TaxTMI 
TaxTMI 
2022 (7) TMI 1300
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....rt dated 04.12.2017 reported as under : "Inspector report I, undersigned as directed by ITO Ward 30(1), Delhi visited E-40, Masjid Moth, GK-II, New Delhi-110048 to enquire about whether separable entrance/separably saleable unit exists in above property or not. Seeing from outside and also talking to Guards there I am of the view that this flat is consisting of Ground Floor, 1st Floor and IInd floor and all these floors are having separable entrances and may be sold separably. It is a corner house and in its right side E-138 is located and on its left side E-39 exists. In E-39, GF ShPrahlads, 1st Floor SriyansNaulakhs and on IInd Floor Sanjay lives." 2.2 Thereafter the AOvide assessment order dated 18.12.2017 declined the exemption u/s. 54 of the Actand added the amount of Rs.2,42,17,559/- as long term capital gain, in the income of the Assessee, while considering 'field enquiry /Inspector report' referred above and the facts that the Assessee had purchased three flats and one basement and did not submit any evidence or certificate to show that three flats and one basement may be treated as one residential units. Hence, the Assessee has failed to discharge i....
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.....e.f. 01/04/2015 w.e.f AY 2015-16. 7.3 Considering the above factual matrix of the case, it is pertinent to reproduce below the provisions of section 54 which provides as under: "54. [(1)] [Subject to the provisions of sub-section (2), where, in the case of an assessee 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 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 date [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 purc....
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....ons of the assessee, it is observed that the assessee had purchased properties according to his plans and requirements which were explained before the lower authorities. It is not disputed that the staircase and common passage was not exclusively used by the assessee. The case law in the case of Gita Duggal (supra) is squarely applicable to the present case, wherein it has been held as under: "There could also be another angle. Section 54/54F uses the expression "a residential house". The expression used is not "a residential unit". This is a new concept introduced by the assessing officer into the section. Section 54/54F requires the assessee to acquire a "residential house" and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement 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 a particular manner. The only requirement is that it should be for the residential use and n....
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.... the exemption of Rs. 59,18,4967- u/s 54 of the Act claimed by the assessee on account of the investment/cost of construction made in the flats on 9th 10th and 11th floor which are in his possession as his residential house has been agitated. It is pertinent to mention that the Ld.CIT(A) has allowed the claim of the assessee for exemption u/s 54 of the Act by relying on the decision of the Karnataka High Court in the case of CIT Vs. Smt K.G. Rukminiamma 120111 331 ITR 211 (Kar) wherein it has been held! that residential flats constitute 'a residential housel for the purpose of section 54, where profit on sale of property is used for residence and further held that four residential flats cannot be construed as four residential houses for the purpose of section 54, when all are situated in the same building. It has to be construed only as 'a residential housel and the assessee is entitled to the benefit accordingly. As regards the contention of the Revenue placing the reliance on the decision of the Punjab & Haryana High Court in the case of PawanArya v. CIT reported in 2011-TIOL-01-HCP&H-IT, it is pertinent to mention that the assessee'in the said case, has claimed exemp....
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....which is reproduced below: "8.10. However, learned CIT has drawn the adverse conclusion that the substance of the judo merit is that the expression" a residential house" should not be literally taken as a single unit or a single flat and that the deduction should be extended to a residential house consisting of several individual units which have been constructed in the manner that they have independent entrance but in case of future need they can be used as a composite independent house and therefore confirm the disallowance made by the assessee 8.11. However, it is pertinent to note that judgment of Gita Duggal (supra) has made it very clear in para 8 of the order and the 'a' does not mean singular Judgment of Karnataka HC CIT vs D. AnandaBasappa (2009) 309 ITR 329 has been followed which reads as under: "8. It is the correctness of the above view that is questioned by the revenue and it is contended that the interpretation placed by the Tribunal gives rise to a substantial question of law. The assessee strongly relies upon the judgment of the Karnataka High Court (supra) which, it is stated, has become final, the special leave petition filed by....
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....im of the assessee with respect to two flats purchased by the assessee as discussed above. It is pertinent to mention here that the hon'ble Madras High Court, in the case of CIT v. Smt. V. R. Karpagam [2015] 373 ITR 127 (Mad), has clearly held that the amendment to provision of section 54F is effective from April 1, 2015, which makes it clear that benefit of section 54F will be applicable to one residential house in India. Prior to the amendment it was clear that a residential house would include multiple residential units. 8.13. I note that in the present case, assessee has sold the property in the next year in AY 2010-11 and withdrew the exemption claimed of Rs. 7,30,538/-in AY 2009-10 and reduced the same from the cost of acquisition claimed in AY 2010-11. Therefore, the impact of the above action of the assessee is that assessee has taxed the amount of Rs. 7,30,538/- as Long term capital gain and therefore disallowance of exemption in AY 2010-11 will leads to double taxation in the hands of the assessee. Therefore, this issue is squarely covered by the judgment of ITAT Mumbai in the case of NileshPravinVora and YatinPravinVora (Supra) and also the exemption is withdrawn in ....
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....ssioner, on appeal, while relying upon various judgments including the decision of Hon'ble High court of Delhi in the case of Gita Duggal (supra), allowed the claim of the Assessee u/s. 54 of the Act by holding that considering the entirety of facts, as discussed above, provisions of section 54 and gist of ratio of decisions mentioned above, including the decision of Hon'ble jurisdictional High court in the case of Gita Duggal (supra), it is evident that the ratio of the Hon'ble High Court is crystal clear that there may be several such considerations for a person while constructing a residential house. . The Hon'ble High Court is 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. High Court do not think 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. 5.2 We have given thoughtful consideration the peculiar facts and circumstances of the case and reasonings given in the orders passed by the authorities below. It is a fact....