RAJAN MADHUKAR PATIL Vs. ITO

JUDGEMENT

(1.) THIS appeal filed by the assessee is directed against the order dated 12 -11 -2013 of the CIT(A) -III, Pune relating to Assessment Year 2008 -09.

(2.) FACTS of the case, in brief, are that the assessee is an individual and employed with TIBCO Software India Pvt. Ltd. He filed his return of income declaring total income of Rs. 16,70,317/ -. The income of the assessee consists of salary, income from house property and Nil capital gain. During the course of assessment proceedings the AO observed from the details furnished by the assessee from time to time that the assessee has sold the house property at 6 Moti Sagar, 377, Kelsuskar Road, South Shivaji Park, Dadar, West Mumba -48. The said property was sold on 14 -08 -2007 for a consideration of Rs. 1,24,00,000/ -. It was claimed that the house property was purchased for a consideration of Rs. 45,000/ - in the year 1978. After deducting the indexed cost of acquisition at Rs. 2,47,950/ -, the total capital gain was determined at Rs. 1,21,52,050/ -. The assessee in the computation of statement claimed the above capital gain as exempt on account of investment in 3 residential flats in Pune, the details of which are as under:

(3.) BEFORE CIT(A) it was submitted that assessee is entitled to claim deduction u/s. 54 in respect of 3 flats. It was argued that words "a residential house" used in section 54 does mean "one house" but being an indefinite article should mean "any residential house". Referring to the decision of the Hon'ble Bombay High Court in the case of Mahomedally Tajbhoy v. Commissioner of Excess Profit Tax reported in : 20 ITR 274, it was argued that the Hon'ble High Court in the said decision has held that the expression " a decision" in section 10A(3) of the Excess Profit Tax Act was held to mean "any decision" which in turn could mean more than one decision. It was argued that had the legislature intended to restrict an investment in one house it could have done so by using the expression one residential house. It was argued that the legislature has used the words "one" to restrict deduction to a single unit within the provision of section 5(1)(iv) of the Wealth Tax Act wherein the expression used is "one residential house". Relying on the decision of the Hon'ble Karnataka High Court in the case of CIT v. D. Ananda Basappa reported in : 309 ITR 329, it was argued that the Hon'ble High Court in the said decision has held that the expression "a residential house" should be understood in the sense that the building should be residential in nature and the expression "a" should not be understood to indicate a singular number. It was argued that the SLP filed by the Department against the decision has been dismissed by the Hon'ble Supreme Court. It was accordingly argued that following the judicial precedents narrated above, deduction u/s. 54 may be granted in respect of more than one house and the claim of deduction u/s. 54 should be allowed to all the 3 residential houses purchased by the assessee.