2012 (6) TMI 899 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the interpretation of section 54 of the Income Tax Act 1961 regarding the eligibility for exemption when multiple residential units are sold under a single agreement.

Details of the judgment:

Issue I: Entitlement for relief u/s 54 of the IT Act
The Assessing Officer denied exemption u/s 54 as the assessee sold four flats under a single agreement, contrary to the requirement that only one residential house used for residence should be sold for exemption.
The Commissioner of Income Tax(Appeals) allowed the claim based on CBDT instructions and a Tribunal decision in a similar case.
The ld DR argued that since the flats were purchased under separate agreements, the assessee was not eligible for exemption u/s 54.
The AR of the assessee contended that the four flats were used as one residential house, fulfilling the requirements of section 54.
The Tribunal held that if multiple units are used as a single residential house, they qualify for exemption u/s 54, as per CBDT circular and Tribunal precedent.
The decision in a previous case cited by the ld DR was deemed inapplicable as the present case involved the use of all four flats as one residential house.

Issue II: Purchase of separate flats and eligibility for exemption
The ld DR argued that since the assessee purchased the flats under separate agreements, they were independent units and not eligible for exemption u/s 54.
The AR contended that the four flats were used as one residential house, meeting the criteria for exemption u/s 54.
The Tribunal clarified that as long as the multiple units are used as a single residential house, they are eligible for exemption under section 54, supported by CBDT circular and Tribunal precedent.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the Commissioner of Income Tax (Appeals) decision to allow the exemption under section 54 of the IT Act.