Capital Gain exemption U/s. 54

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kandavel p (Querist)

22 February 2011 The Sale proceeds arising from sale of a Residential house is invested in a new residential house is exempted.

My query is whether it is allowed for only one house or any number of residential house.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

22 February 2011 More than one house can be purchased.

Guest

Guest (Expert)

22 February 2011 In my opinion, one one house.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

22 February 2011 In the case of K.C.Kaushik vs. ITO reported in (1990) 185 ITR 499, Mumbai High Court said, where more than one house is purchased,then the assessee can claim relief in respect of only one house provided other conditions of section 54 are satisfied.

Guest

Guest (Expert)

23 February 2011 In the provisions also, word singular word 'a house' is used.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

23 February 2011 I have relied upon the following case laws while framing my answer.

D. Anand Basappa V ITO[2004] 91 ITD 53 (Bang.)
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Prem Prakash BhutaniV CIT[2007]110 ITJ (Delhi)
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CIT v.D. Ananda Basappa [2009] 180 Taxman (Kar.)

It has been decided in these cases that to claim deduction U/s 54, there is no bar on acquiring more than one residential house out of the proceeds of one residential house.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

26 February 2011 Bafna Ji

P & H high court distinguished D.Ananda Basappa's case in Pawan Arya Vs. CIT (2011)237 CTR 210 by saying that as regards claim of exemption against acquisition of two houses under section 54, the same is not admissible in plain language of the statute.

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