Sunandan Kumar Minocha Vs ITO (ITAT Delhi)
ITAT held that assessee is eligible for claim of exemption u/s 54 in respect of purchase of 3 different residential houses and amendment brought in the Finance Act, 2014 w.e.f. 01.04.2015 will not be applicable in AY 2013-14.
FULL TEXT OF THE ORDER OF ITAT DELHI
Aforesaid appeal has been filed by the assessee against impugned order dated 26.02.2018, passed by the ld. CIT (Appeals)-27, New Delhi for the quantum of assessment passed under section 143(3) of the Income-tax Act, 1961 (for short ‘the Act’) for the assessment year 2013-14.
2. In the grounds of appeal, the assessee has raised the following grounds :-
“1. That assessment order passed by ITO Ward 63 (1), New Delhi dated 04.03.2016 on basis of purported order u/s 127 dated 03.09.2015 passed by Pr.CIT 21, Delhi is void ab initio as neither assessee has been served with copy of that order nor the reasons for that order etc. which makes the entire proceedings as nullity including orders passed by Ld CIT-A.
2. That Ld CIT-A erred in sustaining the disallowance made by Ld AO of deduction u/s 54 of Rs.49,62,490 on faulty reasoning that assessee has invested in three residential house properties at three different places without appreciating that assessee has admittedly sold three separate units/houses which makes the claim of assessee u/s 54 as completely correct and valid and amendment made by Finance No.2 Act 2014 which is effective prospectively from AY 2015-2016 and has nothing to do with present case where three houses/units are sold separately.”
3. At the outset, ground no.1 has not been argued, therefore, we are not adjudicating the same and the same is treated as dismissed as not pressed.
4. Insofar as disallowance of deduction u/s 54 of Rs.49,62,490/-, the facts in brief are that, the assessee has constructed 4 flats consisting of 4 units, i.e., one flat at each floor in a building which was purchased in the FY 1995-96. Out of these 4 units, the assessee had sold 3 units for a net consideration of Rs.2,29,70,000/- during the year under consideration. The indexed cost of acquisition of property was calculated at Rs.75,20,79,796/- which resulted in long term capital gain of Rs.1,54,49,203/-. The assessee claimed that it has purchased new residential property worth Rs.1,70,83,921.50 and claimed deduction u/s 54 which resulted into ‘nil’ long term capital gain. AO observed that assessee has invested the receipts of sale proceeds of its 3 units on 3 different locations of the city and, therefore, deduction u/s 54 is not available, because the same is available only “a” residential house and not for every residential properties in addition to the first house. AO, after considering various judgments and Explanatory Note to Finance Act, 2014, amending the statute w.e.f. 01.04.2015, i.e., AY 2015-16. He restricted the claim of deduction u/s 54 to only one flat having higher value of Rs.1,04,86,714/- and accordingly, he worked out the disallowance of Rs.49,62,490/-.
5. We have heard the rival submissions and gone through the impugned order as well as material placed on record. The case of the assessee is that the expression “a residential house” is to be understood in a sense that the building should be residential one and the word “a residential” should not be construed as a singular number. Before us, ld. counsel has relied upon various judgments which we shall discuss hereinafter.
6. On the other hand, the case of the Revenue is that “a residential house” should be treated as one residential house and the amendment brought in the statute w.e.f. 01.04.2015 is mere clarificatory.
7. It is and undisputed fact that the assessee has claimed exemption under long term capital gain after selling 3 units of residential property and thereafter has purchased another 3 units in the same city. The only issue is whether exemption is available in respect of one residential house or more than one on facts of the present case.
8. There are various judgments, as relied upon by the ld. counsel for the assessee, wherein Hon’ble Courts has held that exemption u/s 54 is available even for more than one residential unit are purchased which are used for residential purpose and the amendment brought in the statute w.e.f. 01.04.2015 is not retrospective. Prior to the amendment, there were various judgments wherein favourable view has been taken by the Hon’ble High Courts, viz.,:-
