AMIRALI AKBARALI ENGINEER, MUMBAI V. ACIT 24(1), MUMBAI

ITA 289/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5153 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATISHCHANDRA RAJOREDR
• Assessee Lawyers: NANDKISHOR AGRAWAL
• Keywords: Capital asset; Business income; Opportunity of being heard; Deemed to accrue or arise in india; Question of law; Fair market value; Valuation report; Benefit of exemption; Capital Gains
• Section: 143(3); 54B; 54F; 142(1); 260A; 143(1); 195; 274; 251; 143(2); 54EC; 54

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.289/MUM/2017 ASSESSMENT YEAR: 2012-13 AMIRALI AKBARALI ENGINEER, A/201, SENHA APNA GHAR, UNIT NO.11, SWAMI SAMARTH NAGAR, ANDHERI (WEST), MUMBAI-400053 VS ACIT, WARD-24(1), PIRAMAL CHAMBER, LALBAUG, MUMBAI ( /ASSESSEE) ( ! / REVENUE) PAN. NO. AACPE9331N # !$ % & / DATE OF HEARING : 01/10/2018 % & / DATE OF ORDER: 01 /10/2018 / ASSESSEE BY SHRI NANDKISHOR AGRAWAL ! / REVENUE BY SHRI SATISHCHANDRA RAJORE-DR ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 15/11/2016 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE FIRST GROUND RAISED BY THE ASSESSEE IS WITH RESPECT TO CONFIRMING THE ADDITION OF RS.1,07,54,23 4/-, ON ACCOUNT OF LONG TERM CAPITAL GAIN, UNDER SECTION 54 F OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E EXPLAINED THAT THE ASSESSEE IS A SHARE HOLDER OF TH E COMPANY M/S RAJDEEP REALTORS PVT. LTD., PURCHASED SHARES, WHICH WERE SOLD FOR A CONSIDERATION OF RS.3,82,00,000/- AND AFTER CLAIMING INDEXATION OF T HE COST OF PURCHASE OF SHARES INVESTED THE SALE PROCEEDS IN FLATS BEARING NUMBER 1301, 1401 AND 1502 IN THE BUILDING KNOWN AS GAURAV PALACE, KANDIVALI(W) FOR A CONSIDER ATION OF RS.2,63,79,011/-. THE LD. ASSESSING OFFICER DISA LLOWED THE CLAIMED EXEMPTION OF FLAT NO.1502 AND ALLOWED W ITH RESPECT TO FLATS NO.1301 AND 1401. THE LD. COUNSEL EXPLAINED THAT FLATS NO.1301 & 1401 WERE DUPLEX FOR WHICH THE CLAIMED EXEMPTION WAS ALLOWED AND THE EXEMPTION FOR ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 3 THE FLAT NO.1502 WAS DISALLOWED ON THE PLEA THAT TH IS FLAT IS SITUATED AT DIFFERENT FLOOR, BY PLACING RELIANCE UP ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF INCOME TAX OFFICER VS MS. SUSHILA M. JHAVERI (2007) 107 ITD 321 (SB). THE LD. COUNSEL RELIED UPON THE DECIS ION FROM HON'BLE HIGH COURT OF ANDHRA PRADESH IN CIT VS SYED ALI ADIL (352 ITR 418)(AP), HON'BLE DELHI HIGH COURT IN CIT VS GITA DUGGAL (357 ITR 153(DEL.), HON'BLE KARNATAKA H IGH COURT IN CIT VS SMT. K. G. RUKMINIAMMA 331 ITR 211 (KARN.). ON THE OTHER HAND, THE LD. DR, STRONGLY D EFENDED THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE AFO RESAID DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF MS. SUSHILA M. JHAVERI ((SUPRA)) AND CIT VS RAMAN K UMAR SURI 255 CTR 107 (BOM.). IT WAS CONTENDED THAT FLAT NO.1502 IS SITUATED IN THE SAME BUILDING ON 15 TH FLOOR, THEREFORE, DEDUCTION IS NOT ALLOWABLE AS PER THE PR OVISION OF SECTION 54F OF THE ACT, ONLY ONE UNIT/A HOUSE IS TO BE ALLOWED. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDER ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 4 AND DEVELOPER, DECLARED INCOME OF RS.1,26,11,153/- IN HIS RETURN FILED ON 31/08/2012. THE CASE OF THE ASSESSE E WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE UNDER SECT ION 143(2) AND 142(1) WERE ISSUED AND FINALLY THE ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) OF THE ACT, WHEREIN, ADDITION OF RS.1,09,25,665/- WAS MADE. THE ASSESSE E SOLD 5000 EQUITY SHARES ON A CONSIDERATION OF RS.3,82,00 ,000/-, AS PER THE ASSESSEE, WHICH RESULTED INTO LONG TERM CAPITAL GAIN (HEREINAFTER LTCG) OF RS.3,81,12,192/-. THE AS SESSEE INVESTED THE SAME BY PURCHASING THREE FLATS ON A CONSIDERATION OF RS.2,63,79,011/- INCLUDING STAMP D UTY, REGISTRATION FEES AND SERVICE TAX ON THE NEW FLATS. THE CASE OF THE ASSESSEE IS THAT TRIPLEX FLATS IN THE SAME B UILDING WERE PURCHASED AND CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. THE LD. ASSESSING OFFICER ALLOWED THE D EDUCTION WITH RESPECT TO DUPLEX FLATS CONSISTING OF FLAT NO. 1301 & 1401 AND DENIED WITH RESPECT TO FLAT NO.1502. THE L D. COUNSEL FOR THE ASSESSEE EXPLAINED THAT ONE AGREEME NT WAS ENTERED INTO WITH THE BUILDER WITH RESPECT TO FLAT NO.1201 BUT SINCE IT WAS SOLD TO ANOTHER PARTY, THE ASSESSE E, VIDE EXCHANGE AGREEMENT, WAS ALLOTTED FLAT NO.1502. IT W AS ALSO ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 5 EXPLAINED THAT SO FAR AS THE LOCATION OF THE FLATS IS CONCERNED, IT WAS GOT VERIFIED BY THE LD. ASSESSING OFFICER. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, NOW QUESTION ARISES WHE THER THE CLAIMED DEDUCTION FOR FLAT NO.1502 IS ALLOWABLE TO THE ASSESSEE AND SECOND QUESTION AROSE WHETHER THE DECI SION OF THE SPECIAL BENCH OF THIS TRIBUNAL IS TO BE FOLLOWE D OR THE DECISION FROM NON-JURISDICTIONAL HIGH COURT, RELIED UPON BY THE ASSESSEE. THE STAND OF THE LD. DR IS THAT FIRST LY THE DECISION JURISDICTIONAL TRIBUNAL HAS TO BE FOLLOWED AND SECONDLY THE DECISION FROM HON'BLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS RAMAN KUMAR SURI ((SUPRA)) HAS T O BE PREFERRED. WE HAVE PERUSED THESE ORDERS AND FIND TH AT THE SPECIAL BENCH OF THE TRIBUNAL IN MS. SUSHILA M. JHA VERI (2007) 107 ITD 321 (SB) HELD AS UNDER:- SECTION 45, WHICH IS CHARGING SECTION, USES THE EX PRESSION TRANSFER OF A CAPITAL ASSET. HERE THE WORD A ME ANS EVERY, SINCE CAPITAL GAIN OF EACH CAPITAL ASSET HAS TO BE COMPUTED DEPENDING UPON THE PERIOD OF HOLDING. EXEMPTION FRO M THE LEVY OF CAPITAL GAIN TAX IS PROVIDED IN SECTIONS 54, 54B, 5 4D, 54E, 54EA, ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 6 54EB, 54F AND 54H AS IS APPARENT FROM SECTION 45 IT SELF. A PERUSAL OF THE PROVISIONS OF SECTIONS 54, 54B, 54D, 54E, 54EA, 54EB AND 54F CLEARLY REVEALS THAT THE LEGISLATURE H AS USED THE WORDS A AND ANY WITH REFERENCE TO INVESTMENT OF CAPITAL GAIN/SALE CONSIDERATION IN CERTAIN ASSET OR ASSETS. THE LEGISLATURE WAS NOT OBLIVIOUS REGARDING THE MEANING OF THESE TWO WORDS. THE WORD ANY HAS BEEN USED BY THE LEGISLAT URE IN SECTIONS 54B, 54D, 54E, 54EA AND 54EB WHILE THE WOR D A HAS BEEN USED IN SECTIONS 54 AND 54F. THIS CLEARLY SHOW S THAT THE LEGISLATURE INTENDED DIFFERENT MEANINGS TO BE GIVEN TO THESE TWO WORDS. A CLOSE READING OF THESE SECTIONS SHOWS THAT LEGISLATURE INTENDED TO ALLOW EXEMPTION IN RESPECT OF INVESTMEN T IN MORE THAN ONE ASSET BY USING THE WORD ANY. SECTION 54E ALLOWS EXEMPTION IN RESPECT OF INVESTMENT IN ANY SPECIFIE D ASSET. EXPLANATION 1 TO SECTION 54E DEFINES THE SPECIFIED ASSET. IT INCLUDES VARIOUS ASSETS IN WHICH INVESTMENT CAN BE MADE BY THE ASSESSEES WHO ARE ELIGIBLE FOR EXEMPTION UNDER SECTION 54E. THERE IS NOTHING TO INDICATE THAT INVESTMENT IS RES TRICTED TO ANY OF THE SPECIFIED ASSETS. HAD THE LEGISLATURE INTENDED TO RESTRICT INVESTMENT IN ANY ONE OF THE SPECIFIED ASSETS, IT W OULD HAVE USED THE WORDS IN ANY ONE OF THE SPECIFIED ASSETS INST EAD OF IN ANY SPECIFIED ASSET. THIS CLEARLY SHOWS THAT THE WORD ANY HAS BEEN USED WHERE THE LEGISLATURE INTENDED INVESTMENT IN M ORE THAN ONE ASSET. SIMILARLY, IN SECTION 54EB, THE LEGISLAT URE HAS USED THE WORDS IN ANY OF THE ASSETS SPECIFIED BY THE BO ARD. SIMILAR IS THE POSITION IN SECTION 54EA. SECTION 54B AND SECTI ON 54D ALSO USE THE WORD ANY OTHER LAND AND ANY OTHER LAND A ND BUILDING RESPECTIVELY. THE EXPRESSION ANY OTHER LAND IS AN EXPRESSION OF WIDEST AMPLITUDE AND, THEREFORE, ITS MEANING CANNOT BE RESTRICTED TO ANY ONE PIECE OF LAND. ON THE OTHER HAND, THE LE GISLATURE HAS USED THE WORD A IN SECTIONS 54 AND 54F. HAD THE L EGISLATURE INTENDED FOR INVESTMENT IN MORE THAN ONE ASSET, IT COULD HAVE EASILY USED THE WORDS IN ANY RESIDENTIAL HOUSE IN SECTIONS 54 AND 54F INSTEAD OF THE WORDS A RESIDENTIAL HOUSE. SUPERFLUOUS WORDS ARE NOT USED BY THE LEGISLATURE. DIFFERENT WO RDS LIKE A AND ANY HAVE BEEN DELIBERATELY USED BY THE LEGISL ATURE TO CONVEY DIFFERENT MEANINGS. THEREFORE, THE LEGISLATU RE USED THE WORD A, WHERE IT INTENDED INVESTMENT IN ONE RESID ENTIAL HOUSE ONLY AND USED THE WORD ANY, WHERE IT INTENDED INV ESTMENT IN ONE OR MORE ASSETS. [PARA 8] THUS, THE INTENTION OF THE LEGISLATURE WAS TO ALLOW EXEMPTION UNDER SECTIONS 54 AND 54F IN RESPECT OF INVESTMENT IN ONE SINGLE RESIDENTIAL HOUSE. [PARA 9] THEREFORE, THE EXEMPTION UNDER SECTIONS 54 AND 54F WOULD BE ALLOWABLE IN RESPECT OF ONE RESIDENTIAL HOUSE ONLY. IF THE ASSESSEE HAS PURCHASED MORE THAN ONE RESIDENTIAL HO USE, THEN THE CHOICE WOULD BE WITH ASSESSEE TO AVAIL THE EXEM PTION IN RESPECT OF EITHER OF THE HOUSES, PROVIDED THE OTHER CONDITIONS ARE FULFILLED. HOWEVER, WHERE MORE THAN ONE UNIT ARE PU RCHASED ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 7 WHICH ARE ADJACENT TO EACH OTHER AND ARE CONVERTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDENCE BY HAVING COMMON PASSAGE, COMMON KITCHEN, ETC., THEN IT WOULD BE A CASE OF IN VESTMENT IN ONE RESIDENTIAL HOUSE AND CONSEQUENTLY, THE ASSESSE E WOULD BE ENTITLED TO EXEMPTION. [PARA 11] IN THE INSTANT CASE, THE INVESTMENT WAS MADE IN TWO FLATS LOCATED AT DIFFERENT LOCALITIES IN MUMBAI. ACCORDINGLY, THE ASSESSEE WAS ENTITLED TO EXEMPTION IN RESPECT OF INVESTMENT IN O NE HOUSE ONLY OF HER CHOICE. THE ASSESSING OFFICER HAD ALREADY AL LOWED EXEMPTION IN RESPECT OF HOUSE, WHICH PERMITTED HIGH ER EXEMPTION. THEREFORE, THE ORDER OF THE COMMISSIONER (APPEALS) WAS TO BE REVERSED ON THIS ISSUE AND THE ORDER OF A SSESSING OFFICER WAS TO BE RESTORED. [PARA 12] WHILE COMING TO THE AFORESAID CONCLUSION, THE BENCH ALSO CONSIDERED THE FOLLOWING DECISIONS: K.C. KAUSHIK V. P.B. RANE, FIFTH ITO [1990] 185 ITR 499 / 51 TAXMAN 51 (BOM.) (PARA 1), RATANCHAND MURARKA V. JT. CIT [IT APPEAL NO. 4485 (M) OF 1999, DATED 12-9-2001] (PARA 1), ITO V. DAULAT LUTHARIA [IT APPEAL NO. 9639 (B) OF 1989, DATED 16-5-1996] (PARA 1), ITO V. BHUPENDRA PATEL [IT APPEAL NO. 70 (M) OF 1995, DATED 24-4-2002] (PARA 1), FULWANTI C. RATHOD V. ITO [IT APPEAL NO. 1092 (M) OF 1995, DATED 3-5-2002] (PARA 1), ITO V. NANSI KRITI S. [IT APPEAL NO. 2954 (M) OF 1995, DATED 28-5-2005] (PARA 1), HIMMATLAL H. SHETH V. ITO [IT APPEAL NO. 6761 (M) OF 2002, DATED 15-2-2005] (PARA 1), PRABHAKAR S. MOGRE V. JT. CIT [IT APPEAL NO. 27 (M) OF 2000, DATED 2-5-2005] (PARA 1), DY. CIT V. MOHANLAL K. ZAVERI [IT APPEAL NO. 2747 (M) OF 1998, DATED 15-12-2005] (PARA 1), KRISHANGOPAL NAGPAL V. DY. CIT [2004] 2 SOT 628 (PUNE) (PARA 1), MRS. GULSHANBANOO R. MUKHI V. JT. CIT [2002] 83 ITD 649 (MUM.) (PARA 1), MAHOMEDALLY TAJBHOY V. CEPT [1951] 20 ITR 274 (BOM.) (PARA 5), ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 8 DR. ANAND BASAPPA V. ITO [2004] 91 ITD 53 (BANG.) (PARA 6), CIT V. NATU HANSRAJ [1976] 105 ITR 43 (GUJ.) (PARA 6), CIT V. T.N. ARAVINDA REDDY [1979] 120 ITR 46 / 2 TAXMAN 541 (SC) (PARA 6), KESHAVJI RAOJI & CO. V. CIT [1990] 183 ITR 1 / 49 TAXMAN 87 (SC) (PARA 7) AND B.B. SARKAR V. CIT [1981] 132 ITR 150 / 7 TAXMAN 239 (CAL.) (PARA 10). 2.3. IT IS FURTHER NOTED THAT HON'BLE JURISDICTION AL HIGH COURT IN CIT VS RAMAN KUMAR SURI [2013] 29 TAXMANN.COM 231 (BOMBAY)/[2013] 212 TAXMAN 411 (BOMBAY)/[2013] 255 CTR 257 (BOMBAY) HELD AS UNDER:- THIS APPEAL BY THE REVENUE UNDER SECTION 260A OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') CH ALLENGES THE ORDER DATED 30/4/2010 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (HEREINAFTER REFERRED TO AS 'THE TRIBUNAL') FOR THE ASSESSMENT YEAR 2006-07. 2. BEING AGGRIEVED, THE REVENUE HAS FORMULATED THE FOLLOWING QUESTIONS OF LAW FOR THE CONSIDERATION OF THIS COUR T. (A) WHETHER THE TRIBUNAL WAS JUSTIFIED IN APPROVING THE DECI SION OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E ADDITION OF CAPITAL GAIN ASSESSED IN THE HANDS OF THE ASSESSEE IGNORING THE FACT THAT THE MEMORANDUM OF UNDERSTANDING ENTERED I NTO BY THE ASSESSEE WITH HIS BROTHER IS A PERSONAL ARRANGEMENT BETWE EN THE BROTHERS AND THE RELINQUISHMENT OF THE ASSESSEE'S S HARE IN FAVOUR OF HIS BROTHER IS APPLICATION OF CAPITAL GAIN INCOM E WHICH HAS ARISEN TO THE ASSESSEE? (B) WHETHER THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE DECISION OF THE COMMISSIONER OF INCOM E TAX (APPEALS) IN CONSIDERING FMV AS ON 1/4/1981 ESTIMATED BY THE REGISTERED VALUER IGNORIN G THE FACT THAT RATES ADOPTED BY THE A.O. AS FROM NABHI'S GUIDE TO HOUSE TO DELHI BASED ON L& DO RATES IS MORE IN CONSONANCE WI TH THE FMV? (C) WHETHER THE TRIBUN AL WAS JUSTIFIED IN UPHOLDING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) TO ADOPT THE F MV AS PER REGISTER VALUER IGNORING THE FACT THAT THE VALUER H AS NOT GIVEN ANY REASONS FOR NOT ADOPTING THE GOVERNMENT APPROVED RA TES IN ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 9 ABSENCE OF COMPARABLE SALES INSTANCES? (D) WHETHER THE TRIBUNAL WAS JUSTIFIED IN APPROVING THE DECISION OF COMMISSIONER OF INCOME TAX (APPEAL) TO DETERMINE TH E COST INFLATION INDEX OF THE PROPERTY AS ON 1/4/1981 IGNO RING THE FACT THAT AS PER CLAUSE 3 OF THE INFLATION GIVE N IN SECTION 48 OF THE INCOME TAX ACT BENEFIT OF INDEXATION CAN BE GIVEN ONLY FRO M THE YEAR 1999 WHICH IS THE YEAR WHEN THE ASSESSEE INHERITED THE PROPERTY AND BECAME THE OWNER AND NOT FROM 1974? (E) WHETHER THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING TH E DECISION OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING TH E EXEMPTION U/S. 54 FOR INVESTMENT IN TWO NEW FLATS VIZ. 416A A ND 516A BY TREATING THE SAME AS ONE SINGLE UNIT IGNORING THE F ACT THAT THE ASSESSEE PURCHASED TWO DIFFERENT FLATS IN THE SAME SOCI ETY AND CONVERTED THEM INTO ONE DUPLEX FLAT? (F) WHETHER THE TRIBUNAL WAS JUSTIFIED IN TREATING THE TWO FLATS VIZ. 416A AND 516A PURCHASED BY THE ASSESSEE AS ONE SING ULAR UNIT FOR THE PURPOSE OF DEDUCTION UNDER SECTION 54 AND N OT AS TWO SEPARATE AND DISTINCT UNITS? REGARDING QUESTION -(A) : 3. (A) THE RESPONDENT IS AN INDIVIDUAL DERIVING INC OME FROM SALARY, HOUSE PROPERTY AND OTHER SOURCES. FOR THE ASSESSMEN T YEAR 2006- 07, THE RESPONDENT FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS. 2.25 CRORES AND INTER ALIA DISCLOSED A LONG TER M CAPITAL GAIN FROM THE SALE OF PROPERTY AT 3/35, SHANTI NIKETAN, NEW D ELHI. (NEW DELHI PROPERTY). THE RESPONDENT AND HIS BROTHER HAD INHER ITED NEW DELHI PROPERTY FROM THEIR MOTHER IN ACCORDANCE WITH HER W ILL DATED 11/10/1987. THIS INHERITED PROPERTY WAS SOLD BY DEE D OF CONVEYANCE DATED 14/10/2005 FOR A CONSIDERATION OF RS. 14 CROR ES. (B) HOWEVER, THE TOTAL CONSIDERATION OF RS. 14 CROR ES WAS SHARED BETWEEN THE TWO BROTHERS IN ACCORDANCE WITH MEMORAN DUM OF UNDERSTANDING IN WRITING ARRIVED AT BETWEEN THEM WH ICH PROVIDED THAT THE RESPONDENT'S BROTHER WOULD RECEIVE RS. 1 CRORE MORE THAN THE RESPONDENT'S HALF SHARE FROM THE SALE PROCEEDS OF N EW DELHI PROPERTY. THIS UNDERSTANDING WAS REACHED BETWEEN TH E BROTHERS KEEPING IN VIEW THE DESIRE OF THEIR LATE FATHER ONE UTTAMCHAND SURI AS RECORDED IN HIS LAST WILL AND TESTAMENT DATED 12/11 /1968. CONSEQUENTLY, THE SALE CONSIDERATION OF RS. 14 CROR ES WAS DISTRIBUTED BETWEEN THE RESPONDENT AND HIS BROTHER AT RS. 6 CRO RES AND RS. 8 CRORES RESPECTIVELY. (C) THE ASSESSING OFFICER BY HIS ORDER DATED 22/12/ 2008 HELD THAT THE SALE CONSIDERATION OF THE INHERITED PROPERTY HAS TO BE DISTRIBUTED BETWEEN THE TWO BROTHERS AT RS. 7.00 CRORES EACH. T HIS WAS ON THE BASIS THAT RS. 1 CRORE RECEIVED BY RESPONDENT 'S BR OTHER WAS IN EXCESS OF THAT RECEIVED BY THE RESPONDENT AND IS, I N FACT, AN APPLICATION OF INCOME RECEIVED BY THE RESPONDENT AN D NOT DIVERSION ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 10 OF INCOME AT SOURCE. THEREFORE, ASSESSMENT ORDER DA TED 22/12/2008 BROUGHT TO TAX THE CAPITAL GAIN TAXABLE IN THE HAND S OF THE RESPONDENT ON THE BASIS OF THE NET CONSIDERATION OF RS. 7 CROR ES AS AGAINST RS. 6 CRORES DECLARED BY THE RESPONDENT FOR SALE OF NEW D ELHI PROPERTY. (D) IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) HELD THAT THE MEMORANDUM OF UNDERSTANDING ARRIVED AT BETWEEN THE BROTHERS IS A LEGALLY BINDING DOCUMENT, WHICH ALSO FINDS MEN TION IN THE SALE DEED DATED 14/10/2005 UNDER WHICH NEW DELHI PROPERT Y WAS SOLD. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT BY VIRTUE OF MEMORANDUM OF UNDERSTANDING IT IS CLEAR THAT THE IN COME OF RS. 1 CRORES WAS DIVERTED BEFORE IT REACHED THE RESPONDEN T AND IS THUS NOT INCLUDABLE IN THE RESPONDENT'S INCOME. (E) IN APPEAL, THE TRIBUNAL BY ITS ORDER DATED 30/4 /2010 UPHELD THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) . THE TRIBUNAL ALSO RECORDED THE FACT THAT THE ADDITIONAL AMOUNT O F RS. 1 CRORES RECEIVED BY THE BROTHER OF THE RESPONDENT HAD BEEN OFFERED TO TAX BY THE BROTHER AND THE SAME WAS DULY ACCOUNTED AS HIS INCOME UNDER THE HEAD CAPITAL GAIN. THE TRIBUNAL OBSERVED THAT T HE ASSESSMENT CANNOT BE BASED ON THE PERCEPTION OF THE ASSESSING OFFICER THAT THE ASSESSEE SHOULD HAVE RECEIVED RS. 7 CRORES AS SALE CONSIDERATION. THE ASSESSMENT CAN ONLY BE ON THE ACTUAL AMOUNT REC EIVED BY THE ASSESSEE, THE RESPONDENT ASSESSEE HAS SOLD HIS SHAR E IN THE NEW DELHI PROPERTY AT RS. 6 CRORES ONLY AND THAT ALONE CAN BE THE SALE CONSIDERATION. (F) WE FIND NO FAULT WITH THE ORDER OF THE TRIBUNAL . BOTH CIT(APPEALS) AS WELL AS TRIBUNAL HAVE ON CONSIDERATION OF ALL TH E FACTS INVOLVED, CONCLUDED AS A FINDING OF FACT THAT THE APPELLANT H AD RECEIVED ONLY RS. 6 CRORES FOR THE SALE OF HIS RIGHTS IN THE NEW DELHI PROPERTY AND THE SAME HAD BEEN OFFERED TO TAX. THERE IS NO PROVI SION TO TAX A PERSON ON THE BASIS OF THE DEEMED INCOME FOR THE PU RPOSE OF CAPITAL GAIN TAX. THIS FINDING OF THE TRIBUNAL AS WELL AS C IT(APPEALS) HAS TAKEN INTO CONSIDERATION THE MEMORANDUM OF UNDERSTA NDING REACHED BETWEEN THE BROTHERS AS WELL AS THE SALE DOCUMENT D ATED 14/10/2005 WHICH NOT ONLY REFERRED THE MEMORANDUM OF UNDERSTAN DING BUT ALSO SHOWS THAT RS. 6 CRORES IS THE CONSIDERATION RECEIV ED BY RESPONDENT FOR SALE OF HIS INTEREST IN THE NEW DELHI PROPERTY. IN VIEW OF THE ABOVE, WE FIND THAT NO SUBSTANTIAL QUESTION OF LAW ARISES WITH REGARD TO QUESTION (A) ABOVE. THEREFORE, THE APPEAL IS DIS MISSED WITH REGARD TO QUESTION (A) ABOVE. REGARDING QUESTION (B) AND (C) : 4. (A) FOR THE PURPOSE OF COMPUTING CAPITAL GAIN TA X TO BE PAID BY THE RESPONDENT, THE COSTS OF ACQUISITION AT FAIR MARKET VALUE AS ON 1/4/1981 HAD TO BE DETERMINED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE RESPONDENT HAD FILED A VALUATION R EPORT DATED 29/11/2005 WITH REGARD TO THE INHERITED NEW DELHI P ROPERTY BY A REGISTERED VALUER WHO IS EMPANELLED BY THE INCOME T AX DEPARTMENT. THIS VALUATION REPORT DATED 29/1/2005 SHOWED THE VA LUE OF THE ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 11 INHERITED NEW DELHI PROPERTY ON 1/4/1981 AT RS. 47. 74 LACS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER TOOK A VIEW THAT THE FAIR MARKET VALUE OF THE PROPE RTY HAS TO BE ARRIVED AT AS PER NABHI'S GUIDE TO HOUSE TAX IN NEW DELHI. THE ASSESSING OFFICER APPLIED THE NABHI'S GUIDE TO HOUS E TAX AND HELD THAT THE FAIR MARKET VALUE OF THE PROPERTY ON 1/4/1 981 WAS RS. 17.33 LACS AND NOT RS. 47.74 LACS AS ARRIVED AT BY EMPANE LLED REGISTERED VALUER. THUS ON THE ABOVE BASIS OF THE FAIR MARKET VALUE AS ON 1/4/1981 BEING RS. 17.33 LACS THE CAPITAL GAIN WAS COMPUTED AFTER INDEXATION IN THE ASSESSMENT ORDER DATED 22/12/2008 . (B) IN APPEAL THE COMMISSIONER OF INCOME TAX (APPEA LS) BY AN ORDER DATED 4/5/2009 HELD THAT WHILE DETERMINING THE FAIR MARKET VALUE AS ON 1/4/1981 AN ELEMENT OF ESTIMATION WOULD CREEP IN AS ONE WOULD HAVE TO ENVISAGE THE EXISTENCE OF A HYPOTHETICAL SE LLER AND A HYPOTHETICAL BUYER IN A HYPOTHETICAL MARKET. THE CO MMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE REGISTERED VALUE R'S REPORT COULD NOT BE DOUBTED AS IT EXPLAINED THE BASIS FOR ADOPTI NG THE VALUE AND THE APPELLANT HAD DEMONSTRATED THAT NEW DELHI PROPE RTY ENJOYED A BETTER VALUE BECAUSE OF ITS LOCATION. THE COMMISSIO NER OF INCOME TAX (APPEALS) HELD THAT NABHI'S GUIDE TO HOUSE TAX WAS NOT APPLICABLE SPECIALLY IN VIEW OF THE VALUATION REPOR T GIVEN BY THE REGISTERED VALUER WHICH HAS NOT BEEN FOUND TO BE IN CORRECT. CONSEQUENTLY, THE REGISTERED VALUER'S REPORT VALUIN G THE NEW DELHI PROPERTY AT RS. 47.74 LACS AS ITS FAIR MARKET VALUE ON 1/4/1981 WAS ACCEPTED AND THE FAIR MARKET VALUE OF RS. 17.33 AS ON 1/4/1981 AS ARRIVED AT IN THE ASSESSMENT ORDER DATED 22/12/2008 WAS NOT ACCEPTED. (C) IN APPEAL, THE TRIBUNAL BY ITS ORDER DATED 30/4 /2010 UPHELD THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) . THE TRIBUNAL HELD THAT NABHI'S GUIDE TO HOUSE TAX CANNOT BE SUBS TITUTED FOR THE VALUATION OF THE NEW DELHI PROPERTY DONE BY AN EMPA NELLED VALUER OF THE INCOME TAX DEPARTMENT FOR THE PURPOSE OF VALUAT ION OF THE PROPERTY. THE TRIBUNAL UPHELD THE FINDING OF THE CO MMISSIONER OF INCOME TAX (APPEALS) THAT THE VALUATION OF A PROPER TY DIFFERS DEPENDING UPON ITS SIZE, LOCATION, ROAD FRONTAGE, C ORNER PLOT ETC. EVEN IN RESPECT OF TWO PROPERTIES SITUATED IN THE SAME L OCALITY. (D) NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRI BUNAL UPHOLDING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) T HAT THE VALUATION DONE BY AN EMPANELLED REGISTERED VALUER O F THE INCOME TAX DEPARTMENT WOULD CERTAINLY TAKE PRECEDENCE OVER NAB HI'S GUIDE TO HOUSE TAX. THE VALUATION DONE BY THE REGISTERED VAL UER IS WITH REGARD TO THE SPECIFIC PROPERTY AND TAKES INTO ACCO UNT ITS VARIOUS ADVANTAGES AND DISADVANTAGES ALL OF WHICH INFLUENCE THE VALUATION OF THE PROPERTY. AS AGAINST THE ABOVE, THE NABHI'S GUI DE TO HOUSE TAX IS GENERALIZED GUIDE AND DOES NOT TAKE INTO ACCOUNT THE PECULIAR FEATURES OF THE PROPERTY BEING VALUED. MOREOVER, TH E DETERMINATION OF THE FAIR MARKET VALUE AS ON 1/4/1991 IS A QUESTION OF FACT WHICH HAS BEEN EXAMINED BY BOTH THE COMMISSIONER OF INCOME TA X (APPEALS) ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 12 AS WELL AS THE TRIBUNAL AND BOTH HAVE CONCLUDED THA T THE FAIR MARKET VALUE AS ESTIMATED BY THE REGISTERED VALUER AT RS. 47.74 LACS AS ON 1/4/1981 IS ACCEPTABLE. THIS FINDING OF THE AUTHORI TIES IS NEITHER PERVERSE NOR ARBITRARY SO AS TO RAISE A SUBSTANTIAL QUESTION OF LAW. IN VIEW OF THE ABOVE, NO SUBSTANTIAL QUESTION OF LAW A RISES WITH REGARD TO QUESTION (B) AND (C) ABOVE. THEREFORE, THE APPEA L IS DISMISSED WITH REGARD TO QUESTION (B) AND (C) ABOVE. REGARDING QUESTION (D) :- 5. (A) IT IS AN ADMITTED POSITION BETWEEN THE ADVOC ATES THAT QUESTION (D) IS COVERED IN FAVOUR OF THE RESPONDENT-ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THIS COURT IN THE MATTER OF CIT V. MANJULA J. SHAH [2012] 204 TAXMAN 691/[2011] 16 TAXMANN.COM 42. (B) IN VIEW OF THE ABOVE, QUESTION (D) DOES NOT GIV E RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND THE SAME IS DISMISS ED. REGARDING QUESTION (E) AND (F) :- 6. (A) THE RESPONDENT IN HIS RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2006-07 HAD CLAIMED A DEDUCTION OF RS. 3 CRORES UND ER SECTION 54 OF THE ACT BEING THE INVESTMENT MADE FOR PURCHASE OF F LAT NOS. 416A AND 516A AT MITTAL PARK, JUHU, MUMBAI. THE ASSESSIN G OFFICER IN HIS ASSESSMENT ORDER DATED 22/12/2008 RESTRICTED THE EX EMPTION UNDER SECTION 54 TO ONLY RS. 1.34 CRORES ON THE GROUND TH AT THE EXEMPTION IS ALLOWABLE ONLY IN RESPECT OF INVESTMENT IN ONE R ESIDENTIAL HOUSE ONLY. FURTHER THE FACT THAT TWO FLATS HAD BEEN JOIN ED AND MADE INTO ONE FLAT WOULD NOT BE CONSIDERED TO BE PURCHASE OF ONE FLAT BUT WOULD BE PURCHASE OF TWO SEPARATE FLATS. CONSEQUENTLY, TH E ASSESSING OFFICER RESTRICTED THE EXEMPTION TO ONLY RS. 1.45 C RORES AS ACCORDING TO HIM SECTION 54 OF THE ACT EXEMPTS INVESTMENT IN A RESIDENTIAL HOUSE I.E. ONE RESIDENTIAL HOUSE ONLY. (B) IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) BY HIS ORDER DATED 4/5/2009 HELD THAT THE RESPONDENT HEREI N IS ENTITLED TO THE BENEFIT OF EXEMPTION UNDER SECTION 54 OF THE ACT TO THE EXTENT OF RS.3 CRORES AS CLAIMED IN THE RETURN OF INCOME. THIS WAS ON THE BASIS THAT THE RESPONDENT HEREIN HAD PRODUCED A CERTIFICATE OF CO-OPERATIVE SOCIETY THAT TWO FLATS WERE INTER CONNECTED BY INTE RNAL STAIR CASE. THE SITE PLAN WAS ALSO SUBMITTED INTER ALIA SHOWING ONL Y ONE ENTRANCE GATE AND ONE KITCHEN. THE DUPLEX FLAT NOS. 416A AND 516A WAS PURCHASED ON AS IS AND WHERE IS BASIS AND THE ASSES SEE HAD NOT JOINED THE SAID TWO FLAT INTERNALLY AFTER ACQUIRING THE FLATS. THE FLATS WERE INTER CONNECTED BY THE PREVIOUS OWNER ONLY AND THEREFORE, THE FACT THAT THERE WERE TWO DIFFERENT FLATS WAS IMMATE RIAL AS SECTION 54 GRANTS EXEMPTION TO A RESIDENTIAL HOUSE AND UNIT. T HE COMMISSIONER OF INCOME TAX (APPEALS) HAD REACHED A FINDING OF FA CT WAS THAT TWO FLATS WERE JOINED INTO ONE SINGLE FLAT BEFORE THE R ESPONDENT BECAME ITS OWNER AND WAS ONE RESIDENTIAL HOUSE. (C) ON AN APPEAL FILED BY THE REVENUE, THE TRIBUNAL BY ITS ORDER DATED 30/4/2010 UPHELD THE FINDINGS OF COMMISSIONER OF IN COME TAX ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 13 (APPEALS) DATED 4/5/2009. THE TRIBUNAL ALSO FOLLOWE D THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE MATTER OF ITO V. MS. SUSHILA M. JHAVERI [2007] 107 ITD 327 (MUM.) TO HOLD THAT WHER E TWO FLATS BEARING NOS. 416A AND 516A HAD ONLY ONE ENTRANCE, O NE KITCHEN AND COMMON PASSAGE IT HAS TO BE CONSIDERED AS ONE RESID ENTIAL HOUSE AND THE RESPONDENT WAS ENTITLED TO EXEMPTION FOR TH E AGGREGATE CONSIDERATION OF RS. 3 CRORES UNDER SECTION 54 OF T HE ACT. (D) WE FIND NO FAULT WITH THE ORDER OF THE TRIBUNAL WHICH HAS UPHELD THE FINDING OF FACT OF THE COMMISSIONER OF INCOME T AX (APPEALS) TO THE EFFECT THOUGH THE RESPONDENT-ASSESSEE HAD PURCH ASED FLAT NOS. 416A AND 516A IT WAS ONLY PURCHASE OF ONE RESIDENTI AL HOUSE. FURTHER, THE TRIBUNAL HELD THAT TWO FLATS WERE JOIN ED TOGETHER BEFORE THE RESPONDENT ASSESSEE BECAME THE OWNER OF THE TWO FLATS. THE CERTIFICATE FROM THE SOCIETY ALSO ESTABLISHED THE F ACT THAT TWO FLAT NOS. 416A AND 516A WERE JOINED TOGETHER AND WERE CONSIDE RED AS ONE RESIDENTIAL HOUSE. THESE CONCURRENT FINDINGS OF FAC T BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUN AL HAVE NOT BEEN SHOWN TO BE PERVERSE OR ARBITRARY. FURTHER, SE CTION 54 OF THE ACT EXEMPTS CAPITAL GAIN TO THE EXTENT THE CONSIDER ATION IS PAID FOR THE PURPOSE OF A RESIDENTIAL HOUSE. CONSEQUENTLY, W HERE RESPONDENT- ASSESSEE HAS ACQUIRED ONE RESIDENTIAL HOUSE CONSIST ING OF TWO FLATS, IT CANNOT BE SAID THE RESPONDENT ASSESSEE HAD PURCH ASED TWO RESIDENTIAL HOUSES. IN VIEW OF THE ABOVE, WE FIND T HAT QUESTION (E) AND (F) ALSO DO NOT RAISE ANY SUBSTANTIAL QUESTION OF L AW. THEREFORE, THE APPEAL IS DISMISSED WITH REGARD TO QUESTION (E) AND (F) ABOVE. 7. IN VIEW OF THE ABOVE, THE APPEAL IS DISMISSED WI TH NO ORDER AS TO COSTS. 2.4. WE FURTHER NOTE THAT HON'BLE ANDHRA PRADESH HIGH COURT IN CIT VS SYED ALI ADIL (2013) 352 ITR 4 18 (AP), CONSIDERING THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL, RELIED UPON BY THE LD. DR ALONG WITH VARI OUS OTHER DECISIONS HELD AS UNDER:- THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INC OME TAX ACT, 1961 (FOR SHORT 'THE ACT') BY THE REVENUE CHALLENGI NG THE ORDER DATED 09-09-2011 IN I.T.A.NO.284/HYD/2011 OF THE IN COME TAX APPELLATE TRIBUNAL, HYDERABAD BENCH 'B', HYDERABAD. 2. THE RESPONDENT IS AN INDIVIDUAL ASSESSEE. HE FIL ED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31-08- 2007 WITH THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-VI (1) , HYDERABAD ADMITTING THEREIN A NET INCOME OF RS. 43,97,840/-. THE SAID RETURN ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 14 WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 24 -02-2009. MEANWHILE, THE CASE WAS TAKEN UP FOR SCRUTINY BY IS SUING NOTICE DT.25-08-2008 UNDER SECTION 143(2) OF THE ACT. A NO TICE DT.15-06- 2009 UNDER SECTION 142(1) WAS ISSUED CALLING FOR VA RIOUS DETAILS. 3. BEFORE THE ASSESSING OFFICER, THE ASSESSEE OFFER ED UNDER THE HEAD, LONG TERM CAPITAL GAINS, A SUM OF RS. 41.00 L AKHS CONTENDING THAT HE HAD INHERITED AN ANCESTRAL HOUSE PROPERTY W HICH WAS SOLD DURING THE YEAR UNDER CONSIDERATION AND THE RESULTA NT LONG TERM CAPITAL GAINS WERE OFFERED FROM SALE OF THE SAID HO USE; THAT HE HAD TAKEN THE SALE CONSIDERATION OF RS.1,99,50,000/- FO R ARRIVING AT THE CAPITAL GAINS EVEN THOUGH THE SALE DEED MENTIONED T HE SALE CONSIDERATION AS RS. 2,66,00,000/-; THAT OUT OF THE SALE CONSIDERATION HE HAD PURCHASED TWO FLATS IN MAYFAIR APARTMENT, BANJARA HILLS, HYDERABAD AND HE IS ENTITLED TO CLAI M DEDUCTION/EXEMPTION UNDER SECTION 54 OF THE ACT FOR AN AMOUNT OF RS.93,80,192/- AND THAT IN VIEW OF THE DECISION IN CIT V. D. ANANDA BASAPPA [2009] 309 ITR 329/180 TAXMAN 4 (KAR.), EVE N THOUGH SECTION 54 MENTIONS THAT THE PROCEEDS SHOULD BE INV ESTED IN 'A RESIDENTIAL HOUSE', IT BEING A BENEFICIAL PROVISION , IT SHOULD BE CONSTRUED LIBERALLY AND THE DEDUCTION CANNOT BE RES TRICTED TO ONLY ONE RESIDENTIAL HOUSE AND IT SHOULD BE EXTENDED TO THE PURCHASE OF TWO ADJACENT RESIDENTIAL FLATS. 4. THE ASSESSING OFFICER BY ORDER DT.25-08-2009 HEL D THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION IN RESP ECT OF RS.93,80,192/- BUT ONLY TO THE EXTENT OF RS.45,52,8 60/- COMPRISING OF CONSIDERATION OF RS.42,36,000/- AND A STAMP DUTY OF RS.3,16,860/- UTILIZED FOR INVESTMENT ON ONE OF THE FLATS BY THE ASSESSEE ON THE GROUND THAT THE INSPECTION REPORT O F THE I.T.I. DEPUTED BY THE ASSESSING OFFICER SHOWED THAT WHAT W AS PURCHASED WERE TWO RESIDENTIAL UNITS SEPARATED BY A STRONG WA LL; THAT THEY WERE PURCHASED FROM TWO DIFFERENT VENDORS UNDER TWO SEPA RATE SALE DEEDS AND AS SUCH THE DEDUCTION UNDER SECTION 54 HA S TO BE RESTRICTED TO ONLY ONE FLAT. 5. AGGRIEVED THEREBY, THE ASSESSEE FILED AN APPEAL TO THE CIT (APPEALS), GUNTUR. HE ALLOWED THE APPEAL BY ORDER D T.13-10-2010 HOLDING THAT THE ASSESSING OFFICER HAD ACTED TOO TE CHNICALLY AND HAD ERRONEOUSLY DENIED THE ASSESSEE THE DEDUCTION TO TH E EXTENT OF 50% AND THAT SINCE THE ASSESSEE HAD PURCHASED TWO F LATS HAVING ADJACENT KITCHENS AND TOILETS WHICH HAVE A COMMON M EETING POINT, HE IS ENTITLED TO 100% DEDUCTION UNDER SECTION 54 F OR BOTH THE FLATS PURCHASED BY HIM. 6. CHALLENGING THE SAME, THE REVENUE FILED I.T.A.NO.284/HYD/2011 TO THE INCOME TAX APPELLATE T RIBUNAL. BY ORDER DT.09-09-2011, THE TRIBUNAL DISMISSED THE APP EAL OF THE REVENUE ON THE GROUND THAT IT HAD CONSISTENTLY TAKE N THE VIEW THAT EVEN THOUGH FLATS ARE LOCATED AT DIFFERENT FLOORS, WHEN THEY COULD BE COMBINED, IT SHOULD BE CONSTRUED AS A SINGLE RESIDE NTIAL ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 15 ACCOMMODATION ONLY; THAT THE SAID VIEW IS SUPPORTED BY THE DECISIONS OF THE TRIBUNAL REPORTED IN K.G. VYAS V. SEVENTH ITO [1986] 16 ITD 195 (BOM.), ITO V. P.C. RAMAKRISHNA, (HUF) [2007] 108 ITD 251 (CHENNAI) AND PREM PRAKASH BHUTANI V. ASSTT. CIT [2009] 31 SOT 38 (DEL HI) (URO) 7. CHALLENGING THE SAME, THE REVENUE HAS FILED THE PRESENT APPEAL. 8. HEARD SRI B. NARASIMHA SARMA, LEARNED STANDING C OUNSEL FOR THE INCOME TAX DEPARTMENT AT THE STAGE OF ADMISSION . 9. HE CONTENDED THAT THE DEDUCTION UNDER SECTION 54 OF THE ACT IS ALLOWABLE ONLY FOR ONE RESIDENTIAL HOUSE AND NOT FO R MORE THAN ONE RESIDENTIAL HOUSE AND THAT THE TRIBUNAL ERRED IN HO LDING THAT THE DEDUCTION UNDER SECTION 54 OF THE ACT IS ALLOWABLE FOR TWO INDEPENDENT RESIDENTIAL FLATS IN THE SAME COMPLEX. HE ALSO PLACED RELIANCE ON THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN ITO V. MS. SUSHILA M. JHAVERI [2007] 107 ITD 327 (MUM.) 10. WE SEE NO FORCE IN THE SAID CONTENTION. AS HELD IN D. ANANDA BASAPPA'S CASE (SUPRA) BY THE KARNATAKA HIGH COURT, THE EXPRESSION 'A RESIDENTIAL HOUSE' IN SECTION 54 (1) OF THE ACT HAS TO BE UNDERSTOOD IN A SENSE THAT THE BUILDING SHOULD B E OF RESIDENTIAL NATURE AND 'A' SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER AND WHERE AN ASSESSEE HAD PURCHASED TWO RESI DENTIAL FLATS, HE IS ENTITLED TO EXEMPTION UNDER SECTION 54 IN RESPECT OF CAPITAL GAINS ON SALE OF ITS PROPERTY ON PURCHASE O F BOTH THE FLATS, MORE SO, WHEN THE FLATS ARE SITUATED SIDE BY SIDE A ND THE BUILDER HAS EFFECTED MODIFICATION OF THE FLATS TO MAKE IT A S ONE UNIT, DESPITE THE FACT THAT THE FLATS WERE PURCHASED BY SEPARATE SALE DEEDS. THIS DECISION WAS FOLLOWED BY THE KARNATAKA HIGH COURT I N CIT V. SMT. K.G. RUKMINIAMMA [2011] 196 TAXMAN 87/[2010] 8 TAXM ANN.COM 121 (KAR.) WHERE A RESIDENTIAL HOUSE WAS TRANSFERRE D AND FOUR FLATS IN A SINGLE RESIDENTIAL COMPLEX WERE PURCHASED BY T HE ASSESSEE, IT WAS HELD THAT ALL FOUR RESIDENTIAL FLATS CONSTITUTE D 'A RESIDENTIAL HOUSE' FOR THE PURPOSE OF SECTION 54 AND THAT THE F OUR RESIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSE S FOR THE PURPOSE OF SECTION 54. ADMITTEDLY THE TWO FLATS PURCHASED B Y THE ASSESSEE ARE ADJACENT TO ONE ANOTHER AND HAVE A COMMON MEETI NG POINT. IN THE IMPUGNED ORDER, THE TRIBUNAL HAS ALSO RELIED UP ON THE DECISIONS IN K.G. VYAS'S CASE (SUPRA), P.C. RAMAKRISHNA, HUF' S CASE (SUPRA) AND PREMPRAKASH BHUTANI'S CASE (SUPRA) WHEREIN IT W AS HELD THAT EXEMPTION UNDER SECTION 54 ONLY REQUIRES THAT THE P ROPERTY SHOULD BE OF RESIDENTIAL NATURE AND THE FACT THAT THE RESI DENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CANNOT BE AN IMPEDIMENT TO GRANT RELIEF UNDER SECTION 54 EVEN IF SUCH INDEPEND ENT UNITS WERE ON DIFFERENT FLOORS. THE DECISION IN MS.SUSEELA M.JHAV ERI'S CASE (SUPRA) HOLDING THAT ONLY ONE RESIDENTIAL HOUSE SHO ULD BE GIVEN THE RELIEF UNDER SECTION 54 DOES NOT APPEAR TO BE CORRE CT AND WE DISAPPROVE OF IT. WE AGREE WITH THE INTERPRETATION PLACED ON SECTION ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 16 54 BY THE HIGH COURT OF KARNATAKA IN D. ANANDA BASA PPA'S CASE (SUPRA) AND SMT. K.G. RUKMINIAMMA'S CASE (SUPRA) AN D THE DECISIONS OF THE MUMBAI, CHENNAI AND DELHI BENCHES OF THE TRIBUNAL IN K.G. VYAS (SUPRA), P.C. RAMAKRISHNA,HUF (SUPRA) AND PRAKASH BHUTANI (SUPRA). WE THEREFORE HOLD THAT THE CIT (APPEALS) WAS CORRECT IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER AND THE TRIBUNAL RIGHTLY CONFIRMED THE DECI SION OF THE CIT (APPEALS). 11. WE HOLD THAT NO SUBSTANTIAL QUESTION OF LAW ARI SES FOR CONSIDERATION IN THIS APPEAL AND THE SAME IS ACCORD INGLY DISMISSED. NO COSTS. 2.5. WE FURTHER NOTE THAT HON'BLE DELHI HIGH COURT IN CIT VS GITA DUGGAL (357 ITR 153)(DEL.) CONSIDERING THE DECISION IN CIT VS B. ANANDA BASAPPA (2009) 309 ITR 329 HELD AS UNDER:- THE REVENUE HAS FILED THE APPEAL UNDER SECTION 260 A OF THE INCOME TAX ACT, 1961 AGAINST THE ORDER DATED 07.06. 2001 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL IN ITA 3613/DE L./2010 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE WHICH IS THE RESPONDENT IN THE APPE AL IS AN INDIVIDUAL. IN THE COMPUTATION OF INCOME FILED ALON G WITH THE RETURN OF INCOME, SHE DECLARED LONG TERM CAPITAL GAINS OF RS. 2,68,25,750/- IN THE FOLLOWING MANNER :- 'INCOME FROM CAPITAL GAIN LONG TERM A 22 WESTEND COLONY CONSIDERATION AS PER COLLABORATION AGREEMENT 40,000,000.00 LESS INDEX COST FOR PUR. OF RS. 1575000 (FAIR VALUE AS ON 1-04-81) 8,174,250.00 31,825,750.00 LESS : EXEMPTION UNDER SECTION 54EC (REC BONDS) 5,000,000.00 26,825,750.00' WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFIC ER TOOK THE VIEW THAT ON THE TERMS OF THE AGREEMENT ENTERED INTO WITH M/S THAPAR HOMES LTD. ON 08.05.2006, THE COST OF CONSTRUCTION OF THE BUILDING INCURRED BY THE AFORESAID COMPANY WHICH WAS THE DEV ELOPER OF THE PROPERTY WOULD ALSO BE INCLUDED IN THE TOTAL SALE C ONSIDERATION. THE ASSESSEE RESPONDED BY SUBMITTING THAT THE ENTIRE CO ST OF ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 17 CONSTRUCTION WAS INCURRED BY THE BUILDER AND EVEN I F IT IS CONSIDERED AS PART OF THE SALE CONSIDERATION, SINCE IT HAS BEE N FULLY INVESTED IN THE RESIDENTIAL HOUSE ITSELF, THE SAME WOULD BE EXE MPT UNDER SECTION 54 OF THE ACT. THE ASSESSING OFFICER DID NO T ACCEPT THE ASSESSEE'S SUBMISSION. HE THEREFORE, ADDED AN AMOUN T OF RS. 3,43,72,529/- WHICH WAS THE COST OF CONSTRUCTION IN CURRED BY THE DEVELOPER TO THE SALE CONSIDERATION OF RS. FOUR CRO RES RECEIVED BY THE ASSESSEE AND COMPUTED THE TOTAL SALE CONSIDERAT ION AT RS. 7,43,72,529/-. 3. DEALING WITH THE ASSESSEE'S CONTENTION THAT IN A NY CASE THE SALE CONSIDERATION SHOULD BE TAKEN AS HAVING BEEN I NVESTED IN THE NEW RESIDENTIAL HOUSE AND THUS EXEMPT UNDER SECTION 54, WHICH WAS SUPPORTED BY A JUDGMENT OF THE KARNATAKA HIGH C OURT IN CIT V. D. ANANDA BASAPPA [2009] 309 ITR 329/180 TAXMAN 4, THE ASSESSING OFFICER HELD THAT THE TWO FLOORS WHICH WE RE GIVEN TO THE ASSESSEE BY THE DEVELOPER AND ON WHICH THE DEVELOPE R HAD INCURRED CONSTRUCTION COST WERE INDEPENDENT OF EACH OTHER AND SELF- CONTAINED AND THEREFORE THEY CANNOT BE CONSIDERED A S ONE UNIT OF RESIDENCE. ACCORDINGLY, HE HELD THAT THE ASSESSEE W AS NOT ELIGIBLE FOR THE EXEMPTION UNDER SECTION 54. DEALING WITH TH E CLAIM FOR RELIEF UNDER SECTION 54F, THE ASSESSING OFFICER HELD THAT THE EXEMPTION WOULD BE AVAILABLE ONLY IN RESPECT OF ONE UNIT, SIN CE THE TWO RESIDENTIAL UNITS WERE INDEPENDENT OF EACH OTHER AN D THE ASSESSEE CANNOT THEREFORE CLAIM EXEMPTION ON THE FOOTING THA T BOTH CONSTITUTED A SINGLE RESIDENCE. IN THIS VIEW OF THE MATTER HE RECOMPUTED THE CAPITAL GAINS BY MAKING AN ADDITION OF RS. 98,20,722/-. 4. ON APPEAL, THE CIT(APPEALS) AGREED WITH THE ASSE SSEE'S CONTENTION AND FOLLOWING THE JUDGMENT OF THE KARNAT AKA HIGH COURT CITED ABOVE, HELD THAT THE ASSESSEE WAS ELIGIBLE FO R THE DEDUCTION UNDER SECTION 54 IN RESPECT OF THE BASEMENT, GROUND FLOOR, FIRST FLOOR AND THE SECOND FLOOR. HE ACCORDINGLY, ALLOWED THE A PPEAL. 5. THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL AND RAISED THE FOLLOWING GROUND :- 'ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 98,20,722/- U /S. 54F OF THE IT ACT, 1961 WHICH THE ASSESSING OFFICER HAD ALLOWED I N RESPECT OF ONLY ONE UNIT BY TREATING THE UNITS AS TWO SEPARATE RESIDENTIAL PROPERTIES. ' THE TRIBUNAL CONFIRMED THE DECISION OF THE CIT (APP EALS) BY OBSERVING AS UNDER: - '6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD . COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE KARNATA KA HIGH COURT ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 18 IN THE CASE OF CIT & ANR.V. SMT. K.G. RUKMINIAMMA I N ITA NO.783 OF 2008 VIDE ORDER DATED 27.8.2010 WHEREIN IT WAS H ELD AS UNDER :- 'THE CONTEXT IN WHICH THE EXPRESSION 'A RESIDENTIAL HOUSE' IS USED IN SECTION 54 MAKES IT CLEAR THAT, IT WAS NOT THE I NTENTION OF THE LEGISLATION TO CONVEY THE MEANING THAT: IT REFERS T O A SINGLE RESIDENTIAL HOUSE, IF, THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD 'ONE.' AS IN THE EARLIER PART, THE WORDS U SED ARE BUILDINGS OR LANDS WHICH ARE PLURAL IN NUMBER AND THAT: IS RE FERRED TO AS 'A RESIDENTIAL HOUSE', THE ORIGINAL ASSET. AN ASSET NE WLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDING S OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE 'A RESIDE NTIAL HOUSE.' THEREFORE THE LETTER 'A' IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANING 'SINGULAR.' BUT, BEING AN INDE FINITE ARTICLE, THE SAID EXPRESSION SHOULD BE READ IN CONSONANCE WITH T HE OTHER WORDS 'BUILDINGS' AND 'LANDS' AND, THEREFORE, THE SINGULA R 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VIRTUE OF SECT ION 13(2) OF THE GENERAL CLAUSES ACT. CIT V. D. ANANDA BASSAPPA [2009] 223 (KAR) 186 : [2009] 20 DTR (KAR) 266 FOLLOWED. ' 7. UPON CAREFUL CONSIDERATION, WE FIND THAT THE CON TENTIONS OF THE ASSESSEE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ARE CORRECT. 7.1 LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTR OVERT THE ABOVE AND NO CONTRARY DECISION WAS CITED BEFORE US. 8. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY OR ILL EGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) AND HENCE, UPHOLD THE SAME.' 6. IN THE PRESENT APPEAL BEFORE US, THE REVENUE HAS PROPOSED THE FOLLOWING QUESTIONS AS SUBSTANTIAL QUESTIONS OF LAW WHICH IN ITS OPINION ARISE OUT OF THE ORDER OF THE TRIBUNAL. '(A) WHETHER THE HON'BLE ITAT HAS ERRED IN DELETING THE ADDITION OF RS. 98,20,772/- UNDER SECTION 54F OF THE INCOME TAX ACT, 1961 AS MADE BY THE ASSESSING OFFICER? (B) WHETHER THE HON'BLE ITAT HAS ERRED IN LAW AND FACTS IN HOLDING THAT THE ASSESSEE SHOULD BE GIVEN DEDUCTION UNDER SECTION 54 OF THE INCOME TAX ACT, 1961?' 7. WE HAVE CONSIDERED THE FACTS AND TAKEN NOTE OF THE RIVAL SUBMISSIONS. TO COMPLETE THE NARRATION OF FACTS, IT NEEDS TO BE NOTICED THAT THE ASSESSEE WAS THE OWNER OF PROPERTY AT A/22, WESTEND COLONY, NEW DELHI COMPRISING OF THE BASEMEN T, GROUND FLOOR, FIRST FLOOR AND SECOND FLOOR. SHE WAS DERIVI NG RENTAL INCOME FROM THE PROPERTY. ON 08.05.2006 SHE ENTERED INTO A COLLABORATION AGREEMENT WITH M/S THAPAR HOMES LTD. FOR DEVELOPING THE PROPERTY. ACCORDING TO ITS TERMS, THE ASSESSEE BEING DESIROUS OF GETTING THE PROPERTY REDEVELOPED/RECONSTRUCTED AND NOT BEING PO SSESSED OF ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 19 SUFFICIENT FINANCE AND LACKING IN EXPERIENCE IN CON STRUCTION, APPROACHED THE BUILDER TO DEVELOP THE PROPERTY FOR AND ON BEHALF OF THE OWNER AT THE COST OF THE BUILDER. THE BUILDER W AS TO DEMOLISH THE EXISTING STRUCTURE ON THE PLOT OF LAND AND DEVELOP, CONSTRUCT, AND/OR PUT UP A BUILDING CONSISTING OF BASEMENT, GROUND FL OOR, FIRST FLOOR, SECOND FLOOR AND THIRD FLOOR WITH TERRACE AT ITS OW N COSTS AND EXPENSES. IN ADDITION TO THE COST OF CONSTRUCTION I NCURRED BY THE BUILDER ON DEVELOPMENT OF THE PROPERTY, A FURTHER P AYMENT OF RS. FOUR CRORES WAS PAYABLE TO THE ASSESSEE AS CONSIDER ATION AGAINST THE RIGHTS OF THE ASSESSEE. THE BUILDER WAS TO GET THE THIRD FLOOR. THE ASSESSEE ACCORDINGLY HANDED OVER VACANT PHYSICA L POSSESSION OF THE ENTIRE PROPERTY ALONG WITH 22.5% UNDIVIDED I NTEREST OVER THE LAND. THE HANDING OVER OF POSSESSION OF THE ENTIRE PROPERTY WAS HOWEVER ONLY FOR THE LIMITED PURPOSE OF DEVELOPMENT ; THE UNDIVIDED INTEREST IN THE LAND STOOD TRANSFERRED TO THE DEVEL OPER/BUILDER ONLY TO THE EXTENT OF 22.5% FOR HIS EXCLUSIVE ENJOYMENT. IT WAS ON THESE FACTS THAT THE ASSESSING OFFICER FIRST TOOK THE VIE W THAT THE SALE CONSIDERATION FOR THE TRANSFER OF THE CAPITAL ASSET SHOULD BE TAKEN NOT MERELY AT RS. FOUR CRORES WHICH WAS THE CASH AM OUNT RECEIVED BY THE ASSESSEE, BUT THE COST OF CONSTRUCTION INCUR RED BY THE DEVELOPER ON THE DEVELOPMENT OF THE PROPERTY AMOUNT ING TO RS. 3,43,72,529/- SHOULD ALSO BE ADDED TO THE SALE CONS IDERATION. THE ASSESSEE THEREUPON CLAIMED THAT IF THE COST OF CONS TRUCTION INCURRED BY THE BUILDER IS TO BE ADDED TO THE SALE PRICE, TH EN THE SAME SHOULD ALSO BE CORRESPONDINGLY TAKEN TO HAVE BEEN INVESTED IN THE RESIDENTIAL HOUSE NAMELY THE TWO FLOORS WHICH THE A SSESSEE WAS TO GET IN ADDITION TO THE CASH AMOUNT UNDER THE AGREEM ENT WITH THE BUILDER, AND THE AMOUNT SO SPENT ON THE CONSTRUCTIO N SHOULD BE ALLOWED AS DEDUCTION UNDER SECTION 54 OF THE ACT. I T WAS AT THIS STAGE THAT THE ASSESSING OFFICER REJECTED THE CLAIM FOR DEDUCTION UNDER SECTION 54 ON THE FOOTING THAT THE TWO FLOORS OBTAINED BY THE ASSESSEE CONTAINED TWO SEPARATE RESIDENTIAL UNITS H AVING SEPARATE ENTRANCES AND CANNOT QUALIFY AS A SINGLE RESIDENTIA L UNIT. HE AGREED THAT THE ASSESSEE WAS ELIGIBLE FOR THE RELIEF UNDER SECTION 54F IN RESPECT OF THE COST OF CONSTRUCTION INCURRED ON ONE UNIT. HE NOTED THAT THE ASSESSEE HAS RETAINED THE GROUND FLOOR AND THE BASEMENT. HE THEREFORE, APPORTIONED THE CONSTRUCTION COST OF RS. 3,43,72,529/- TO HAVE BEEN INCURRED ON THE BASEMENT, GROUND FLOOR , FIRST FLOOR AND SECOND FLOOR IN THE RATIO OF 1:1:1:0.5 FOR SECOND F LOOR, FIRST FLOOR, GROUND FLOOR, BASEMENT RESPECTIVELY. SINCE HE WAS A LLOWING THE RELIEF UNDER SECTION 54F OF THE ACT ONLY IN RESPECT OF ONE UNIT, HE ADDED RS. 98,20,722/- WHICH IS THE FIGURE ARRIVED A T BY DIVIDING THE TOTAL COST OF CONSTRUCTION OF RS. 3,43,72,529/- BY 3.5. THIS IS HOW THE ASSESSMENT WAS MADE. WHAT IN EFFECT THE ASSESSING O FFICER HAD DONE WAS TO REJECT THE ASSESSEE'S CLAIM FOR DEDUCTI ON UNDER SECTION 54/54F OF THE ACT IN RESPECT OF THE HOUSE/UNITS IN THE FIRST AND SECOND FLOORS HOLDING THAT THEY WERE SEPARATE AND I NDEPENDENT RESIDENTIAL UNITS HAVING SEPARATE ENTRANCES AND CAN NOT BE CONSIDERED AS ONE UNIT TO ENABLE THE ASSESSEE TO CL AIM THE DEDUCTION. THIS WAS DISAPPROVED BY THE CIT(APPEALS) ON THE BASIS ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 20 OF THE JUDGMENT OF THE KARNATAKA HIGH COURT ( SUPRA ) AND HIS DECISION WAS APPROVED BY THE TRIBUNAL. THE TRIBUNAL EXPRESSED THE VIEW THAT THE WORDS 'A RESIDENTIAL HOUSE' APPEARING IN SECTION 54/54F OF THE ACT CANNOT BE CONSTRUED TO MEAN A SIN GLE RESIDENTIAL HOUSE SINCE UNDER SECTION 13(2) OF THE GENERAL CLAU SES ACT, A SINGULAR INCLUDES PLURAL. 8. IT IS THE CORRECTNESS OF THE ABOVE VIEW THAT IS QU ESTIONED BY THE REVENUE AND IT IS CONTENDED THAT THE INTERPRETA TION PLACED BY THE TRIBUNAL GIVES RISE TO A SUBSTANTIAL QUESTION OF LA W. THE ASSESSEE STRONGLY RELIES UPON THE JUDGMENT OF THE KARNATAKA HIGH COURT ( SUPRA ) WHICH, IT IS STATED, HAS BECOME FINAL, THE SPECIA L LEAVE PETITION FILED BY THE REVENUE AGAINST THE SAID DECI SION HAVING BEEN DISMISSED BY THE SUPREME COURT AS REPORTED IN THE A NNUAL DIGEST OF TAXMAN PUBLICATION. THE JUDGMENT OF THE KARNATAKA H IGH COURT SUPPORTS THE CONTENTION OF THE ASSESSEE. AN IDENTIC AL CONTENTION RAISED BY THE REVENUE BEFORE THAT COURT WAS REJECTE D IN THE FOLLOWING TERMS : 'A PLAIN READING OF THE PROVISION OF SECTION 54(1) OF THE INCOME- TAX ACT DISCLOSES THAT WHEN AN INDIVIDUAL-ASSESSEE OR HINDU UNDIVIDED FAMILY- ASSESSEE SELLS A RESIDENTIAL BUIL DING OR LANDS APPURTENANT THERETO, HE CAN INVEST CAPITAL GAINS FO R PURCHASE OF RESIDENTIAL BUILDING TO SEEK EXEMPTION OF THE CAPIT AL GAINS TAX. SECTION 13 OF THE GENERAL CLAUSES ACT DECLARES THAT WHENEVER THE SINGULAR IS USED FOR A WORD, IT IS PERMISSIBLE TO I NCLUDE THE PLURAL. THE CONTENTION OF THE REVENUE IS THAT THE PHRASE 'A ' RESIDENTIAL HOUSE WOULD MEAN ONE RESIDENTIAL HOUSE AND IT DOES NOT APPEAR TO THE CORRECT UNDERSTANDING THE EXPRESSION 'A' RESIDE NTIAL HOUSE SHOULD BE UNDERSTOOD IN A SENSE THAT BUILDING SHOUL D BE OF RESIDENTIAL IN NATURE AND 'A' SHOULD NOT BE UNDERST OOD TO INDICATE A SINGULAR NUMBER. THE COMBINED READING OF SECTIONS 5 4(1) AND 54F OF THE INCOME-TAX ACT DISCLOSES THAT, A NON RESIDEN TIAL BUILDING CAN BE SOLD, THE CAPITAL GAIN OF WHICH CAN BE INVESTED IN A RESIDENTIAL BUILDING TO SEEK EXEMPTION OF CAPITAL GAIN TAX. HOW EVER, THE PROVISO TO SECTION 54 OF THE INCOME-TAX ACT, LAYS DOWN THAT IF THE ASSESSEE HAS ALREADY ONE RESIDENTIAL BUILDING, HE IS NOT ENT ITLED TO EXEMPTION OF CAPITAL GAINS TAX, WHEN HE INVESTS THE CAPITAL G AIN IN PURCHASE OF ADDITIONAL RESIDENTIAL BUILDING.' THIS JUDGMENT WAS FOLLOWED BY THE SAME HIGH COURT I N THE DECISION IN CIT V . SMT K.G. RUKMINIAMMA [2011] 196 TAXMAN 87/[2010] 8 TAXMANN.COM 121 (KAR.) . 9. THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/54F USES THE EXPRESSION 'A RESIDENTIAL HOUSE'. THE EXPRESSION US ED IS NOT 'A RESIDENTIAL UNIT'. THIS IS A NEW CONCEPT INTRODUCED BY THE ASSESSING OFFICER INTO THE SECTION. SECTION 54/54F REQUIRES T HE ASSESSEE TO ACQUIRE A 'RESIDENTIAL HOUSE' AND SO LONG AS THE AS SESSEE ACQUIRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVERAL UNITS WHI CH CAN, IF THE ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 21 NEED ARISES, BE CONVENIENTLY AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTI ON SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN T HESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCT ED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE F OR 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 PARTICULAR MANNER, IT SEEMS TO US THAT THE INCOME T AX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY C ONSTRUCT A HOUSE ACCORDING TO HIS PLANS AND REQUIREMENTS. MOST OF THE HOUSES ARE CONSTRUCTED ACCORDING TO THE NEEDS AND REQUIREM ENTS AND EVEN COMPULSIONS. FOR INSTANCE, A PERSON MAY CONSTRUCT A RESIDENTIAL HOUSE IN SUCH A MANNER THAT HE MAY USE THE GROUND F LOOR 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 DIF FERENT FLOORS) IN SUCH A MANNER THAT AN INDEPENDENT RESIDENTIAL UNIT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED OUT WITH AN IND EPENDENT ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARR ANGE FOR HIS CHILDREN AND FAMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WHICH CAN BE MUTUALLY SUPPORTIVE. HE MA Y CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT IN CASE OF A FU TURE NEED HE MAY BE ABLE TO DISPOSE OF A PART THEREOF AS AN INDEPEND ENT HOUSE. THERE MAY BE SEVERAL SUCH CONSIDERATIONS FOR A PERS ON WHILE CONSTRUCTING A RESIDENTIAL HOUSE. WE ARE THEREFORE, UNABLE TO SEE HOW OR WHY THE PHYSICAL STRUCTURING OF THE NEW RESI DENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTICAL, SHOULD COME IN T HE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. WE DO NOT THINK THAT THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS OF SEV ERAL INDEPENDENT UNITS CAN BE PERMITTED TO ACT AS AN IMPEDIMENT TO T HE ALLOWANCE OF THE DEDUCTION UNDER SECTION 54/54F. IT IS NEITHER E XPRESSLY NOR BY NECESSARY IMPLICATION PROHIBITED. FOR THE ABOVE REASONS WE ARE OF THE VIEW THAT THE T RIBUNAL TOOK THE CORRECT VIEW. NO SUBSTANTIAL QUESTION OF LAW AR ISES FOR OUR CONSIDERATION. THE APPEAL IS ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS. 2.6. IN THE LIGHT OF THE ABOVE DECISIONS, IT IS OU R BOUNDED DUTY TO EXAMINE SECTION 54F OF THE ACT AS W AS APPLICABLE DURING THE IMPUGNED ASSESSMENT YEAR, WHI CH IS REPRODUCED HEREUNDER:- ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 22 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHER E, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDE D FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPI TAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERR ED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR B EFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PUR CHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW A SSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROV ISIONS OF THIS SECTION, THAT IS TO SAY, ( A ) IF THE COST OF THE NEW ASSET IS NOT LESS THAN TH E NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; ( B ) IF THE COST OF THE NEW ASSET IS LESS THAN THE NE T CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPIT AL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS TH E COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGE D UNDER SECTION 45: [ PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY 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 TH E ORIGINAL ASSET; OR ( III ) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND ( B ) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER TH AN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPER TY'.] EXPLANATION. FOR THE PURPOSES OF THIS SECTION, 5 [***] 6 [***] 'NET CONSIDERATION', IN RELATION TO THE TRAN SFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRAN SFER. (2) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIOD OF 7 [TWO YEARS] AFTER THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET, OR CONSTRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOU SE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOU SE PROPERTY', OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARIS ING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE ( A ), OR, AS THE CASE MAY BE, CLAUSE ( B ), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WHICH SUCH RESIDENTIAL HOUSE IS PURCHASED O R CONSTRUCTED. (3) WHERE THE NEW ASSET IS TRANSFERRED WITHIN A PER IOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE OR, AS THE CASE MAY BE, IT S CONSTRUCTION, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST O F SUCH NEW ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ), OF SUB-SECTION (1) SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE H EAD 'CAPITAL GAINS' ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 23 RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOU S YEAR IN WHICH SUCH NEW ASSET IS TRANSFERRED.] [(4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS N OT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGIN AL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CO NSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF I NCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RE TURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLIC ABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SUCH BANK OR INST ITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME 9 WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SU CH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY , ALREADY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NE W ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE C OST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION O F THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, ( I ) THE AMOUNT BY WHICH ( A ) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRAN SFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ) OF SUB- SECTION (1), EXCEEDS ( B ) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED H AD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTIO N (1) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 A S INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES ; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE U NUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. EXPLANATION. [ OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993. ]] LATER VIDE FINANCE ACT, 2014 W.E.F. 01/04/2015, SECTION 54F WAS AMENDED AND A WORD A RESIDENTIAL H OUSE WAS SUBSTITUTED WITH ONE RESIDENTIAL HOUSE. 2.7. IF THE AFORESAID SECTION IS ANALYZED SECTION 54/54F USES THE EXPRESSION 'A RESIDENTIAL HOUSE' AS WAS ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 24 APPLICABLE DURING THE IMPUGNED ASSESSMENT YEAR. THE EXPRESSION USED IS NOT 'A RESIDENTIAL UNIT'. THIS I S A NEW CONCEPT INTRODUCED BY THE ASSESSING OFFICER INTO TH E SECTION. SECTION 54/54F REQUIRES THE ASSESSEE TO AC QUIRE A 'RESIDENTIAL HOUSE' AND SO LONG AS THE ASSESSEE ACQ UIRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVE RAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTL Y 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 PARTIC ULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE F OR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. IF THER E IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESI DENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SE EMS THAT THE INCOME-TAX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORD ING TO HIS PLANS AND REQUIREMENTS. MOST OF THE HOUSES ARE CONSTRUCTED ACCORDING TO THE NEEDS AND REQUIREMENTS AND EVEN COMPULSIONS. FOR INSTANCE, A PERSON MAY CONSTR UCT A ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 25 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 ARRANGEM ENTS, PARTICULARLY POST-RETIREMENT. ONE MAY BUILD A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN THE SAME OR DIF FERENT FLOORS) IN SUCH A MANNER THAT AN INDEPENDENT RESIDE NTIAL UNIT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CAR VED OUT WITH AN INDEPENDENT ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARRANGE FOR HIS CHILDREN AND FAMILY TO STA Y THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WHICH CAN B E 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 HOUS E. THERE MAY BE SEVERAL SUCH CONSIDERATIONS FOR A PERSON WHI LE CONSTRUCTING A RESIDENTIAL HOUSE. THEREFORE, ONE CA NNOT SEE HOW OR WHY THE PHYSICAL STRUCTURING OF THE NEW RESI DENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTICAL, SHOULD CO ME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HO USE. THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNIT CANNOT BE PERMITTED TO ACT AS AN ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 26 IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UNDER SECTION 54/54F. IT IS NEITHER EXPRESSLY NOR BY NECE SSARY IMPLICATION PROHIBITED. THE CONTEXT IN WHICH THE EX PRESSION 'A RESIDENTIAL HOUSE' IS USED IN SECTION 54 MAKES I T CLEAR THAT, IT WAS NOT THE INTENTION OF THE LEGISLATION T O CONVEY THE MEANING THAT: IT REFERS TO A SINGLE RESIDENTIAL HOU SE, IF, THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD 'O NE.' AS IN THE EARLIER PART, THE WORDS USED ARE BUILDINGS O R LANDS WHICH ARE PLURAL IN NUMBER AND THAT: IS REFERRED TO AS 'A RESIDENTIAL HOUSE', THE ORIGINAL ASSET. AN ASSET NE WLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE 'A RESIDENTIAL HOUSE.' THEREFORE THE LETTER 'A' IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANI NG 'SINGULAR.' BUT, BEING AN INDEFINITE ARTICLE, THE S AID EXPRESSION SHOULD BE READ IN CONSONANCE WITH THE OT HER WORDS 'BUILDINGS' AND 'LANDS' AND, THEREFORE, THE S INGULAR 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VI RTUE OF SECTION 13(2) OF THE GENERAL CLAUSES ACT. CIT V. D. ANANDA BASSAPPA[2009] 223 (KAR) 186 : [2009] 20 DTR (KAR) 266 FOLLOWED. IN THE PRESENT APPEAL, NO DOUBT FLAT NO. 1502 IS ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 27 SITUATED AT 15 TH FLOOR WHILE THE OTHER FLATS WERE SITUATED ON 13 TH & 14 TH FLOOR OF THE SAME BUILDING AND THE CLAIMED DEDUCTION WAS REJECTED BY THE LD. ASSESSING OFFICER WITH RESPECT TO FLAT SITUATED IN 15 TH FLOOR BY HOLDING THAT IT IS SEPARATE AND RESIDENTIAL UNIT HAVING SEPARATE ENTRA NCE, THEREFORE, IT IS A SEPARATE UNIT, CONSEQUENTLY, CAN NOT BE CONSIDERED AS ONE UNIT TO ENABLE THE ASSESSEE TO CL AIM THE DEDUCTION. THE FACT REMAINS THAT ALL THE THREE FLAT S ARE IN THE SAME BUILDING AND ALSO ARE SITUATED ON FLOORS A BOVE EACH OTHER I.E. 13 TH , 14 TH & 15 TH FLOOR, WHILE THE FLATS AT 13 TH & 14 TH FLOOR ARE DUPLEX FLATS JOINED WITH EACH OTHER BUT THE FACT REMAINS THE THIRD FLAT IS SITUATED ON THE IMME DIATE NEXT FLOOR I.E. 15 TH FLOOR OF THE SAME BUILDING WHICH IS IN THE IMMEDIATE VICINITY. THIS QUESTION HAS BEEN SETTLED BY HON'BLE DELHI HIGH COURT IN THE AFORESAID ORDER IN CIT VS GITA DUGGAL ((SUPRA)) AND ALSO BY HON'BLE BY KARNAT AKA HIGH COURT ((SUPRA)). IT IS FURTHER NOTED THAT THE SLP, FILED BY THE REVENUE WAS DISMISSED BY HON'BLE APEX COURT. THE ONLY REQUIREMENT, AS PER THE SECTION, IS THAT IT SH OULD BE A RESIDENTIAL HOUSE AND THERE IS NOTHING IN THE SECTI ON WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 28 PARTICULAR MANNER. A PERSON MAY CONSTRUCT A HOUSE ACCORDING TO HIS REQUIREMENTS/NEEDS AND SOMETIME DU E TO COMPULSIONS. THERE MAY BE SEVERAL SUCH CONSIDERATI ON FOR A PERSON WHILE CONSTRUCTING A RESIDENTIAL HOUSE. ID ENTICAL RATIO WAS LAID DOWN BY HON'BLE KARNATAKA HIGH COURT IN CIT VS SMT. KG. RUKMINAMMA (2011) 331 ITR 211 (KARNATAKA). SO FAR AS, THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS RAMAN KUMAR SUR I IS CONCERNED, IT WAS DECIDED RATHER IN FAVOUR OF THE A SSESSEE, WHEREIN, TWO FLATS WERE INTERCONNECTED AS ONE RESID ENTIAL UNIT, WHEREIN, EXEMPTION WAS DISALLOWED ON DIFFEREN T FACTS. THIS DECISION IS DATED 27/11/2012, WHEREAS, THE DEC ISION IN THE CASE OF CIT VS SYED ALI ADIL IS OF LATER DAT E AND THE DECISION IN CIT VS GITA DUGGAL IS OF 21/02/2013. TH E FACTS OF THE CASE OF THE PRESENT ASSESSEE ARE SIMILAR TO THE FACTS IN GITA DUGGAL (DECIDED BY HON'BLE DELHI HIGH COURT ) AND THE CASES FROM HON'BLE KARNATAKA HIGH COURT. THUS, CONSIDERING THE TOTALITY OF FACTS AND THE AFORESAID DECISIONS, THIS GROUND OF THE ASSESSEE IS ALLOWED. 4. THE NEXT GROUND IS WITH RESPECT TO CONFIRMING THE ADDITION OF RS.1,50,000/- ON ACCOUNT OF LOSS UN DER THE ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 29 HEAD INCOME FROM HOUSE PROPERTY. IT WAS EXPLAINE D THAT THE INTEREST WAS PAID TO THE BANK AND THE LD. ASSES SING OFFICER HAS MIXED UP THIS ISSUE, THEREFORE, IT REQU IRES VERIFICATION. IT WAS POINTED OUT THAT FOR ASSESSMEN T YEAR 2014-15 AND 2015-17 (PAGES 171TO 175 AND 180-184 OF THE PAPER BOOK) IDENTICALLY IT WAS ALLOWED BY THE LD. A SSESSING OFFICER. THE LD. DR THOUGH DEFENDED THE ADDITION BUT DID NOT OBJECT IF THE ISSUE IS AGAIN VERIFIED. CONSIDER ING THE TOTALITY OF FACTS, AND THE ASSERTIONS MADE FROM BOT H SIDES, WE DIRECT THE LD. ASSESSING OFFICER TO EXAMINE THE FACTUAL MATRIX AND THEN DECIDE IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT GROUND WITH RESPECT TO ADDITION OF RS.21,430/- ON ACCOUNT OF EXPENSES UNDER THE HEAD BUSINESS INCOME WAS NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, IT IS DISMISSED AS NOT PRESSED . 6. THE LAST GROUND PERTAINS TO CONFIRMING THE DEMAND OF RS.49,04,380/-, AS PER THE ASSESSEE, THER E IS CALCULATION MISTAKE. THE ASSESSEE IS DIRECTED TO FU RNISH THE ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 30 NECESSARY EVIDENCE TO SUBSTANTIATE ITS CLAIM. THE LD. ASSESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM O F THE ASSESSEE AND IF ANY CALCULATION MISTAKE IS FOUND, T HE SAME MAY BE DIRECTED TO BE VERIFIED/CORRECTED. OTHERWISE , THE LD. ASSESSING OFFICER MAY DECIDE IN ACCORDANCE WITH LAW , THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 01/10/2018. SD/- SD/- ( RA MIT KOCHAR ) (JOGINDER SINGH) ! ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER # $ MUMBAI; ( DATED : 01/10/2018 F{X~{T? P.S/. . . $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. ITA NO.289/MUM/2017 AMIRALI AKBARALI ENGINEER 31 3. 0 0 # 1 ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1 / CIT(A)- , MUMBAI 5. 3!4 . , 0 *+& * 5 , # $ / DR, ITAT, MUMBAI 6. 6 7$ / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI