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No exemption under Sec 54 if property purchased in different localities


In Shri Arunkumar Nathan Vs. Asst. Commissioner of Income Tax, Bangalore bench of the ITAT, on Wednesday, observed that purchasing of two properties in different localities cannot be claim tax deductions under sec 54 of the Income Tax Act, 1961.

The Assesse sold his residential property and has purchased two apartments in two different localities, and he claimed tax deductions for both properties under sec 54 of the income tax act 1961. But the Asst. CIT denied the claim of the Assessee and observed that the benefit is available to one residential unit under the said provision.

The Assessee argued that the order of the department is so far it is prejudicial to the interest of the Appellant is bad and the CIT erred in law and facts in holding that the amendment to Finance Act 2014 is clarificactory in nature even though the memorandum explaining the Finance Act 2014 clearly states that the amendment will apply in relation to AY 2015-2016 and subsequent assessment years. 

Overruling the contentions of the assessee, the Tribunal noted that the claim cannot be allowed as the assessee has purchased two separate flats in two different localities and further both the flats are not used for residential purpose of the assesse but one flat was let out by the assessee.

Article refered: http://www.taxscan.in/purchasing-two-separate-houses-different-localities-disentitle-assesse-claiming-capital-gain-exemption-us-54-itat-read-order/12599/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

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