Selling many flats to buy one?

You can get tax benefits, rul .. 

In this case, Bipin N Sagar sold three adjoining flats a .. 

Multiple flats' sale can still get you tax benefit

MUMBAI: In a landmark decision, the Income Tax Appellate Tribunal (ITAT)

has held that a taxpayer can avail of tax benefitswhere long-term capital
gains (LTCGs) arising on sale of more than one flat are invested or will be
invested in one residential house in India, within the stipulated time.

It is not uncommon for taxpayers to sell more than one house to buy a
larger accommodation or move to a tonier area. There have been instances
where tax benefit claims have been denied as sale proceeds of more than
one flat were invested in a new residential property. The recent ITAT
decision will benefit taxpayers in Mumbai and in the absence of any contrary
jurisdictional order, strengthen the case of other taxpayers.
If the taxpayer makes profit on sale of a residential house held for at least
two years, then such profit is treated as LTCG. This is taxable at 20% with
an adjustment for inflation referred to as indexation benefit. Section 54 of I-
T Act, the subject matter of the dispute, provides that if investment is made
in one house in India in the stipulated period, then to the extent of this
investment the taxable component of the LTCG is reduced, resulting in a
lower tax outgo.

The tribunal agreed with the taxpayer that Section 54 has an inbuilt
restriction that capital gain arising from sale of a residential house cannot be
invested in more than ‘one’ residential house, in India. But there is no
restriction that capital gains arising from the sale of more than one
residential houses can be so invested.

ITAT held: “The provision of Section 54 is applied to the transfer of any

number of residential houses by the taxpayer provided the capital gains
arising therefrom are invested in a proper manner within the prescribed time
period.”

In this case, Bipin N Sagar sold three adjoining flats and claimed exemption
under Section 54. These flats were used as a single unit, with just one
kitchen. But the I-T officer sought to deny Section 54 benefits on the ground
that LTCGs arose on sale of three flats, and not just one, as the sale was via
three separate agreements.

ITAT observed that in this case, the I-T officer had not disputed the evidence
that the three flats were united as a single unit. Notwithstanding this, there
is no restriction anywhere in Section 54 that exemption is available in
relation to sale of only one residential house, it added.

ITAT is the final fact-finding authority. The I-T department can file an appeal
only if it involves a question of law. At this stage, it is not known whether
the I-T department will file an appeal in the HC.

SOURCE :- TIMES OF INDIA