TaxTMI 
TaxTMI 
2024 (7) TMI 1771
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....d for 20.03.24 or in the alternative should had communicated the rejection thereof with some final date of hearing, in the absence of which, no proper and reasonable opportunity of hearing has been allowed. 3. That under the facts and circumstances, the Ld. A.O. has exceeded his jurisdiction by not strictly following and working within the four corners of directions and findings in order u/s. 263, hence the impugned order is not sustainable in law being without jurisdiction and illegal. 4. That under the facts and circumstances, the Ld. A.O. committed serious legal and factual errors in allowing deduction u/s. 54 only for Rs. 11,08,402/- against correctly claimed at Rs. 64,23,843/-, thus short by Rs. 53,15,441/-. 5. That in view of the submissions, evidences furnished and the settled legal position as per case laws, the deduction u/s. 54 should have been allowed for Rs. 64,23,843/-." 2.1 The core issue for adjudication here is that whether the disallowance of deduction of Rs. 53,15,441/- under section 54 of the Income Tax Act, 1961 (In short, the 'Act') is justified. 3. The relevant facts giving rise to this appeal, in brief....
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....s as under:- Investment in Prop. No. Invested Rs. . Allowed Rs Disallowed Rs. Residential Flat at Supertech 21,08,402/- 11,08,402/- 10,00,000/- Constn. of residential house on roof of Prop. At 34,35, NRI Complex, Mandakini Enclave G.K., New Delhi 43,15,441/- ----- 43,15,441/- Total 64,23,843/- 11,08,402/- 53,15,441/- 3.3 The Assessing Officer (In short, the 'AO') allowed deduction of Rs. 11,08,402/- only as against the aggregate claim of Rs. 64,23,843/-holding that section 54 of the Act provides deduction with respect to one residential unit only. With respect to the above mentioned two properties, the AO first worked out allowable deduction of (i) Rs. 11,08,402/- for Supertech property and (ii) Rs. 6,22,155/- for G.K. Property. Thereafter, the AO, holding that the higher of these two deductions being beneficial to the assessee is valid as per the law, allowed deduction of Rs. 11,08,402/- in respect of Supertech property. Out of claim of deduction of Rs. 21,08,402/- for Supertech property, the AO disallowed the claim of Rs. 10,00,000/- holding that this investment was not made by ....
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....o Supertech on behalf of the appellant /assessee on 11.03.2011. Hence, the AO's finding that the appellant/assessee had not invested the sum of Rs. 10,00,000/- was not well founded. However, it was categorically admitted that the appellant/assessee was not able to explain the source of this investment before the AO and CIT(A); hence, the deduction under section 54 of the Act was disallowed by them. In view of the new facts, the Ld. AR contended that the bank details demonstrating the investment made by the appellant/assessee were filed for the first time before the Tribunal; hence, he prayed for restoring this matter to the AO for further investigations and verifications. 4.2 As far as the disallowance of deduction of Rs. 43,15,947/- with respect to G.K. Property is concerned, the Ld. AR admitted that the disallowance of Rs. 5,01,700/- made out of the investment Rs. 43,15,947/- was justified as it pertained to prior period. Admittedly, the dispute was with respect to Rs. 38,15,852/- only. The Ld. AR further contended that the AO and CIT (A) had rightly held the sum of Rs. 6,22,155/- as allowable deduction under section 54 of the Act as the assessee ....
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....ecision of the Hon'ble Court Karnataka High Court in the case of Arun K Thiagarajan in I.T.A. No. 25 of 2011 (Date of Judgement/Order: 18/06/2020), wherein this issue was dealt in details. The relevant part of decision in case of Gita Duggal (supra) is as under: "5. The revenue carried the matter in appeal before the Tribunal and raised the following ground:- "On the facts and on the circumstances of the case Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 98,20,722/- u/s. 54F of the IT Act, 1961 which the Assessing Officer had allowed in respect of only one unit by treating the units as two separate residential properties." The Tribunal confirmed the decision of the CIT (Appeals) by observing as under: - "6. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that ld. counsel of the assessee submitted that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Karnataka High Court in the case of CIT & Anr. Vs. Smt. K.G. Rukminiamma in ITA No. 783 of 2008 vide order dated 27.8.2010 wherein it wa....
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....h the expression 'a residential house' is used in Section 54 makes it evident that it is not the intention of the legislature to convey the meaning that it refers to a single residential house. It was also held that an asset newly acquired after sale of original asset can also be buildings or lands appurtenant thereto, which also should be residential house, therefore, the letter 'a' in the context it is used should not be construed as meaning singular, but the expression should be read in consonance with other words viz., buildings and lands. Accordingly, the contention raised by the revenue was rejected. Similar view was taken by a bench of this court in Khoobchand M. Makhija supra, B. Srinivas supra and in the case of Smt Jyothi K Mehta supra. The Madras High Court while dealing with Section 54 of the Act as it stood prior to amendment by Finance Act No. 2/2014 in the case of Tilokchand and Sons supra took the similar view and held that the word 'a' would normally mean one but in some circumstances it may include within its ambit and scope some plural numbers also. The Delhi High Court also took the similar view in case of Gita Duggal supra. ....
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....endi, that is to say, the general reasons given for the decision or the general grounds on which it is based, detached or abstracted from the specific peculiarities of the particular case which gives rise to the decision. 15. This Court as well as Madras and Delhi High Court have interpreted the expression 'a residential house' and have held that the aforesaid expression includes plural. The ratio of the decisions rendered by coordinate bench of this court are binding on us and we respectively agree with the view taken by this court while interpreting the expression 'a residential house'. Therefore, the contention of the revenue that the assessee is not entitled to benefit of exemption under Section 54(1) of the Act in the facts of the case does not deserve acceptance. In view of preceding analysis, the substantial question of law framed by this court is answered in favour of the assessee and against the revenue. In the result, the order passed by the assessing officer and Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal insofar as it deprives the assessee of the benefit of exemption under Section 54(1) of the Act are here....