TaxTMI 
TaxTMI 
2021 (7) TMI 61
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....ion on considering the excessive area of 2 flats wherein the carpet area had been hypothetically converted into built-up area on the basis of incorrect presumptions; b) The sale consideration had been determined on considering the ready reckoner rate without considering the locational disadvantages, etc; 3.0 The Ld. CIT(A) ought to have ought to have admitted the appellant's alternate prayer made u/s.50C(2) to refer the valuation matter to DVO to determine the fair value of the capital asset transferred during the year; 4.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the disallowance of deduction u/s.54 of Rs. 35,68,144/- in respect of the 2nd flat acquired by the appellant; 4.1 The Ld. CIT(A), before confirming the disallowance of deduction u/s.54 of Rs. 35,68,144/-, ought to have considered the understated vial facts being; a) The 2 small flats acquired by the appellant in same building constitutes as one residential house; b) The amendment to Sec 54 made in Finance Act 2014 w.e.f. 01/04/2015 would not apply retrospectively. 3. Brief facts of the case are that in the assessment orde....
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....ng as ail (he flats are in the same address/location even if they/ are located in separate blocks or towers it does not alter the position. In the instant case, after all, all the flats are a product of one development agreement of the same niece of land being said land. 'Therefore, even if flats/apartments are in different blocks any different towers as long as they are in same address/location it does not disentitle the assessee from getting the benefit of section 54F. . Therefore, tile sole and sheet anchor submission of revenue that the 15 flats in the instant case are located in the different blocks does not impress 'will not disentitle the assessee from getting the hem-fit of section 54F as all file flats are in the same location /address and all flats are by products of one development agreement with the same builder. main/ flats, gets proportionate undivided share in land only for the slime piece of land. Therefore, assessee does not buy more than one property in that sense of the matter. Flats, apartments are completely based on co ownership. It is concluded Unit the assessee is entitled to the benefit of section 54F." b....
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....circumstances, the AO is also not permitted to read any such restrictions under the law while examining the claim of the assessee." d) CIT vs. Devdas Naik 49 taxmann.com 30 (Bom-HC) "Assessee claimed deduction under section 54 on purchase of two flats -Though these flats mere acquired under different agreement bat map of general layout plan and internal layout plan indicated that there was only one common kitchen for both flats and both flats were used as a single unit - Flats were constructed in such u way that adjacent units or flats could be combined into one -Whether though acquisition of flats had been done independently but eventually they were a single unit and house for purpose of residence, claim under section 54 could not be denied." 3.2 Without prejudice to the above, the appellant submits that the provision of Sec. 54 (prior to amendment in Finance Act, 2014)permitted to avail the deduction on more than one residential house. The Ld. AO erroneously held that the deduction u/s 54 is eligible only in respect of one residential house on ignoring the fact that the amended prolusion of Sec. 54 is applicable w.e.f. 01/04/2015 onwards. The provision ....
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....dings or lands appurtenant thereto" issued before the words "a residential house" would mean that the buildings or lands (which are 'plural' terms) are eligible for deduction u/s.54 of the Act, The words "a residential house "means that the buildings or lands should be in the nature of a residential house and not of commercial nature. The legislative intent (prior to amendment) of allowing the deduction u/s 54 was to provide an incentive to a seller of the residential house to re-invest the capital gain for repurchase of the residential house and the only condition prescribed was that the re-investment should be made in the residential house. The statute has not prescribed the manner in winch the residential house should be purchased and thus it would be a sufficient compliance if the capital gain is re-invested in the residential house irrespective whether it is one house or two houses, In case the legislative intention would have been to allow the deduction u/s 54 only for one house, there the words used in Sec 54 would have beer, "a residential unit" or "one residential house". However, the words incorporated in Sec. 54 (prior to amendment) were "a residential h....
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....uirement of the section should be taken to have been satisfied, there is nothing in. these sections which require the residential house to be constructed in n particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the section require* that the residential house should he built in n particular manner, it sm.'/s that the income-tax authorities cannot insist upon that requirement." C) CIT vs. K.C. Rukminiamma 131 ITR 211 (Knr-HC) "The context in which the expression 'a residential house' is used in s. 54 makes it dear that it was not the intention of the legislation to convey the meaning that it refers to a single residential house. If that was the intention, they would have used the word "one". As in the earlier part, the words used are buildings or lands which are plural in number and that is referred to as "a residential house", the original asset. An asset new newly acquired after the sale of the original asset also can be building or lands appurtenant thereto, which also should be "a residential house". Therefore the letter 'a' in the context it is used ....
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....exemption would be restricted to a single residential unit. The Karnntaka High Court held that 'a residential house' as mentioned in section 54(1) has to be understood in a sense that the building should he of a residential nature and the word 'a' should not be understood to indicate a singular number. The jurisdictional High Court in the case of CIT v. Syed Ali Adil 12013] 352 ITR 418/215 Taxman 283/33 taxmaiin.com 212 (A P) agreed with the aforesaid view of the Karnataka High Court. [Para 8]. Considering the totality of the facts and circumstances in the light of consistent view of different High Courts including the jurisdictional High Court, the lower authorities were not correct in restricting the exemption under section 54F to only one flat. In the aforesaid view of the matter, the assessee is entitled to exemption under section 54F in respect of all the seven flats." g) Mehar R. Surti vs. ITO 37 CCH 213 (Mum-ITAT) "Deduction u/s 54 is eligible even for purchase of more than one house. The assessee has deposited Rs. 1.25 crore in the capital gain account within the proscribed period and further the said amount has been invested in an....
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.... flats in the same floor. Be that as it may, the appellant has not filed any floor plan of the two flats to demonstrate that the units were joined. The A.O. also has not made any verification in this regard. Therefore, the A.O. is directed to verify the plans/floor plans whether two units are joined with proper approvals to make a single residential unit. If both the flats are joined with approvals etc., he is directed to grant the deduction u/s 54 in respect of both the units. Otherwise, the assessee is eligible for deduction in respect of only one unit as allowed by the AO. The ground is adjudicated as above. This ground is treated as dismissed for statistical purpose. In the result, the appeal is dismissed. 7. Against the above order assessee is in appeal before us. 8. We have heard both the parties and perused the records. Ld. Counsel of the assessee claimed that the issue is fully covered in favour of assessee. He referred to following decisions. 1. CIT VS. Gumanmal Jain 80 Taxman.com 21 [Madras High Court) 2. CIT VS. Smt. K.G. Rukminiamma 196 Taxman 87 [Karnataka High Court) 3. CIT VS. Smt. V.R. Karpagam 50 taxman.com 55 [Madras High Court) ....