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TMI Blog2022 (7) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 514 - KARNATAKA HIGH ] and we find that the issue involved in the present appeal is squarely covered by the decision of the Hon ble Karnataka High Court where it has been held that where two apartments owned by the assessee, even though had been sanctioned for residential purpose, yet same were in fact, being used for commercial purposes as service apartments, then both needs to be excluded for the purpose of deduction u/s.54F. Assessee is entitled for deduction u/s.54F in respect of amount invested for purchase of another residential property. Hence, we direct the AO to delete additions made towards disallowance of deduction claimed u/s.54F - Decided in favour of assessee. - I.T.A.No.3314/Chny/2019 - - - Dated:- 27-7-2022 - Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs.5,49,500/-. During financial year relevant to assessment year 2007-08, the assessee has sold property for consideration of Rs.40 lakhs and computed long term capital gain of Rs.26,28,898/-. The assessee had also claimed deduction u/s.54F of the Income Tax Act, 1961 for purchase of another residential house property for consideration of Rs.27,50,000/-. The Assessing Officer has disallowed deduction claimed u/s.54F of the Income Tax Act, 1961, on the ground that at the time of transfer of original asset, the assessee is having more than one house property. The assessee carried the matter in appeal before the first appellate authority, but could not succeed. The learned CIT(A), for the reasons stated in their appellate order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that the assessee owns more than one houses at the time of transfer of original asset. It was explanation of the assessee before the Assessing Officer that although, he had owned more than one houses, but those houses are let out for commercial purposes and if we exclude houses let out for commercial purposes, then the assessee does not have more than one houses, when the original asset was transferred and thus, entitled for exemption u/s.54F of the Income Tax Act, 1961. We have considered rival submissions and also decision relied upon by the learned AR for the assessee in the case of Navin Vs, ITO (supra) and we find that the issue involved in the present appeal is squarely covered by the decision of the Hon ble Karnataka High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where- (a) the assessee, - i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or ii)purchases any residential house other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while interpreting section 54F of the Act has held that provisions of section 54F is a beneficial provision for promoting construction of residential houses and has to be construed liberally. Kerala, Delhi, Allahabad, Calcutta and Hyderabad High Courts have taken a view that usage of the property has to be considered in determining whether it is a residential property or a commercial property and Madras High Court in C.H.KESVA RAO supra has held that expression residence implies some sought of permanency and cannot be equated to the expression temporary stay as a lodger. 10. In the backdrop of aforesaid well settled legal principles, the facts of the case in hand may be examined. Learned counsel for the revenue have fairly submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffirmative. The appeal against the aforesaid decision was dismissed by the Supreme Court by an order reported in (2014) 52 taxmann.com 246 (SC). We agree with the view taken by Delhi High Court. 12. For the aforementioned reasons, the substantial questions of law are answered in favour of the assessee and against the revenue. In the result, the orders of the Assessing Officer and Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal insofar as it pertains to denial of exemption under section 54F(1) of the Act to the appellant is hereby quashed. In the result, appeal is allowed. 7. In this view of the matter, and by respectfully following decision of the Hon ble Karnataka High Court in the case of Navin Vs, ITO (su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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