TMI Blog2017 (10) TMI 1392X X X X Extracts X X X X X X X X Extracts X X X X ..... d not as a general rule. Accordingly, when the assessee has purchased two separate houses in different localities which are not adjacent to each other and further one of the houses was let out by the assessee and was not intended to be used for his residential purpose clearly manifest the intention of the assessee to purchase two separate houses not to be used as one residential house disentitle the assessee to claim the benefit u/s 54 in respect of both the houses. No error or illegality in the orders of the authorities below in restricting the deduction under Section 54 in respect of one house only. - decided against assessee. - I.T.A. No.1041/Bang/2017 - - - Dated:- 25-10-2017 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER For the Appellant : Shri S. Ramasubramanian, CA For the Respondent : Shri M.K. Biju, JCIT (DR) (ITAT)-3, Bengaluru. ORDER Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.13.03.2017 of Commissioner of Income Tax (Appeals) for the Assessment Year 2013-14. 2. The assessee has raised the following grounds : 3. The solitary issue arises in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The flat in Jalahalli was purchased for the residential purpose of the assessee because the assessee was working in Peenya area but his son and daughter-in-law were working in Sarjapur Road area. Therefore the assessee purchased another flat near Sarjapur Road and henc, both these flats will constitute a residential house to meet the requirement of the family of the assessee. He has relied upon the decision of the Hon'ble High Court in the case of CIT Vs. K.G. Rukmaniamma (surpa) as well as other decisions as relied upon by the assessee before the authorities below. The learned Authorised Representative of the assessee has pointed out that in the said case the assessee has purchased two residential houses and the deduction under Section 54 was allowed by this Tribunal and upheld by the Hon'ble High Court. He has also referred to the communication from the CBDT dt.22.7.1960 whereby the decision of the Hon'ble High Court in case of K.G. Rukmaniamma (supra) has been accepted by the department and it was also clarified that the amendment in section 54 and 54F substituting one residential house in place of a residential house vide Finance Act, 2014 is not retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbandan (supra) as well as Smt. B.S. Shantakumari (supra). As regards the decision of Hon'ble jurisdictional High Court in the case of K.G. Rukmaniamma (supra), it was a case of JDA entered into with the builder and under the said agreement the assessee was to receive 48% super built up area in the form of residential apartments. Therefore the built up area received by the assessee in the same project and under JDA in the shape of four flats were adjacent and accordingly, this Tribunal as well as Hon'ble High Court has held that these four flats received by the assessee under the JDA in the project will constitute a residential house as per the provisions of Section 54 of the Act. In the case of CIT Vs. Sambandam Udaykumar (supra) the substantial question for consideration of the Hon'ble High Court was regarding eligibility of deduction under Section 54 of the Act in respect of the building under construction and not being constructed within the stipulated period of three years. Therefore, there was no dispute in the said case regarding the purchase or construction of more than one house or unit. In the case of CIT Vs. B.S. Shantakumrari (supra), again the dispute was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Nathu Hansraj 105 ITR 43 is relevant wherein the Hon'ble High Court has held as under : It is well settled that words of a statute, when there is doubt about their meaning, are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the legislature has in view. Their meaning is found not so much in a strictly grammatical or etymological propriety of language, nor even in its popular use, as in the subject or in the occasion on which they are used, and the object to be attained. (See Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate AIR 1958 SC 353). The expressions used in a statute should ordinarily be understood in a sense in which they best harmonise with the object of the statute and which effectuate the object of the legislature (See New India Sugar Mills v. Commissioner of Sales Tax AIR 1963 SC 1207). It is necessary, therefore, to read section 54 in the context of the subject-matter and its setting in the scheme of capital gains and the object of exemption and then to ascertain the true import of the relevant part ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee to purchase a big residential house so as to accommodate both his sons, in which event in terms of Section 54 (1), he would have been entitled to the benefit of the said Section. However, instead of purchasing one big house, having regard to the fact that both his sons are grown up, have families and in order to see that in future there won't be any litigation or disharmony, he chose to purchase two small residential houses to accommodate both his sons. 17. It is clear that the assessee was not attempting to evade tax. In fact, after purchasing two residential houses, still there remained unutilized capital gain, which he has offered for tax. Therefore, as held in the aforesaid Rukminiamma's case, the context in which the expression a residential house is used in Section 54 makes it clear that it was not the intention of the legislature to convey the meaning that it refers to a single residential house. The letter a in the context, which is used, should not be construed as meaning singular, but being a indefinite article, the said expression should be read in consonance with the other words buildings and lands and therefore, the singular a resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be admissible against second house. However, the CIT(A) upheld the claim of the assessee relying upon decision of Bangalore Bench of the Tribunal in D.Anand Basappa v. ITO [2004] 91 ITD 53. The said view has been reversed by the Tribunal as follows : 6. We have carefully considered the rival submissions in the light of the material placed before us. The facts in the present case are clear. The assessee is claiming exemption in respect of two independent residential houses situated at different locations; one is in Dilshad Colony, Delhi and the other is in Faridabad. The assessee in the Special Bench case had also purchased two residential houses against sale consideration of residential flat at 'Gulistan' situated at Bhulabai Desai Road, Mumbai. One residential property was at Varun Apartments at Varsova and the other property was at Erlyn Apartments, Bandra and it was held by the Special Bench in the aforementioned case i.e.ITO v. Ms. Sushila M. Jhaveri (supra) that the assessee is entitled to get exemption only in respect of one house of her choice. Therefore, the decision of Special Bench is fully applicable to the present case and the assessee can avail exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t admissible in plain language of statute. In the judgment of Karnataka High Court in CIT v . D. Ananda Basappa [2009] 309 ITR 329 / 180 Taxman 4 referred to in the impugned order, exemption against purchase of two flats was allowed having regard to the finding that both the flats could be treated to be one house as both had been combined to make one residential unit. The said judgment, thus, proceeds on a different fact situation. Therefore, so long as more than one unit could be treated as one house by considering the fact that these constitute one combined unit then the benefit of Section 54(1) cannot be denied as per the pre-amended provisions of the Act. However, where it is clear from the fact that in the case what is purchased by the assessee are two separate residential houses located in different and separate localities and by any parameter cannot be treated as one residential unit then the decisions relied upon by the assessee would not help the case of the assessee for allowing the deduction under Section 54 of the Act. So far as the applicability of the amended provisions of Section 54 by Finance Act, 2014 it cannot be applied retrospectively prior to the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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