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Issues Involved:
1. Eligibility for exemption u/s 54 of the Income-tax Act, 1961 for multiple residential properties. 2. Interpretation of the term "a residential house" in the context of Section 54. Summary: Issue 1: Eligibility for exemption u/s 54 for multiple residential properties Assessee sold a residential house and claimed exemption u/s 54 for acquiring two properties: a new residential house and a land for constructing another residential house. The Assessing Officer (AO) disallowed the exemption for the second property, stating that exemption u/s 54 could be given to only one residential property. The CIT(Appeals) upheld the AO's decision, relying on the decision of the Hon'ble Punjab & Haryana High Court in the case of Pawan Arya v. CIT (2011) 49 DTR 123. Issue 2: Interpretation of "a residential house"Assessee argued that the term "a residential house" should be construed in plurality, citing various judicial precedents. However, the Tribunal noted that in all cited cases, the residential units were part of the same building or complex and could be considered as a single unit. The Tribunal referred to the Hon'ble Delhi High Court's observation in CIT v. Gita Duggal, which emphasized that the physical structuring of the house should not affect the exemption if it is for residential use. The Tribunal also considered the Hon'ble Andhra Pradesh High Court's decision in CIT v. Syed Ali Adil, which allowed exemption for two adjacent flats modified to form one unit. However, in the present case, the two properties were geographically disparate and could not be joined to form a single residential house. The Tribunal concluded that the CIT(Appeals) was justified in confirming the AO's view that the assessee could not claim exemption u/s 54 for two separately located properties. Thus, the appeal filed by the assessee was dismissed. Order pronounced in the Court on Thursday, the 4th of July, 2013, at Chennai.
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