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TMI Blog2020 (7) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment and service of the notice under section 143(2) of the I.T. Act, 1961. These grounds are accordingly dismissed as not pressed. 4. On Ground No.3, assessee challenged the Orders of the authorities below in denying exemption under section 54 of the I.T. Act, 1961, to the assessee on the long term capital gains arising on transfer of residential house. 4.1. Briefly the facts of the case are that during the year under consideration, assessee sold two residential flats situated at Andheri, Mumbai and purchased one residential flat at Noida. The details filed on record shows that the assessee has modified the flats in two flats (units) and sold through two different registrations. The A.O. noted that assessee has sold flat A-401 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,10,427/- has been worked-out and there is no corresponding purchase of residential house, therefore, no benefit could be allowable under section 54 of the I.T. Act, 1961. The A.O. accordingly made addition of Rs. 20,10,427/-. 4.2. The Ld. CIT(A) noted in the impugned order that admittedly assessee has sold two residential units by two separate transfer deeds duly registered and in turn has purchased one residential flat in Noida within the permitted period from the sale of the residential flats. The Ld. CIT(A) confirmed the findings of the A.O. and dismissed the appeal of assessee. 5. Learned Counsel for the Assessee submitted that it is not in dispute that assessee used both the residential flats at Andheri for residential purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential house, the claim of exemption cannot be denied if the other conditions of section 54 are fulfilled. This aspect had been examined by the Mumbai Bench of the Tribunal in Rajesh Keshav Pillai v. Incometax Officer [2011] 44 SOT 617 (Mum.) in which it has been held that exemption u/s 54 will be available in respect of transfer of any number of long-term capital assets being residential houses if other conditions are fulfilled. The Id. DR appearing for the Revenue has placed reliance on the judgment of the Hon'ble High Court of Punjab and Haryana in the case of Pawan Arya v. CIT (237 CTR 210) (supra) to argue that the claim of exemption is not available in respect of sale of more than one residential house. On careful perusal of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an inbuilt restriction that capital gain arising from the sale of one residential house cannot be invested in more than one residential house. However, there is no restriction that capital gain arising from sale of more than one residential houses cannot be invested in one residential house. In case, capital gain arising from sale of more than one residential houses is invested in one residential house, the condition that capital gain from sale of a residential house should be invested in a new residential house gets fulfilled in each case individually because the capital gain arising from sale of each residential house has been invested in a residential house. Therefore, even if two flats are sold in two different years, and the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring before the Tribunal, the Ld. DR did not produce any material to show that the Vishnu Vila flat had been used for the purposes of business. Therefore, the flat in Vishnu Vila had to be treated as residential house, the income from which is chargeable to tax under the head "income from house property". The only requirement of section 54 is that income should be chargeable to tax under the head "house property income" and it is not necessary that income should have been actually charged. Therefore, capital gain arising from the sale of the Vishnu Villa flat would be eligible for exemption u/s 54 subject to fulfilment of other conditions. 13. In view of the foregoing discussion, we direct the AO to allow the capital gain exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal, it is clear that assessee has purchased two residential flats at Andheri bearing flat A-401 and flat B-401, 4th Floor, Brighton Tower Cooperative Housing Society Ltd., Plot No.356, Cross Road No.2, Lokhanwala Complex, Andheri (West), Mumbai and assessee modified both the flats and converted two units as one residential unit. This fact is also mentioned in statement of facts and by the A.O. in the assessment order. The assessee has further sold both the flats through two separate sale deeds. It is an admitted fact that assessee has purchased residential flat at Noida within the permitted time period from the sale of the residential flats. Thus, the above decisions of the ITAT, Mumbai Bench are squarely apply to the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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