TMI Blog2015 (9) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... ) it was held in CIT & Anr. vs. Smt. K.G. Rukminiamma (2010 (8) TMI 482 - Karnataka High Court) that expression "a residential house" used in s. 54 should be understood in a sense that the building should be of residential nature and "a" should not be understood to indicate a singular number. Assessee was entitled to claim exemption under s. 54 in respect of four residential flats acquired by her. The CIT(A) has followed the decision of the Hon’ble jurisdictional High Court and therefore the said order does not require any interference. The Assessee was therefore entitled to exemption u/s.54 of the Act in respect of the two flats which were both located in the third floor. - Decided against revenue. - ITA No.625/Bang/2015 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efeat the purpose of sec.48 of the Income tax Act of bringing long term capital gain from sale of residential houses to tax because assessees would then be able to claim the entire capital gain as exempt u/s 54 by investing the entire amount in multiple proximal houses in apartment complexes. 5. The learned CIT(A) has erred in holding that the term a residential house could mean more than one residential house whereas in clauses (i) and (ii) of sec.54(1), the use of the definite article the with the words residential house and new asset in singular makes it explicitly clear that the legislative intent of section 54 is to allow exemption to the extent of the amount invested in only one residential house and not in any number of hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 because he got the full value of consideration in the form of flats. 4. The AO, on a reading of the provisions of section 54 of the Act, was of the following view:- As could be seen from the plain reading of the said section that the assessee will become eligible when the capital gains, arisen out of sale of buildings or land appurtenant thereto and being a residential house, invested in a residential house. In the instant case the assessee has, in lieu of land and building handed over to the builders, received two flats, i.e residential units and a part in another flat in different floor. According to the AO, u/s.54 of the Act exemption is available only to a residential house , whereas the Assessee got two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40000X711/100X2/3 26,667 1,89,603 Capital gains 94,96,030 Less: Exemption allowed on flat No.301 Measuring 1325 sq.ft. @ 3000 39,75,000 Taxable capital gains 55,21,030 6. In other words, the AO allowed exemption only in respect of one flat measuring 1325 sq.ft. u/s. 54 of the Act. 7. On appeal by the assessee, the CIT(Appeals) following the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submissions. In CIT Anr. vs. D. Ananda Basappa (2009) 223 CTR (Kar) 186 : (2009) 309 ITR 329 (Kar) High Court of Karnataka has observed that expression a residential house should not be understood to indicate a singular number; assessee having purchased two residential flats, exemption under s. 54 was available, more so as these flats are situated side by side and the builder has effected modification of the flats to make it as one unit. 11. Following CIT vs. D. Ananda Basappa (2009) 223 CTR (Kar) 186 : (2009) 309 ITR 329 (Kar), it was held in CIT Anr. vs. Smt. K.G. Rukminiamma (2011) 239 CTR (Kar) 435 : (2011) 331 ITR 211 (Kar) that expression a residential house used in s. 54 should be understood in a sense that the building ..... X X X X Extracts X X X X X X X X Extracts X X X X
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