Two flats purchased by the assessee were situated side by side. Builder also stated that he had effected modifications to the flats to make them one unit by opening the door in between the two apartments. The fact that the assessee could not have purchased both the flats in one single sale deed or could not have narrated the purchase of two premises as one unit in the sale deed could not make any difference. In the earlier part of the section 54, the words used are ‘buildings or lands’ which are plural in number and that is referred to as “a residential house”, the original asset. An asset newly acquired after the sale of the original asset can also be buildings or lands appurtenant thereto, which also should be “a residential house”. Therefore, the letter ‘a’ in the context it was used should not be construed as meaning “singular”. But being an indefinite article, the said expression should be read in consonance with the other words ‘buildings’ and ‘lands’ and, therefore, the singular ‘a residential house’ also permits use of plural by virtue of section 13(2) of the General Clauses Act. Therefore, merely because the assessee purchased two units, it could not be said that she was not entitled to the benefit of section 54. The evidence on record also disclosed that the two units were situated side by side, modification were made, the door was opened making it as a single unit and the consideration received from the sale of the residential unit was utilised to purchase those residential units and, therefore, the assessee was entitled to the benefit of section 54. As such, she was not liable to pay the capital gains. The order of the Tribunal was in accordance with law and did not suffer from any infirmity.
Source- Commissioner of Income-tax, Bangalore Vs. Smt. Jyothi K. Mehta (HIGH COURT OF KARNATAKA), IT APPEAL NO. 194 OF 2010, Dated – JANUARY 5, 2011