Exemption u/s. 54

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Juzer Sadikot (Querist)
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25 December 2010 Dear Expert

Facts:

1) Individual Sells TWO connected flats with common wall.Say LTCG is Rs. X and Rs. Y for each properties

2) Re-investment of Rs. X+Y in ONE new Residential property with in stipulated time.

Is claim of exemption u/s. 54 valid?

Regards
Juzer

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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25 December 2010 Yes

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 December 2010 If the two flats are used as one single residential house, exemption u/s 54 is possible if reinvested in sigle residential property by virtue of a corollary to the Bangalore bench of the tribunal's decision in Dr. Anand Basappa Vs. ITO (2004) 91 ITD 53.

Nikhil Kothari

Nikhil Kothari (Expert)
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25 December 2010 Yes its valid.

Juzer Sadikot

Juzer Sadikot (Querist)
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25 December 2010 Dear Chakrapani Sir

If flats are connected with common wall, can 1 say it is used as 1 house property.

What I am trying to understand is how one can say that it was used as one residential property?

In case the two flats are rented to single tenant, is it enough?

Request you expert advice on this.

Best Regards
Juzer

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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26 December 2010 It is a question of fact meaning thereby the assessee has to prove before a court of law with convincing documetary evidence that the situation warrented to break the wall so as to make it one house for the assessee's habitual use. As per my understanding, rent agreement will not suffice.

Juzer Sadikot

Juzer Sadikot (Querist)
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26 December 2010 Dear Chakrapani Sir

Thank you

Juzer

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