TMI Blog2011 (2) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai 2) Flat No.302, Saqib Apartment, 24, Turner Road, Bandra (W), Mumbai 3) Flat No.303, Blue Bird, Sherly Rajan Road, Bandra (W), Mumbai 2.1 The capital gain arising from the sale of above three flats after considering the indexed cost of acquisition were ₹ 8,92,781/-, ₹ 36,08,400/- and ₹ 4,70,194/- respectively. The total capital gain was ₹ 49,71,375/-. The assessee invested the capital gain in purchase of three residential flats in the same building known as Silver Arc, Andheri (W), Mumbai being the flat Nos.1003, 1101 and 1201. The assessee claimed that flats No.1101 and 1201 were adjacent to each other and had been converted into one house for the purpose of residence. AO accepted the claim and treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et and therefore the provisions of section 54 were applicable only in respect of sale of one residential flat. The AO also held that corresponding investment has also to be only in one flat and not more than one flat. Reliance was placed on the decision of the Special Bench of the tribunal in case of ITO Vs Miss Sushila M. Jhaveri (292 ITR (AT) 1) in which it was held that capital gain arising from sale of residential flat had to be invested only in one residential house for exemption under section 54. AO therefore allowed exemption only in respect of sale of one flat and the corresponding investment in one flat. Since the maximum capital gain had arisen from sale of flat No.302 amounting to ₹ 36,08,400/- the AO allowed exemption in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions were fulfilled. As regards the decision of special bench of tribunal in case of ITO vs Miss Sushila M. Jhaveri (supra), was concerned, it was pointed out that the same was relevant for the proposition that capital gain arising from transfer of one residential house could not be invested in more than one residential house because the phrase used in section 54 was purchased or constructed a residential house . However, there was no bar for investment of capital gain arising from transfer of two residential houses into one residential house. He placed reliance on the decision of the tribunal in case of Ravindra K. Mariwala Vs JCIT (86 ITR 35) in support of the said proposition. In the said case the assessee had earned long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidential house. There is no dispute that the assessee owned three residential houses and all of them had been used for residential purposes. The sale consideration had been invested by the assessee in purchase of three residential flats two of which i.e flat No.1101 and 1201 had been treated as one residential unit which had also been accepted by the AO involving total cost of ₹ 42,12,500/-. The investment in third residential flat was ₹ 14,96,744/-. The AO had treated the long term capital gain of ₹ 36,08,400/- arising from sale of one flat i.e. the flat No.302 Saqib Apartment as fully exempt as corresponding investment in flat No.1101 and 1201 treated as one unit was more than the capital gain i.e. ₹ 42,12,500/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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