Exemption u/s 54 of the it act, 1961
RD
(Querist) 18 February 2012
This query is : Resolved
Plz answer the following Query:
A & B being co-owners of a residential property sold the same and acquired 2 properties – both properties being owned jointly by the co-owners. (50%-50%) Now, they have claimed in their return of Income – exemption u/s 54 for both the properties – to the extent of 50% in each of the property. So, return of income is showing that one person has claimed exemption in respect of 2 properties – 50% for both the properties - which is against the language used in section 54 – that is – “a residential house” and hence the claim has not been allowed fully in the scrutiny assessment. Stand of the assessee is that in between them they have claimed exemption for 2 properties – so one can say – one property for one assessee and hence the claim should be allowed.
Kindly opine and also give judgment if available.
Plz reply ASAP.
Thanking in Advance
ajay sethi
(Expert) 18 February 2012
raise this query in CAclub india .com
A V Vishal
(Expert) 18 February 2012
Mr Sethi,
Please note that there are taxation experts in this section, if you cannot reply please don't direct them to other sites, my observation is based on a couple of incidents where the experts are redirecting the querists to other sites.
A V Vishal
(Expert) 18 February 2012
D. Anand Basappa v. ITO (2004) 91 ITD 53 (Bang.):
To claim deduction under section 54, there is no bar on acquiring more than one residential house out of proceeds of one residential house.
However, in the instant case it is not clear whether two independent properties were bought in two different places, in case of such transaction the benefit can be adjusted against any one property of the assessees choice.
Vineet
(Expert) 20 February 2012
Please refer to Karnataka High Court decision in K G Rukminiamma case 331 ITR 211. The court held:
The context in which the expression 'a residential house' is used in Section 54 makes it clear that, it was not the intention of the legislation to convey the meaning that it refers to a single residential house. If that was the intention, they would have used the word "one." As in the earlier part, the words used are buildings or lands which are plural in number and that is referred to as "a residential house", the original asset. An asset newly acquired after the sale of the original asset also can be buildings or lands appurtenant thereto, which also should be "a residential house." Therefore the letter 'a' in the context it is used should not be construed as meaning "singular." But, being an indefinite article, the said expression should be read in consonance with the other words 'buildings' and lands' and, therefore, the singular 'a residential house' also permits use of plural by virtue of Section 13(2) of the General Clauses Act
