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Issues involved: Interpretation of deduction u/s 54 for multiple residential houses, applicability of legal precedents.
Issue 1: Interpretation of deduction u/s 54 for multiple residential houses The appeal was filed by the revenue challenging the CIT (A) order allowing deduction u/s 54 for the purchase of two residential houses. The AO restricted the exemption to one house only, leading to a dispute. The CIT (A) relied on a Bangalore ITAT decision to support the assessee's claim for deduction on both houses. The revenue contended, based on a Special bench decision, that exemption should be granted for one house only. The AR cited a Karnataka High Court judgment supporting deduction for two houses. The Tribunal held that the assessee is entitled to exemption u/s 54 for one residential house only, based on the Special Bench decision, despite factual agreement on the two properties' purchase. Issue 2: Applicability of legal precedents The AR relied on the Karnataka High Court judgment in CIT vs. D. Anand Basapa to support the claim for deduction on two residential houses. However, the Tribunal differentiated the facts of the present case from the cited judgment, emphasizing the unity of the two properties in the Karnataka High Court case. The Tribunal highlighted the importance of considering the context and true principle of legal decisions, as cautioned by the Supreme Court, in determining the applicability of precedents. Ultimately, the Tribunal allowed the revenue's appeal, emphasizing the relevance of the Special Bench decision in granting exemption for one residential house only. This summary provides a detailed overview of the issues involved in the legal judgment, focusing on the interpretation of deduction u/s 54 for multiple residential houses and the applicability of legal precedents in deciding the case.
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