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2013 (4) TMI 209 - AT - Income TaxExemption of Long Term Capital Gains u/s. 54F - disallowance of one residential flat out of 2 adjacent flats used as one residential unit - Whether the phrase 'a residential house' used in sub-section (1) of Section 54 and 54F means one residential house or more than one residential house independently located in the same building/compound/city ? - Held that:- Considering the case of Ms. Sushila M. Jhaveri [2007 (4) TMI 289 - ITAT BOMBAY-I] exemption u/s 54 and 54F would be allowable in respect of one residential house only. If the assessee has purchased more than one residential house, then the choice would be with assessee to avail the exemption in respect of either of the houses. However, where more than one unit are purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen, etc., then, it would be a case of investment in one residential house and consequently, the assessee would be entitled to exemption. As in the present case two adjacent flats were purchased and later on same were converted into one single residential unit. Both the flats were on one floor only and no other dwelling unit there was there on that floor. Builder had constructed two units, but the assessee converted them in one unit only. Spot inspection report clearly prove that there was common passage and only one kitchen was functional with all appliances. There is no doubt that assessee had purchased two flats and later on converted them into one unit for the purpose of residence. Therefore, assessee is entitle to claim exemption u/s. 54 - in favour of assessee.
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