TaxTMI 
TaxTMI 
2019 (4) TMI 1293
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.... of income and relief may please be granted. 2. The AO as well as the Learned CIT Appeals-2, Udaipur have also erred in not allowing deduction for the deposit in Capital Gain Scheme Account amounting to Rs. 28177656/- invested before the due date of filing of return under the facts and circumstances of the case being contrary to the provisions of the sec. 54 of the Income Tax Act, 1961. 3. The Learned AO as well as Hon'ble CIT Appeals have grossly erred in applying the amended provisions of the Income Tax Act, 1961 in section 54(1) applicable w.e.f. 01/04/2015 i.e. for assessment year 2015-16 onwards in the assessment year 2014- 15 without considering the fact that the amended law was applicable in the subsequent assessment year as clearly spelt out in the section itself under the facts and circumstances of the case. The addition of Rs. 2,50,00,003/- may please be deleted. 4. The assessee may please be permitted to raise more/additional grounds of appeal before or at the time of hearing." 2. The assessee is HUF and filed e-return of income on 21.07.2014 declaring total income of Rs. 5,62,58,190/- which includes net long term capital gain of Rs. 5,55,30,511/- after claim....
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.... erred in applying the amended provisions of Section 54 of the Act without considering the fact that the said amendment is prospective in nature and w.e.f. 01.04.2015 and therefore, not applicable for the assessment year under consideration but it is applicable from the subsequent assessment year. Thus, the ld. AR has submitted that the deduction U/s 54 of the Act to the extent of Rs. 5,00,00,00/- may be allowed instead of restricted to only one flat. 4. On the other hand, the ld. DR has submitted that the assessee purchase two separate flats which are independent units in the building and purchase through two separate transfer documents. Further, in the plan of the building there is no provisions for passage or any other interconnection between these two flats which are two separate residential units and therefore, do not satisfy the requirement of a single dwelling unit. The decision relied by the ld. AR are not applicable in the present case when the assessee has failed to establish that these two flats are having common passage, common kitchen and to be used as a single residential house. He has relied upon the orders of the authorities below. 5. We have considered the ri....
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....cted (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 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. ^34[***] ^35[(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 purchase or construction of the new asset before the date of furnishing the return of income under sec....
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.... 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. 12. Coming to the facts of the present case, we find that investment was made in two flats located at different localities in Mumbai. Accordingly, the assessee was entitled to exemption in respect of investment in one house only of her choice. The Assessing Officer has already allowed exemption in respect of house which permitted higher deduction. Therefore, on the basis of opinion expressed by us, we reverse the order of the learned CIT(A) on this issue and restore the order of Assessing Officer." Therefore, as per the plan and unambiguous language of the Section 54 of the Act the exemption is available only in respect of one residential house. What constitutes a residentia....
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....oner within one year of the date of the sale of the flat in Survarnadeep and both the flats were purchased for the purpose of residence. In the absence of any provision to the contrary, in my judgment, the petitioner is entitled to avail of the relief in respect of the capital gain arising on the sale of his flat in 1979 against the flat purchased in that year as also against the flat purchased on July 26, 1980, and, as held by the Commissioner in his order under section 264 of the Income-tax Act for the assessment year 1980-81, I am inclined to hold that it is for the petitioner to claim relief under this section against the purchase of any one of the flats provided that the other conditions mentioned in the section are satisfied. There being no dispute that the flat purchased by the petitioner in Kalpana on July 26, 1980, satisfies the conditions laid down in section 54, i.e. it was purchased within one year of the sale of the Suvarnadeep flat and for the purpose of his own residence, the petitioner is entitled to seek adjustment of capital gains against the purchase of this flat. However, clause (i) provides that if the new asset for the purchase of which the assessee sought ....
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....es point in that direction, that the real relief, intention or motive entertained by the assessee at or about the time of purchase or construction as regards the use of the newly acquired house property was to occupy it himself." Therefore, the primary requirement for treating a structure as residential house is the purpose for which the same is acquired or constructed by the assessee for the purpose of his own residence. Hence, if a residential unit is purchase by the assessee but not wholly and substantially for his own residential purpose then, the said residential unit cannot be regarded a residential house. The Hon'ble jurisdictional High Court in case of Rajesh Surana vs. CIT 306 ITR 368 had the occasion to deal with the term of residence used in section 53 and has held in para 13 to 15 as under:- "13. The other aspect of the matter is, that the word "residence" has been defined in the Blacks Law Dictionary, sixth edition, at p. 1308, as "place where one actually lives or has his house; a person's dwelling place or place of habitation; an abode, house where one's home is, a dwelling house". It has further been described that residence implies something more than mere....
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.... considering from any standpoint, it cannot be said, that the asset fulfills the character of residential house, within the meaning of s. 53 of the Act. 15. There is yet another aspect, which has not been gone into by the learned authorities below, but it cannot be lost sight of. That being, that the purpose of s. 53 was not to entirely exempt the long-term capital gain, derived from the residential building. If the interpretation as suggested by the assessee were taken, a person may engage himself, in property dealing, and would be disposing of the property after allowing it to become a long-term asset, and then, may be that he might be raising construction, as found in the present case, or even may be, he might be working as a regular builder, having more than one plot, and constructing more than one house on such plots, and then selling them, and thereby earning income. May be a smart dealer might be living for a short while in each of such building, but then, the question that would arise is, as to whether s. 53 at all comprehends providing absolute holiday in payment of tax to such person, and in our view, the answer has to be in the negative. Inasmuch as the purpose of pro....