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TMI Blog2008 (1) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee, but, were not used by himself for its residential purpose? - We are conscious about the decision of the Special Bench in the case of Ms. Sushila M. Jhaveri [ 2007 (4) TMI 289 - ITAT BOMBAY-I] , in which it has been held that if the two adjoining flats are purchased by the assessee which can be used as a residential house by removing the intermediate walls with a common kitchen, the same can be treated as a residential house for allowing deduction under section 54(1) of the Act. But, in the instant case, the assessee has purchased two independent flats though, adjoining with each other, and they were let out to two different tenants and finally in 2005, they were sold out. From the facts available, we are of the view that assessee had never intended to use these flats as a residential house by removing the intermediate walls with a common kitchen, as such, assessee is not entitled for deduction with respect to both the flats. He can only claim deduction with respect to any one of the flat. We, accordingly, restore the matter to the file of the Assessing Officer to allow deduction under section 54(1) of the Act with respect to any one of the flat as claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled for deduction under section 54(1) of the Act and with regard to two residential flats, it was contended that these flats are adjoining flats and they can be used as single unit. The CIT(A), re-examined the issue in the light of legal provisions of the Act and has held that the assessee is entitled for deduction under section 54(1) of the Act even when the capital gain are invested in more than one flat. With regard to investment of sale proceeds, he has further held that the entire sale proceeds was utilized for purchase of both the flats in question, as such, deduction to be allowed at Rs. 1,04,78,750 as claimed by the assessee. 6. Now the revenue has preferred an appeal before the Tribunal. The learned DR has raised his two fold arguments. The first objection is that the sale proceeds received on account of sale of flat in the building known as Dilwara was utilized in purchase of commercial properties at Kolhapur. In support of his contention, the learned DR has invited our attention to the chart prepared by the Assessing Officer at page No. 2 in the assessment order. Later on, the assessee has purchased two residential flats in Lady Ratan Tower, Worli, Mumbai for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f long term capital asset, must be utilized for the purchase of another residential house. The assessee is simply required to acquire the residential house within a period of one year before or two years after the date on which transfer took place. In the instant case, the assessee has purchased the residential flat before the due date of filing of the return and as such, its claim is not hit by sub-section (2) of section 54 of the Act. The learned counsel for the assessee further contended that the proposition propounded by the learned DR that the identity of the head should not be changed, is without any basis as it cannot be applied where the assessee acquires/purchases the residential house before the transfer took place. With regard to deduction with respect to two residential flats, the learned counsel for the assessee has submitted that the assessee has purchased the two residential flats with an intention to join them by removing the intermediate wall with a common kitchen, as such, the assessee is entitled for deduction with respect to both the flats. 9. Having heard the rival submissions and from careful perusal of the Orders of the lower authorities and provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil ; or ( ii )if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45 ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139 , shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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