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2015 (10) TMI 85 - BOMBAY HIGH COURT

2015 (10) TMI 85 - BOMBAY HIGH COURT - TMI - Exemption in respect of both the residential unit under section 54F - ITAT allowed the claim relying on the decision of the Special Bench of the ITAT in the case of Ms.Sushila M.Jhaveri (2007 (4) TMI 289 - ITAT BOMBAY-I) - Held that:- The fact that only one kitchen was functional in the house was itself an indication of the fact that both the flats are being used as one residential unit. The Special Bench of the Tribunal in the case of Ms.Sushila M.Jh .....

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3 - Dated:- 15-9-2015 - M.S.SANKLECHA AND G.S.KULKARNI, JJ For The Appellant : Mrs.S.V.Bharucha i/b Ms.P.S.Cardozo Advocate For The Respondent : Mr.F.V.Irani with Mr.A.K.Jasani Advocates JUDGMENT : The appellant-revenue has filed this appeal under section 260A of the Income Tax Act, 1961 (the Act) against the order dated 15th February 2013. The Assessment year involved is Assessment Year 2008- 09. 2. The appellant has proposed the following question of law for our consideration : (a) Whether und .....

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rights of the property for a consideration of ₹ 5.49 crores. An amount of ₹ 3.09 crores out of the sale consideration of ₹ 5.49 crores was utilised in purchasing two adjoining residential flats being flat Nos.701 and 702 in Lido Towers, 7th Floor, Santacruz, Mumbai. Thus, claiming benefit of ₹ 3.05 crores under section 54F of the Act and offering only the balance of ₹ 2 crores to tax as long term capital gains. During the assessment proceedings the Assessing Officer .....

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ated 30th December 23010 passed under section 143 (3) of the Act restricted the benefit under section 54F of the Act only to one residential premises. Thus bringing to tax on amount of ₹ 3.35 crores as long term capital gains. 4. In appeal, the Commissioner of Income Tax (Appeals) by order dated 2nd November, 2011 placed reliance on the Ward Inspector's report and dismissed the appeal. It held that the two flats were having separate kitchens as the two flats were originally built as tw .....

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chased more than one residential house which are adjacent to each other and thereafter converted into one house, then it would be a case of investment in one residential house and not two. Therefore, in such a case the assessee would be entitled to exemption on consideration paid for the two flats. The Tribunal on consideration of the Ward Inspector's report dated 16th December, 2010 concluded that as both flats purchased were adjacent and converted into one single residential unit, and exem .....

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dential premises which had been converted into one unit. Thus, the respondentassessee's appeal was allowed. 6. Mrs.Bharucha learned counsel for the revenue submits that the Tribunal by the impugned order is not justified in holding that the respondent-assessee was entitled to exemption under section 54F of the Act in respect of both flats. This is because they have separate kitchens, separate electricity meters and separate maintenance bills. Thus, mere joining of the two flats post their pu .....

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e we deal with the rival contentions, it may be useful to reproduce the relevant portion of the Ward Inspector's report dated 16th December, 2010 made after visit to the respondent-assessee's premises: 1. The assessee is having 2 flats no.701 and 702 on the 7th floor of the building. 2. There are only 2 flats on every floor of the building having common passage and both the above flats are registered in the name of the assessee. 3. Both the above flats was having different entry doors ho .....

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