2011 (8) TMI 1104 - AT - Income Tax

Summary

Issues involved:
The issue involves the interpretation of deduction u/s 54 of the IT Act, 1961 for the purchase of two separate flats by the assessee, leading to a dispute regarding whether both flats can be considered as a single residential unit for the purpose of claiming the deduction.

Details of the Judgment:

Issue 1: Interpretation of deduction u/s 54 for purchase of two flats:
The assessee claimed a deduction u/s 54 for the purchase of two separate flats in Mayfair Apartment, Banjara Hills, Hyderabad. The Assessing Officer contended that the deduction u/s 54 should only be allowed for one flat. An ITI Inspector's report confirmed that the two flats were distinct and separate, with separate kitchens and no passage connecting them. The CIT(A) allowed the claim of the assessee based on the Karnataka High Court judgment in the case of CIT Vs. D. Ananda Basappa, which emphasized that the intention of the assessee to purchase two flats as one unit should be considered for granting the exemption u/s 54.

Issue 2: Precedents supporting the assessee's claim:
The Tribunal cited various judgments to support the assessee's claim that even when flats are located on different floors, they can be considered a single residential unit if they can be combined. Judgments such as K.G. Vyas Vs ITO, ITO Vs. P.C. Ramakrishna HUF, and Pre Prakesh Bhutani Vs. ACIT emphasized that the exemption u/s 54 should be granted as long as the property is of a residential nature, irrespective of whether it consists of multiple independent units.

Conclusion:
The Tribunal concluded that the judgments relied upon by the department were not applicable to the present case, as the facts differed significantly. Therefore, the appeal of the revenue was dismissed, and the grounds taken by the revenue were also dismissed. The Tribunal upheld the decision of the CIT(A) to allow the deduction u/s 54 for both flats purchased by the assessee, considering them as a single residential unit.