Law:

Section:

[2008] 306 ITR 368 [2008] 306 ITR 368 (Rajasthan) HIGH COURT OF RAJASTHAN Rajesh Surana v. Commissioner of Income-tax* N.P. GUPTA AND DEO NARAYAN THANVI, JJ. IT APPEAL NO. 74 OF 2002 JANUARY 28, 2008 Section 53 of the Income-tax Act, 1961 - Capital gains - Exemption of, on sale of residential house - Assessment year 1992-93 - A plot of land, having a boundary wall and a garage-cum-room constructed thereon, cannot be treated as a residential house for purpose of allowing exemption under section 53 in respect thereof Admittedly the Income-tax Act does not define the expression "residential house" and section 53 only comprehends 'buildings or lands appurtenant thereto and being a residential house'. Thus it does not exempt merely a building, nor does it exempt merely the land appurtenant thereto, but it exempts both of them, with the concomitant requirement of it being a residential house, obviously, as contra-distinguished from residential building. The distinction between the residential building and residential house is very significant, and not far to seek, inasmuch as the 'residential building' would be any structure existing on land, which has been constructed with intention of being used as a residential house, whether by the assessee, or by any other human being, and it is not necessary, that the building should ever be, or ever have been occupied as a residential house. The predominant intention of the nature of construction can be decisive factor as to whether it is a residential building, as contra-distinguished from a commercial building, or any industrial building. But every 'residential building' would not be "residential house". Though every residential house has to be residential building but not vice versa. In absence of any statutory definition in the Act, even employing dictionary meaning, and/or the common sense approach, in order to describe the asset as residential house, it should be fulfilling the characteristics of a residential house as defined above. The language of section 53 comprehends that the assets should be predominantly residential building and may have land appurtenant thereto, and not that it be a open plot of land, having some…

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