Krishnagopal B. Nangpal Vs DCIT (Bombay High Court)
Bombay High Court held that the expression ‘a residential house’ in unamended Section 54(1) of the Act includes more than one residential house. Thus, sale proceeds of one residential house used for purchase of multiple residential house qualifies for exemption u/s. 54(1).
Facts- The Assessee has filed the present appeal under provisions of Section 260 (A) of the Income Tax Act, 1961 (the Act) challenging the judgment and order dated 7th March 2003, passed by Income Tax Appellate Tribunal, Pune Bench dismissing his Appeal to the extent of exemption on capital gains under Section 54 of the Act arising out of sale proceeds of a flat in Mumbai used towards purchase of seven row houses in Pune.
Conclusion- Held that the expression ‘a residential house’ in unamended Section 54(1) of the Act includes more than one residential house. Thus, the Appeal is allowed. The substantial question of law formulated by this Court is answered in favour of the Assessee and against the Revenue. In the result, the order passed by the Assessing Officer and the ITAT, to the extent of deprivation of benefit of exemption under Section 54 (1) of the Act is hereby quashed and set aside and the Assessee is held entitled to the benefit of exemption under provisions of Section 54(1) of the Act against the entire capital gains of Rs.1,08,30,625/- arising out of sale of his flat in Mumbai, on account of utilization thereof towards purchase of seven row houses in Pune.
