By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi, Chartered Accountants
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Section 54F, read with section 54 – Capital Gains– The expression ‘a residential house’ appearing in sections 54 and 54F has to be understood in the sense that building should be of a residential nature and word ‘a’ should not be understood to indicate a singular number.
Facts:-
The assessee was a co-owner of a residential property. The assessee entered into a development agreement for construction of flats with a developer. As per development agreement the owner had to transfer 50 % of his land for superstructure received as consideration. The assessee received 7 flats towards his share. The Ld AO held that the assessee was entitled to exemption u/s. 54F but only in respect of one flat out of seven flats. CIT (A) also upheld the order of AO.
Held:-
Both the sections, 54 and 54F, speak of either purchase or construction of “a residential house”. Following the decision of the Hon’ble Karnataka High Court in case of. CIT v. Smt. K.G. Rukmini Amma [2011] 331 ITR 211, the Tribunal held that the expression “a residential house” as appears in section 54 of the Act, cannot be interpreted in a manner to suggest that the exemption would be restricted to a single residential unit. “A residential house” as mentioned in section 54(1) of the Act, has to be understood in a sense that the building should be of a residential nature and the word “a” should not be understood to indicate a singular number. Assessee was entitled to exemption u/s. 54F in respect of all the seven flates.
Note:
As the decision of Special Bench, Mumbai in case of ITO vs. Sushila M. Jhaveri [2007] 107 ITD 327 (Mum.) (SB) has been disapproved by the High Court in case of CIT vs. Syed Ali Adil. [2013] 352 ITR 418, the same was not considered to be a good law and hence not followed. CIT vs. D. Anand Basappa [2009] 309 ITR 329/180 Taxman 4 (Kar.) followed CIT vs. Syed Ali Adil [2013] 352 ITR 418/215 Taxman 283/33 taxmann. com 212 (AP) followed
