Landmark Judgement : Acquiring property on lease for period exceeding 12 year eligible exemption u/s 54F exemption: Chennai ITAT
- Ramaswamy v. ITO – [2020] 113 taxmann.com289 (Chennai – Trib.)
Assessee entered into an agreement for perpetual lease and claimed exemption under section 54F.
Assessing Officer (AO) allowed the exemption claimed by the assessee. However, Principal Commissioner (PCIT) found that the assessee had acquired the property by way of perpetual lease deed agreement.
It couldn’t be considered as outright/absolute purchase of the property by claiming exemption under Section 54F of the Act. Thus, he revised the order of AO and disallowed the assessee’s claim.
On appeal, the Chennai Tribunal held that a bare reading of section 2(47) shows that the agreement or arrangement which has effect of transferring or enabling the enjoyment of immovable property, has to be considered as transfer. Furthermore, section 269UA(2) of the Act clearly says that any lease for a term of more than 12 years including the possession of property has to be construed as transfer.
Since the assessee had acquired the residential house by means of perpetual lease for more than 12 years, it had to be treated as acquisition of property within the meaning of section 54F.
Therefore, assessee was entitled to exemption under section 54F.
