The Assessee sold a residential flat in Mumbai and invested the sale proceeds in a joint venture with a builder for acquisition/construction of seven row houses in Pune. The Assessee claimed exemption under section 54 of the Income-tax Act against the entire capital gain arising from the sale of the Mumbai flat. The Assessing Officer disallowed the claim on the ground that exemption under section 54(1) was permissible only for investment in one residential house and not multiple houses. On appeal, the Tribunal allowed exemption only in respect of one row house. Aggrieved, the Assessee filed an appeal before the Hon’ble Bombay High Court, which granted relief to the Assessee holding that the expression “a residential house” in section 54, as it stood prior to the 2014 amendment, would include multiple residential houses and was not restricted to one house. Relying on decisions of the Karnataka High Court in Arun K. Thiagarajan v. CIT (A) [2020] 272 Taxman 235 and the Madras High Court in Tilokchand & Sons v. ITO [2019] 263 Taxman 713, the Court observed that the provision is beneficial in nature and should be interpreted liberally. It further noted that the 2014 amendment substituting the words “a residential house” with “one residential house” was prospective and applicable only from AY 2015-16. Accordingly, the Court held that the Assessee was entitled to exemption under section 54 against the entire capital gain arising from the sale of the Mumbai flat, as the investment in seven row houses was made prior to the amendment.(AY. 1995-96)