TMI Blog2019 (2) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... ER: The present appeal has been preferred by the Revenue against the order dated 28.04.2014 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12. 2. The only issue raised by the Revenue in various grounds of appeal is against the order of Ld. CIT(A) directing the AO to delete the disallowance of ₹ 1,88,18,852/- of exemption under section 54 of the Act which was disallowed by the AO on the ground that the assessee has purchased and sold three flats by three separate agreements for flat No.701, 702 703 at Glen Eagle and thereafter converted them into one. 3. The facts in brief are that the AO observed on the basis of details filed by the assessee that assessee has sold three flats i.e. flat No.701, 702 703 at Glen Eagle and claimed exemption under section 54 of the Act. The AO accordingly issued show cause notice dated 19.02.2014 which was replied by the assessee vide letter dated 28.02.2014 submitting therein that all the flats were located on the same floor when purchased and later on the same were combined and converted into one flat. The assessee submitted before the AO that due to legal fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution of separate agreements cannot decide this issue. The flats were constructed in such a way that adjustment units of flats can be combined into one. The acquisition of flats may be done independently but eventually there is a single unit and house for the purpose of residence. Recently, the jurisdictional Hon'ble Bombay High Court in the context of section 54 of the Act, in CIT vs. DevdasNaik [2014] 49 taxmann.com 30 (Bombay) decided similar issue as under: We are unable to agree. We found that the evidence based on which the claim was granted by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal has been noted by the Tribunal in paragraph 4 of its order. Prior thereto, the factual position has also been noticed that the Assessee alongwith his wife jointly owned bungalow. The bungalow was sold at ₹ 3/-crores. With this sum, they bought three flats, one in the Assessee's name, another in the name of Assesses and his wife and third in the name of the wife. The Assessee claimed deduction under section 54 on purchase of two flats in which he is either a sole owner or a joint owner. Though these flats were acquired under two distinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n one residential flat cannot be invested in one residential house. The proposition that the long term capital gain arising on transfer of multiple residential houses can be invested in purchase / construction of one residential house. It is also supported by the decision of the jurisdictional bench of the Tribunal in the case of DCIT v. Ranjit Vithaldas [2012] 23 taxmann.com 226 (ITAT-Mum)] (ITA No. 7443 (Mum) of 2002; AY 1998-99; order dated 22.6.2012). It is held that no restriction placed in section 54 that exemption is allowable only in respect of sale of one residential house. Even if the assessee sells more than one residential houses in the same year and the capital gain is invested in a new residential house, the claim of exemption cannot be denied if the other conditions of section 54 are fulfilled. This aspect had been examined by the Mumbai Bench of the Tribunal in Rajesh Keshav Pillai v, ITO (2011) 44 SOT 617 (Mum.) in which it has been held that exemption u/s 54 will be available in respect of transfer of any number of long term capital assets being residential houses if other conditions are fulfilled. No rulings have been brought on record by the Id. DR to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel appearing for the assessee argued that there was no restriction under section 54 that capital gain arising from two residential houses cannot be invested in one residential house. We find substance in the argument advanced by the Id. Counsel for the assessee. No rulings have been brought on record by the Id DR to show that the capital gain arising from sale of more than one residential houses cannot be invested in one residential house. The provisions of section 54 as pointed out earlier apply to transfer of any number of residential hoses by the assessee provided the capital gain arising there from is invested in a residential house. The exemption u/s 54 is available if capital gain arising from transfer of a residential house is invested in a new residential house within the prescribed time limit. Thus there is an inbuilt restriction that capital gain arising from the sale of one residential house cannot be invested in more than one residential house. However, there is no restriction that capital gain arising from sale of more than one residential houses cannot be invested in one residential house. In case capital gain arising from sale of more than one residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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