Capital gains on redevelopment

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Kinnari (Querist)
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02 February 2013 a father transferred a residential property in the name of his 2 sons by mentioning it in the will in the year 2008. That house was a part of chawl system.

Now that chawl has been redeveloped to a building. So these 2 sons were allotted 3 flats each - 2 adjacent and 1 on separate floor. Also they were given cash consideration of Rs 15,00,000/- each.

So can these 3 flats be claimed for deduction u/s 54?

pls answer in detail and kindly give reference to any case law to support the answer....thanks in advance!

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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02 February 2013 It is a controversial issue so as to decide whether you get deduction in respect of all the 3 flats-

You may refer-

1. CIT V. K.G. Rukminimma(2011) 48 DTR 377 (Kar)
2. K.C. Kaushik v. P.B. Rane ITO(1990) 185 ITR 499(Bom)
3. ACIT V. Leela P Nanda (2006) 286 ITR(AT) 113(Mum)
4. CIT V D Ananda Basappa (2009) 309 ITR 329 (Karn)
5. Pawan Arya V CIT(2011) 49 DTR 123 (P&H)
.
If you can form an opinion, by reading the above case laws, as well as the case laws referred in these , please discuss.
.

Kinnari

Kinnari (Querist)
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04 February 2013 Thanks sir for the case laws...I could relate my case to 1, 3 and 5th case laws to some extent. I also referred this case law - "K.G. Vyas vs Seventh Income-Tax Officer on 6 January, 1986."
In some places, I came across a case law named "ITO vs. Abbas Ali Shiraz (supra)" but i cudnt find exact case law.
you may also refer to a case law in this link -
https://ramadvice.wordpress.com/2012/07/27/capital-gains-purchase-of-two-adjacent-flats-to-avoid-capital-gain-tax-case-law/

so in my opinion, deduction u/s 54 can b claimed for all 3 flats....if it is wrong treatment or if in ur view different treatment is to be given, pls let me know...
Thanks! :)

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