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TMI Blog2025 (5) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 3. The subject matter of controversy in the appeals before the learned ITAT centres around the Assessee's claim for deduction under Section 54F of the Act. 4. The Assessee filed her return of income for AY 2011-12 on 31.12.2011, declaring an income of Rs. 70,87,301/-. The Assessee also claimed a deduction of Rs. 90 crores under Section 54F of the Act asserting that the consideration received from the sale of shares of FIITJEE Ltd.-an unlisted company, the gains from which would otherwise be chargeable to tax as capital gains - was invested in acquiring a residential house property bearing the address E-27, Vasant Vihar, New Delhi [the new asset]. 5. On 17.12.2012, a search and seizure operation was carried out under Section 132 of the Act on persons constituting the FIITJEE Group. The Assessee was also one of the persons searched. Thereafter, the AO issued a notice dated 13.08.2013 under Section 153A of the Act and during the ensuing proceedings, examined the claim of the Assessee for deduction under Section 54F of the Act. 6. The AO passed an assessment order dated 27.03.2015 under Section 153A read with Section 143 (3) of the Act restricting the deduction under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty on the date of the transfer of the shares of FIITJEE Ltd. [the original asset] being the basement and second floor of the property bearing address D-6/5, Vasant Vihar, New Delhi. According to the AO, the basement and second floor were required to be considered as two separate residential houses. 13. In terms of clause (i) to the proviso to Section 54F(1) of the act, the said section would not apply if the assessee owned more than one residential house. Clause (i) of the proviso to Section 54F of the Act is extracted below: "Section 54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. *** *** *** Provided that nothing contained in this sub-section shall apply where.- (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of the transfer of the original asset; or" 14. The AO held that the Assessee had more than one residential unit on the date of transfer of the original asset and therefore, disallowed the entire deduction claimed under Section 54F of the Act. It is material to note that the Assessee had also filed objections for re-opening the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's son) vide registered sale deed 02.07.2001. Both parties are having equal share in the said property. d. D-6/5, First Floor, Vasant Vihar, New Delhi was purchased by Ms Monila Gael. Physical possession of the said property was taken over on 02.09.2014, but not registered as 100% payment is made to the seller only in financial year 2013-14." 19. It is clear from the above that separate floors of the singular house bearing the address D-6/5 Vasant Vihar, New Delhi, were purchased by the family members of the Assessee. The fact that different floors may be owned or partly owned would not detract from the fact that the portions owned were required to be considered 'one residential house'. 20. In Commissioner of Income-tax and Anr. v. D. Ananda Basappa: (2009) 309 ITR 329, the Karnataka High Court considered the admissibility of exemption under Section 54 of the Act in a case where the Assessee had sold a residential house and purchased two adjacent apartments. The Court held that "the expression 'a' residential house should be understood in a sense that building should be of residential in nature and 'a' should not be understood to indicate a singular number". However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements. Most of the houses are constructed according to the needs and requirements and even compulsions. For instance, a person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly postretirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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