TMI Blog2016 (3) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... the house should be of residential nature. The Court held that the expression “a” should not be understood to indicate a singular number. The Court observed, where the assessee had purchased two residential flats it is entitled to exemption under section 54 in respect of both the flats. Thus an assessee is eligible for exemption under section 54(1) even if the investment on capital gain has been made in more than one house. As far as the contention of the learned Departmental Representative that the amendment to section 54(1) by substituting the word “a” with “one” clarifies the position, we are of the view that such amendment having been made effective from 1st April 2015, would apply prospectively and will not apply to the impugned ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.601 D Wing, Sai Radiance, Sector 15, CBD Belapur. In the return of income filed for the impugned assessment year, assessee, though, declared long term capital gain from sale of two flats but at the same time, he claimed exemption under section 54 of the Act towards investment of the capital gain in two new flats purchased by him. The Assessing Officer being of the view that as per section 54 of the Act, assessee is entitled for claiming exemption of capital gain towards investment in a residential house which in other words would mean one residential house, the exemption claimed under section 54 has to be restricted to one residential house and not two flats as claimed by the assessee. Accordingly, after issuing a show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court in CIT v/s Anand Basappa, [2009] 309 ITR 329 (Kar.) and it held that a residential house as expressed in section 54 requires liberal interpretation as section 54 is a beneficial provision. The Hon'ble Court held that the word a would not mean one residential house. He submitted, the same view was again reiterated by Hon'ble Karnataka High Court in CIT v/s K.G. Rukminiamma, [211] 331 ITR 211 (Kar.). He, therefore, submitted that the disallowance of exemption claimed by the assessee by interpreting the word a as one is not the correct interpretation of the statutory provision. Learned Counsel referring to instruction no.1081(F) no.207/20/76 IT(A) II dated 3rd August 1977, submitted, as per the said instruction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted, the amendment made to section 54 by substituting the word one in place of a having been made by the Finance Act, 2014 w.e.f. 1st April 2015, will apply prospectively and will not be applicable to the impugned assessment year. 8. We have considered the submissions of the parties and perused the orders of the Departmental Authorities in the light of material available on record as well as relevant case laws cited before us. Undisputed facts are, assessee was the owner of two residential flats used for the purpose of his own residence which were sold by him during the relevant previous year. The gain derived from sale of both the flats were invested by the assessee for purchase of two new flats. In the return of income filed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion imposed under section 54(1) is, the house should be of residential nature. The Court held that the expression a should not be understood to indicate a singular number. The Court observed, where the assessee had purchased two residential flats it is entitled to exemption under section 54 in respect of both the flats. The same view was again reiterated by Hon'ble Karnataka High Court in K.G. Rukminiamma (supra). The Hon'ble Andhra Pradesh High Court in CIT v/s Syed Ali Adil [2013] 33 Taxmann.com. 212 (A.P) following the aforesaid decisions of the Hon'ble Karnataka High Court, held that the assessee would be eligible to avail exemption under section 54 in respect of investment made in more than one residential house. As far a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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