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TMI Blog2021 (7) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion on merits, Ld.CIT(A) has further displayed his scant regard to the principle of stare decisis. The dismissal of S.L.P without a speaking order by Hon ble Supreme Court does not in any manner reduce the precedential value of Hon ble High Court decision. Hence, we set aside the order of Ld.CIT(A) and direct that the deduction u/s 54 claimed by the assessee is to be allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ms. The Ld. AO is not justified in considering the 2 flats as two residential houses and ought to have considered as a residential house. The appellant had acquired the 2 flats under the same development agreement executed with the developer on 30/04/2012. The appellant, under development agreement, had surrendered her old residential house along with parcel of land and had been allotted the 2 flats in the same building on the same piece of land. Thus, the 2 flats would constitute ns a residential house and would be eligible for deduction u/s.54 of the Act. In understated judicial decisions, Hon'ble High Courts and ITAT's had decided that 2 or more flats in same building would still constitute as a residential house : a) CIT vs. Gumaninaljain 8O Taxmann.com 21 (Mad-HC) "The 15 flats, even if they are located in different blocks would not disentitle the assessee from getting the benefit of section 541-. The order of Tribunal which has been called in question is correct, there is no infirmity in the said order it does not call for any interference and the said order deserves to be confirmed. Once it is in the same location/address, the question of wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... locks and different towers, as long as they are in same address/location, it does not disentitle the assessee from getting the benefit of section 54F. I he legal proposition before the amendment of section 54F by the Finance Act, 2014 with effect from 1-4-2015, in the case of development agreement, is very clear that if the land owner receive* number of flats, even though they are located in different blocks any different toners, once they are in same address/location ant! all the flats are a product of one development agreement, then the assesses is eligible for exemption under section 541- in respect of all the flat*." c) Sanjay B. Pahadia ITA No.6099/Mum/2014 "Undoubtedly, the benefit of deduction is available to an assessee in respect of only 'one' residential house. But no limit has been prescribed under the laic upon the size, shape and nature of the residential house property. Thus, it mm/ also happen sometimes that a smaller unit may not be sufficient for use of an assessee's family and therefore, he may choose to combine more than one unit so as to make it useful for him and his family. No such embargo has been laid down by the law as would be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be. reduced by the amount of the / capital gain."; Thereafter, the Finance Act, 2014 w.e.f. 01/04/2015 substituted the words" a residential house" with "one residential house", however it is most vital to note that such amendment is applicable from Asst. year 2015-16 onwards. Accordingly, prior to amendment in Sec. 54 made w.e.f. 01/04/2015, the deduction u/s 54 would be eligible even for purchase/construction of more than one house. The words "a residential house" incorporated in Sec 54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would include multiple flats/residential units as in the present case where the assessee has got five residential flats." b) CIT vs. Gita Duggal 52Taxmann.com 246 (SC) "High Court by impugned order held that merely because n residential house consist of several independent residential unit, deduction under section 54/54F could not be disallowed - Whether special leave petition filed against impugned order was to be dismissed - Held, yes." CIT vs. Gita Duggal 30 Taxmann.com 230 (Del-HC) "On appeal, the Commissioner (Appeals), as well as the Tribunal held that the words 'a residential house' appearing in section 54/54F cannot be construed to mean a single residential house since under section 13(2) of the General Clauses Act, a singular includes plural. ............. Section 54/54F uses the expression 'a residential house'. The expression used is not "a" residential unit'. This is n new concept introduced by the Assessing Officer into the section. Section 54/54F requires the assessee to acquire a 'residential house' and so long as the assessee acquires a building, which may he constructed, for the sake of convenience, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 54." e) CIT vs. Syed All Adil 33 Taxmann.com 212 (AP-HC) "Profit on sale of property used for residential house - Whether exemption under section 54 only requires that property purchased by assessee out of sale proceeds should be of residential nature and fact that residential house consisted of several independent units could not be an impediment for granting relief under said section, even if such independent units were situated side by side, on different floors or were purchased under separate sale deeds - Held, yes [Para 10] [In favour of assessee I," f) Vittishna Conjeevaram vs. ITO 36 Taxmann.com 542 (Hyd-lTAT) "The Assessing Officer as well as the Commissioner (Appeals), while interpreting the expression 'a residential house', have come to a conclusion that such expression would mean a single residential unit... 'Flat' and not all the seven flats and, accordingly, have restricted the exemption under section 54F to the cost of one flat only. However, the Karnntaka High Court, while interpreting the words ''a residential house' as appearing in section 54 in case of CITv. Suit. K.G. RukminiAmnta 120111 331 ITR 211/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to direct the Li. AO to allow the deduction u/s 54 of ₹ 71,36,288/- as against₹ 35,68,144/- allowed in assessment." 5. Thereafter, Ld.CIT(A) observed that dismissal of SLP by Hon'ble Supreme Court without any discussion on merits is not binding. He referred to two head notes of ITAT deciding against assessee and observed that he is bound to follow them. 6. Thereafter, he directed as under:- 5.3 It can be seen from both the decisions it is held that undoubtedly only one residential house is eligible for deduction. However, it is also held that in view of the smallness of the flats, adjacent flats may be combined to make single unit with common kitchen as per the plan, then the deduction can be claimed for combined unit consisting of more than one flat. The decision of ITAT Mumbai and Bombay High Court do not explicitly state that the assessee can claim deduction under the section for multiple units in different floors or different blocks. Adjacent flats combined to make one unit and benefit may be claimed. However in this case, the assessee received flat No.102 and 302 in 1st floor and 3rd floor. Obviously the flats in separated floors (1st and 3rd floors) ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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