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The Assistant Commissioner of Income Tax, International Taxation, Mangalore Versus Shri Sundara Derebail Poojary,

2015 (9) TMI 271 - ITAT BANGALORE

Restricting the exemption claimed u/s 54 to the amount invested @ ₹ 3000/- per sq.ft. in Flat No.301 (1325sq.ft.) denied by CIT(A) - Held that:- In CIT & Anr. vs. D. Ananda Basappa (2008 (10) TMI 99 - KARNATAKA HIGH COURT) 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 modi .....

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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:- 7-8-2015 - SHRI N.V. VASUDEVAN AND SHRI ABRAHAM P. GEORGE, JJ. For The Appellant : Shri Sunil Kumar Agarwal, Jt. CIT(DR) For The Respondent : Shri V .....

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IT(A) has relied on the decision of the jurisdictional High Court in the case of CIT Vs. Ananda Basappa(2009) 309 ITR 329(Kar), he has erred in holding that the assessee is entitled to deduction u/s 54 in respect of Flat No.301 and 302 on the basis of mere proximity although the two flats were sold as separate units and are divided by a stair case whereas in the afore cited case, the Hon ble High Court of Karnataka while allowing exemption in respect of two adjacent flats had observed that the a .....

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in 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 o .....

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or transferring 67% of the right over the land, over which the developer has to develop and construct flats in accordance with the scheme sanctioned by the competent authority. As and by way of assessee s share, the assessee received built-up area of 3300 sq.ft. which was received by him as follows:- Sl.No. Flat No. Area in Sq.ft. 1. 301 1325 2. 302 1175 3. 102 800 out of total area of 1175 sq.ft. of the flat The assessee valued the built-up area at 3000/- sq.ft and considered a sum of 99,00,000 .....

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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 .....

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, however, was of the view that the aforesaid decision has not been accepted by the department and he therefore did not allow the claim of assessee for deduction u/s. 54. The deduction was allowed by the AO as follows:- 6. The assessee has got built up area of 3300 sq.ft. out of total built up area of 10000 sq.ft. The assessee has adopted ₹ 3000/sq.ft. while determining the consideration received for the purpose of capital gains. By adopting the same rate LTCG in this case has been worked .....

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n 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 the Hon ble High Court of Karnataka in the case of Smt. K.G. Rukminiamma (supra) and the decision of the Madras High Court in the case of CIT v. B.R. Karpagam, TCA No.301 of 2014 dated 18.8.2014, held that assessee was entitled to claim deduction u/s. 54 in respect of two flats which are located on the third floor. Following were the observations of the CIT(App .....

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the Act, with respect to Flat Nos. 301 & 302 only on the third floor. The third unit being on the first floor is completely disjointed and lacks proximity. It is ordered accordingly. 8. In coming to the aforesaid conclusion, the CIT(A) has followed the decision of the Hon ble High Court of Karnataka in the case of CIT v. D. Ananda Basappa, 309 ITR 329 (Karn), wherein a view was taken that if the two units are adjacent to each other, then they could be regarded as a residential unit. 9. Aggri .....

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