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TMI Blog2019 (4) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed for statistical purposes. - ITA No. 517/JP/2018 - - - Dated:- 3-4-2019 - Shri Ramesh. C. Sharma, AM And Shri Vijay Pal Rao, JM For the Assessee : Shri P.C. Sharma (Adv.) For the Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 12.02.2018 of ld. CIT(A), Udaipur for the assessment year 2014-15. The assessee has raised following grounds:- 1. The Learned CIT Appeals-2, Udaipur has grossly erred in confirming the restriction of claim u/s 54 of the Income Tax Act, 1961 to ₹ 2,50,00,003/- out of the total investment of ₹ 5,00,00,007/- claimed by the assessee for investment in two flats, one above the other in the same building for flat no. 7103 and 7113 adjacent by roof under the facts and circumstances of the case. The exemption claim u/s 54 covered by various pronouncements of Apex Court, High Courts and Coordinate Bench may please be allowed for the full amount of ₹ 5,00,00,007/- as claimed by the assessee in the return of income and relief may please be gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of his contention, he has relied upon the decision of Hon ble Delhi High Court in case of CIT vs. Gita Duggal 214 Taxman 51 and submitted that the SLP filed by the Department has been dismissed by the Hon ble Supreme Court reported in 228 Taxman 62. Thus, the Hon ble Delhi High Court has held that merely because a residential house consists of several independent residential unit deduction U/s 54/54F of the Act could not be disallowed. He has also relied upon the decision of Coordinate Benches of this Tribunal dated 18.03.2016 in case of Surendra Sharma vs. ITO in ITA No. 606/JP/2013 as well as decision in case of Jag Mohan Sharma vs. ITO dated 13.03.2018 in ITA No. 1089/JP/2016 and submitted that the Tribunal has held that if two properties are adjacent to each other and to be used by the assessee for residential purpose the benefit of Section 54F of the Act cannot be denied. The ld. AR has then referred to a series of decisions on the point and submitted that when the assessee has purchased two flats which are adjacent to each other and with the purpose to use as duplex flats then the deduction in respect of the investment made in these two flats is eligible for deduction U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessment year 2015-16 onwards and not for the year under consideration. However, the dispute has to be considered on the basis of existing provisions of Section 54 of the I.T. Act. For ready reference the provisions of Section 54 is quoted as under: 54. 24 [(1)] 25 [ 26 [Subject to the provisions of sub-section (2), where, in the case of an assessee 27 being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset 28 [***], being buildings or 29 lands appurtenant thereto, and being a residential house 29 , 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 30 [one year before or two years after the date on which the transfer took place purchased 31 ], or has within a period of three years after that date 31a [constructed, a residential house], then] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. It is also settled proposition of law that the fiscal statute has to be interpreted strictly and further the exemption provisions are required to be interpreted as per the strict language of statute and there is no scope of giving any different meaning to what is indent by the legislature. The language of Section 54 of the Act is plan and unambiguous and the term usesed a residential house can be understood as a residential dwelling . Therefore, if more than one smaller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from the sale of the existing asset being residential house is used for purchase or construction of a new residential house within the period prescribed U/s 54(1) of the Act. Therefore, the purchase or the construction of a house property for assessee s own residence is the primary requirement for availing incentive U/s 54 of the Act and hence, while considering the residential house the intention of the assessee at the time of purchase or construction of the property is relevant. The residential house is distinct from a residential building and the distinction is only use and purpose of the residential building. The Hon ble Bombay High Court in case of K.C. Kaushik vs. P.B. Rane, Fifth Income Tax Officer 185 ITR 499 while considering the term a residential house U/s 54 of the Act and has held as under:- Evidently, relief is not available under the section in respect of capital gains arising on the transfer of any and every capital asset. Relief is available only if the capital asset is such that its income is chargeable under the head income from house property and which in the two years immediately preceding the transfer was being use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly let out by the petitioner to his employer, Bank of Baroda, on and from 27, 1982, on his transfer to Baroda can be said to be a factor that would bring the petitioner within the mischief of clause (i). In this context, it is desirable to refer to the Gujarat High Court decision in the cast, CIT vs. Tikyomal Jasanmal [1971] 82 ITR 95. The facts in that case were that out of the total constructed portion of the house admeasuring 1,389 sq.ft, the assessee had let out an area of 734 sq. Ft., i.e., more than half, immediately on completion of the construction. It was held that the new house was not constructed by the assessee for the purpose of his own residence. The court, however, observed that it was not the case of the assessee that the house was originally constructed by him for the purpose of his own residence but by reason of subsequent events or supervening circumstances, it became impossible or impracticable for him to occupy a part of the house for the purpose of his own residence and was let out to tenants for that reason. Such indeed could not be the case of the assessee since no period of time elapsed between the completion of construction of the ground floor and the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, a self-contained unit having a ground floor and one or more upper storeys; or part of a building occupied by one tenant or family, and so on. Then, the expression residence has been defined in the said Shorter Oxford Dictionary to mean, a certain place used as residence suitable for or characterized as private house, and so on. 14. In our view, even without any invocation of much logic, on the face of the dictionary meaning also, the construction can possibly not be said to be fulfilling the character of residential house. May be that some person might be living there, being Chowkidar, but then he cannot mean to be dwelling therein, even if considered on the common sense, to the effect, that any person could have lived anywhere under compulsion, or circumstances, and at times such residence even may not require building, or even a structure, as footpath dwellers are not in scarcity in India, but thereby the footpath would not be their residential house. Likewise Nomads do live in their mobile bullock cart, but then the bullock cart cannot be said to be falling within expression residential house . Thus, in absence of any statutory definition in the Act, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires some other residential building, retains it, so as to allow it to become long-term asset, and then sell it. Thus, merely dealing in purchase and sale of residential building/property will not be regarded as a residential house but only when a residential unit is purchased for the assessee s own residential purpose then, it will be treated as a residential house for the purpose of Section 54 of the I.T. Act. In the case in hand, there is no dispute that the assessee has purchased two separate flats at two floors 10th and 11th of the building. Therefore, for considering the two flats as a residential house the various aspects are to be taken into consideration as discussed by us in the foregoing part of this order as well as the term residential house discussed in the various decisions. Accordingly, we find that the issue requires a proper verification and examination in light of the above discussion and observation. Accordingly, the matter is set aside to the record of the Assessing Officer for proper examination and verification of the relevant facts and then decide the same in light of the observation discussed by us in this order. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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