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TMI Blog2016 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... ee by : Sh. Ved Jain, Adv. Sh. Ashish Goel, CA Department by : None ORDER Per H. S. Sidhu, JM Assessee has filed the Appeal against the Order dated 28.3.2014 passed by the Ld. Commissioner of Income Tax (Appeals)--V, New Delhi pertaining to assessment year 2009-10. 2. The grounds raised by the assessee read as under:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of AO whereby he has computed the capital gain of ₹ 8,35,564/- as against 'Nil' computed by the assessee. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in considering an amount of ₹ 3,00,000/- only as cost of acquisition for the purpose of indexation as against 3,72,040/- actually incurred and allowable under the provisions of the Act. 4(I) On the facts and circumstances of the case, the Learned CIT(A) has erred both on facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee. 5. Aggrieved with the aforesaid order of the Ld. CIT(A), assessee is in appeal before the Tribunal. 6. Ld. Counsel of the assessee in support of his contention has filed the Written Synopsis. For the sake of convenience, we are reproducing the same as under: 1. This is assesssee's appeal filed against the order passed by learned CIT(A) under section 250 of the Income Tax Act dated. 28.3.2014. 2. The Issue involved in the present appeal is regarding computation Long term capital gain of ₹ 8,35,564/- as against Rs. NIL filed by the assessee by withdrawing exemption of ₹ 7,30,539/- under section 54 claimed by the assessee and reducing the cost of indexation by ₹ 72,040/- 3. During the year under consideration assessee has filed ROI declaring total income of ₹ 20,99,070/- on 28.9.2009 and same is assesseed uls 143(3) of the Income Tax Act at the income of ₹ 30,70,881/- 4. During the year under consideration assessee has sold a property at AG/270, Shalimar Bagh, Delhi for the sale consideration of ₹ 18,10,000 which was purchase in the financial year 1998-99 for ₹ 3,72,0401-. Assessee has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved by the order of the learned AO assessee preferred an appeal before the Learned CIT(A). 12.Learned CIT(A) has confirmed the addition made by the AOon different footing and issued a show cause notice to the assessee to restrict the exemption only to the extent of one residential house as section 54 contains the words 'a residential house'.(Pg.22 Para 1st) 13.ln this context assessee placed his reliance on the judgement of jurisdictional Delhi HC in the case of CIT Vs Geeta Duggal 357 ITR 153 (2013) which reads as under: 9. There could also be another angle. Section 54/54F uses the expression a residential house . The expression used is not a residential unit . This is a new concept introduced by the assessing officer into the section. Section 54/54F requires the assessee to acquire a residential purchased by the assessee was too old and renovation charges were necessary too make the property in use cannot be ignored and brokerage charges are generally incurred to get the property as well as to get the property in own name. 7. Further. during the assessment proceedings Ld. AD issued show cause as to restricting the exemption only to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction which requires that the residential house should be built in a particular manner, it seems to us that the income tax authorities cannot insist upon that requirement. A person may construct a house according to his plans and requirements. Most of the houses are constructed according to the needs and requirements and even compulsions. For instance, a person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly post-retirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such -a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee sells a residential building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek exemption of the capital gains tax. Section 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural. The contention of the Revenue is that the phrase a residential house would mean one residential house and it does not appear to the correct understanding The expression a residential house should be understood in a sense that building should be of residential in nature and a should not be understood to indicate a singular number. The combined reading of sections 54(1) and 54F of the Income-tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to section 54 of the Income-tax Act, lays down that if the assessee has already one residential building, he is not entitled to exemption of capital gains tax, when he invests the capital gain in purchase of additional residential building. This judgment was followed by the same High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequent assessment years. [Clauses 22 24] 18. This fact clearly shows that the intention of legislature before 1.4.2015 was not to restrict the exemption to one residential property only and therefore investment could be made in multiple residential properties before 1.4.2015. 19.This issue came up before ITAT Mumbai in the case of Niles.h Pravin Vora and Vatin P.ravin Vora (Legal Heirs of Late Pravin Laxmidas Vora) Vs ITO 2016 (5) TMI 64 and it has been held that held that exemption u/s 54F will be allowed for purchase of more than one residential unit as the amendment to section 54F is effective form 1.4.2015. 6. The facts being similar, following the same reasoning the Assessing Officer is directed to allow the claim of the assessee with respect to two flats purchased by the assessee as discussed above. It is pertinent to mention here that the hon'ble Madras High Court, in the case of CIT v. Smt. V. R. Karpagam [2015J 373 ITR 127 (Mad), has clearly held that the amendment to provision of section 54F is effective from April 1, 2015, which makes it clear that benefit of section 54F will be applicable to one residential house in India. Prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. 8. I have heard the Ld. Counsel of the assessee and perused the relevant records available with me, especially the orders passed by the revenue authorities alongwith the Written Synopsis filed by the assessee's counsel as well as the case laws cited by him therein, as aforesaid. 8.1 The issue involved in the present appeal is regarding computation Long Term Capital Gain of ₹ 8,35,564/- as against Rs. NIL filed by the assessee by withdrawing exemption of ₹ 7,30,539/- under section 54 claimed by the assessee and reducing the cost of indexation by ₹ 72,040/- 8.2 I find that during the year under consideration assessee has sold a property at AG/270, Shalimar Bagh, Delhi for the sale consideration of ₹ 18,10,000 which was purchase in the financial year 1998-99 for ₹ 3,72,0401-. Assessee has shown if capital gain of Rs. Nil by claiming indexed cost of acquisition of ₹ 6,11,022/- and exemption under section 54 being investment in residential property of ₹ 12,07,539/- against the sale consideration of ₹ 18,10,000/-. The Assessee has invested the amount of ₹ 12,07,539 in two residential properties:- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words 'a residential house'. ln this context, I find that Hon'ble High Court of Delhi in the case of CIT Vs Geeta Duggal 357 ITR 153 (2013) has dealt with similar situation wherein it has been held as under:- 9. There could also be another angle. Section 54/54F uses the expression a residential house . The expression used is not a residential unit . This is a new concept introduced by the assessing officer into the section. Section 54/54F requires the assessee to acquire a residential house and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the Section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the section which requires that the residential house should be built in a particular manner, it seems to us that the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that judgement of Gita Duggal (supra) has made it very clear in para 8 of the order and the 'a' does not mean singular. Judgement of Karnataka HC CIT vs D. Ananda 8asappa (2009) 309 ITR 329 has been followed which reads as under: 8. It is the correctness of the above view that is questioned by the revenue and it is contended that the interpretation placed by the Tribunal gives rise to a substantial question of law. The assessee strongly relies upon the judgment of the Kamataka High Court (supra) which, it is stated, has become final, the special leave petition filed by the revenue against the said decision having been dismissed by the Supreme Court as reported in the annual digest of Taxman publication. The judgment of the Kamataka High Court supports the contention of the assessee. An identical contention raised by the revenue before that Court was rejected in the following terms: A plain reading of the provision of section 54(1) of the Income-tax Act discloses that when an individual-assessee or Hindu undivided family- assessee sells a residential building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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