TaxTMI 
TaxTMI 
2026 (7) TMI 862
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.... of Rs. 1,73,704/-, the assessee computed long-term capital gain at Rs. 1,48,26,296/-. After claiming deduction under section 54 of the Income Tax Act, 1961 ("the Act"), the net capital gain of Rs. 50,26,296/- was offered to tax by the assessee. This is the second round of appeal before this Tribunal. In the first round, the Learned Assessing Officer ("Ld. AO") passed the assessment order on 27.12.2011, wherein the entire receipt of Rs. 1,50,00,000/- was brought to tax in the hands of the assessee. Aggrieved by the order of the Ld. AO, the assessee had preferred an appeal before the Ld. CIT (A) and finally before this Tribunal. The Tribunal vide order dated 31.01.2020 in ITA No. 860/Hyd/2013 had restored the issue to the file of the Ld. AO with specific directions to examine the claim of deduction under section 54F of the Act as pe law. During the set-aside proceedings, the Ld. AO issued notices to the assessee. However, the assessee did not comply with the notices issued by the Ld. AO. Accordingly, the Ld. AO completed the assessment under section 143(3) read with section 254 and section 144B of the Act vide order dated 14.09.2021, assessing the income of the assessee at Rs. 1,50,....
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....case of the assessee. The Ld. AR submitted that the expression "a residential house" has been interpreted by Courts and Tribunals to include multiple residential units and therefore the claim of deduction cannot be denied merely on the ground that the investment is made in more than one unit. In support of this contention, the Ld. AR relied upon the following judicial precedents: (a) Decision of the Hon'ble Andhra Pradesh High Court in the case of CIT Vs. Syed Ali Adil, 352 ITR 418. (b) Decision of the Hyderabad ITAT in the case of Vittal Krishna Conjeevaram Vs. ITO, 36 Taxmann.com 542. (c) Decision of the Hon'ble Bombay High Court in the case of Krishnagopal B. Nangpal Vs. DCIT, 484 ITR 272. 6.1 The Ld. AR further submitted that though the decision of the Hon'ble Bombay High Court is rendered in the context of section 54, the principle laid down therein is equally applicable to section 54F since the language used in both provisions is identical for the relevant period. 7. Addressing the second objection of the Revenue, the Ld. AR submitted that the provisions of section 54F of the Act do not prescribe any condition that the construction must strict....
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....ies. 10. We have heard the rival submissions and perused the material available on record including the case laws relied upon. The solitary issue before us relates to the allowability of deduction under section 54F of the Act in respect of investment made in construction of multiple residential units. As far as the first contention of the assessee regarding applicability of the provision of unamended section 54F of the Act is concerned, we find merits in the submissions of the Ld. AR that for the Assessment Year under consideration, the provisions prior to amendment by the Finance Act, 2014 are applicable, wherein the expression used was "a residential house". In this regard, we have gone through para nos.12 and 13 of the judgment of the Hon'ble Bombay High Court in the case of Krishnagopal B. Nangpal vs. DCIT (Supra), which is to the following effect: "12. For purpose of the present appeal, what is relevant is replacement of the expression 'a residential house' by the expression 'one residential house' by way of 2014 amendment. Prior to the 2014 amendment, capital gains arising from transfer of a long term capital asset, including a residential house, q....
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.... by the statutory authorities is concerned, we have gone through the decisions relied upon by the Ld. AR, particularly para no. 6 of the order of the Chennai Bench of the Tribunal in the case of B. Slvasubramanian Vs. ITO (Supra), which is to the following effect: "6. We have heard the submissions made by the representatives of both the sides. We have also perused the orders of the authorities below as well as the documents placed on record by the ld Counsel for the assessee. It is not disputed that the assessee is not in possession of plot on which a residential building is in existence. The assessee has allegedly utilized the Long Term Capital Gain arising from the sale of shares towards the construction of a new residential house after demolition of old building on the plot-in-question. The assessee has claimed exemption u/s.54F on the ground that the assessee has invested Long Term Capital Gains arising from sale of shares towards construction of a new house within the prescribed period as mentioned in the Act. However, the contentions of the assessee has been rejected by the authorities below for the reason that the assessee has not placed on record the approved build....
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....tion of one residential house property or not. In our considered view, whether the house property is built upon an approved plan or not and whether the two flats have been converted into one after obtaining requisite approvals from the local authorities or not, shall not fall in the domain of Income-tax proceedings, so long as other conditions as prescribed under the law are duly fulfilled. Legal position has been threadbare clarified by Hon'ble Bombay High Court in the judgements relied upon by the Ld. CIT(A) in the case of CIT v. Devdas Naik (supra) as well as CIT v. Raman Kumar Suri (supra) wherein in the similar facts it was held that even if two flats were acquired under two distinct agreements, but if the flats were constructed in such a view that adjacent units of the flats can be combined into one, then the assessee would be eligible to claim the benefit on the entire amount invested in two flats combined into one by the assessee. Thus, on legal principle, the AO's action was not proper, therefore, it has rightly been reversed by Ld. CIT(A)." 14. On perusal of the findings given by the Chennai Bench of the Tribunal in the case of B. Slvasubramanian Vs. ITO (Supra....