Exemption under section 54f

Last updated: 07 June 2008

Court :

Brief :
Sale of residential house and investment in new house – Even though registration is not complete assessee is entitled to exemption u/s. 54F

Citation :
CIT. vs. Ajitsingh Khajanchi [2008] 297 ITR 95 (MP)

The issue before the Hon’ble Madhya Pradesh High Court was whether the benefit of section 54F can be allowed even if the transfer is not evidenced by a registered deed. In this case the assessee had sold his plot of land and claimed exemption under section 54F of the Act in respect of purchase of residential flat. While completing the assessment the Learned Assessing Officer had denied the claim of the assessee by observing that the title was not vested in the assessee because the flat was not registered in his name. On appeal, the first appellate authority allowed the appeal of the assessee. Being aggrieved by the Order of the CIT(A), the revenue preferred an appeal to the Income-tax Appellate Tribunal. The Hon’ble Tribunal dismissed the appeal of the revenue and observed that there was effective transfer of the flat in favour of the assessee, the same having been actually possessed by him. Therefore, merely on account of the absence of registered sale deed, the assessee was not disentitled to exemption under section 54F of the Act. Being aggrieved by the Order of the Appellate Tribunal, the revenue filed an appeal before the Hon’ble Madhya Pradesh High Court under section 260A of the Act. Hon’ble High Court upheld the order of the Appellate Tribunal and held that in order to attract the application of section 54F, it is not necessary that the new house should be registered in the name of the assessee. Section 54F speaks of purchase and registration is not imperative.

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