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TMI Blog2018 (1) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... is directed against the order passed by Ld. CIT(A)-8, Hyderabad and it pertains to A.Y. 2012-2013. 2. Facts necessary for disposal of the appeal are stated in brief. Assessee declared long term capital gains upon transfer of house property at Himayathnagar, Hyderabad. In fact she entered into a development agreement with a builder whereby the assessee was entitled to 51% of the total build up area i.e., 8 residential flats. 3. Assessee claimed exemption u/s 54 of the Act on the ground that 8 residential flats allotted to her are meant for her residential purpose and they should be treated as one residential accommodation. A.O. was of the opinion that section 54 limits the claim of deduction in respect of purchase of one residential flat only and accordingly re-worked out the capital gains. 4. On an appeal filed by the assessee, Ld. CIT(A) allowed the claim of assessee by following the ratio laid down by the Hon ble jurisdictional High Court in the case of CIT vs. Syed Ali Adil (260 CTR 219) and also took note of the amendment to section 54 of the Act by Finance Bill 2014-15 w.e.f 01.04.2015, to conclude that the emphasis on restriction of deduction to one independent resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45: (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where- (a) the assessee, (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset ; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset ; or (iii) constructs any residential house, other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit and one door number is given, it should be construed as a residential unit, namely, one unit. In that sense, the said provision is available to the assessee. 12. In the decision reported in (2012) 75 DTR 56 (Dr.(Smt.) P.K.Vasanthi Rangarajan, this Court, while dealing with the benefit of exemption under Section 54F, followed the above-said decision of this Court in T.C.(A)No.656 of 2005 and granted the benefit to the assessee under Section 54F of the Income Tax Act on the investment made in the four flats. 13. Hence, the above-said decisions of this Court make it clear that the property should be assessed as one unit, even though different flats are available 8. The jurisdictional High Court in the case of CIT V/s. Vittal Krishna Conjeevaram (supra), following the decision in the case of CIT V/s. Syed Ali Adil (supra) and the decision of the Delhi High Court in the case of CIT V/s.Gita Duggal (supra) dismissed the appeal of the Revenue, confirming the order of the ITAT. The above judgments lay down a principle that merely because a residential house consists of several independent residential units, deduction under S.54/S.54F could not disallowed. Respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of transfer purchased or has within a period of three years after the date of transfer constructed a residential house, the capital gains shall be dealt with in accordance with . Thus, the deduction is admissible from capital gains in respect of purchase / construction of a residential house and not multiple independent residential units. In the instant case, each of the eight flats received by the assessee towards her share is independent and self-contained in all respects. A simple test is such case is whether all eight flats can be combined and sold as single residential unit. The answer is emphatic No . The indivisibility and simultaneous transferability is the criteria to decide whether it is a residential house for the purpose of deduction u/s 54. Further, as per the proviso to section 54, if the amount deposited under sub-section 2 is not utilized wholly or partly for the purpose of construction of the New Asset within the periods specified in sub-section (1), then the amount not so utilized shall be charged u/s 45 as the income of the previous year in which the period of three years from the date of transfer of the original asset expires. The use of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot claim deduction u/s 54 on two disparately placed properties. (iv) Thus, in context of deduction u/s 54F it cannot be said that all the 8 units received by the assessee from the developer constitute single transferable unit. This legal position was made clear by the Finance (No.2) Act, 2014, and in the Memorandum to the Finance Bill (No.2) 2014, where it is clearly mentioned that the benefit was intended for investment in one residential house within India. (v) In the light of the foregoing, as observed by the A.O., deduction u/s 54 is not allowable on the aggregate value of eight units and it was rightly restricted to the value of one unit in the assessment order. Hence, the order of CIT (A) may be set aside and the order of the A.O. be restored. 8. We have considered the rival submissions and perused the record. The limited issue for consideration is as to whether different flats allotted to the assessee are meant for residential use of the assessee and if such test is fulfilled, assessee is entitled to the benefit of exemption u/s 54 of the Act, particularly for the year under consideration. Ld. CIT(A) was of the opinion that the 8 flats allotted to the a ..... 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