Exemption u/s 54

CA Hardik Bunha (self) (2121 Points)
Replied 19 December 2011

Yes, Mr. X will be eligible

ronak (article) (73 Points)
Replied 19 December 2011

In my opinion you cannot invest in 3-4 houses. You can invest in only one house property in order to claim exemption u/s 54

Z ( ) (2960 Points)
Replied 19 December 2011

It depends on the facts of the case

If all those residential units can be modified to unite and make it a single residential house property then assesse can claim ecemption having regards to decision made in (CIT v D. Ananda Basappa ( 2009 ) 20 DTR 266 (Kar)).

However if the house properties are scattered and can not be united then the exemption will be available to only one house property unit.

Cite: ITO Vs. Ms. Sushila M. Jhaveri

2 Like

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 19 December 2011

Mr. Z is right perfectly,

It is not like you need to invest whole of your capital gain for exemption. Exemption will be Lower of CG or investment in New house. It provides exemption only for 1 new house purchased or constructed within the time limit specified.

You can claim deduction for only 1 house..

Members correct me if I'm wrong

CA LALIT WADHWA (FRESHER) (105 Points)
Replied 19 December 2011

for exemption u/s 54 dere is no such limit of one house or more...

u cn claim deduction if purchase is within the time...

Nitesh Matta (Nothing) (198 Points)
Replied 20 December 2011

You should purchase the house 1 year before or within 2 years after the date of transfer to get exemption.. There is no such limit of claiming exemption of one house.

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 20 December 2011

Thank you Lalit ji, for correcting me.

Sec. 54 states- the assessee should purchase “a house property” within prescribed time.

The article “a” is not necessarily a singular term. It is often used in the sense of any, and when so used it may be applied to more than one individual object.- National Union Bank Vs. Copeland 4N.E. 794

The expression “a residential house” has been defined in the sec. itself as buildings or lands appurtenant thereto. The use of plurality in the meaning of the expression further supports the view expressed above.

Z ( ) (2960 Points)
Replied 20 December 2011

As per decision made in CIT v. Kodandas Chanchlomal .House property for the purposes of sec 54 has the same meaning as the concept of house property under ss. 22 to 27 which make it clear that the expression "house property" takes into account an independent residential unit

Same view point is taken in

ITO Vs. Ms. Sushila M. Jhaveri

K.C. Kaushik v. PB Rane ITO

(others mentioned in cite)

But in sec 22

"The expression “a residential house” has been defined in the sec. itself as buildings or lands appurtenant thereto."

This viewpoint has also been taken in many cases . Some of them are below

Krishangopal Nagpal v. Dy. CIT (2004) 82 TTJ (Pune)

Mrs. Gulshanbanoo R. Mukhi v. Jt. CIT (2003)

Dispute?

The word "any" has been used by the legislature in Sections 54B, 54D, 54E, 54EA and 54EB while the word "a" has been used in Sections 54 and 54F of the Act. This clearly shows that the legislature intended different meanings to be given to these two words

"However, we are in agreement with certain decisions of the Tribunal relied on by the learned Counsel for the assessee wherein exemption was allowed in respect of investments in two adjacent or contiguous units converted into one residential house by having common passage/stair case, common kitchen, etc. intended to be used as single house for the residence of the family. As already observed, the intention of the legislature is that investment should be made in one residential house. So long as the house purchased is one even after conversion, the exemption would be available. On the other hand, if the investment is made in two independent residential houses, even located in the same complex, then, in our opinion, exemption cannot be allowed for investment in both the houses. However, the choice would be with assessee to avail exemption in respect of any one house as held by the Hon'ble Bombay High Court in the case of K.C. Kaushik (supra). The view taken by us in this para is also justified by the decision of the Hon'ble Calcutta High Court in the case of B.B. Sarkar v. CIT , wherein purchase of ground floor of a house"

I quote my post, which I have written after considering Income Tax Officer vs Ms. Sushila M. Jhaveri on 17 April, 2007 , Which takes into consideration all the cases mentioned in this post except for those which I specifically mentioned in my QUOTED POST and they also hold same view point.

"It depends on the facts of the case

If all those residential units can be modified to unite and make it a single residential house property then assesse can claim ecemption having regards to decision made in (CIT v D. Ananda Basappa ( 2009 ) 20 DTR 266 (Kar)).

However if the house properties are scattered and can not be united then the exemption will be available to only one house property unit.

Cite: ITO Vs. Ms. Sushila M. Jhaveri"

(My opinion maybe wrong, am citing the sources so that any error(s) can be identified and rectified by the readers)

citeation

https://www.indiankanoon.org/doc/982382/

(i) Ratanchand Murarka v. Jt. CIT asst. yr. 1996-97 ITA No. 4485/Mum/1999 dt. 12th Sept., 2001;

(ii) ITO v. Shn Daulat Luthana ITA No. 9639/Bom/1989 dt. 16th May, 1996;

(iii) ITO v. Shri Bhupendra Patel ITA No. 70/Mum/1995 dt. 24th April, 2002;

(iV) Fulwanti C. Rathod v. ITO ITA No. 1092/Mum/1995 dt. 3rd May, 2002;

(v) ITO v. Nansi Kriti S. ITA No. 2954/Mum/1995 dt. 28th May, 2005;

(vi) Shri Himmatlal H. Sheth v. ITO ITA No. 6761/Mum/2002 dt. 15th Feb., 2005;

(vii) Shri Prabhakar S. Mogre v. Jt. CIT ITA No. 27/Mum/2000 dt. 2nd May, 2005;

(viii) Dy. CIT v. Mohanlal K. Zaven ITA No. 2747/Mum/1998 dt. 15th Dec, 2005.

: ITO Vs. Ms. Sushila M. Jhaveri

CIT v D. Ananda Basappa ( 2009 ) 20 DTR 266 (Kar)

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 20 December 2011

Unlike in the case of Sec. 23, 53 (Now omitted) or 54F of the in the Act and sec 5 (vi) of the Wealth tax Act, there is no express limitation in the sec. 54 to the effect that the assessee should own only one house.

In case of People Vs. One 1940 Buick Sedan, it was held that “A” is synonymous with “ANY”

Bhanu Prakash Rao (Think Beyond Stay Ahead...!) (1064 Points)
Replied 20 December 2011

agree with Ketan Wagela.......

Z ( ) (2960 Points)
Replied 22 December 2011

Originally posted by : Ketan Waghela
	Unlike in the case of Sec. 23, 53 (Now omitted) or 54F of the in the Act and sec 5 (vi) of the Wealth tax Act, there is no express limitation in the sec. 54 to the effect that the assessee should own only one house. In case of People Vs. One 1940 Buick Sedan, it was held that “A” is synonymous with “ANY”

People Vs. One 1940 Buick Sedan,

This is not the decision of Indian court. Its California court case decision. Even if you follow this case refer to explanation given below in

Income Tax Officer vs Ms. Sushila M. Jhaveri

The case I mentioned

Mrs. Gulshanbanoo R. Mukhi v. Jt. CIT (2003)

WHOLE FLAT WAS CONSIDERED AS RESIDENTIAL UNIT ,

for Krishangopal Nagpal v. Dy. CIT (2004) 82 TTJ (Pune) am citing

Income Tax Officer vs Ms. Sushila M. Jhaveri which considered the above mentioned case

The Division Bench also noticed that Mumbai Bench of the Tribunal in the case of Ratanchand Murarka (supra) had also considered the decision of the Hon'ble Bombay High Court in the case of K.C. Kaushik (supra) and distinguished the same and thereby held that exemption under Section 54/54F was available in respect of investments made in two house properties even if they were distantly located from each other. The Division Bench also found that contrary opinion has also been expressed by other Benches of the Tribunal in the case of Krishangopal Nagpal v. Dy. CIT (2004) 82 TTJ (Pune) 481, as well as in the case of Mrs. Gulshanbanoo R. Mukhi v. Jt. CIT (2003) 78 TTJ (Mumbai) 768 : (2002) 83 ITD 649 (Mumbai), even after considering the earlier decision of the Tribunal in the case of Ratanchand Muiaika (supra). Since inconsistent views were expressed by the different Benches, the Division Bench referred the matter to the Hon'ble President, Tribunal, under Section 255(3) of the Act for constituting the Special Bench to adjudicate the aforesaid question. The Hon'ble President, Tribunal, was pleased to constitute this Bench to decide this appeal including the question mentioned in para 1 above.

My pal Mr. Ketan Waghela mentioned

"The article “a” is not necessarily a singular term. It is often used in the sense of any, and when so used it may be applied to more than one individual object.- National Union Bank Vs. Copeland 4N.E. 794"

Yes you are absolutely correct and THIS WAS ALSO CONSIDERED IN

Income Tax Officer vs Ms. Sushila M. Jhaveri case

Extracts of the case are

According to the Illustrated Oxford Dictionary, it (the alphabet a) means:

1. One, some, any (when referring to something for the first time in a text or conversation), 2. one like, 3. one single (not a thing or sight), 4. the same (all of a size), 5. in, to, or far each (twice a year, seven aside).

As per Webster's Encyclopaedic Unabridged Dictionary, it means:

Indefinite article--1, not any particular or certain one of a class or group; a man, a chemical, a horse, 2. another typically representing; 3. one; a certain; a particular: one at a time; two of a kind, 4. (used before plural, noun that are preceded by a quantifier singular in term) : a hundred men; a dozen times, 5. indefinitely or non-specifically: a great many years: a few stars,

6. any; a single: not a one; '/. (when stressed) each, every, per: ten cents a dance, three time a day.

As per Judicial Dictionary by K.J. Aiyer (8th Edition), it means:

Sometimes, 'a' is reads as 'the', sometimes as 'some' but more frequently as 'any'. Similar meaning is given by the Law Lexicon.

Perusal of the above clearly shows that the word "a" is ambiguous as it has no definite meaning. Various meanings are given to the word "a". It not only means "one" or "any" but it has various other meanings depending upon the context in which it is to be used. Therefore, the cardinal principle of interpretation cannot be applied and consequently, the intention of the legislature has to be discovered by resorting to the aids to the interpretation. One of the rules of interpretation is to find out the context in which such word is used by the legislature.

Before coming to the context in which word "a" is used in Section 54/54F, we would like to mention that much emphasis was made on the word "any". It has been contended that the word "a" means "any" which in turn means "many" or "more than one". This appears to be partially true. As per various dictionary meanings, it also includes "one" or "one out of many". According to Law Lexicon, the word "any" may have several meanings according to the circumstances. It may mean "all", "each", "some" or "one or more out of several". It further says that it is not confined to a plural sense. According to Illustrated Oxford Dictionary as well as Webster's Encyclopaedic Unabridged Dictionary also, the word "any" has various meanings including "one". This clearly shows that the word "any" does not always mean more than one. It may also be used to denote "one". So, both the words "a" as well as "any" are ambiguous and, therefore, the meaning of these words has to be seen with reference to the context in which these words are used.

Let us, therefore, consider the scheme of the exemption under Chapter IV-E relating to the capital gains. Section 45 which is charging section uses the expression "transfer of a capital asset". Here the word "a" means "every" since capital gain of each capital asset has to be computed depending upon the period of holding. Exemption from the levy of capital gain tax is provided in Sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F and 54H as is apparent from Section 45 itself. The relevant portion of these sections are being extracted below:

The word "any" has been used by the legislature in Sections 54B, 54D, 54E, 54EA and 54EB while the word "a" has been used in Sections 54 and 54F of the Act. This clearly shows that the legislature intended different meanings to be given to these two words

What ICAI opines?

Purchase of more than
one house
Held allowed only for one flat; Gulshanbanoo
R. Mukhiv. JCIT (2002) 83 ITD 649 (ITAT-Mum)

Held: Not allowable except in the case of
adjacent & contiguous flats; ITO v. MrsSushila
M. Jhaveri107 ITD 327 (ITAT-Mum. SB)

Adjacent flats
Several self occupied dwelling units which were
contiguous and situated in the same compound
with in the common boundary having unity of
structure should be regarded as one residential
house
ShivNarainChoudharyv. CWT 108 ITR 104 (All

Two adjacent flats; Held allowable;
D. AnandBasappav. ITO 309 ITR 329 (Karnatka)