TMI Blog2020 (6) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... have been sanctioned for residential purposes and are being used for commercial purposes as serviced apartments. The usage of the property has to be considered for determining whether the property in question is a residential property or a commercial property. It is not in dispute that the aforesaid two apartments are being put to commercial use and therefore, the aforesaid apartments cannot be treated as residential apartments. The contention of the revenue that the apartments cannot be taxed on the basis of the usage does not deserve acceptance. We hold that assessee even otherwise is entitled to the benefit of exemption under Section 54F(1) of the Act as the assessee owns two apartments of 500 square feet in same building and therefore, it has to be treated as one residential unit. The aforesaid fact cannot be permitted to act as impediment to allowance of exemption under Section 54F(1). Similar view was taken by Delhi High Court in case of Geeta Duggal wherein the issue whether a residential house which consists of several independent residential units would be entitled to exemption under Section 54F(1) was dealt with and the same was answered in the affirmative. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in his name and that he is deriving the income from the residential flats and declared the same under the head income from house property during Assessment year 2006-07 and is therefore, not eligible to claim exemption by invoking proviso (a)(i) and (b)to Section 54F (1). The assessing officer further recorded a finding that properties owned by the appellant are residential apartments. Accordingly, exemption under Section 54F of the Act was denied. 4. Being aggrieved, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) by an order dated 31.05.2010 inter alia held that by virtue of clauses (a)(i) and (b) of proviso to Section 54F(1), the assessee is ineligible to claim exemption. It was further held that from perusal of the record, it is evident that out of nine properties two properties viz., Unit No.204 and 605 of Oxford Suites have got plan sanction of residential in nature and therefore, the claim of the assessee that the properties be not treated as residential houses cannot be accepted. It was further held that on the date of transfer of original asset the assessee was in possession of atleast two residential houses and therefore, the appellant is not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to Section 54F(1) of the Act and it is submitted that the expression 'residence' implies some sought for permanency and cannot be equated to the expression 'temporary stay' as a lodger. It is also argued that usage of property has to be taken into account while determining whether the property is a residential property or commercial property and the beneficial provisions of the Act have to be construed liberally in order to achieve the purpose for which it were incorporated. Alternatively, it is submitted that even if two apartments are treated to be residential, then also since, they are situate in the same building, therefore, the apartments have to be treated as one residential only. In support of aforesaid submissions, reliance has been placed on the following decisions 'CIT V. I.IFTHIQAR ASHIQ', (2016) 239 TAXMAN 443 (MADRAS), 'FIRM GANGA RAM KISHORE CHAND VS. FIRM JAI RAM BHAGAT RAM', AIR 1957 PUNJAB 293, 'GLOBE THEATRES LTD. VS. KHAN SAHEB ABDUL GANI AND ANOTHER', 1956 MYSORE 57 ((S) AIR V 43 C 25 DEC.), 'C.H.KESAVA RAO VS. CIT', (1985) 156 ITR 369 (MADRAS), 'CIT VS. OUSEPH CHACKO', 271 ITR 29 (KERALA), 'SANJEEV P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the provisions of sub- section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SVA RAO supra has held that expression 'residence' implies some sought of permanency and cannot be equated to the expression 'temporary stay' as a lodger. 10. In the backdrop of aforesaid well settled legal principles, the facts of the case in hand may be examined. Learned counsel for the revenue have fairly submitted that out of nine apartments, seven flats have been sanctioned for commercial purposes. Therefore, the dispute only survives in respect of two apartments, which have been sanctioned for residential purposes and are being used for commercial purposes as serviced apartments. The usage of the property has to be considered for determining whether the property in question is a residential property or a commercial property. It is not in dispute that the aforesaid two apartments are being put to commercial use and therefore, the aforesaid apartments cannot be treated as residential apartments. The contention of the revenue that the apartments cannot be taxed on the basis of the usage does not deserve acceptance in view of decisions of Kerala, Delhi, Allahabad, Calcutta and Hyderabad High Courts with which we respectfully concur. 11. Alternatively, we hol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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