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TMI Blog2015 (12) TMI 1665X X X X Extracts X X X X X X X X Extracts X X X X ..... investments and hence, allowing deduction u/s.54 in respect of one flat no. 801. 2. On the facts and in the circumstances of the case and in law, the Commissioner of Income -tax (Appeals) was not justified in confirming the cost of construction of the flat at Rs. 62,26,684/- as worked out by the A.O. against Rs. 77,36,540/- for the purpose of set off against the long term capital gain u/s. 54 of the Income-tax Act,1961 3. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was not justified in not granting deduction of rent paid, brokerage, etc. of Rs. 6,36,280/- against the rent received towards the alternative accommodation. 4. WITHOUT PREJUDICE - The appellant submits that the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. The AO while making the assessment has observed that assessee and co-owners of the property at Matta House for which the assessee entered into builder agreement with other co-owners of the property and received consideration of Rs. 3,99,00,000/- and further the assessee was given the two residential flat vide flat no. 101 admeasuring 819 Sq. Ft. on the 1st floor and flat no. 801 admeasuring 1460 sq. ft. on 8th floor with 2 stilt parking and 2 open parking in lieu of granting development right to the developer M/s Elite Corporation and further compensated the assessee of Rs. 15,50,000/- in respect of alternate accommodation. 5. By AO the confirmation was sought from M/s Elite Corporation about the development agreement, wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs. 15,50,000/- as taxable u/s 56 of the I.T. Act. 7. While arguing for ground No. 1, ld. AR of the assessee has relied upon the judgment of Hon'ble Karnataka High Court in CIT vs. Chand M. Makhija in ITA No. 496-516 dated 18.12.2013 wherein it has held: "Whether letter 'a' in expression 'a' residential house', used in section 54 should not be construed as meaning singular, but being an indefinite article, said expression should be read in consonance with other words 'buildings and lands', therefore, 'a residential house' also permits use of plural by virtue of section 13(2) of General Clauses Act " "17. It is clear that the assessee was not attempting to evade tax. In fact, after purchasing two residential houses, still ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon the circular no.1 of 2015 of CBDT with regard to capital gain exemption in cast of investment in residential house property. Circular are reproduced for the sake of convenience. 20. Capital gains exemption in case of investment in a residential house property 20.1 The provisions contained in sub-section (1) of section 54 of the Income-tax Act, before its amendment by the Act, inter alia, provided that where capital gain arises from the transfer of a long term capital asset, being buildings or lands appurtenant thereto, and being a residential house, and the assessee within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transfer constructs, a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to assessment year 2015-16 and subsequent assessment years. 9. The comprehensive reading of circular 1 of 2015 made it clear that the exemption of LTCG is also available if investment made in more than 1 residential house. 10. In view of the above discussion, judgment of Karnataka High Court and circular 1 of 2015 of CBDT, the assessee was not liable for LTCG against flat no.101 and the addition made by the AO which was sustained by the CIT(A) is deleted. 11. Since ground no.1 of appeal has been allowed by us and holding of 2 flat are not to be treated as separate investment for allowing deduction u/s 54 of the Act, hence, ground no.2 has become infructuous. 12. Next ground of appeal for our consideration is addition of Rs. 15,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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