2016 (3) TMI 1342

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....e Tax Act, 1961 (for short "the Act"). 3. Briefly stated the facts are, assessee an individual. Assessee was the owner of two residential flats being flat no.42 at The Gulmohar Bandra Co-operative Housing Society Ltd., new MIG Colony, Bandra (West), Mumbai, and another flat no.2025, Gandhnagar Shivam Co-operative Housing Society, Gandhinagar, Bandra (East), Mumbai. During the relevant previous year, assessee sold both the flats and the sale proceeds of the two flats were invested in two new flats purchased by the assessee being flat no.101-B, Lakhani's Galaxi, Sector-15, CGD Belapur, and flat no.601 "D" Wing, Sai Radiance, Sector-15, CBD Belapur. In the return of income filed for the impugned assessment year, assessee, though, declared l....

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....hat as per the provisions of section 54, assessee is eligible to claim exemption in respect of one residential house. 5. Learned Counsel for the assessee reiterating the stand taken before the Departmental Authorities, submitted, both the Assessing Officer and the learned Commissioner (Appeals) have misinterpreted the provisions of section 54 while observing that "a" residential house as referred to in sub-section (1) of section 54 would mean one residential house. Learned counsel submitted, the expression "a" residential house appearing in section 54 was interpreted by the Hon'ble Karnataka High Court in CIT v/s Anand Basappa, [2009] 309 ITR 329 (Kar.) and it held that "a" residential house as expressed in section 54 requires libera....

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....tion of legislature is also made clear by the amendment made to section 54 w.e.f. 1st April 2015 by substituting the word "a" with "one". Learned Departmental Representative submitted that the amendment made to section 54 would make it clear that the legislature all along wanted to provide the benefit of exemption under section 54 in respect of one residential house. He submitted, in the circumstances, the decision of the Departmental Authorities in restricting the exemption under section 54 to "one" residential house is just and proper. 7. In the rejoinder, learned Counsel for the assessee submitted, the amendment made to section 54 by substituting the word "one" in place of "a" having been made by the Finance Act, 2014 w.e.f. 1st April....

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.... payment of capital gain tax. The bone of contention between the assessee and the Department is in respect of interpretation of the word "a" preceding the expression "residential house" as used in section 54(1) of the Act. While the assessee is claiming that the word "a" cannot be interpreted to mean "one" residential house, the Department is of the view that "a" would mean "one". The Hon'ble Karnataka High Court in D. Anand Basappa (supra), while interpreting the expression "a residential house" used in section 54 has held that the expression "a" used therein would not mean "one". Only condition imposed under section 54(1) is, the house should be of residential nature. The Court held that the expression "a" should not be understood to ....