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2005 (10) TMI 213 - ITAT BOMBAY-EDeduction u/s 54 - Capital Gains - Two adjacent flats were purchased by the assessee for self-residence and converted into a single residence as the exemption u/s 54 is available for purchase of a residential house - investment made by way of adjustment of loan - deductible payment of brokerage to two brokers while working out the capital gain. HELD THAT:- The property in question is Unit No. 1201 which was registered in the name of Rajiv Nanda and the assessee. The funds were provided by the assessee as loan to Shri Rajiv Nanda for purchase of this flat. The assessee had purchased Unit No. 1202 from Rajiv Nanda by agreement dated 3-5-1991 and had absolved him of the loan. It was also agreed between them that due to the close relationship between the two parties, the premises shall continue to stand in both the names. The original documents and the possession of Unit No. 1202 was handed over to the assessee. The assessee had acquired the domain, substantial interest and possession of flat. In view of the above noted judgments, as relied by the assessee, it cannot be said that the assessee had not purchased the Unit No. 1202 within the meaning of section 54(1). As such, we hold that the assessee had purchased Unit No. 1202 within the time prescribed u/s 54. Flat Nos. 1201 and 1202 were adjacent flats which were converted into a single residence by the assessee and were being used for the sell-residence of the assessee and family members. It has been held by Hon'ble Allahabad High Court in the case of Shiv Narain Chaudhari v. CWT (Lucknow) [1977 (4) TMI 34 - ALLAHABAD HIGH COURT] while explaining the meaning of house for exemption u/s 51(iv) of WT Act, that self-contained dwelling unit which are contiguous and situated in same compound and within common Boundaries and having unity of structure could be treated as one house. In our view two contiguous flats converted into a single residential premise should be treated as a residential house for the purpose of section 54. As there is no dispute that the purchase of Flat Nos. 1201 and 1202 has been made within the prescribed time and for the purpose of self-residence, the deduction has been correctly allowed by the CIT(A). The order of the CIT(A) is upheld. As such first and second ground of the appeal are dismissed. Payment of brokerage to two brokers - We are of the view that the said payment made to the brokers was an expenditure incurred wholly and exclusively in connection with transfer of the asset as provided u/s 48(1). Hence the same was deductible while working out the capital gain. The expenditure was for the services of the brokers, which resulted in arranging the sale of the flat to Parikh family. The assessee was not able to sell the flat to Parikh family because it was acquired by the appropriate authority but the brokerage had become due and was paid by the assessee. The expenditure on brokerage was incurred by the assessee in connection with the sale of the flat. We uphold the finding of the CIT(A) and decline to interfere the same. The third ground is dismissed. The appeal of the Revenue is dismissed.
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