TaxTMI 
TaxTMI 
2017 (2) TMI 276
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....t the impugned issue is covered in favour of the assessee. 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion of the order dated 13/08/2010 (2011) 44 SOT 617 (Mum.) for ready reference and analysis:- "2. Briefly stated the facts of the case are that the assessee owned two flats being the flat Nos. 41 and 51 in Shikha Building, Pali Hill, Bandra (West). Both the flats had been purchased on 5th Jan., 2001. The flat No. 41 was sold by the assessee on 16th June, 2005 for a sum of Rs. 1,01,00,000 and the flat No. 51 had been sold on 29th April, 2005 for a sum of Rs. 97,79,500. The assessee had thus earned income on account of long-term capital gain from sale of two flats in asst. yr. 2006-07. The indexed gain in respect of flat No. 41 was Rs. 88,55,558 whereas the indexed gain in respect of the flat No. 51 was Rs. 85,55,508. The assessee invested the gain on sale of flats in two different flats i.e., flat in Sai Dham at Govind Patil Road for Rs. 81,57,624 and flat at Girnar 55, Pali Hill for a sum of Rs. 95,71,364. The total investment in two flats was Rs. 1,77,28,988 which....
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....ed to the decision of the Special Bench of the Tribunal in case of ITO vs. Ms. Sushila M. Jhaveri (2007) 109 TTJ (Mumbai)(SB) 299 : (2007) 107 ITD 321 (Mumbai)(SB) in which it was held that exemption under s. 54 should be allowed only in respect of investment in one residential house. In the said case, it was pointed out, the Tribunal had observed that wherever the legislature intended that investment could be made in more than one asset, the word used was 'any' as was the case in ss. 54B, 54D, 54E, 54EA and 54EB. For example, s. 54E allowed exemption of capital gain if invested in any of the specified assets and, therefore, the word used was 'any' and not 'a'. But in case of ss. 54 and 54F the word used was "a" and not "any" which shows that the legislature intended to allow expenditure only in respect of one residential house. The Tribunal, therefore, concluded that the investment has to be in only one residential house for getting exemption in respect of sale of an asset. The AO also observed that when a statutory provision was plain and unambiguous, literal interpretation has to be adopted. Reliance was placed on the judgment of Hon'ble Supreme Court in case of Polestar Electro....
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....elow and placed reliance on the findings given in the respective orders. 4. We have perused the records and considered the rival contentions carefully. The dispute is regarding computation of exemption under s. 54 which is available in case the long-term capital gain arising from sale of a residential house is invested either by way of purchase and construction of a residential house within the prescribed period. In this case the assessee had sold two flats during the year being the flat Nos. 41 and 51 in Shikha Building, Pali Hill, Bandra (W) resulting into indexed gain of Rs. 88,55,558 and Rs. 85,55,058 respectively. The capital gain had been invested by the assessee in a flat at Sai Dham for Rs. 81,57,624 and a flat at; Girnar for Rs. 95,71,364. The case of the assessee is that exemption under s. 54 is available in respect of sale of any number of flats with corresponding investment in a residential house whereas the view taken by the authorities below is that exemption can be allowed only in respect of sale of one residential property with corresponding investment in only one residential house. There is no dispute either in the computation of capital gain or in respect of ful....
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....m transfer of a long-term capital asset if whole or any part of the net consideration is invested in any specified assets within six months from the date of transfer. Since the specified assets were more than one, the word "any" has been used because the exemption will be available if the investment is made in any of the specified assets. The situation in s. 54 is different. Considering the language used in s. 54(1), in our view exemption will be available in respect of transfer of any number of long-term capital assets being residential houses if other conditions are fulfilled. 4.2 The Revenue has placed reliance on the decision of Special Bench of the Tribunal in case of Ms. Sushila M. Jhaveri (supra) but the said case is distinguishable as in that case nowhere it was held that exemption will be available only in respect of sale of one residential house. In fact issue in that case was different. The issue was whether exemption was available in case the gain from sale of a house is invested in more than one residential house. It was held by the Special Bench that exemption will be available only when the investment was made in only one residential house. We are in full agreement....
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....tal gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date39[constructed, one residential house in India], then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three y....
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.... be dealt with in accordance with the provisions of this section. Such assessee can invest capital gains for purchase of residential building/house to seek exemption of the capital gains tax. Section 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural. The contention of the Revenue is that the phrase "a" residential house would mean one residential house and it does not appear to the correct understanding. The expression "a" residential house should be understood in a sense that building should be of residential in nature and "a" should not be understood to indicate a singular number. The combined reading of sections 54(1) and 54F of the Income- tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to section 54 of the Income-tax Act, lays down that if the assessee has already one residential building, he is not entitled to exemption of capital gains tax, when he invests the capital gain in purchase of additional residential building. The context in which the expression, a ....
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....ome is augmented. It is quite common to find such arrangements, particularly post-retirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited. The ratio l....