Exemption u/s 54

This query is : Resolved

niki (Querist)
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18 December 2008 If an assessee has sold two residential flats (adjacent - used as one unit) and invested the sale proceeds towards purchase of two new residential flats (not adjacent), can the assessee claim expemtion u/s 54, in respect of investment in both the new flats?

Thanks & Regards,
NIki

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 December 2008 In my opinion exemption u/s 54 will be denied.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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18 December 2008 You can purchase any number of residential houses. Exemption u/s 54 is not limited to one house only.

So u can enjoy the benefits of investments in both houses.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 December 2008 Myself and Tilak differed in the opinion.
See also some judicial decisions.
1) Where the assessee purchases more than one house,then he can claim exemption in respect of one house. KC.Kaushik's case 185 ITR 499(Mum). I relay on this and gave the above answer.

2) Contrary view: There is no bar in acquiring more than one house out of proceeds of sale of a residential house. Refer 91 ITD 53 (Ban-Tri). Perhaps Tilak is relying on this decision.