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2016 (3) TMI 1342 - AT - Income TaxDisallowance of claim of exemption u/s 54 - investment made in more than one residential house - interpretation of the word “a” preceding the expression “residential house” as used in section 54(1) - as per AO exemption claimed under section 54 has to be restricted to “one” residential house and not two flats as claimed by the assessee - Held that:- The Hon'ble Karnataka High Court in D. Anand Basappa (2008 (10) TMI 99 - KARNATAKA HIGH COURT), while interpreting the expression “a residential house” used in section 54 has held that the expression “a” used therein would not mean “one”. Only condition 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. 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 assessment year. Moreover, the aforesaid amendment brought to the statute by substituting the word “a” with “one” all the more supports the case of the assessee that prior to the amendment the exemption provided under section 54(1) was not restricted to investment made in one residential house. - Decided in favour of assessee.
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