Purchase of more than one house property -Is this eligible for exemption u/s 54

[Mansha]

Respected Experts
If an assessee ,sold a residential property for Rs 50 lacs and he wants to purchase three property on the same amount .
Is he eligible for exemption under section 54 of IT Act ?
Hope for prompt reply
Thank you

[satyanveshi]

As per the decison of sepcial bench reported in 292 ITR 1(AT), the deduction will not available in the given circumstances.  But as per the Karnataka High court decision reported in 331 ITR 211 the person is eligible for deduction u/s 54. Now it is left to you to go ahead.......................

[vsaiyar]

"a property" according to one court could be plural and whereas it is sigular according to some courts.  However, if the three properties are adjacent to each other so as to form one residential unit though in plans it may appear to be different properties, it could be argued that what is invested is in purchase of single unit.

[vsaiyar]

HIGH COURT OF PUNJAB AND HARYANA

Pawan Arya

v.

Commissioner of Income-tax*

ADARSH KUMAR GOEL AND AJAY KUMAR MITTAL, JJ.
IT APPEAL NO. 613 OF 2010
DECEMBER 13, 2010
Section 54 of the Income-tax Act, 1961 - Capital gains - Profit on sale of property used for residential house - Assessment year 2005-06 - Assessee claimed exemption on capital gains on sale of flat on ground of acquisition of two houses - Assessing Officer set off capital gain against one of houses but held claim not to be admissible against second house - Tribunal upheld order of Assessing Officer - Whether claim for exemption under section 54 is not admissible against acquisition of two houses - Held, yes - Whether, therefore, no substantial question of law arose from Tribunal's order - Held, yes

[2011] 12 taxmann.com 440 (Kar.)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore

v.

Smt. Jyothi K. Mehta

N. KUMAR AND RAVI MALIMATH, JJ.
IT APPEAL NO. 194 OF 2010
JANUARY 5, 2011




Section 54 of the Income-tax Act, 1961 - Capital gains - Profit on sale of property used for residential house - Assessment year 2006-07 - Whether expression 'a residential house' should be read in consonance with other words 'buildings' and 'lands' and, therefore, the singular 'a residential house' also permits use of plural by virtue of section 13(2) of General Clauses Act - Held, yes - Assessee sold her property and utilized sale consideration for purchase of two flats - Her claim for exemption under section 54 was rejected by Assessing Officer on ground that she was already an owner of a residential flat and had purchased two flats out of sale proceeds - Whether since evidence on record showed that two units were situated side by side, modification were made and door was opened making them as a single unit, assessee was entitled to benefit of section 54 - Held, yes [In favour of assessee]

Words and phrases : 'A residential house' as occurring in section 54 of the Income-tax Act, 1961