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Capital Gain Allowed Even for Partial or Fractional Ownership of Residential House

In DIT v. Dawood Abdulhussain, Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently ruled that capital gain exemption under section 54F of the Income Tax Act cannot be denied to the Assessee even though he has only a partial or fractional ownership in the residential house.

Assessee in the present case, is an individual duly filed his return of income for the relevant assessment year and declared total income at Rs. 5,96,947 and processed under section 143(1) of the Act. During the relevant year, he purchased a house property and claimed exemption regarding the capital gain arising from the house property under section 54F of the Income Tax Act 1961. 

During the assessment proceedings, the Assessing Officer (AO) noticed that the Assessee had received an amount of Rs. 1,00,00,000 on surrender of tenancy rights in respect of a flat and the investment made by the Assessee towards the purchase of the new residential house was in excess of the amount received on surrender of the aforesaid tenancy rights. He was of the view that the Assessee owned more than one house property at the time of purchase of the new residential property and he also observed that the Assessee has only partial or fractional ownership of the property therefore he cannot be considered as the absolute owner of the said properties. Accordingly he denied the claim of the Assessee under section 54F of the Act.

Read more at: http://www.taxscan.in/capital-gain-exemption-cant-be-denied-merely-on-ground-that-assessee-has-a-partial-or-fractional-ownership-of-residential-house-itat/19314/

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