Deduction u/s 54F for house purchased from father in law allowed

Deduction u/s 54F for house purchased from father in law allowed when he was assessed to long term capital gain with reference to sold house

ABCAUS Case Law Citation:
ABCAUS 2971 (2019) (05) ITAT

Important Case Laws Cited/relied upon by the parties:

In this appeal, the assessee had challenged the order of the CIT(A) in upholding the action of Assessing Officer (AO) in not allowing the claim of deduction u/s 54F of the Income Tax Act, 1961 (the Act) in respect of house property purchased from father in law.

The assessee filed an appeal before the CIT(A). However, the appeal of assessee was dismissed.

The Tribunal observed that in the case of the father in law (seller) the department had issued notice uls 148 on the basis of information that he had sold house to the assessee.

The Tribunal further noted that in the assessment order of the said father in law passed u/s 143(3)/147 a finding was given that possession was handed over to the buyer and the transaction relating to the sale of immovable property stood completed Accordingly, on sale of the house, the father in law was assessed at long term capital gain. Against this order the father in law had preferred an appeal before ITAT who allowed the indexed cost of acquisition. The order had become final.

Thus, the Tribunal opined that when the seller was assessed to long term capital gain with reference to the sale of his property, claim of the assessee for deduction u/s 54F in respect of the same house property could not be denied to assessee.

Accordingly, the Tribunal directed the AO to allow assessee’s claim of deduction U/s 54F of the Act.

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