TaxTMI 
TaxTMI 
2019 (12) TMI 1701
X X X X Extracts X X X X
X X X X Extracts X X X X
....s u/s 271 (1)(c) of the Income Tax Act, 1961, that the assessee came to know about the passing of the appellate order. Thereafter, the assessee applied for certified true copy of the order of the CIT(A) which was provided to him on 20.2.2019 and the appeal was filed immediately within the period of limitation. The above averments made by the assessee are supported by the affidavit of the assessee. 3. On the other hand, the Department has not produced any documents on file to show that the copy of the order sent through Speed Post was actually delivered to the assessee. Since the assessee's contention have been supported with his Affidavit and no contrary evidence has been filed by the Revenue, hence, the delay in filing the present appeal is hereby condoned and we proceed to decide the appeal on merits. 4. The assessee in this appeal has taken following grounds of appeal: - 1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) in Appeal No. 109/14-15 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961. 2. That on law, facts and circumstances of the case, the Worthy CI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsal in the month of May 2017. The assessee, therefore, could not construct the residential house over the said plot. Thereafter, the assessee entered into an agreement to purchase a residential flat No. C-2/609 at Nirmal Chhaya, Zirakpur and amount of Rs. 32,55,398/- was paid for the purchase of the said flat. Further, the assessee purchased another Flat No. C-3/606 at Nirmal Chaya, Zirakpur for Rs. 31,93,400/-. The assessee submitted that both the flats were adjacent to each other which are being used as a single unit. The assessee accordingly claimed deduction u/s 54 of the Act in respect of the amount of consideration paid for purchase of the plot at Kansal Village for a sum of Rs. 51,56,500/- and further in respect of the two adjacent flats used as a single unit for Rs. 32,55,398/- plus Rs. 31,93,400/- totaling Rs. 6448798/-. The Assessing Officer, however, denied the deduction to the assessee u/s 54 of the Act in respect of the consideration paid for residential plot at village Kansal amounting to Rs. 51,56,500/- and further in respect of second flat bearing No. C-3/606 for Rs. 31,93,400/-. However, he allowed the claim of the assessee in respect of the first flat i.e. C-2/60....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... covered by the various decisions of the Hon'ble Higher Courts. He, in this respect has relied on the following decisions :- 1. CIT(A) vs Gita Duggal (357 ITR 153) [2013] Delhi High Court] 2. CIT vs Syed Ali Adil ()352 ITR 418) (AP High Court) 3. CIT vs KG Rukminiamma (321 ITR 211) (Kar. High Court) 4. CIT vs Ananda Basappa (309 ITR 329) (Kar. High Court) 5. CIT vs RL Sood (245 ITR 727) (2000) (Del. High Court) 10. The Ld. Counsel has further submitted that even in the case of 'CIT vs Ananda Basappa' (309 ITR 329), the Hon'ble Karnataka High Court) has held that in the word Expression "a residential house", 'a' should not be understood to indicate a singular number. 11. We find that the issue is settled by the various decisions of High Courts, wherein, it has been held that where two adjacent flats are purchased and are being used as a single unit, deduction u/s 54 of the Act is allowable to the assessee in respect of purchase of both the units. Next grievance of the assessee is against denial of deduction u/s 54 of the Act of the exemption of Rs. 31,93,400/- on account of purchase of second flat on 3.12.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hereto, 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 purchased or constructed (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) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rty, has within a period of one year before or two years after the date of such transfer or within a period of three years, constructs a residential house, the capital gains will not be charged to tax upto the extent of the amount spent on the purchase or construction of residential house. Sub Section (1) of section 54 of the Act is a substantive provision enacted with the purpose of promoting purchase / construction of residential houses. However, sub section (2) of section 54 is an enabling provision which provides that the assessee should deposit the amount earned from capital gains in a scheme framed in this respect by the Central Government till the amount is invested for the purchase / construction of the residential house. This provision, in our view, has been enacted to gather the real intention of the assessee to invest the amount in purchase / construction of a residential house. As per the provisions of sub section (1) of section 54, the assessee has been given two years time to purchase and three years time to construct a residential house subsequent to the date of transfer of the original asset. At the time of the assessment proceedings, subsequent to the date of trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the exemption provisions of section 54 of the Act. Our above view, is fortified with the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Shri K Ramachandra Rao, ITA No. 47 of 2014 c/w ITA No. 46/2014, ITA No. 494/2013 and ITA No. 495/2013, decided vide order dated 14.7.2014 wherein the Hon'ble High Court has directly dealt with this issue while interpreting the identical worded provisions of section 54F(2) of the Act. The following question of law was framed by the Hon'ble High Court on this issue: - "2) When the assessee invests the entire sale consideration in construction of a residential house within three years from the date of transfer can he be denied exemption under Section 54F on the ground that he did not deposit the said amount in capital gains account scheme before the due date prescribed under Section 139(1) of the IT Act?" 10. The said question has been answered by the Hon'ble High Court in the following words: - "As is clear from Sub Section (4) in the event of the assessee not investing the capital gains either in purchasing the residential house or in constructing a residential house within the per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 1.4.1981 as against claimed by the assessee at Rs. 6 lacs. Apart from that, the assessee claimed indexed cost of the improvement of the residential house at Rs. 1,60,200/- in respect of first floor and Rs. 1,64,000/- in respect of the second floor. However, the Assessing Officer observed that the assessee had not given any reliable evidence to prove the fair market value of the plot and ground floor and further no reliable evidence had been produced regarding the cost of improvement i.e. construction of first floor and second floor. The Assessing Officer estimated the fair market value of the plot as on 1.4.1981 at Rs. 1 lac and construction of the house at Rs. 8 lacs totaling to Rs. 9 lacs, in which the assessee's share @ 1/3rd of the total house was calculated at Rs. 3 lacs and after indexation, the benefit of Rs. 23,55,000/- was given. 14. The assessee claimed before the Ld. CIT(A) that the cost of acquisition as on 1.4.1981 was on the basis of the valuation report of the Registered valuer, however, the said report was not available before the Assessing Officer. The assessee also prayed before the CIT(A) that the said report be admitted as 'additional evidence' ....