Tribunal Allows Exemption for Multiple Flats Gifted

The tribunal ruled in favor of the assessee, allowing exemption under section 54 for all three flats gifted, rejecting the CIT (A)'s objection that two flats were not used for residential purposes by the assessee. The tribunal found no requirement in the current provisions that the new residential house must be for the assessee's own residence, allowing for deduction on multiple residential properties. The tribunal distinguished a recent apex court judgment cited by the revenue's DR, stating it applies in cases of ambiguity in exemption provisions, which was not applicable here.

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Issues:
Interpretation of exemption u/s 54 for multiple flats gifted by the assessee after the relevant assessment year.

Analysis:
The appeal was filed against the CIT (A)'s order regarding the exemption u/s 54 for flats gifted by the assessee post the relevant assessment year. The AR of the assessee pressed Ground No. 5, arguing for exemption for all three flats. The CIT (A) noted that two flats were gifted and not used by the assessee for residential purposes. The AR referred to various judgments, including a tribunal order and a judgment of the Hon’ble Gujarat High Court, highlighting the requirement of the new residential house being for the assessee’s own residence for claiming deduction u/s 54. However, the tribunal found no such requirement in the present year's provisions of section 54, differing from the previous provisions cited.

The tribunal analyzed the requirement for the new residential house under section 54 and found no stipulation that it must be for the assessee’s own residence in the current provisions. The tribunal rejected the CIT (A)'s objection regarding the two flats not being for the assessee's own residential use, emphasizing the changes in the law over different assessment years. The issue of deduction u/s 54 being allowable for only one flat was addressed, citing a judgment of the Hon’ble Karnataka High Court in favor of the assessee. The tribunal followed the interpretation that the term “a residential house” does not imply singular usage, based on the context and legislative intent, allowing for deduction on multiple residential properties.

The tribunal distinguished the relevance of a recent apex court judgment cited by the revenue’s DR, emphasizing that it applies in cases of ambiguity in exemption provisions, which was not present in this case. Consequently, the tribunal partly allowed the appeal of the assessee, ruling in favor of granting exemption for all three flats gifted by the assessee.

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