TMI Blog2019 (4) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the revenue against the order dated 03.04.2017 passed by the Commissioner of Income Tax (Appeals)-7, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the assessment year 2013-14. 2. The revenue has raised the following grounds: - 1. Whether on the facts in the circumstance of the case and as per law, the Ld. CIT(A) has erred in accepting the claim of the assessee for deduction u/s. 54 of the Income Tax Act, I961 in respect of two residential flats without appreciating that the deduction u/s. 54 of the I.T. Act is allowed only for one residential house. 2. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in concluding that the word a residential house used in Section 54 of the Act would mean multiple residential units prior to the amendment brought in by Finance (No.2) Act, 2014 whereby the word a residential house was replaced by one residential house , without appreciating that the Explanatory Notes to Finance. (No.2) Act, 2014 have very categorically stated that the benefit under Section 54 was always intended for investment in one residential house in India. 3. Whether on the facts in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a property and claimed exemption u/s. 54 of Long Term Capital Gain for two residential houses. However, AO had allowed the claim only for one residential house and disallowed the claim u/s.54 for the second residential house for ₹ 46,51,562/. 4.3 During the course of appellate proceedings, appellant had relied on the decision of Hon'ble TAT, 'C' Bench, Mumbai in the case of Nilesh Pravin Vora and Yatin Pravin Vora vs. ITO (ITA No.2219/Mum/2013 dated 28.10.2015) wherein in para 5 it is held as under:- 5. The facts being similar, following the same reasoning the Assessing Officer is directed to allow the claim of the assessee with respect to two flats purchased by the assessee as discussed above. It is pertinent to mention here that the Hon'ble Madras High Court, in the case of CIT v. V. R. Karpagam MANU/TN/1390/2o14: (2015)373 ITR 127 (Mad), has clearly held that the amendment to provision of section 54F is effective from April 1, 2015, which makes it clear that benefit of section 54F will be applicable to one residential house in India. Prior to the amendment it was clear that a residential house would include multiple residential units. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15, as per which the term a residential house was substituted by one residential house in India . We are of the considered view that the pre-amended Sec. 54 as would be applicable to the case of the present assessee, by using the term a residential house though characterized the nature of investment and thus required that the investment was to be made towards purchase or construction of a residential house, but however, it did not place any restriction as regards the number of residential houses in which the assessee could invest for claiming deduction under the said statutory provision. We are of the considered view that the amendment made available on the statute, vide the Finance(No.2) Act, 2014, with effect from 01.04.2015, pursuant whereto the term a residential house had been substituted by one residential house in India , rather supports the fact that the restriction of making the investment in only one residential house had been made available on the statute only with effect from A.Y 2015-16, and as such cannot be extended to the years prior to that. We find that our aforesaid view is fortified by the judgment of the High Court of Karnataka in the case of Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rukminiamma reported in (2011) 331 ITR 211 (Karn), had an occasion to consider Section 54 of the Act and had held as under: For a proper appreciation of the aforesaid contention, it is necessary to have a careful look at Section 54 of the Income Tax Act, which reads as under: 54. Profit on sale of property used for residence - (1) Subject to the provisions of sub-section (2), where, in the case of an assesses being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of winch is chargeable under the head Income from house property‟ (hereafter in this section referred to as the original asset), and the assesses has within a period of one year before or two years after the dole on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finite article, the said expression should be read in consonance with the other words buildings and lands and, therefore, the singular a residential house also permits use of plural by virtue of Section 13(2) of the General Clauses Act. This is the view which is taken by this court in the aforesaid Anand Basappa's case in I.T.A.No. 113/2004, disposed of on September 20, 2008([2009] 309 ITR 329 (Karn)]. 15. That was the case where the assessee gave his property for joint development agreement for putting up flats. Under the terms of the agreement, out of eight flats to be put up, four flats had to be given to the assessee, representing 48%, the consideration for the said four flats was consideration for selling 52% of the site. It was held that, though under the joint development agreement, the assessee received four residential flats, it constituted a residential house for the purpose of Section 54 and therefore, entitled to the said benefit. 16. In the instant case, one residential house is sold. Out of the sale consideration, it was open to the assessee to purchase a big residential house so as to accommodate both his sons, in which event in terms of Section 54 (1), he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble High Court of Andhra Pradesh in the case of CIT Vs. Syed Ali Adil (2013) 352 ITR 418 (AP). 12. We have given a thoughtful consideration to the facts of the case in context of the issue under consideration. We are of the considered view that in the backdrop of our aforesaid observations and the judgment of the Hon‟ble High Courts as had been deliberated upon by us hereinabove, it can safely be concluded that prior to A.Y 2015-16 no restriction was placed by the legislature in respect of investments in the residential houses that an assessee could make for claiming deduction under Sec. 54 of the Act. We thus are of the view that the claim of deduction raised by the assessee under Sec. 54 in respect of investment made towards purchase of residential house at Mumbai and Pune was well in order. We thus in context of the issue under consideration set aside the order of the CIT and uphold the claim of deduction as was raised by the assessee. The Grounds of appeal Nos. 1 to 3 are allowed in terms of our aforesaid observations. The Ground of appeal No. 4 being general in nature is dismissed as not pressed. 6. The case of the assessee for the A.Y. 2013-14 and t ..... 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