TaxTMI 
TaxTMI 
2010 (10) TMI 351
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....3.4.2003 and accordingly your appellant was eligible fro exemption under section 54 on investment of gains arising from sale each of the residential unit in a new house property and that in accordance with the above the exemption claimed by the appellant under section 54 of the IT Act, 1961 on reinvestment of gains in four residential flats was correct" 4. Brief facts of the case are that the assessee has shown long term capital gain of Rs. 106,66,162 on sale of residential flats on which exemption u/s 54 amounting to Rs. 70,30,600/was claimed being investment in four new residential flats to be used as one single unit. On verification of purchase deed of the investment in the new residential flats, the AO noted that the assessee has made investment in four new residential flats which were situated at different floors of the building. The AO observed that as per the provisions of section 54 of the Act the assessee is entitled for exemption of investment in residential houses The assessee was asked to show cause as to why the excess exemption u/s 54 claimed in respect of additional three houses should not be disallowed and added to his total income as "Income From Capital Gain". ....
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....he exemption u/s 54 on the first residential house having a greater purchase consideration. 7. On appeal, the assessee has reiterated the same contentions as raised before the AO. The main contention of the assessee before the CIT(A) was that the assessee has purchased four flats two adjacent flats on and floor each which are used as single unit/residential house with common kitchen to meet the housing need of large family. The CIT(A) did not accept the contention of the assessee and observed that on this issue a Special Bench in the case of ITO V/s Sushila N Jhaveri has been constituted. 8. Before us, the learned AR of the assessee has submitted that the assessee purchased these new four flats with a common kitchen and therefore, the same can be treated as a residential house for the purpose of section 54. he has further contended that all these four flats were purchased jointly in the name of the assessee's wife and assessee. However, the same would not make any effect in ownership as the assessee was the owner of the four flats. These flats were purchased for the purposes of residence of the family of the assessee. He has relied upon the decision of this Tribunal in the....
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....ter construction of first floor ground floor of a hose and thereafter construction of first floor was held to be an investment in one house only. Their Losrdships at page 156 observed as under : "If a floor is constructed to the new house or if it is renovated it remains a house and this will not be two houses" 11. In view of the above discussion, it is held that exemption under section 54 and 54F of the Act would be allowable in respect of one residential house only. If the assessee has purchased more than one residential house, then the choice would be with assessee to avail the exemption in respect of either of the houses provided the other conditions are fulfilled. However, where more than one unit are purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage common kitchen, etc, then, it would be a case of investment in one residential house and consequently, the assessee would be entitled to exemption" 11. Thus, it is held in the above decision of the Special Bench of this Tribunal, that the exemption u/s 54F of the Act would be allowable in respect of one residential unit only. In the case where....
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....so to the sub-section (1) of section 54F. 12. The decisions relied upon by the learned AR are not application to the facts and circumstances of the present case. 13. Therefore, we decide this issue against the assessee and in favour of the revenue. Additional Ground 14. The learned AR of the assessee has submitted that the assessee has not raised this additional ground before the lower authorities. He has submitted that the capital gain arises from the transfer of the property in question was plot of land together with three old structures which were three different residential units. He has referred the map filed at page 45 of the paper book and submitted that the property is bearing city survey No.201, CS-202 and having three separate structures. One was used by the assessee was known as "GROTTO HOUSE" and other two were known as "MARY PEREIRA CHAWLS". He has submitted that these three structures were three different residential units. He has referred the additional evidence filed from pages 1 to 7 as property tax assessment certificate and submitted that the Municipal authority have recorded in the municipal record of these properties as different residential units. ....
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....already on record. The assessee has also sought the additional evidence to be considered in support of the additional ground. The main contention of the learned AR in support of the additional ground is that the residential property sold by the assessee was having three structures and used as three separate residential units, therefore for the purposes of section 54, these three structures should be treated as three residential units and accordingly eligible for exemption under section 54 on investment of the gain arising from each of the residential unit in a new house property. We note that the expression used in section 54 is "the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house" is a plural word and therefore, the entire extent of land adjoining the residence including the ancillary structures to the main building to be treated as land appurtenant to the building. The Sub-section (1) of Section 54 is quoted as under : "Profit on sale of property used for residence. 54. [(1)] [Subject to the provisions of sub-section (2), where, in the case of an assessee being an individua....