TaxTMI 
TaxTMI 
2008 (1) TMI 649
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....n the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee is eligible for relief in respect of both the flats." 2. We have heard the rival submissions and carefully perused the orders of the authorities below and documents placed on record. 3. The facts borne out from the record are that assessee has acquired a residential flat in the building known as 'Dilwara' at Cooperage, Mumbai at cost of Rs. 3,22,464. The said property was sold during the year for a total consideration of Rs. 1,40,00,000. After claiming deductions for the expenses incurred for sale and cost of long term capital gains was worked out by the assessee at Rs. 1,24,02,738. The assessee claimed an exemption under section 54(1) of the Act....
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....e of both the flats in question, as such, deduction to be allowed at Rs. 1,04,78,750 as claimed by the assessee. 6. Now the revenue has preferred an appeal before the Tribunal. The learned DR has raised his two fold arguments. The first objection is that the sale proceeds received on account of sale of flat in the building known as 'Dilwara' was utilized in purchase of commercial properties at Kolhapur. In support of his contention, the learned DR has invited our attention to the chart prepared by the Assessing Officer at page No. 2 in the assessment order. Later on, the assessee has purchased two residential flats in Lady Ratan Tower, Worli, Mumbai for a sum of Rs. 1,04,78,750 out of the funds received from different sources and claimed e....
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....and there is no possibility of joining them together, the said residential flats cannot be called to be one residential house and deduction under section 54 cannot be allowed with regard to both the residential flats. 8. The learned counsel for the assessee on the other hand has submitted that no doubt the sale proceeds received on sale of residential flat in the building known as 'Dilwara' was utilized to purchase a commercial property at Kolhapur for a total consideration of Rs. 125.28 lakhs, but, the assessee has purchased another residential house within the period specified under section 54(2) of the Act. He has also invited our attention that provisions of section 54 of the Act with the submissions that nowhere it has been mentioned ....
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....f the Act, and these facts are not disputed by the revenue. The revenue's main dispute is that the sale proceeds were utilized for purchase of a commercial property and residential house was purchased out of the funds obtained from different sources, as such, the identity of heads has been changed. We do not find much force in this argument as the requirement of section 54 is that the assessee should acquire a residential house within the period of one year before or two years after the date on which transfer took place. Nowhere, it has been mentioned that the same funds must be utilized for the purchase of the another residential house. The requirement of the Law is that, the assessee should purchase a residential house within the specifie....
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....riod of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii )if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purch....
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....ot hit by sub-section (2) of section 54 of the Act. We, therefore, of the view that assessee is entitled for deduction under section 54(1) of the Act. Now the question comes whether the assessee can claim deduction with respect to both the flats purchased by the assessee, but, were not used by himself for its residential purpose ? Undisputedly, the assessee has purchased two adjoining flats in one building and these flats were rented out to two different tenants after few days from the purchase and later on these flats were finally sold in 2005 as stated by the learned counsel for the assessee. Meaning thereby, the assessee had never intended to use both the flats as a residential house by removing the intermediate wall with a common kitche....