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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI ASHWANI TANEJA (ACOUNTANT MEMBER)
O R D E R Per ASHWANI TANEJA, AM
This appeal has been filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-46, Mumbai [hereinafter called CIT(A)] dt 06-01-2014 for A.Y. 2011-12 on the following grounds:
“1) On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing officer in allowing the claim of exemption uls 54 of the Income Tax Act,1961 of Rs.21,76,0401- instead of Rs. 24,34,261/- as claimed by the appellant, without considering the facts and circumstances of the case.
2) On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing officer in not appreciating the fact that the Investment made in two flats is the adjoining flats and to be considered as one flat, without considering the facts and circumstances of the case.
2. The solitary issue raised in this appeal is with regard to denial by the Assessing Officer of the claim of exemption u/a 54. The brief background is that the assessee is an individual and sold residential house property during the year under consideration on which he earned long term capital gain. The amount of sale proceeds were invested by the assessee in two adjacent flats. The AO allowed the claim with respect to one flat only. Being aggrieved, he assessee filed appeal before Ld. CIT(A) an submitted that there was no restriction under the law in claiming the benefit of deduction for more than one house. The Ld. CIT(A) was not satisfied with the submission of the assessee and therefore, she rejected the claim of the assessee an upheld the order of the Assessing Officer. Still being aggrieved, the assessee filed appeal before the Tribunal. It has been submitted by the ld.counsel that two flats were adjacent flats and they were used by the assessee as one house. The family needs of the assessee were greater and, therefore, in a place like Mumbai, the assessee need two flats to fulfil his needs. It was further submitted that the legislature used the word “a” u/s 54 and not the word “one”. It is further submitted that the word “a” does not mean “one”. It was further submitted that this issue was covered in favour of the assessee on the basis of following judgements of various High Courts and different benches of the Tribunal:
CIT & Anr VS Smt. K.G. Rukminiamma 331 ITR 211 (Kar)
CIT vs Anand Basappa 309 ITR 329 (Kar) 3. CIT vs Khoochand M Makhija 223 Taxmann 189 (Kar) 4. CIT vs SAyed Ali Adil 352 ITR 418 (AP) 5. CIT vs Gita Duggal 357 ITR 153 (Del) 6. CIT vs V.R. Karpagam 373 ITR 127 (Mad) 7. Dy.CI vs Jai Trikanand Rao 149 ITD 112 (ITAT, Mum) 8. Girdhar Mohanani vs ITO 4650/Mum/2013
Per contra, the ld.Dr relied upon the orders of the lower authorities.
We have gone through the orders of lower authorities and judgements relied upon by the ld.counsel before us. It is noted that the Karnataka High Court in its various judgements has clarified this issue threadbare. In the other judgements also which have been relied upon by the ld.counsel as mentioned above, this issue has been decided in favour of the assessee. The gist of these judgements is that –
“The expression "a residential house" in s. 54(1) has to be understood in the sense that the building should be of residential nature and "a" should not be understood to indicate a singular number. Where an assessee had purchased two residential flats, he is entitled to exemption u/s 54 in respect of capital gains on sale of its property on purchase of both the flats, despite the fact that the flats were purchased by separate sale deeds). Deduction is allowable even if the flats are on different floors. On facts, as the two flats purchased by the assessee are adjacent to one another and have a common meeting point, the deduction cannot be denied.”
In the case of CIT vs Gita Duggal 357 ITR 153 (Del), Hon’ble Delhi High Court held that merely because a residential house consists o several independent residential units, it would not take away the benefit of deduction u/s 54. The revenue filed SLP against this judgement before Hon’ble Supreme Court, which has been dismissed by the Hon’ble Supreme Court. This admitted fact on record that both the flats were adjacent flats and were used by the assessee as one. Thus, under these circumstances, in view of the settled position of law as is coming out from the cases relied upon by the ld.counsel, we find that the assessee is entitled for the benefit of deduction on both the flats. The Assessing Officer is directed to provide the same. The grounds of the assessee are allowed.
As a result, appeal filed by the assessee is allowed. Order pronounced on this 24th day of June, 2016.