TMI Blog2013 (6) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased two residential flats, he is entitled to exemption under section 54 in respect of capital gains on sale of its property on purchase of both the flats, more so, when the flats are situated side by side and the builder has effected modification of the flats to make it as one unit, despite the fact that the flats were purchased by separate sale deeds. - Exemption to be allowed - Decided against the revenue. - I.T.T.A. No. 410 of 2012 - - - Dated:- 20-12-2012 - GODA RAGHURAM and RAMACHANDRA RAO M. S., JJ. JUDGMENT The judgment of the court was delivered by M. S. Ramachandra Rao J.-This appeal is filed under section 260A of the Income-tax Act, 1961 (for short "the Act"), by the Revenue challenging the order dated September 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in "a residential house", it being a beneficial provision, it should be construed liberally and the deduction cannot be restricted to only one residential house and it should be extended to the purchase of two adjacent residential flats. The Assessing Officer by order dated August 25, 2009, held that the assessee is not entitled to claim exemption in respect of Rs. 93,80,192 but only to the extent of Rs. 45,52,860 comprising consideration of Rs. 42,36,000 and a stamp duty of Rs. 3,16,860 utilized for investment on one of the flats by the assessee on the ground that the inspection report of the I. T. I. deputed by the Assessing Officer showed that what was purchased were two residential units separated by a strong wall ; that they were p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He contended that the deduction under section 54 of the Act is allowable only for one residential house and not for more than one residential house and that the Tribunal erred in holding that the deduction under section 54 of the Act is allowable for two independent residential flats in the same complex. He also placed reliance on the decision of the Special Bench of the Tribunal in ITO v. Ms. Sushila M. Jhaveri [2007] 292 ITR (AT) 1 (Mumbai) ; [2007] 107 ITD 327 (Mumbai). We see no force in the said contention. As held in D. Ananda Basappa's case [2009] 309 ITR 329 (Karn) by the Karnataka High Court, the expression "a residential house" in section 54(1) of the Act has to be understood in a sense that the building should be of residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different floors. The decision in Ms. Sushila M. Jhaveri's case [2007] 292 ITR (AT) 1 (Mumbai) [SB] holding that only one residential house should be given the relief under section 54 does not appear to be correct and we disapprove of it. We agree with the interpretation placed on section 54 by the High Court of Karnataka in D. Ananda Basappa's case [2009] 309 ITR 329 (Karn) and Smt. K. G. Rukminiamma's case [2011] 331 ITR 211 (Karn) and the decisions of the Mumbai, Chennai and Delhi Benches of the Tribunal in K. G. Vyas (supra), P. C. Ramakrishna, HUF (supra) and Prem Prakash Bhutani (supra). We, therefore, hold that the Commissioner of Income-tax (Appeals) was correct in setting aside the order of the Assessing Officer and the Tribunal ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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