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TMI Blog2013 (7) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... property. He, therefore, disallowed the claim of exemption with reference to first property, viz. ₹ 1,86,15,220/- and reworked the total income. 2. Assessee moved in appeal before CIT(Appeals) against the denial of exemption under Section 54 on two properties. Argument of the assessee was that the term a residential house used in Section 54 of the Act, had to be construed in plurality. Reliance was placed on the decision of Hon ble Karnataka High Court in the case of CIT v. K.G. Rukminiamma (331 ITR 211), CIT v. D. Anand Basappa (309 ITR 329), CIT v. Smt. Jyothi K. Mehta (2011) 12 taxman 440, decision of Chennai Bench of the Tribunal in the case of ITO v. P.C. Ramakrishna (108 ITD 251), Delhi Bench of this Tribunal in the case of Prem Prakash Bhutani v. ACIT (2009) 31 SOT 38. However, CIT(Appeals) was not appreciative of these contentions. According to him, in all such cases, exemption under Section 54 was given for more than one residential unit for a reason that such residential units were situated within the same building or were adjacent or oppositely placed flats, amenable to a joint enjoyment. Reliance was placed by the CIT(Appeals) on the decision of Hon ble Punja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 bed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilder has effected modification of the flats to make it as one unit, despite the fact that the flats were purchased by separate sale deeds. This decision was followed by the Karnataka High Court in CIT Vs. Smt. K.G.Rukminiamma6 where a residential house was transferred and four flats in a single residential complex were purchased by the assessee, it was held that all four residential flats constituted a residential house for the purpose of Section 54 and that the four residential flats cannot be construed as four residential houses for the purpose of Section 54. Admittedly the two flats purchased by the assessee are adjacent to one another and have a common meeting point. In the impugned order, the Tribunal has also relied upon the decisions in K.G.Vyas's case (2 supra), P.C.Ramakrishna, HUF's case (3 supra) and Prakash Bhutani's case (4 supra) wherein it was held that exemption under Section 54 only requires that the property should be of residential nature and the fact that the residential house consists of several independent units cannot be an impediment to grant relief under Section 54 even if such independent units were on different floors. The decision in Susee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad Colony, Delhi and the other is in Faridabad. The assessee in the Special Bench case had also purchased two residential houses against sale consideration of residential flat at Gulistan situated at Bhulabai Desai Road, Mumbai. One residential property was at Varun Apartments at Varsova and the other property was at Erlyn Apartments, Bandra and it was held by the Special Bench in the aforementioned case i.e. ITO Vs. Ms. Sushila M. Jhaveri (supra) that the assessee is entitled to get exemption only in respect of one house of her choice. Therefore, the decision of Special Bench is fully applicable to the present case and the assessee can avail exemption u/s 54 in respect of one residential house only. The factual aspect has not been disputed by ld. AR. The only dispute before us is legal proposition that whether the assessee is entitled to get exemption in respect of two independent residential houses purchased out of sale consideration of another residential house. Therefore, the issue is decided in favour of the department and it is held that the assessee is entitled to get exemption u/s 54 in respect of one property only and no question has been raised by ld. AR regarding the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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