Section 54/54F exemption restricted to investment in one residential house only

Section 54/54F exemption restricted to investment in one residential house only
Proposed amendment by FB,2014 on Section 54/54F exemption is now end all disputes  regarding Capital gain investment. These amendments will take effect from 1st April, 2015 and will accordingly apply in relation to assessment year 2015-16 and subsequent assessment years.
Proposed Amendment
The Finance Bill, 2014 proposes to restrict the benefits under sections 54 and 54F for investment in purchase or construction of one residential house in India. Following two changes are proposed in section 54F:
(a)  Benefit under section 54F shall be allowed only for investment in one residential house; and
(b)  Such benefit shall not be allowed if investment is made in purchase or construction of a residential house which is situated outside India.

Judicial Rulings
Various Tribunals and High Courts have allowed exemptions to assessee under sections 54 and 54F for investment in multiples houses. The exemptions under sections 54 and 54F were introduced to encourage people to invest in new residential houses for the purpose of their self-occupation. These exemptions were not contemplated to incentivize the taxpayers purchasing the residential accommodations as a part of their investment portfolio.The proposed amendment would overcome the following legal precedents:
Exemption under section 54 is available when two flats are purchased and combined to make them one residential unit. Section 13 of the General Clauses Act was referred to which states that whenever the singular is used for a word, it is permissible to include the plural – CIT v. D. Ananda Basappa [2009] 180 Taxman 4 (Kar.).
The expression ‘a residential house’ should be understood in a sense that the building should be of residential nature and ‘a’ should not be understood to indicate a singular number – CIT v. Smt. K.G. Rukminiamma [2010] 8 121/[2011] 196 Taxman 87(Kar.).
Four residential flats constituted ‘a residential house’ for the purpose of section 54 of the Act – Dr. Smt. P.K. Vasanthi Rangarajan v. CIT [2012] 23 299/209 Taxman 628 (Mad.).
The fact that residential house consists of several independent units cannot be permitted to act as an impediment to allowance of deduction under section 54/54F of the Income-tax Act – CIT v. Gita Duggal [2013] 30 230/214 Taxman 51 (Delhi).
Purchase of 2 flats adjacent to one another having a common meeting point would fulfil the requirement of exemption provisions of section 54 of the Income-tax Act – CIT v. Syed Ali Adil [2013] 212/215 Taxman 283 (AP).
The Tribunal’s decisions on allowability of deductions under section 54F for investment made outside India:

In Vinay Mishra v. Asstt. CIT [2013] 30 341/141 ITD 301 (Bang.) it was held that a residential property acquired outside India is also eligible for exemption under section 54.
However, in Leena J.Shah v. Asstt. CIT [2006] 6 SOT 721 (Ahd.) it was held that for availing of exemption under section 54 the property acquired/constructed must be within India.

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