (Appeals) held that section 54EC provides for tax exemption even when part of the capital gain is invested in specified longterm asset, i.e., notified bonds. With regard to exemption under section 54F, he allowed the exemption as claimed by the assessee, since the flats were contiguous to one another and operated as a single dwelling house. The Tribunal held that where more than one dwelling units are acquired, which are adjacent to one another and are converted into one house for the purpose of residence by having
a common passage, common kitchen, etc., it would be a case of reinvestment in one residential house and, hence, eligible for exemption for all the flats. Accordingly, it upheld the claim of the assessee and allowed exemption under section 54F and held that the benefit of section 54EC is no way limited by the Statute and, hence, was also allowable to the assessee. In ITO v. Ms. Sushila M. Jhaveri [2007] 107 ITD 327 (Mum.) (SB) the Tribunal held that if the assessee has acquired more than one residential house, the benefit of exemption under section 54 or section 54F is limited to one residential house only. Where the residential units are independently located the benefit of exemption cannot be extended to all the residential units and would be limited to one residential unit at the choice of the assessee. CONCLUSION 12345678901234567890123 12345678901234567890123 12345678901234567890123 The Tribunal was emphatic to hold that the benefit of exemption or denial of the same must be in accordance with what is mandated in law. When section 54EC mandates deposit of long-term capital gain either in whole or in part, the benefit has to be conferred in the absence of any other condition limiting or restricting the same. The plea of the Revenue, that the entire benefit of section 54F was to be denied, was something more than what the Assessing Officer had resorted to in the assessment. The Tribunal opined that it could not enhance the assessment than what was made by the Assessing Officer. Readers may note that this power of enhancing the income more than what is originally assessed, however, is vested in the CIT(Appeals). The above said analogy of availing twin benefits by combination of investments falling under different legal provisions could be thought of by combining section 54 with section 54EC also when a residential house is transferred and yet another residential house is acquired or constructed along with deposit in capital gains bonds. Transfer of depreciable assets held for more than 36 months with block ceasing to exist and reinvestment in a residential house covered by section 54F along with bonds specified in section 54EC, could also be contemplated. • DT - Secs. 54EC, 54F-EC - Asstt. CIT v. Deepak S. Bheda [2012] 23 taxmann.com 159 (Mum. - Trib.). August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 63 ••• 683
- Page 13 and 14: for earning tax exempt income. Howe
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- Page 39 and 40: of the Act. It will not apply to de
- Page 41 and 42: ank. It follows that if the amount
- Page 43 and 44: This article aims to study various
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682<br />
DECISION<br />
Validity of availing twin benefits of sections<br />
54F and 54EC in respect of sale of one<br />
long-term capital asset<br />
An analysis of Asstt. CIT v. Deepak S. Bheda [2012] 23<br />
taxmann.com 159 (Mum. - Trib.)<br />
The appellate Tribunal in Asstt. CIT v. Deepak<br />
S. Bheda [2012] 23 taxmann.com 159 (Mum.)<br />
has held that on transfer of a long-term capital<br />
asset (not being a residential building) the<br />
assessee can avail of twin benefits of tax<br />
exemptions, viz., under section 54F for the<br />
investment in a residential house and by making<br />
deposit in the bonds specified under section<br />
54EC. It held that there is no embargo, in law,<br />
to restrict the benefit of exemption, limiting<br />
it to any one particular section. Another passing<br />
reference made in this decision by the Tribunal<br />
related to specification of its jurisdiction by<br />
stating that it could not enhance the income<br />
than what was assessed originally by the<br />
Assessing Officer.<br />
COMMENTS<br />
CA V.K. SUBRAMANI<br />
12345678901234567890123456<br />
12345678901234567890123456<br />
1234567890123456789012345<br />
1234567890123456789012345<br />
The assessee in this case sold his ancestral<br />
property for ` 340 lakhs. The entire amount<br />
was taken as long-term capital gain, since the<br />
cost of acquisition of the ancestral property<br />
was taken as ‘nil’. The assessee reinvested<br />
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 62<br />
` 260 lakhs for purchase of a residential house<br />
property and deposited ` 50 lakhs in capital<br />
gain bonds of the Rural Electrification<br />
Corporation Ltd. The assessee claimed the benefit<br />
of exemption under sections 54F and 54EC<br />
which the Assessing Officer rejected. In the<br />
assessment the exemption was granted only<br />
under section 54F and the benefit of section<br />
54EC was denied in toto.<br />
Even in respect of the benefit under section<br />
54F, the Assessing Officer held that the assessee<br />
had acquired four flats out of which only one<br />
flat was eligible for the exemption. The<br />
Commissioner (Appeals) held that section 54EC<br />
provides for tax exemption even when part of<br />
the capital gain is invested in specified longterm<br />
asset, i.e., notified bonds. With regard to<br />
exemption under section 54F, he allowed the<br />
exemption as claimed by the assessee, since<br />
the flats were contiguous to one another and<br />
operated as a single dwelling house.<br />
The Tribunal held that where more than one<br />
dwelling units are acquired, which are adjacent<br />
to one another and are converted into one<br />
house for the purpose of residence by having
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