TaxTMI 
TaxTMI 
2025 (6) TMI 227
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, the Assessee also transferred her capital asset in the form of office premises at Santacruz on dated 07.07.2017 on a total sale consideration of Rs. 4,50,00,000/- with a indexed cost of acquisition at Rs. 1,47,82,609/- and consequently earned the capital gain of Rs. 2,99,47,240/- and out of which claimed the amount of Rs. 2,67,36,488/- qua purchase price of residential house at Runwal Greens numbered as T-6/1502, as exempt under the provisions of section 54F of the Act. 4. Though the Assessing Officer (AO) allowed the exemption claimed by the Assessee to the tune of Rs. 3,30,86,397/- u/s 54 of the Act for the purchase of residential house property numbered as T-6/1402 (Runwal Greens), however, denied the exemption claimed by the Assessee u/s 54F of the Act, for the residential property i.e. T-1502(Runwal Greens), mainly on the following reasons: "That all the provisions i.e. a(i), a(ii) & a(iii) of section 54 are distinguished in nature as they are separated by the word "or" which means that if the Assessee fails to satisfy either of these clauses, then the Assessee is not eligible for the exemption within the provision of section 54 of the Act. In the instant case o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the original asset, then the provisions contained in section 54F of the Act would not apply", is not a correct interpretation. The Assessee further submitted that even otherwise the Assessee had purchased two flats i.e. T-6/1402 & T-6/1502 down and above as "duplex house" and there is no bar to purchase two units in the same building consisting one, at a time. The Assessee in support of its claim also relied on various judgments passed by various courts. 6.1 With regard to the claim of cost of improvement/claim of expenditure incurred for the additions and alterations made to the capital asset, the Assessee has submitted that the Assessee had purchased the property at Deonar on dated 01-04-2001 i.e. before more than 17 years from the date of sale made on dated 13.12.2017 on a consideration of Rs. 5,56,00,000/-, on which the Assessee has claimed the indexed cost of improvement of Rs. 50,81,123/- u/s 55 of the Act. The Assessee successively spent the said amount in the successive years i.e. more than 10 years from the date of the purchase of the property and duly submitted the relevant documents during the assessment proceedings. However, still the AO doubted the said claim of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on 07.07.2017, has also purchased a residential house i.e. T-6/1402 (Runwal Greens) by claiming exemption of capital gain of Rs. 3,30,86,397/- earned on sale of house property at Deonar on dated 13.12.2017 for a total sale consideration of Rs. 5,56,00,000/- and therefore the Assessee is not entitled for the claim of exemption within the provision of section 54F of the Act to the tune of Rs. 2,67,36,488/-, which was claimed as long term capital gain being exempt. For brevity and ready reference, the provisions of section 54F of the Act are reproduced herein below: "54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (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 (hereafter in this section referred to as the new asset), the capital gain shall be de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the net consideration 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 section 139, shall be deposited by him before furnishing such return [such deposit being ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, then also the Assessee is not entitled to claim the exemption u/s 54F of the Act. 8.2 The Assessee has claimed that she had purchased two units i.e. 1402 & 1502 on a total consideration amount of Rs. 7,60,00,000/- {Rs. 380,00,000/- each} for both the flats being duplex on the very same date i.e. 08.12.2017 and paid the amount of Rs. 5,00,00,000/- (Rs. Five Crores) vide HDFC bank cheque no. 745086 dated 08-12-2017 towards earnest money, as it appears from the allotment letter dated 08-12-2017 and receipt (bill of supply) dated 11-12-2017 and agreed to pay balance amount of Rs. 2,60,00,000/- and subsequently got executed the agreements for sale dated 12.12.2017, which were subsequently got registered on dated 13.12.2017 from the office of Sub Registrar Kurla-Bandra, Mumbai. There is no bar for claiming both the exemptions u/s 54 & 54F of the Act simultaneously and therefore the Assessee claimed the exemptions u/s 54 & 54F of the Act simultaneously. 8.3 We observe that the only controversy for not denying the benefit u/s 54F of the Act by the Revenue Authorities is that the clause a(ii) of the proviso to sub section (1) of section 54 of the Act is attracted in the instant cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 416A and 516A situated at Mittal Park, Juhu, Mumbai, which were joined together and made into one flat and consideration of which was claimed as deduction u/s 54 of the Act", however, the same was denied by the AO. On appeal, the then Ld. CIT(A) allowed such claim of the Assessee by considering two flats bearing No.416A & 516A as one unit, being duplex. On appeal, the Tribunal affirmed the decision of the Ld. Commissioner in allowing the claim of the Assessee u/s 54 of the Act. Subsequently, on appeal by the Department, the Hon'ble High Court affirmed the decision of the Tribunal in affirming the decision of the then Ld. CIT(A) in holding "that where the Assessee has acquired one residential house consisting of two flats, it cannot be said that the Assessee had purchased two residential houses". 12. We further observe that Hon'ble Karnataka High Court in the case of Navin Jolly [2020] 117 taxmann.com 323 (Karnataka) has also dealt with the provision of section 54F(1) of the Act and the issue wherein the Assessee owned two apartments of 500 sft. in the same building and therefore the Hon'ble High Court treated two apartments as one residential unit and ultimately allowed the cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e purchased on 08-12-2017 by making substantive payment of Rs. 5,00,000,000/- (Rs. Five Crores) as earnest money and executing the Sale Agreements on dated 12-12-2017, therefore the said fact, also supports the case of the Assessee that the Assessee had purchased 02 flats in the same building being one unit, as residential house on the very same day i.e. 08-12-2017. Even otherwise, there is no evidence is available on record to controvert such clam of the Assessee and therefore it cannot be construed that the Assessee has purchased any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset. Thus bar as prescribed under clause a(ii) of section 54F(1) of the Act, would not be applicable to the instant case. 15.1 For the sake of brevity, we again reiterate that Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Gita Duggal (supra) has categorically held "that there is nothing in the sections 54 and 54F of the Act, 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 not for commercial use. If there is n....