CIT v. D. Ananda Basappa (2009) 309 ITR 0329 (Kar.)
The assessee-HUF sold its residential house in Mumbai and purchased two residential flats adjacent to each other (from two different persons) on the same day vide two separate registered sale deeds. The builder had certified that he had effected necessary modification to make it one residential apartment. The assessee sought exemption under section 54 in respect of the investment made in purchase of the two residential flats. The Assessing Officer, however, gave exemption under section 54 to the extent of purchase of one residential flat only contending that
(i) Sub-section (1) of section 54 clearly restricts the benefit of exemption to purchase of one residential house only; and
(ii) It was found by the Inspector that, before the sale, the residential flats were in occupation of two different tenants.
The order of the Assessing Officer, though confirmed by the Commissioner (Appeals), was set aside by the Tribunal holding that the assessee was entitled to exemption in respect of the amount invested in both theflats, since they were to be treated as one single residential apartment.
The Karnataka High Court observed that the assessee had shown that the flats were situated side by side and the builder had also certified that he had effected modification of the flats to make them one unit by opening the door between the apartments. Therefore, it was immaterial that the flats were occupied by two different tenants prior to sale or that it was purchased through different sale deeds. The Court observed that these were not the grounds to hold that the assessee did not have the intention to purchase the two flats as one unit. The Court held that the assessee was entitled to exemption under section 54 in respect of purchase of both the flats to form one unit.
The Contributor is CA. Priya Subramanian
The Contributor is CA. Priya Subramanian
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