Exemption u/s 54F
This query is : Resolved
03 September 2010
One individual assessee has 2 residential houses. One is self occupied by him and 2nd one is purely used for staff quarters. The value of 2nd house is shown in his B/S and he has been claiming depreciation on it at 5% in past 5 years.
During the F.Y.2009-10 the assessee sold some of his long term capital asset for 12 lakhs & deposited 10 lakhs in capital gain account scheme. He intends to purchase one more house in F.Y.2010-11.
One of the condition under Section 54F says that "the assessee should not be owning more than one residential house property at the time of transfer"
Considering the 2nd house as business asset can the assessee claim exemption u/s 54F?
Please quote decisions supporting the answer.
Other facts remaining the same, what would have been the position of the if the assessee has not been showing the 2nd house as asset in his B/S?
During the F.Y.2009-10 the assessee sold some of his long term capital asset for 12 lakhs & deposited 10 lakhs in capital gain account scheme. He intends to purchase one more house in F.Y.2010-11.
One of the condition under Section 54F says that "the assessee should not be owning more than one residential house property at the time of transfer"
Considering the 2nd house as business asset can the assessee claim exemption u/s 54F?
Please quote decisions supporting the answer.
Other facts remaining the same, what would have been the position of the if the assessee has not been showing the 2nd house as asset in his B/S?
03 September 2010
Sec 54F applies to Individual or HUF Only.
Pls clarify the assessee shows 2nd house as asset in the balance sheet of what?
Because he charges depreciation then the asset might have bought under that business not in the name of assessee.
If the asset in the name of assessee , then he can charge rent only. Not depreciation.
Pls clarify my understanding.
Because if the 2nd asset is not in his name then 54F condition satisfied.
Pls clarify the assessee shows 2nd house as asset in the balance sheet of what?
Because he charges depreciation then the asset might have bought under that business not in the name of assessee.
If the asset in the name of assessee , then he can charge rent only. Not depreciation.
Pls clarify my understanding.
Because if the 2nd asset is not in his name then 54F condition satisfied.
03 September 2010
The assessee is an individual. He is propritor of a business & his business is covered u/s 44AB. He bought the 2nd house property, which is a flat and uses it for his staff accomodation.
As he is an individual the property is in his name only & no distiction is made between him and his business.
As he uses it purely as staff quarters, he has been showing it as an asset in his B/S & claimed depreciation on the same.
As he is an individual the property is in his name only & no distiction is made between him and his business.
As he uses it purely as staff quarters, he has been showing it as an asset in his B/S & claimed depreciation on the same.
03 September 2010
1.Rent from residential quarters for employees - Jamshedpur Engineering Machine Mfg. Co. Ltd. v. CIT [1957] 32 ITR 41 (Pat), Rohtas Industries Ltd. v. CIT [1961] 41 ITR 524 (Pat), CIT v. Delhi Cloth & General Mills Co. Ltd. [1966] 59 ITR 152 (Punj). Taxed under Income from house property.
2.Any property used for own business or profession as per section 22 ( Income from property by way of rent is not charged to tax under Income House property)
The Above case Law and Provision applicable to ur situation.
My Observation , u r charging 5% Depreciation which is applicable for Residential house property under income Tax Act 1961.
Hence if u can prove that the house used for business purpose then exemption U/s 54F can also be claimed.
2.Any property used for own business or profession as per section 22 ( Income from property by way of rent is not charged to tax under Income House property)
The Above case Law and Provision applicable to ur situation.
My Observation , u r charging 5% Depreciation which is applicable for Residential house property under income Tax Act 1961.
Hence if u can prove that the house used for business purpose then exemption U/s 54F can also be claimed.
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05 September 2010
I agreed with arun to certain extent, section 54F doesnt classify under busines/individual but it simply says that shouldn't be in his name
In problem above the HP is in the name of same person so exemption will not apply.
There is no mention of "use" in this section
Thanks & Regards
In problem above the HP is in the name of same person so exemption will not apply.
There is no mention of "use" in this section
Thanks & Regards
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02 August 2023
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