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2022 (8) TMI 132 - AT - Income TaxDeduction u/s 54 - assessee had purchased three independent residential plots and had constructed three independent houses each having all facilities like kitchen, living rooms, toilets etc. - scope of one residential house - Whether expression a house mentioned in section 54 may mean several contiguous houses? - HELD THAT - Relying on the decision of Hon ble Delhi High Court in the case of Gita Duggal 2013 (3) TMI 101 - DELHI HIGH COURT in which the Hon ble Delhi High Court quoted with approval the decision of Hon ble Karnataka High Court in Smt. K.G. Rukminiamma s case 2010 (8) TMI 482 - KARNATAKA HIGH COURT CIT(A) held that word a may represent the multiple residential units so long as they are in the same building and contiguous to each other and used as single residential house. In the present case the claim of deduction u/s 54 is for a residential house built up on three adjacent contiguous plots. He further observed that the principle of multiple residential houses/units holds good till these units are in same physical location and contiguous to each other. We are inclined to agree with the above observations and findings of the Ld. CIT(A). - Decided against revenue.
Issues:
1. Deduction under section 54 of the Income Tax Act. 2. Interpretation of the term "a house" in section 54 of the IT Act. 3. Whether constructing multiple houses on adjacent plots qualifies for deduction. Issue 1: Deduction under section 54 of the Income Tax Act: The case involved a non-resident Indian who sold a property and claimed exemption under section 54 of the Income Tax Act, 1961. The assessee invested in three plots in Gurgaon and constructed houses on them. The Assessing Officer (AO) restricted the deduction to one house, resulting in an addition to the income. The Commissioner of Income Tax (Appeals) allowed the deduction, emphasizing that the three houses were contiguous and used as a single residential house, as supported by photographs and the District Town Planner's certificate. Issue 2: Interpretation of the term "a house" in section 54 of the IT Act: The AO contended that each of the three constructed houses was independent, thus not qualifying as "one residential house" for deduction under section 54. However, the CIT(A) referred to the decision in the case of Gita Duggal by the Delhi High Court, which stated that the term "a residential house" does not restrict the construction to a single unit but includes multiple units in the same building, as long as they are contiguous and used as a single residential house. Issue 3: Whether constructing multiple houses on adjacent plots qualifies for deduction: The Revenue challenged the CIT(A)'s decision, arguing that the AO's interpretation was correct. The CIT(A) relied on previous judgments and held that constructing multiple residential units on adjacent plots, as long as they are contiguous and used as a single residential house, qualifies for deduction under section 54. The Tribunal agreed with the CIT(A) and dismissed the Revenue's appeal, emphasizing that the physical structuring of the new residential house should not hinder considering it as a residential house for the purpose of deduction under section 54. In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing that the construction of multiple residential units on adjacent plots, used as a single residential house, qualifies for deduction under section 54 of the Income Tax Act. The judgments referred to, especially the decision in the case of Gita Duggal by the Delhi High Court, supported the interpretation that the term "a residential house" includes multiple units in the same building, as long as they are contiguous and used as a single residential house.
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