TaxTMI 
TaxTMI 
2018 (1) TMI 980
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.... appeal are without prejudice to one another:- 1. The CIT(A) erred in upholding the disallowance made by the A.O. in respect of the appellant claims for exemption/deduction u/s 54 of the Income Tax Act, 1961. 2. The CIT(A) and the A.O. failed to correctly interpret the amendment made by the Finance Act, 2014, wherein the words "a residential house' appearing in section 54 of the Act were changed to " one residential house " , thereby making a prospective amendment in the Act, that implied that, prior to the amendment the word "a' in a residential house was a grammatical reference and not a numeric reference, meaning one residential house. 3. The CIT(A) failed to appreciate this amendment and wrongly upheld the A.O.'s action of denying the benefits of the provisions of section 54 of the Income Tax Act, 1961 to the appellant. 4. The appellant craves leave to add, alter and/or amend all/any foregoing Grounds of Appeal. 2. Briefly stated, the facts of the case are that the assessee who is an architect by profession had filed his return of income for A.Y. 2012- 13 on 26.09.2012, declaring total income of Rs. 59,07,550/-. The return of income wa....
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...., to facilitate his stay at both the places he had purchased the aforesaid residential houses. It was the claim of the assessee that as there was no express limitation in Sec. 54 to the effect that the assessee should own only one residential house, therefore, his claim of deduction under Sec. 54 was well in order. The assessee fortified his aforesaid view by claiming that the term "a residential house' used in Sec. 54 would mean "any residential house'. It was the claim of the assessee that the expression "a residential house' was descriptive of the nature of property and in no way had any reference to the numerical strength of the house property. However, the submissions of the assessee did not find favour with the A.O, who holding a conviction that the claim of deduction under Sec. 54 could not be extended beyond the investment made by the assessee in one residential house, therefore, called upon the assessee to choose the property against which he sought to claim deduction under Sec. 54. The assessee however being of the view that he was duly entitled for claim of deduction in respect of the investment made in both of the residential houses, therefore, pressed upon his entitlem....
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....idential houses in two different cities. The CIT(A) being of the view that the entitlement of the assessee towards the claim of deduction under Sec. 54 was rightly restricted by the A.O only as regards the investment made in one residential property, viz. flat in Mumbai, which was of the higher value, therefore, upheld the order passed by the A.O. 8. The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee submitted that Sec. 54 as was available on the statute during the year under consideration, clearly provided that the claim of entitlement of the assessee for deduction under the said statutory provision was available if the assessee had 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 3 years after that date constructed, a residential house. It was submitted by the ld. A.R that the term "a residential house' nowhere provided any restriction as regards the number of the residential houses in which an investment could validly be made by an assessee for claim of deduction under Sec. 5....
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....ial house' had been substituted by "one residential house in India', rather supports the fact that the restriction of making the investment in only one residential house had been made available on the statute only with effect from A.Y 2015-16, and as such cannot be extended to the years prior to that. We find that our aforesaid view is fortified by the judgment of the High Court of Karnataka in the case of Commissioner of Income tax Vs. Khoobchand M. Makhija (2014) 223 taxman 189 (Kar), wherein the High Court after deliberating at length on the issue under consideration, had observed as under: 9. The word 'a' is not defined in the Act. When a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which that word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule that the meanings of words and expressions used in an Act must take their colour from the context in which they appear. Therefore, when the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a pa....
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.... and Regulations, unless there is anything repugnant in the subject or context.- (1) words importing the masculine gender shall be taken to include females; and (2) words in the singular shall include the plural, and vice versa. 14. This Court in the case of Commissioner of Income-Tax and Another -vs- Smt. K.G. Rukminiamma reported in (2011) 331 ITR 211 (Karn), had an occasion to consider Section 54 of the Act and had held as under: "For a proper appreciation of the aforesaid contention, it is necessary to have a careful look at Section 54 of the Income Tax Act, which reads as under: "54. Profit on sale of property used for residence - (1) Subject to the provisions of sub-section (2), where, in the case of an assesses being an individual or a Hindu undivided family, the capital 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 winch is chargeable under the head 'Income from house property' (hereafter in this section referred to as the original asset), and the assesses has within a period of one year before or two years after the dole on w....
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....ed are buildings or lands which are plural in numberand that is referred to as a residential house', the original asset. An asset newly acquired after the sale of the original asset also can be buildings or lands appurtenant thereto, which also should be "a residential house.' Therefore the letter "a' in the context it is used should not be construed as meaning "singular.' But, being an indefinite article, the said expression should be read in consonance with the other words "buildings and lands' and, therefore, the singular "a residential house' also permits use of plural by virtue of Section 13(2) of the General Clauses Act. This is the view which is taken by this court in the aforesaid Anand Basappa's case in I.T.A.No. 113/2004, disposed of on September 20, 2008([2009] 309 ITR 329 (Kam)]. " 15. That was the case where the assessee gave his property for joint development agreement for putting up flats. Under the terms of the agreement, out of eight flats to be put up, four flats had to be given to the assessee, representing 48%, the consideration for the said four flats was consideration for selling 52% of the site. It was held that, though under the joint developmen....