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TMI Blog2017 (1) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... r note dated 11/01/2011 and 21/04/2011, wherein, it was mentioned that the plot was assessed as residential rateable value from 01/01/2008 and the building plan was sanctioned as “residential building” vide note dated 29/09/2009. Before the Ld. Commissioner of Income Tax (Appeal), the assessee also enclosed copy of receipt dated 27/04/2011 for transfer of residential gas Cylinder at the new address. All these documents were made part of the paper book before the First Appellate Authority and also before us. The small units were converted in a single unit (as mentioned earlier the total area of all units is 1935 Sq. Ft.), therefore, in our considered opinion, it is a single unit. It is not the case that all the six flats are having abnormally bigger areas and simply to get the benefit u/s 54 of the Act, a story was concocted by the assessee. The evidences filed by the assessee clearly indicates that small units on the same floor were converted into one habitable unit for a peaceful/comfortable living, thus, the assessee cannot be denied the benefit of exemption. - Decided in favour of assessee - ITA NO.1563/Mum/2014 - - - Dated:- 18-11-2016 - Shri Joginder Singh, Judicial Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor s report, report from the water Department, letter from the Assistant Engineer, letter from the assessee for assessment of units bearing number 101 to 106, as residential unit (wrongly assessed as commercial). The assessee also filed the reply taken through RTI application dated 11/12/2010, internal note from the assessment department Inspector to Superintendent, building plan, sanctioned as residential. Sale of the property as residential bungalow property, report from the building department and the factual matrix that all the small units were converted into one single unit, having one kitchen, etc. In view of this factual matrix, the Ld. Commissioner of Income Tax (Appeal) took a stand that it was a single unit and granted relief to the assessee. It is also noted that the paper book filed by the assessee was forwarded to the Assessing Officer vide letter dated 23/01/2012 for carrying out necessary verification during remand proceedings, to which, no adverse comment were furnished by the Assessing Officer. The building was constructed as a residential unit and even the report of the Inspector clarified that it was a residential vacant floor . The occupation certificate date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date39[constructed, one residential house in India], then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- ( i ) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sells a long term capital assets and within a specified period construct residential unit (new asset), the capital gain arises from the original asset, shall be dealt with in accordance with the provisions of this section. Such assessee can invest capital gains for purchase of residential building/house 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 entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consists of several independent units can be permi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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