Tax Tribunal Limits Exemption to One House; Assessee Chooses Higher Deduction Flat, Brokerage Claim Approved.

Income-tax Officer, Ward 19 (3) -4, Mumbai. Versus Ms. Sushila M. Jhaveri.

Income-tax Officer, Ward 19 (3) -4, Mumbai. Versus Ms. Sushila M. Jhaveri. - [2007] 292 ITR (A. T.) 1, TTJ 109, 299, [2007] 107 ITD 327 (MUM.) (SB), Issues Involved:
1. Interpretation of the phrase 'a residential house' under sections 54 and 54F of the Income-tax Act, 1961.
2. Allowability of brokerage paid in computing capital gains.

Issue-Wise Detailed Analysis:

1. Interpretation of 'a residential house':
The primary issue revolves around the interpretation of the phrase 'a residential house' under sections 54 and 54F of the Income-tax Act, 1961. The question is whether this phrase means one residential house or more than one residential house independently located in the same building/compound/city.

Arguments by Revenue:
- The revenue contended that exemption under section 54/54F would be available only in respect of investment made in one residential house.
- Reliance was placed on the judgment of the Hon'ble Jurisdiction High Court in the case of K.C. Kaushik v. P.B. Rane, Fifth ITO [1990] 185 ITR 499 (Bom.).
- The word 'a' means only one. Even if the word 'a' means 'any,' it does not mean many. The word 'any' would mean one out of many.

Arguments by Assessee:
- The assessee argued that the exemption would be available even if the investment is made in two house properties, though distantly located from each other.
- Relied on various decisions of the Tribunal, including Ratanchand Murarka v. Joint CIT and others, which held that exemption under section 54/54F was available in respect of investments made in two house properties even if they were distantly located.
- The judgment of the Hon'ble Bombay High Court in K.C. Kaushik was distinguishable as the questions before the High Court were different from the present case.
- The word 'a' is an indefinite word and can mean 'any,' which in turn could mean more than one.

Tribunal's Analysis:
- The Tribunal noted that both the words 'a' and 'any' are ambiguous and have various meanings depending upon the context in which they are used.
- The Legislature used the word 'a' in sections 54 and 54F, while the word 'any' was used in sections 54B, 54D, 54E, 54EA, and 54EB, indicating different intentions.
- The intention of the Legislature was to allow exemption in respect of investment in one residential house only.
- The Tribunal agreed with certain decisions where exemption was allowed in respect of investments in two adjacent or contiguous units converted into one residential house by having a common passage/staircase, common kitchen, etc., intended to be used as a single house for the residence of the family.
- If the investment is made in two independent residential houses, even located in the same complex, exemption cannot be allowed for investment in both houses. The assessee has the choice to avail exemption in respect of any one house.

Conclusion:
- Exemption under sections 54 and 54F would be allowable in respect of one residential house only.
- If the assessee has purchased more than one residential house, the choice would be with the assessee to avail the exemption in respect of either of the houses provided the other conditions are fulfilled.
- In the present case, investment was made in two flats located at different localities in Mumbai. The assessee was entitled to exemption in respect of investment in one house only of her choice. The Assessing Officer had already allowed exemption in respect of the house which permitted higher deduction. Therefore, the Tribunal reversed the order of the learned CIT(A) and restored the order of the Assessing Officer.

2. Allowability of Brokerage Paid:
The next issue relates to the disallowance of Rs. 1,51,500 being brokerage paid in computing the capital gain.

Arguments by Revenue:
- The Assessing Officer disallowed the claim merely on the ground that the assessee failed to produce proof of payment. The Xerox copy of the brokerage bill was not considered as evidence.

Arguments by Assessee:
- On appeal, the assessee produced proof of payment along with the bank statement of the assessee.
- The learned CIT(A) allowed the claim after considering the proof of payment.

Tribunal's Analysis:
- The Tribunal found no infirmity in the order of the learned CIT(A).
- The Assessing Officer had not disputed the allowability of the claim but disallowed it on the ground of lack of proof of payment.
- The learned CIT(A) allowed the claim after considering the proof of payment.
- It was not the case of the revenue that the provisions of rule 46A had been violated by the learned CIT(A).

Conclusion:
- The Tribunal upheld the order of the learned CIT(A) allowing the brokerage claim.

Final Judgment:
The appeal was partly allowed. The Tribunal held that exemption under sections 54 and 54F is allowable in respect of one residential house only, and the brokerage paid was allowable as claimed by the assessee.