2000 (2) TMI 198

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....t), Mumbai, from M/s Shreyans Developments, Mumbai, vide two separate deed of agreement for sale dt. 10th Dec, 1988. The break-up of the same is as under:                                           Rs   (1) Amount given for Flat No. 302         4,62,000 (2) Amount given for terrace space     adjacent to the above flat              50,000           &nb....

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....50 while calculating the capital gain vide order dt. 27th Dec, 1990, passed under s. 143(3). 3. Subsequently it was noticed by the AO that the deduction under s. 54 is allowable only for purchase of a flat/residential house and not for the terrace space. Accordingly, he issued a notice under s. 154 and after rejecting the assessee's explanation, the AO disallowed the deduction under s. 54 to the extent of Rs. 55,000 in respect of terrace space. The CIT(A) has upheld the AO's order and dismissed the assessee's appeal. 4. Now the assessee is in appeal before us. It was argued by the learned authorised representative that the terrace space of flat No. 302 is an integral and undivided part of the said flat, the purchase of flat and terrac....

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....nd, the learned Departmental Representative relied upon the order of the AO and CIT(A). He further submitted that the assessee is entitled for the deduction under s. 54 in respect of residential house/flat only and not for terrace space which was purchased by the assessee vide separate deed, therefore, it cannot be termed as integral part of the flat. He distinguished the case laws relied upon by the learned authorized representative. However, on the issue of proceedings initiated under s. 154, he relied on the following case laws: (i) Oudh Sugar Mills Ltd. vs. CIT (1996) 135 CTR (Bom) 53 : (1996) 222 ITR 726 (Bom); and (ii) M.H. Daryani vs. CIT (1993) 202 ITR 731 (Bom). Finally he argued that the AO has rightly invoked the provisi....