I-T - Expression 'a residential house' used in Sec 54 for allowing exemption necessarily means one property and not more than one property: ITAT
By TIOL News Service
NEW DELHI, JUNE 08, 2018: THE ISSUE IS - Whether the expression 'a residential house' used in Sec 54 for allowing exemption necessarily means one property and not more than one property. YES IS THE ANSWER.
Facts of the case:
The assessee, an individual, had filed his return declaring income of Rs.34,84,180/-. During the course of his assessment proceedings, the AO noted that the assessee had sold property at Safdarjung Development Area on which capital gains were computed at Rs.2,35,05,000/-. All these capital gains were claimed as exemption u/s 54 (which was wrongly mentioned in the assessment order as Section 54F) on account of investment in three different residential properties. The AO therefore held that exemption u/s 54 was allowable only with respect to one residential property.Accordingly the deduction u/s 54 was limited to Rs.73,88,306/- and an amount of Rs.1,61,16,694/- was treated as long term capital gain taxable in the hands of assessee. On appeal, the FAA upheld the order of AO.
Tribunal held that,
++ the framing of Section 54 is clearly set out for one residential property and not that for more than one property. The same can be seen by the language of the statue as there is a singular form used for the term "a residential house" and not used the term "residential premises/houses" which is in plural form. The reliance upon the decision of Delhi High Court in case of DIT vs. New Skies Satellite BV & Ors. by the AR does not support the case of assessee, as the jurisdictional High Court has held that amendments can be made prospective only. But in the present case, the issue is not that of clarificatory nature of statute or whether amendment be prospective or retrospective. Otherwise also factually the Delhi High Court decision is different from the issue involved in the present case. As regards other decisions of various High Courts and Tribunal as well as circulars relied upon by the AR at the time of hearing also does not involve identical issue as in the present case there are three residential properties for which deduction u/s 54 was claimed by the assessee. The factual aspect is totally different. In fact, Section 54 is clear at the beginning and the amendment reiterated the same. Thus, the FAA is right in holding that the claim of deduction u/s 54 to investment in only one residential property and upheld the disallowance of the exemption claimed on investment in two other residential properties.
(See 2018-TIOL-814-ITAT-DEL)
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