TMI Blog2010 (10) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... ats cannot be said to be contiguous units converted into one residential house. - Benefit of exempted u/s 54 not available to assessee. - ITA No. 2972/Mum/2007 - - - Dated:- 20-10-2010 - S.V. MEHROTRA, ACCOUNTANT MEMBER AND VIJAY PAL RAO, JUDICIAL MEMBER Suboth L. Ratnaparthi for the Appellant. Sharvan Kumar for the Respondent. ORDER PER VIJAY PAL RAO, JM This appeal by the assessee is directed against the order dated, 8.2.2007 of CIT(A)-I, Mumbai for the assessment year 2004-05. 2. The assessee has raised various grounds in this appeal, however, the only issue arises in this appeal for our consideration and adjudication is whether in the facts and circumstances of the case, the CIT(A) is justified in confirming the disallowance of exemption u/s 54 of the Act claimed by the assessee in four new residential flats. 3. The assessee has also raised the additional ground along with the additional evidence as under : On the facts and in law, the ld. AO/CIT(A) erred in not appreciating the fact that your appellant had sold/transferred three structures comprising multiple residential units under development agreement dated 3.4.2003 and accordingly your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceed of earlier old property is one unit only. It is only with a view of foresightness i.e. supposes in future the sons desire to separate from parents it can be easily worked out for the premises otherwise can be separated very easily and with that view only four separate agreements have been executed by my client. In view of the aforesaid facts it is apparent that my client purchased one residential premises out of the long term capital gain and entire family is staying together therein. I therefore hereby beg to submit that considering all the facts mentioned herein above as well as the circumstances, the claim put up by my client for exemption under section 54 is proper and valid and the same my please be treated as allowable as per provisions of relevant section 6. The AO relied upon the order of this Tribunal in the case of Mrs. Gulshanbanoo R Mukhi V/s Jt. CIT (2002) 83 ITD 649 (Mum) and held that the claim of exemption under section 54 is in respect of more than one flats is not allowable and exemption under section 54 can be given for purchase of one residential house. Accordingly, the AO allowed the exemption u/s 54 on the first residential house having a great ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Tribunal relied on by the learned counsel for the assessee wherein exemption was allowed in respect of investments in two adjacent or continuous units converted into one residential house by having common passage/stair case, common kitchen, etc intended to be used as single house for the residential of the family. As already observed, the intention of the legislature is that investment should be made in one residential house. So long as the house purchased is one even after conversion, the exemption would be available on the other hand, if the investments is made in two independent residential house, even located in the same complex, then, in our opinion, exception cannot be allowed for investment in both the houses. However, the choice would be with assessee to avail exemption in respect of any one house as held by the Hon. Bombay high Court in the case of K C Kaushik (supra). The view taken by us in this para is also justified by the decision of the Hon. Calcutta High Court in the case of B B Sarkar V CIT (1981) 132 ITR 150, wherein purchase of ground floor of a house and thereafter construction of first floor ground floor of a hose and thereafter construction of first f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al house as it is renovated and will not be two houses. We further note that this decision has been considered by the Special Bench of this Tribunal in the case of M/s Sushila M Jhaveri (supra). In the case in hand it is not the reconstruction of existing house by the assessee but it was constructed in multistoried apartments for sale purposes. Since the assessee already converted erstwhile residential house in the stock-in-trade then the construction of multistoried building for the purpose of business of the assessee, therefore, cannot be compared with the situation where the assessee reconstructed its own residential house. Accordingly by following the decision of the Special Bench of this Tribunal in the case of Smt. Sushila M Jhaveri (supra), we set aside the order of the CIT(A) and restore the order of the AO. It is to be noted that when the assessee purchases any residential house other than new assets within a period of one year after the date of transfer of the original asset then the exemption under section 54F is not available as per the sub-clause (ii) clause (a) of the proviso to the sub-section (1) of section 54F. 12. The decisions relied upon by the learned AR are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the rival contentions and relevant record. It is undisputed fact that the additional issue raised by the assessee was not raised either before the AO or the learned CIT(A). The additional plea/ground raised by the assessee before us as altogether changed the complexion of the case as originally brought before the lower authorities regarding the fact of sale /transfer of the residential house. The assessee did not claim before the lower authorities that the residential house sold /transferred by the assessee was not a single unit but three multiple residential units and the assessee is eligible for exemption under section 54 on the investment of gain arisen from the sale of each residential house in a new residential house property. Thus, the issue raised in the additional ground needs investigation and examination of the fact as to whether the said existing residential house sold /transferred by the assessee was a single house or multiple residential unit. In other words, the question raised in the additional ground cannot be decided on the basis of the facts already on record. The assessee has also sought the additional evidence to be considered in support of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. 17. It is clear from the underline portion of the sub-section (1) that the capital asset being buildings or lands appurtenant denotes more than one building and more than one land can be a residential house. Therefore, even more than one buildings /structures or lands appurtenant thereto shall be treated as one residential house for the purpose of section 54 if all are connected and situated in a way that it would not be possible to treat them separate residential houses in terms of section 54(1) of the Act. Therefore, even if for the sake of argument it is presumed that the property sold /transferred by the assessee was consisting of more than one building or lands, the same does not constitutes more than one residential house. Accordingly, we decline to admit the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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