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TMI Blog2021 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of sale of original asset. 3) That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in applying the amendment brought in Finance (No.2) Act 2014 to the proviso to section 54F(1) of the Act and thereby denying the exemption even though the amendment was made only to sub-section(1) of section 54 and 54F of the Act. 4) That the learned Commissioner of Income-Tax (Appeals) ought to have held that the residential property in Jayanagar has to be considered as one residential house since it is a duplex house containing single Khatha number, single Property Identification (PID) number. Each of the above grounds is independent of one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify any of the above grounds either before or during the hearing." 2. The facts are that during AY 2016-17, the assessee has declared Income from House Property of Rs. 1,05,470/-, Income from Other Sources of Rs. 8,87,923/- and Long Term Capital Gains of Rs.NIL. The assessee along with family members has sold vacant site situated at Survey No.34/1, Ekkarajapura Village, Sulibele Hobli, Hoskote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset and therefore, the proviso to section 54F is applicable. On appeal, the learned CIT(A) confirmed the disallowance made by the AO. The learned CIT(A) further held that as per the amendment made vide Finance (No.2) Act 2014 w.e.f 1.4.2015 (AY 2015- 16), one residential unit has to be considered as one residential house and since the assessee purchased two residential units, he is not eligible for deduction u/s 54F of the Act. 5. The AR submitted that on the date of the sale of original asset the assessee owned a residential house having two units in the same building i.e, a residential unit in ground floor and in 1st floor. The property has single Katha number, single Property Identity Number (PID No.), single BESCOM connection. These are undisputed facts. Therefore, it has to be considered as one residential house. Hence, the deduction u/s. 54F cannot be denied on this ground. He relied on the decision of Hon'ble Karnataka High Court in Navin Jolly Vs ITO (424 ITR 462). The appellant relies on the following observations of the High Court in paragraph 11 at page 469 of ITR 424 wherein it was held as under:- "11. Alternatively, we hold that assessee even otherwise is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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, requirements and compulsions. 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 bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. The phys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal on facts is that the assessee purchased only one house property. In the circumstances, we are of the view that there is no mistake, much less an apparent mistake, in the order of Tribunal." 9. The above decision of the Hon'ble Tribunal pertains to AY 2015-16 i.e after the amendment. 10. On identical facts, the Bangalore Tribunal has held similarly in the following cases:- - Chandrashekar Veerabhadraiah Vs ITO (ITA No. 2293/Bang/19 dtd, 24.9.2021) - Halesh KC Vs ITO (ITA No. 194/Bang/2020 dtd. 24.2.2021 - Shri Ramaiah Harish Vs ITO (ITA No. 789/Bang/2019) dated 24.09.2021 11. The ld. AR submitted that the CIT(A) relied on the decision of Bangalore Tribunal in Shri Ramaiah Harish Vs ITO (ITA No. 789/Bang/2019) dated 04.09.2019 for the proposition that each portion in a floor is a separate residential house and therefore, the deduction u/s 54F has to be denied on the ground that the assessee has purchased more than one residential house. He submitted that the above decision of the Bangalore Tribunal has been recalled vide MP order dated 10.01.2020 and the case has been decided in favour of the assessee on 24.09.2021. The decision relied on by the CIT(A) in Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was let out and another is self-occupied by the assessee. The contention of the department is that these two units i.e., ground floor and first floor constitute two separate residential units for the assessment year under consideration and as such the assessee is not entitled for deduction u/s. 54F. However, we come across the recent decision of the Tribunal in the case of Shri Ramaiah Harish v. ITO, ITA No.789/Bang/2019 dated 24.09.2021 wherein it was held as under:- "4. We heard the parties and perused the record. The question, whether each floor of a single stand alone building should be considered as separate house was examined by the co-ordinate bench in the case of Shri Bhatkal Ramarao Prakash vs. ITO (ITA No.2692/Bang/2018 dated 04-01-2019). The relevant portion of the order in the above said case is extracted below:- "20. As far as the case of the AO that assessee has purchased two properties under Sale Deed dated 28.06.2014 is concerned, we have perused the schedule of the property that was purchased. Actually this was a single piece of property viz., Site No.1 owned by Smt. Janaki Iyengar, Smt. Janaki Iyengar constructed a residential house in ground floor in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. The Hon'ble Court observed that as held in B.AnandaBassappa (SLP dismissed) & K G Rukminiamma, the Revenue's contention that the phrase "a" residential house would mean "one" residential house is not correct. The expression "a" residential house should be understood in a sense that building should be of residential in nature and "a" should not be understood to indicate a singular number. Also, section 54/54F uses the expression "a residential house" and not "a residential unit". Section 54/54F requires the assessee to acquire a "residential house" and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if 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 partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the aforesaid amendment, the conclusions drawn by the Tribunal are incorrect and suffers from an apparent mistake on the face of record and should be rectified suitably. 5. We have heard the rival submissions. The ld. DR reiterated the stand of revenue as contained in the petition. 6. We are of the view that there is no mistake, much less an apparent mistake, in the order of the Tribunal. The Tribunal in para 20 of its order has clearly given a finding that the property at N.R. Colony belonged to one owner, Smt. Janaki Iyengar and as per the Will of Smt. Janaki Iyengar, the Ground Floor of the premises which was numbered as Door No.37 was given to Smt. Janaki's sister, Dr. M. Vaidehi and the 1st Floor numbered as Door No.37/1 was given to Smt. Janaki's nephew, Shri P. Ramanuja Chari. Both these owners of Ground Floor and 1st Floor sold the property to the assessee. The Tribunal in para 20 of the order clearly observed that the entire property constitutes one residential house, but was bifurcated with two Door Nos. for Ground Floor and 1st Floor with common entrance in Ground Floor only to earmark the share of each beneficiary and that otherwise the property constitut ..... 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