Sh. Brij Bhushan Tayal, New Delhi V. ACIT, New Delhi

ITA 3272/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4231 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 18-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH GOEL
• Keywords: Capital asset; Question of law; Cost of acquisition
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3272/DEL/2014 (AY. 2009-10) BRIJ BHUSHAN TAYAL, A-1/2, WAZIRPUR INDUSTRIAL AREA, NEW DELHI 110 034 (PAN:AADPT8072G) VS. ACIT, CIRCLE 19(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VED JAIN, ADV. & SH. ASHISH GOEL, CA DEPARTMENT BY : NONE ORDER PER H.S. SIDHU, JM ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER DATED 2 8.3.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)V , NEW DELHI PERTAINING TO ASSESSMENT YEAR 2009-10 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PA SSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO WHEREBY HE HAS COMPUTED THE CAPITAL GAIN OF RS.8,35,564/- AS AGAINST 'N IL' COMPUTED BY THE ASSESSEE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CONSIDERING AN AMOUNT OF RS.3,00,000/- ONLY AS COST OF A CQUISITION FOR THE ITA NO.3272/DEL/2014 2 PURPOSE OF INDEXATION AS AGAINST 3,72,040/- ACTUALLY IN CURRED AND ALLOWABLE UNDER THE PROVISIONS OF THE ACT. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNE D CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTI ON OF THE AO IN NOT ALLOWING THE BENEFIT OF RS.7,30,539/- BEING THE AMOU NT INVESTED IN THE PURCHASE OF THE PROPERTY AS ELIGIBLE UNDER SECTION 54 O F THE ACT. (II) THAT THE CONTENTION OF THE APPELLANT HAS BEEN RE JECTED ARBITRARILY IGNORING THE PROVISIONS OF THE ACT AND THE INTERPRETATION THERE OF. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR A LTER ANY OF THE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME DECLARING AN INCOME AT RS. 20,99,070/- ON 28.9.2009. THE CASE WAS SELECTED FOR SCRUTINY. NOTICE U/S. 143(2) WAS ISSUED ON 27. 8.2010 AND WAS DULY SERVED UPON THE ASSESSEE. SUBSEQUENTLY NOTICE U/S. 14 2(1) OF THE I.T. ACT. IN COMPLIANCE THERETO, LD. COUNSEL OF THE ASSESSEE AND SON OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIM E. NECESSARY DETAILS / INFORMATION AS CALLED FOR HAVE BEEN FILED BY THE ASSESSEE WHICH WERE EXAMINED BY THE AO. THE ASSESSEE IS ENGAGED IN TH E MANUFACTURING AND RESALE OF HOSIERY GOODS. THE ASSESSEE DURING THE YEAR DERIVED INCOME FROM BUSINESS, INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. DURING THE ASSESSEE HAS DECLARED A GROSS PROFIT OF RS. 1,32, 13,389/- ON THE TOTAL TURNOVER OF RS. 6,47,26,704/- YIELDING A G.P. RATE OF 20.41% IN COMPARISON TO THE IMMEDIATE PRECEDING YEARS GP RATE OF 23.52% ON THE TOTAL TURNOVER OF RS. 4,93,62,1785/-. THERE IS DECLI NE IN THE GP RATE IN THE CURRENT YEAR AS COMPARED TO THE IMMEDIATE PRECEDING YEA R. THE ASSESSEE WAS SPECIFICALLY ASKED TO SUBMIT THE REASONS FOR DECLINE I N THE TRADING RESULTS. THE ASSESSEE THAT THERE IS INCREASE IN THE TURNOV ER FROM RS. 4.93 CRORES TO RS. 6.47 CRORES AS COMPARED TO PREVIOUS YEAR. TH E ASSESSEE FURTHER SUBMITTED THAT THERE IS CONSTANT INCREASE IN THE NP RATE. THE ASSESSEE ALSO PRODUCED BOOKS OF ACCOUNTS AND RELEVANT BILLS AN D VOUCHERS IN SUPPORT OF EXPENSES DEBITED INTO PROFIT AND LOSS ACCOUNT W HICH HAVE BEEN ITA NO.3272/DEL/2014 3 TEST CHECKED. THE ASSESSEE ALSO MAINTAINED NECESSARY RECORDS OF INCOME DERIVED AND SUPPORTING DETAILS THEREOF WERE ALSO FILED . THEREAFTER, AFTER PERUSING THE DETAILS, THE AO ASSESSED THE INCOME AT RS. 30 ,70,880/- U/S. 143(3) OF THE I.T. ACT, 1961 ON 27.5.2011. 4. AGAINST THE ASSESSMENT ORDER DATED 27.5.2011, ASSESSEE A PPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATE D 28.3.2014 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL OF THE ASSESSEE IN SUPPORT OF HIS CONTENTION HAS FILED THE WRITTEN SYNOPSIS. FOR THE SAKE OF CONVENIENCE, WE ARE R EPRODUCING THE SAME AS UNDER: 1. THIS IS ASSESSSEE'S APPEAL FILED AGAINST THE ORDER PASSED B Y LEARNED CIT(A) UNDER SECTION 250 OF THE INCOME TAX ACT DATED. 28.3.2014. 2. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS REGARDIN G COMPUTATION LONG TERM CAPITAL GAIN OF RS. 8,35,564/- A S AGAINST RS. NIL FILED BY THE ASSESSEE BY WITHDRAWING EXEMPTION OF RS. 7,30,539/- UNDER SECTION 54 CLAIMED BY THE ASSESSEE AND REDUCING THE COST OF INDEXATION BY RS. 72,040/- 3. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS FILED ROI DECLARING TOTAL INCOME OF RS. 20,99,070/- ON 28.9.2009 AND SAME IS ASSESSEED ULS 143(3) OF THE INCOME TAX ACT AT THE INCOME O F RS. 30,70,881/- ITA NO.3272/DEL/2014 4 4. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS SOLD A PROPERTY AT AG/270, SHALIMAR BAGH, DELHI FOR THE SAL E CONSIDERATION OF RS. 18,10,000 WHICH WAS PURCHASE IN THE FINANCIAL YEAR 19 98-99 FOR RS. 3,72,0401-. ASSESSEE HAS SHOWN IF CAPITAL GAIN OF RS. NI L BY CLAIMING INDEXED COST OF ACQUISITION OF RS. 6,11,022/- A ND EXEMPTION UNDER SECTION 54 BEING INVESTMENT IN RESIDENTIAL PROPER TY OF RS. 12,07,539/- AGAINST THE SALE CONSIDERATION OF RS. 18,10 ,000/-. 5. ASSESSEE HAS INVESTED THE AMOUNT OF RS. 12,07,539 IN TW O RESIDENTIAL PROPERTIES:- I. PURCHASE OF RESIDENTIAL HOUSE IN AG-587, SHALIMAR 8AGH WITH 50% SHARE OF HIS SON RS.4,77,000/ - II. PURCHASE. OF PLOT NO. 114 IN OMAXE PLOT IN OMAXE CITY SONEPAT-A RESIDENTIAL PLOT RS. 7 30 539/- RS. 12,07,539/- 6. TOTAL COST OF ACQUISITION CLAIMED BY THE ASSESSEE IS RS. 3,72,040/- WHICH INCLUDES PURCHASE COST OF RS. 3,00,000/-, RS. 60,000/-- IN RESPECT OF RENOVATION AND BROKERAGE EXP ENSES AND RS. 12,040 TOWARDS PROFESSIONAL CHARGES WHICH WERE INCURRED T O TRANSFER THE PROPERTY IN THE ASSESSEE'S NAME. HOWEVER, OUT OF THE ABOVE RS. 72,040 WAS NOT ALLOWED BY THE AO IN THE ABSENCE OF DOCU MENTARY EVIDENCES AND SAME WAS CONFIRMED BY THE CIT(A). THE FACT THAT THE PROPERTY PURCHASED BY THE ASSESSEE WAS TOO OLD AND RENOVAT ION CHARGES WERE NECESSARY TOO MAKE THE PROPERTY IN USE CANNO T BE IGNORED AND BROKERAGE CHARGES ARE GENERALLY INCURRED T O GET THE PROPERTY AS WELL AS TO GET THE PROPERTY IN OWN NAME. ITA NO.3272/DEL/2014 5 7. FURTHER. DURING THE ASSESSMENT PROCEEDINGS LD. AO ISSU ED A SHOW CAUSE AS TO RESTRICTING THE EXEMPTION ONLY TO THE EX TENT OF AMOUNT INVESTED IN RESIDENTIAL HOUSE I.E., OF RS. 4,77,0 00/- AS SECTION 54 SPECIALLY MENTIONED THAT INVESTMENT SHALL BE MADE I N RESIDENTIAL HOUSE AND NOT IN RESIDENTIAL PLOT. 8. ASSESSEE PLACED HIS RELIANCE ON THE CIRCULAR NO. 667 DATED.18.10.1993 ISSUED BY CBOT WHEREIN IT HAS BEEN STA TED THAT COST OF LAND IS THE INTEGRAL PART OF COST OF RESIDENTIAL HOU SE AND THEREFORE EXEMPTION WILL BE AVAILABLE FOR THE PURCHASE OF PLOT ALSO.( PG. 4 PARA 3RD) 9. FURTHER IT IS BROUGHT TO NOTICE TO THE AO BY THE ASSESSEE THAT HE HAS SOLD THE PROPERTY OF OMAXE PLOT NO. 114 IN THE FY 2009-10 I.E., BEFORE THE HOLDING PERIOD OF THREE YEARS SPECIFIED U/ S 54 AND THEREFORE WITHDREW THE EXEMPTION CLAIMED U/S 54 IN AY 2008-09 B Y PAYING TAX ON THE SAME IN AY 2009-10 DURING THE YEAR THE AMOUNT RECEIVED. (PG.5 PARA 2ND) 10. HOWEVER, LEARNED AO IGNORING THE IMPACT OF THE AB OVE SALE IN THE SUBSEQUENT YEAR DISALLOW THE EXEMPTION CLAIMED U/S 54 BY RS. 7,30,539/- 11. AGGRIEVED BY THE ORDER OF THE LEARNED AO ASSESSEE P REFERRED AN APPEAL BEFORE THE LEARNED CIT(A). 12.LEARNED CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AOON DIFFERENT FOOTING AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO RESTRICT THE EXEMPTION ONLY TO THE EXTENT OF ONE RESID ENTIAL HOUSE AS SECTION 54 CONTAINS THE WORDS 'A RESIDENTIAL HOUSE'.(PG.2 2 PARA 1ST) ITA NO.3272/DEL/2014 6 13.LN THIS CONTEXT ASSESSEE PLACED HIS RELIANCE ON THE JUDGE MENT OF JURISDICTIONAL DELHI HC IN THE CASE OF CIT VS GEETA DUGGA L 357 ITR 153 (2013) WHICH READS AS UNDER: '9. THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/5 4F USES THE EXPRESSION 'A RESIDENTIAL HOUSE'. THE EXPRESSION USED IS NO T 'A RESIDENTIAL UNIT'. THIS IS A NEW CONCEPT INTRODUCED BY TH E ASSESSING OFFICER INTO THE SECTION. SECTION 54/54F REQUIRE S THE ASSESSEE TO ACQUIRE A 'RESIDENTIAL PURCHASED BY THE ASSESSEE WAS TOO OLD AND RENOVATION CHARGES WERE NECESSARY TOO MAK E THE PROPERTY IN USE CANNOT BE IGNORED AND BROKERAGE CH ARGES ARE GENERALLY INCURRED TO GET THE PROPERTY AS WELL AS TO GET THE PROPERTY IN OWN NAME. 7. FURTHER. DURING THE ASSESSMENT PROCEEDINGS LD. AD ISSU ED SHOW CAUSE AS TO RESTRICTING THE EXEMPTION ONLY TO THE EX TENT OF AMOUNT INVESTED IN RESIDENTIAL HOUSE I.E., OF RS. 4,77,0 00/- AS SECTION 54 SPECIALLY MENTIONED THAT INVESTMENT SHALL BE MADE IN RESIDENTIAL HOUSE AND NOT IN RESIDENTIAL PLOT. 8. ASSESSEE PLACED HIS RELIANCE ON THE CIRCULAR NO. 667 DATED.18.10.1993 ISSUED BY CBDT WHEREIN IT HAS BEEN STA TED THAT COST OF LAND IS THE INTEGRAL PART OF COST OF RESIDEN TIAL HOUSE AND THEREFORE EXEMPTION WILL BE AVAILABLE FOR THE P URCHASE OF GOT ALSO.( PG. 4 PARA 3RD) 9. FURTHER IT IS BROUGHT TO NOTICE TO THE AD BY THE A SSESSEE THAT HE HAS SOLD THE PROPERTY OF OMAXE PLOT NO. 114 I N THE FY 2009-10 I.E., BEFORE THE HOLDING PERIOD OF THREE YE ARS SPECIFIED ULS 54 AND THEREFORE WITHDREW THE EXEMPTION CLAIMED ULS 54 IN ITA NO.3272/DEL/2014 7 AY 2008-09 BY PAYING TAX ON THE SAME IN AY 2009-10 D URING THE YEAR THE AMOUNT RECEIVED.(PG.5 PARA 2ND) 10. HOWEVER, LEARNED AD IGNORING THE IMPACT OF THE AB OVE SALE IN THE SUBSEQUENT YEAR DISALLOW THE EXEMPTION CLAIMED ULS 54 BY RS. 7,30,539/- 11. AGGRIEVED BY THE ORDER OF THE LEARNED AD ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). 12. LEARNED CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AD ON DIFFERENT FOOTING AND ISSUED A SHOW CAUSE NOTICE T O THE ASSESSEE TO RESTRICT THE EXEMPTION ONLY TO THE EXTENT OF ONE RESIDENTIAL HOUSE AS SECTION 54 CONTAINS THE WORDS 'A RE SIDENTIAL HOUSE' .(PG.22 PARA 1ST). 13. LN THIS CONTEXT ASSESSEE PLACED HIS RELIANCE ON THE JUDGEMENT OF JURISDICTIONAL DELHI HC IN THE CASE OF CIT VS. GEETA DUGGAL 357 ITR 153 (2013) WHICH READS AS UNDER:- '9. THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/54F USES THE EXPRESSION 'A RESIDENTIAL HOUSE'. THE EXPRESSION USED IS NOT 'A RESIDENTIAL UNIT'. THIS IS A NEW CONCEPT INTR ODUCED 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 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 INDEPENDE NT RESIDENCE, THE REQUIREMENT OF THE SECTION SHOULD BE TAK EN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN THESE SECTION S ITA NO.3272/DEL/2014 8 WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHO ULD BE FOR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. I F THERE IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANN ER, IT SEEMS TO US THAT THE INCOME TAX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDING 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 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 INDEPENDEN T 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 F AMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMEN T WHICH CAN BE MUTUALLY SUPPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH -A MANNER THAT IN CASE OF A FUTURE NEE D 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 RESIDENTIA L HOUSE. WE ARE THEREFORE, UNABLE TO SEE HOW OR WHY TH E PHYSICAL STRUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETHE R IT IS LATERAL OR VERTICAL, SHOULD COME IN THE WAY OF ITA NO.3272/DEL/2014 9 CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. WE DO N OT THINK THAT THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CAN BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UNDER SECTION 54/54F. IT IS NEITHER EXPRESSLY NOR BY NECESSARY IMPLICATION PROHIBITED. FOR THE ABOVE REASONS WE ARE OF THE VIEW THAT THE TRI BUNAL 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. ' 14. HOWEVER, LEARNED CIT HAS DRAWN THE ADVERSE CONCLUSION THAT THE SUBSTANCE OF THE JUDGEMENT IS THAT THE EXPRESSION' A RESID ENTIAL HOUSE' SHOULD NOT BE LITERALLY TAKEN AS A SINGLE UNIT O R A SINGLE FLAT AND THAT THE DEDUCTION SHOULD BE EXTENDED T A RESIDENTIAL HOUSE CONSISTING OF SEVERAL INDIVIDUAL UNITS WHICH HAVE BEEN CONSTRUCTED I N THE MANNER THAT THEY HAVE INDEPENDENT ENTRANCE BUT IN CASE OF FUT URE NEED THEY CAN BE USED AS A COMPOSITE INDEPENDENT HOUSE AND THEREFO RE CONFIRM THE DISALLOWANCE MADE BY THE ASSESSEE.{PG.21 LAST PARA) 15. HOWEVER, IT IS PERTINENT TO NOTE THAT JUDGEMENT O F GITA DUGGAL (SUPRA) HAS MADE IT VERY CLEAR IN PARA 8 OF THE ORDER AND THE 'A' DOES NOT MEAN SINGULAR. JUDGEMENT OF KARNATAKA HC CIT VS D. ANANDA 8ASAPPA (2009) 309 ITR 329 HAS BEEN FOLLOWED WHICH REA DS AS UNDER: '8. IT IS THE CORRECTNESS OF THE ABOVE VIEW THAT IS QUESTIONED BY THE REVENUE AND IT IS CONTENDED THAT THE INTERPRETATION PLACED BY THE TRIBUNAL GIVES RISE TO A ITA NO.3272/DEL/2014 10 SUBSTANTIAL QUESTION OF LAW. THE ASSESSEE STRONGLY RELIES UPON THE JUDGMENT OF THE KAMATAKA HIGH COURT (SUPRA) WHICH, IT IS STATED, HAS BECOME FINAL, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE SAID DECISIO N HAVING BEEN DISMISSED BY THE SUPREME COURT AS REPORTE D IN THE ANNUAL DIGEST OF TAXMAN PUBLICATION. THE JUDG MENT OF THE KAMATAKA HIGH COURT SUPPORTS THE CONTENTION OF THE ASSESSEE. AN IDENTICAL CONTENTION RAISED BY THE REVENUE BEFORE THAT COURT WAS REJECTED 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 BUILDING OR LANDS APPURTENANT THERETO, HE CAN INVEST CAPITAL GAINS FOR PURCHASE OF RESIDENTIAL BUILDING TO SEEK EXEMPTION OF THE CAPITAL GAINS TAX. SECTION 13 OF THE GENERAL CLAUSES ACT DECLARES THAT WHENEVER THE SINGULAR IS USED FOR A WORD, IT IS PERMISSIBLE TO INCLUDE 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' 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. THE COMBINED READING OF SECTIONS 54(1) AND 54F OF THE INCOME-TAX ACT DISCLOSES THAT, A NON RESIDENTIAL ITA NO.3272/DEL/2014 11 BUILDING CAN BE SOLD, THE CAPITAL GAIN OF WHICH CAN BE INVESTED IN A RESIDENTIAL BUILDING TO SEEK EXEMPTION OF CAPITAL GAIN TAX. HOWEVER, THE PROVISO TO SECTION 54 OF THE INCOME-TAX ACT, LAYS DOWN THAT IF THE ASSESSEE HAS ALREADY ONE RESIDENTIAL BUILDING, HE IS NOT ENTITLED TO EXEMPTION OF CAPITAL GAINS TAX, WHEN HE INVESTS THE CAPITAL GAIN IN PURCHASE OF ADDITIONAL RESIDENTIAL BUILDING.' THIS JUDGMENT WAS FOLLOWED BY THE SAME HIGH COURT IN THE DECISION IN CIT V. SMT K.G. RUKMINIAMMA [20117 196 TAXMAN 87/ [20107 8 TAXMANN.COM 121 (KAR.).' 16. THE ABOVE JUDGEMENT OF DELHI HE CIT VS GEETA DUGGAL (SUPRA) IS AFFIRMED BY THE SUPREME COURT (2015 ) 228 TAXMAN 62 (SC) 17. IN ADDITION TO THE ABOVE, IT IS PERTINENT TO NOT E THAT VIDE FINANCE ACT NO. 2 (2014) AMENDMENT TO SECTION 54 WAS CARRIED BY SUBSTITUTING THE WORDS 'ONE RESIDENTIAL HOUSE' IN PLACE OF 'A RESIDENTIAL HOUSE' W.E.F. 1-4-20 15. THE MEMORANDUM EXPLAINING THE FINANCE BILL READS AS UNDER: 'CAPITAL GAINS EXEMPTION IN CASE OF INVESTMENT IN A RESIDENTIAL HOUSE PROPERTY THE EXISTING PROVISIONS CONTAINED IN SUB-SECTION (1) OF SECTION 54, INTER ALIA, PROVIDE THAT WHERE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, BE ING ITA NO.3272/DEL/2014 12 BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, AND THE ASSESSEE WITHIN A PERIOD OF ON E YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER, PURCHASES, OR WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER CONSTRUCTS, A RESIDENTIAL HOUSE THEN THE AMOU NT OF CAPITAL GAINS TO THE EXTENT INVESTED IN THE NEW RESIDENTIAL HOUSE IS NOT CHARGEABLE TO TAX UNDER SECTION 45 OF THE ACT. THE EXISTING PROVISIONS CONTAINED IN SUB-SECTION (1) OF SECTION 54F, INTER ALIA, PROVIDE THAT WHERE CAPITAL GAINS ARISES FROM TRANSFER OF A LONG-TERM CAPITAL ASSET, NOT BE ING A RESIDENTIAL HOUSE, AND THE ASSESSEE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSF ER, PURCHASES, OR WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER CONSTRUCTS, A RESIDENTIAL HOUSE THEN THE POR TION OF CAPITAL GAINS IN THE RATIO OF COST OF NEW ASSET TO TH E NET CONSIDERATION RECEIVED ON TRANSFER IS NOT CHARGEABLE TO T AX. THE BENEFIT WAS INTENDED FOR INVESTMENT IN ONE RESIDENTIAL HOUSE WITHIN INDIA. ACCORDINGLY, IT IS PROP OSED TO AMEND THE AFORESAID SUB-SECTION (1) OF SECTION 54 SO AS TO PROVIDE THAT THE ROLLOVER RELIEF UNDER THE SAID SE CTION IS AVAILABLE IF THE INVESTMENT IS MADE IN ONE RESIDENTIAL HOUSE SITUATED IN INDIA. IT IS FURTHER PROPOSED TO AMEND THE AFORESAID SUB- SECTION (1) OF SECTION 54F SO AS TO PROVIDE THAT THE EXEMPTION IS AVAILABLE IF THE INVESTMENT IS MADE IN ON E RESIDENTIAL HOUSE SITUATED IN INDIA. ITA NO.3272/DEL/2014 13 THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST APRIL, 2015 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2015-16 AND SUBSEQUENT ASSESSMENT YEARS. [CLAUSES 22 & 24]' 18. THIS FACT CLEARLY SHOWS THAT THE INTENTION OF LEGIS LATURE BEFORE 1.4.2015 WAS NOT TO RESTRICT THE EXEMPTION TO ONE RESID ENTIAL PROPERTY ONLY AND THEREFORE INVESTMENT COULD BE MADE IN MULTIPLE RESIDENTIAL PROPERTIES BEFORE 1.4.2015. 19.THIS ISSUE CAME UP BEFORE ITAT MUMBAI IN THE CASE OF N ILES.H PRAVIN VORA AND VATIN P.RAVIN VORA (LEGAL HEIRS OF LA TE PRAVIN LAXMIDAS VORA) VS ITO 2016 (5) TMI 64 AND IT HAS BEE N HELD THAT HELD THAT EXEMPTION U/S 54F WILL BE ALLOWED FOR PURCHASE OF MORE THAN ONE RESIDENTIAL UNIT AS THE AMENDMENT TO SECT ION 54F IS EFFECTIVE FORM 1.4.2015. '6. THE FACTS BEING SIMILAR, FOLLOWING THE SAME REASONIN G THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF TH E ASSESSEE WITH RESPECT TO TWO FLATS PURCHASED BY THE ASSESSEE AS DISCUSSED ABOVE. IT IS PERTINENT TO MENTION HERE THAT THE HON'BLE MADRAS HIGH COURT, IN THE CASE OF CIT V. SMT. V. R. KARPAGAM [2015J 373 ITR 127 (MAD), HA S CLEARLY HELD THAT THE AMENDMENT TO PROVISION OF SECTION 54F IS EFFECTIVE FROM APRIL 1, 2015, WHICH MAKES IT CLEA R THAT BENEFIT OF SECTION 54F WILL BE APPLICABLE TO ONE RESIDENTIAL HOUSE IN INDIA. PRIOR TO THE AMENDMENT IT WAS CLEAR THAT A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE RESIDENTIAL UNITS. ITA NO.3272/DEL/2014 14 20. FURTHER AS PER THE PROVISIONS OF SECTION 54 IT CANNOT BE DENIED THAT THE NEW RESIDENTIAL HOUSE PROPERTY PURCHASED / CONSTRUCTED SHOULD NOT BE TRANSFERRED WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER. IF THE NEW PROPERTY IS TRA NSFERRED WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER THEN THE BENEFIT GRANTED UNDER SECTION 54 WILL BE WITHDRAWN. T HE ULTIMATE IMPACT OF THE RESTRICTION IS AS FOLLOWS: (I) THE RESTRICTION WILL BE ATTRACTED, IF AFTER CLAIMI NG EXEMPTION UNDER SECTION 54, THE NEW HOUSE IS SOLD BEFO RE A PERIOD OF 3 YEARS FROM THE DATE OF ITS PURCHASE/COMPLETI ON OF CONSTRUCTION. (II) IF THE NEW HOUSE IS SOLD BEFORE A PERIOD OF 3 Y EARS FROM THE DATE OF ITS PURCHASE/COMPLETION OF CONSTRUCTION, THEN AT THE TIME OF COMPUTATION OF CAPITAL GAIN ARISIN G ON TRANSFER OF THE NEW HOUSE, THE AMOUNT OF CAPITAL GAIN CLAIMED AS EXEMPT UNDER SECTION 54 WILL BE DEDUCTED FRO M THE COST OF ACQUISITION OF THE NEW HOUSE. 21. IN THE PRESENT CASE, ASSESSEE HAS SOLD THE PROPERTY IN T HE NEXT YEAR IN AY 2010-11 AND WITHDREW THE EXEMPTION CLAIME D OF RS. 7,30,538/-IN AY 2009-10 AND REDUCED THE SAME FROM THE COST OF ACQUISITION CLAIMED IN AY 2010-11. (PLEASE REFER PB PG . 26.) 22. THE IMPACT OF THE ABOVE ACTION OF THE ASSESSEE IS THAT ASSESSEE HAS TAXED THE AMOUNT OF RS. 7,30,538/- AS LONG TERM CAP ITAL GAIN AND THEREFORE DISALLOWANCE OF EXEMPTION IN AY 2010-11 WIL L LEADS TO DOUBLE TAXATION IN THE HANDS OF THE ASSESSEE. ITA NO.3272/DEL/2014 15 23. SINCE THE ISSUE IS SQUARELY COVERED BY THE JUDGEMENT OF ITAT MUMBAI IN THE CASE OF NILESH PRAVIN VORA AND YATIN PRA VIN VORA (SUPRA) AND ALSO THE EXEMPTION IS WITHDRAWN IN THE S UBSEQUENT YEAR BY THE ASSESSEE HIMSELF EXEMPTION CLAIMED BY THE ASSESSEE CANN OT BE DISALLOWED. 7. IN THIS CASE, NOTICE OF HEARING TO BOTH THE PARTIES WAS SENT, DESPITE THE SAME, THE LD. DR NOT APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT BY THE DEPARTMENT. KE EPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE REVENUE, THEREFORE, I AM DECIDING THE PRESE NT APPEAL EXPARTE QUA REVENUE, AFTER HEARING THE LD. COUNSEL OF THE ASSESSEE AND PERUSING THE RECORDS. 8. I HAVE HEARD THE LD. COUNSEL OF THE ASSESSEE AND PER USED THE RELEVANT RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS PASSED B Y THE REVENUE AUTHORITIES ALONGWITH THE WRITTEN SYNOPSIS FILED BY TH E ASSESSEES COUNSEL AS WELL AS THE CASE LAWS CITED BY HIM THEREIN, AS AFORESAID. 8.1 THE ISSUE INVOLVED IN THE PRESENT APPEAL IS REGARDI NG COMPUTATION LONG TERM CAPITAL GAIN OF RS. 8,35,564/- AS AGAINST R S. NIL FILED BY THE ASSESSEE BY WITHDRAWING EXEMPTION OF RS. 7,30,539/- UNDE R SECTION 54 CLAIMED BY THE ASSESSEE AND REDUCING THE COST OF INDEXATION BY RS. 72,040/- 8.2 I FIND THAT DURING THE YEAR UNDER CONSIDERATION A SSESSEE HAS SOLD A PROPERTY AT AG/270, SHALIMAR BAGH, DELHI FOR THE SAL E CONSIDERATION OF RS. 18,10,000 WHICH WAS PURCHASE IN THE FINANCIAL YEAR 1998- 99 FOR RS. 3,72,0401-. ASSESSEE HAS SHOWN IF CAPITAL GAIN OF RS. NIL B Y CLAIMING INDEXED COST OF ACQUISITION OF RS. 6,11,022/- AND EXEMPTION UNDE R SECTION 54 BEING INVESTMENT IN RESIDENTIAL PROPERTY OF RS. 12,07,539/- AGAINST THE SALE ITA NO.3272/DEL/2014 16 CONSIDERATION OF RS. 18,10,000/-. THE ASSESSEE HAS INVESTED THE AMOUNT OF RS. 12,07,539 IN TWO RESIDENTIAL PROPERTIES:- I. PURCHASE OF RESIDENTIAL HOUSE IN AG-587, SHALIMAR 8AGH WITH 50% SHARE OF HIS SON RS.4,77,000/ - II. PURCHASE. OF PLOT NO. 114 IN OMAXE PLOT IN OMAXE CITY SONEPAT-A RESIDENTIAL PLOT RS. 7 30 539/- RS. 12,07,539/- 8.3 TOTAL COST OF ACQUISITION CLAIMED BY THE ASSESSEE IS RS. 3 ,72,040/- WHICH INCLUDES PURCHASE COST OF RS. 3,00,000/-, RS. 60,000 /-- IN RESPECT OF RENOVATION AND BROKERAGE EXPENSES AND RS. 12,040 TOWA RDS PROFESSIONAL CHARGES WHICH WERE INCURRED TO TRANSFER THE PROPERTY IN THE ASSESSEE'S NAME. HOWEVER, OUT OF THE ABOVE RS. 72,040 WAS NOT ALL OWED BY THE AO IN THE ABSENCE OF DOCUMENTARY EVIDENCES AND SAME WAS CONFIRM ED BY THE CIT(A). THE FACT THAT THE PROPERTY PURCHASED BY THE ASSE SSEE WAS TOO OLD AND RENOVATION CHARGES WERE NECESSARY TOO MAKE THE PROPE RTY IN USE CANNOT BE IGNORED AND BROKERAGE CHARGES ARE GENERALLY INCURRE D TO GET THE PROPERTY AS WELL AS TO GET THE PROPERTY IN OWN NAME. 8.4 FURTHER DURING THE ASSESSMENT PROCEEDINGS LD. AO ISSUE D A SHOW CAUSE AS TO RESTRICTING THE EXEMPTION ONLY TO THE EXTENT OF AMOUNT INVESTED IN RESIDENTIAL HOUSE I.E., OF RS. 4,77,000/- AS SECTION 54 SPECIALLY MENTIONED THAT INVESTMENT SHALL BE MADE IN RESIDENTIAL HOUSE AND NOT IN RESIDENTIAL PLOT. 8.5 ASSESSEE PLACED HIS RELIANCE ON THE CIRCULAR NO. 667 DA TED.18.10.1993 ISSUED BY CBOT WHEREIN IT HAS BEEN STATED THAT COST OF LA ND IS THE INTEGRAL ITA NO.3272/DEL/2014 17 PART OF COST OF RESIDENTIAL HOUSE AND THEREFORE EXEMPTI ON WILL BE AVAILABLE FOR THE PURCHASE OF PLOT ALSO. 8.6 IT WAS FURTHER SEEN THAT THE ASSESSEE HAS SOLD THE PR OPERTY OF OMAXE PLOT NO. 114 IN THE FY 2009-10 I.E., BEFORE THE HOL DING PERIOD OF THREE YEARS SPECIFIED U/S 54 AND THEREFORE WITHDREW THE EXEMPTION CLAIMED U/S 54 IN AY 2008-09 BY PAYING TAX ON THE SAME IN AY 2009-10 DURI NG THE YEAR THE AMOUNT RECEIVED. 8.7. HOWEVER, AO IGNORING THE IMPACT OF THE ABOVE SALE IN THE SUBSEQUENT YEAR DISALLOW THE EXEMPTION CLAIMED U/S 54 BY RS. 7,30 ,539/- 8.8 AGGRIEVED BY THE ORDER OF THE AO ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). 8.9 LEARNED CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AOON DIFFERENT FOOTING AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO REST RICT THE EXEMPTION ONLY TO THE EXTENT OF ONE RESIDENTIAL HOUSE AS SECTION 54 CONTAINS THE WORDS 'A RESIDENTIAL HOUSE'. LN THIS CONTEXT, I FIN D THAT HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS GEETA DUGGAL 357 ITR 153 (2013) HAS DEALT WITH SIMILAR SITUATION WHEREIN IT HAS BEEN HEL D AS UNDER:- '9. THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/54F USES THE EXPRESSION 'A RESIDENTIAL HOUSE'. THE EXPRESSION USED IS NOT 'A RESIDENTIAL UNIT'. THIS IS A NEW CONCEPT INTR ODUCED 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 BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNE R AS TO CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTLY AND INDEPENDENTLY USED AS AN INDEPENDE NT ITA NO.3272/DEL/2014 18 RESIDENCE, THE REQUIREMENT OF THE SECTION SHOULD BE TAK EN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN THESE SECTION S WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHO ULD BE FOR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. I F THERE IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANN ER, IT SEEMS TO US THAT THE INCOME TAX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDING 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 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 B UILD 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 F AMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMEN T WHICH CAN BE MUTUALLY SUPPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH -A MANNER THAT IN CASE OF A FUTURE NEE D 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 RESIDENTIA L HOUSE. WE ARE THEREFORE, UNABLE TO SEE HOW OR WHY TH E ITA NO.3272/DEL/2014 19 PHYSICAL STRUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETH ER IT IS LATERAL OR VERTICAL, SHOULD COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. WE DO N OT THINK THAT THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS O F SEVERAL INDEPENDENT UNITS CAN BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UNDER SECTION 54/54F. IT IS NEITHER EXPRESSLY NOR BY NECESSARY IMPLICATION PROHIBITED. FOR THE ABOVE REASONS WE ARE OF THE VIEW THAT THE TRI BUNAL 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. ' 8.10. HOWEVER, LEARNED CIT HAS DRAWN THE ADVERSE CONCLUSI ON THAT THE SUBSTANCE OF THE JUDGEMENT IS THAT THE EXPRESSION' A RESID ENTIAL HOUSE' SHOULD NOT BE LITERALLY TAKEN AS A SINGLE UNIT OR A SIN GLE FLAT AND THAT THE DEDUCTION SHOULD BE EXTENDED T A RESIDENTIAL HOUSE CONSI STING OF SEVERAL INDIVIDUAL UNITS WHICH HAVE BEEN CONSTRUCTED IN THE MANN ER THAT THEY HAVE INDEPENDENT ENTRANCE BUT IN CASE OF FUTURE NEED THEY C AN BE USED AS A COMPOSITE INDEPENDENT HOUSE AND THEREFORE CONFIRM THE D ISALLOWANCE MADE BY THE ASSESSEE. 8.11. HOWEVER, IT IS PERTINENT TO NOTE THAT JUDGEMENT OF GITA DUGGAL (SUPRA) HAS MADE IT VERY CLEAR IN PARA 8 OF THE ORDER AND TH E 'A' DOES NOT MEAN SINGULAR. JUDGEMENT OF KARNATAKA HC CIT VS D. ANANDA 8 ASAPPA (2009) 309 ITR 329 HAS BEEN FOLLOWED WHICH READS AS UNDER: ITA NO.3272/DEL/2014 20 '8. IT IS THE CORRECTNESS OF THE ABOVE VIEW THAT IS QUESTIONED BY THE REVENUE AND IT IS CONTENDED THAT THE INTERPRETATION PLACED BY THE TRIBUNAL GIVES RISE TO A SUBSTANTIAL QUESTION OF LAW. THE ASSESSEE STRONGLY RELIES UPON THE JUDGMENT OF THE KAMATAKA HIGH COURT (SUPRA) WHICH, IT IS STATED, HAS BECOME FINAL, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE SAID DECISIO N HAVING BEEN DISMISSED BY THE SUPREME COURT AS REPORTED IN THE ANNUAL DIGEST OF TAXMAN PUBLICATION. THE JUDG MENT OF THE KAMATAKA HIGH COURT SUPPORTS THE CONTENTION OF T HE ASSESSEE. AN IDENTICAL CONTENTION RAISED BY THE REVENUE BEFORE THAT COURT WAS REJECTED 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 BUILDING OR LANDS APPURTENANT THERETO, HE CAN INVEST CAPITAL GAINS FOR PURCHASE OF RESIDENTIAL BUILDING TO SEEK EXEMPTION OF THE CAPITAL GAINS TAX. SECTION 13 OF THE GENERAL CLAUSES ACT DECLARES THAT WHENEVER THE SINGULAR IS USED FOR A WORD, IT IS PERMISSIBLE TO INCLUDE 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' RESIDENTIAL HOUSE SHOULD BE UNDERSTOOD IN A SENSE THAT BUILDING SHOULD BE OF RESIDENTIAL IN NATURE AND 'A' SHOULD NOT BE ITA NO.3272/DEL/2014 21 UNDERSTOOD TO INDICATE A SINGULAR NUMBER. THE COMBINED READING OF SECTIONS 54(1) AND 54F OF THE INCOME-TAX ACT DISCLOSES THAT, A NON RESIDENTIAL BUILDING CAN BE SOLD, THE CAPITAL GAIN OF WHICH CAN BE INVESTED IN A RESIDENTIAL BUILDING TO SEEK EXEMPTION OF CAPITAL GAIN TAX. HOWEVER, THE PROVISO TO SECTION 54 OF THE INCOME-TAX ACT, LAYS DOWN THAT IF THE ASSESSEE HAS ALREADY ONE RESIDENTIAL BUILDING, HE IS NOT ENTITLED TO EXEMPTION OF CAPITAL GAINS TAX, WHEN HE INVESTS THE CAPITAL GAIN IN PURCHASE OF ADDITIONAL RESIDENTIAL BUILDING.' THIS JUDGMENT WAS FOLLOWED BY THE SAME HIGH COURT IN THE DECISION IN CIT V. SMT K.G. RUKMINIAMMA [20117 196 TAXMAN 87/ [20107 8 TAXMANN.COM 121 (KAR.).' 8.12 I ALSO FIND THAT THE ABOVE JUDGEMENT OF DELHI HC IN THE CASE OF CIT VS GEETA DUGGAL (SUPRA) IS AFFIRMED BY THE SUPREME COUR T (2015) 228 TAXMAN 62 (SC). I ALSO FIND THAT THIS ISSUE CAME UP BEFORE ITA T MUMBAI IN THE CASE OF NILES.H PRAVIN VORA AND VATIN P.RAVIN VORA (LEGAL HEIRS OF LATE PRAVIN LAXMIDAS VORA) VS ITO 2016 (5) TMI 64 AND IT HAS BEEN HELD THAT HELD THAT EXEMPTION U/S 54F WILL BE ALLOWED FOR PURCHASE OF MORE THAN ONE RESIDENTIAL UNIT AS THE AMENDMENT TO SECTION 54F IS EFFECTIVE FORM 1.4.2015. '6. THE FACTS BEING SIMILAR, FOLLOWING THE SAME REASONIN G THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF TH E ASSESSEE WITH RESPECT TO TWO FLATS PURCHASED BY THE ASSESSEE AS DISCUSSED ABOVE. IT IS PERTINENT TO MENTION ITA NO.3272/DEL/2014 22 HERE THAT THE HON'BLE MADRAS HIGH COURT, IN THE CASE OF CIT V. SMT. V. R. KARPAGAM [2015J 373 ITR 127 (MAD), HA S CLEARLY HELD THAT THE AMENDMENT TO PROVISION OF SECTION 54F IS EFFECTIVE FROM APRIL 1, 2015, WHICH MAKES IT CLE AR THAT BENEFIT OF SECTION 54F WILL BE APPLICABLE TO ONE RESIDENTIAL HOUSE IN INDIA. PRIOR TO THE AMENDMENT IT WAS CLEAR THAT A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE RESIDENTIAL UNITS. 8.13. I NOTE THAT IN THE PRESENT CASE, ASSESSEE HAS SOLD THE PROPERTY IN THE NEXT YEAR IN AY 2010-11 AND WITHDREW THE EXEMPTION CLAIMED OF RS. 7,30,538/-IN AY 2009-10 AND REDUCED THE SAME FROM THE COST OF ACQUISITION CLAIMED IN AY 2010-11. THEREFORE, THE IMPACT OF THE A BOVE ACTION OF THE ASSESSEE IS THAT ASSESSEE HAS TAXED THE AMOUNT OF RS. 7,30,5 38/- AS LONG TERM CAPITAL GAIN AND THEREFORE DISALLOWANCE OF EXEMPT ION IN AY 2010-11 WILL LEADS TO DOUBLE TAXATION IN THE HANDS OF THE ASSESSEE. T HEREFORE, THIS ISSUE IS SQUARELY COVERED BY THE JUDGEMENT OF ITAT MUMBAI IN THE CASE OF NILESH PRAVIN VORA AND YATIN PRAVIN VORA (SUPRA) AND ALSO T HE EXEMPTION IS WITHDRAWN IN THE SUBSEQUENT YEAR BY THE ASSESSEE HIMSELF E XEMPTION CLAIMED BY THE ASSESSEE CANNOT BE DISALLOWED. ITA NO.3272/DEL/2014 23 8.14. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND R ESPECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID, I DECIDE ALL THE GROUNDS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/10/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 13/10/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES