IT Deduction available on purchase of Two Residential Houses even If Investment is not made out of Capital Gain: Income Tax Appellate Tribunal.
Assessee earned a long-term capital gain on the sale of immovable property and claimed deduction under section 54 of the Act towards investment made in the purchase of new flats amounting to Rs. 68,84,388.
The Assessing Officer disallowed assessee’s claim of deduction under section 54 of the Act on two grounds.
Firstly, the flat was purchased in the financial year 2003–04 relevant to the assessment year 2004–05 and
secondly, the investment made towards the purchase of new flats was not out of assessee’s own funds.
In an assessee-favour ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the deduction under section 54 is available on the purchase of two residential houses by the assessee from the capital gain earned from the sale of the old asset.
The bench further clarified that such deduction would be available even if the investment is not made out of the capital gain.