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2009 (8) TMI 837

..... t. ORDER D.K. Agarwal, Judicial Member. - These two appeals by two respective assessees are directed against the separate orders passed by the ld. CIT(A) dated 19-11-2007 for the assessment year 2004-05. Since facts are identical and grounds are common both these appeals are disposed of by this common order for the sake of convenience. 2. Briefly stated facts of the case in ITA No. 953/Mum./08 in respect of appeal of Shri Suresh C. Sadarangani are that the assessee is a Managing Director in two companies and his income consist of salary, director s fees, commission from the company, income from house property and income from other sources. The return was filed showing an income of Rs. 2,93,99,590. However, the assessment was completed at an income of Rs. 3,11,75,020 including the income from two house properties Rs. 5,15,274+Rs. 5,15,274=Rs. 10,30,548 and capital gain Rs. 6,19,682, vide order dated 27-12-2006 passed under section 143(3) of the Income-tax Act, 1961 ( the Act ). On appeal the ld. CIT(A) confirmed the additions made by the Assessing Officer and dismissed the appeal. 3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us. 4. Ground No. 1( .....

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..... are two separate agreements of flat Nos. 18B and 19B, therefore, they are two separate units and, accordingly, upheld the order of the Assessing Officer. 7. At the time of hearing the ld. Counsel for the assessee while reiterating the same submissions as submitted before the Assessing Officer and the ld. CIT(A) further submits that the assessee owns a house, which is a duplex flat. These flats 18B and 19B are one above the other and connected with internal staircase. In support, the reference was also made on the floor plan of lower duplex floor and upper duplex floor appearing at pages 43 and 44 of assessee s paper book. The nature of ownership of the assessee is joint with his wife Mrs. Kusum Sadarangani. It was used by the assessee and his family as single flat though technically it had two numbers. He further submits that both the flats i.e., 18B and 19B are also assessed as one flat as per society maintenance bill appearing at page 98 of assessee s paper book. He further submits that the said duplex flat, during the year under consideration, was used for self-occupation by the assessee, therefore, no income from house property was shown in the return of income and, therefore, .....

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..... ce, half of each flat is assessable under sub clause (b) of sub-section (4) of section 23 of the Act. 10. The relevant provisions of section 23(2), (3) and (4) read as under :- Annual value how determined.-****** (2) Where the property consists of a house or part of a house which- (a)is in the occupation of the owner for the purpose of his own residence; or (b)cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil. (3) The provisions of sub-section (2) shall not apply if- (a)the house or part of the house is actually let during the whole or any part of the previous year; or (b)any other benefit therefrom is derived by the owner. (4) Where the property referred to in sub-section(2) consists of more than one house- (a)The provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf; (b)The annual value of the house or houses, other than the house in respect of whic .....

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..... has certified that he has effected necessary modifications to the two flats to make it one residential apartment. The assessee sought for exemption under section 54 of the Income-tax Act. The assessing authority gave exemption for capital gains to the extent of purchase of one residential flat. It was found in the inspection by the Inspector that the residential flats were in occupation of two different tenants disclosing separate enjoyment. Therefore, it is held that section 54(1) of the Income-tax Act does not permit exemption for the purchasers for more than one residential premises. . . . It has been held (330 head notes ) :- Held, dismissing the appeal, that it was shown by the assessee that the apartments were situated side by side. The builder had also stated that he had effected modification of the flats to make them one unit by opening the door in between the two apartments. The fact that at the time when the Inspector inspected the premises, the flats were occupied by two different tenants was not a ground to hold that the apartment was not one residential unit. The fact that the assessee could have purchased both the flats in one single sale deed or could have narrated .....

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..... (a) of the Act. Merely because the assessee has entered jointly with two separate agreements to purchase the above duplex flat having two separate numbers does not mean that they are two residential units. Accordingly, the value of the property is liable to be taken at nil. In this view of the matter the addition of Rs. 5,15,274 made by the Assessing Officer and sustained by the ld. CIT(A) is deleted. The ground taken by the assessee is, therefore, allowed. 18. Ground No. 1(b ) is against sustenance of addition of Rs. 5,15,274 in respect of house property flat No. 21 at Belvedere Court. 19. After hearing the rival parties and perusing the material available on record we find that before the ld. CIT(A) the assessee has taken following ground :- 1. On the basis of facts of the case, the ld. Assessing Officer erred in seeking to tax income from house property of Rs. 10,30,548. He ought to have considered the facts and circumstances made during the course of assessment. 20. However, the ld. CIT(A) in para-2 of his order has mentioned the aforesaid ground as under :- The first ground of appeal is against the addition of Rs. 5,15,274 under the head Income from house property . 21. The ld .....

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