Ravuri Bhanusri, V. ITO, WARD-1(2), Vijayawada

CO 128/VIZ/2013

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2857 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S R S NARAYAN
• Keywords: Capital asset; Benefit of exemption; Revised return
• Section: 54F; 147; 148; 54

Judgement Text

ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.498/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) ITO, WARD - 1(2), VIJAYAWADA SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI BHANUSRI VIJAYAWADA [PAN NO. APWPR3568K ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NO.128/VIZAG/2013 (ARISING OUT OF I.T.A.NO.498/VIZAG/2013) ( / ASSESSMENT YEAR: 2009-10) SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI BHANUSRI VIJAYAWADA ITO, WARD - 1(2), VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.499/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) ITO, WARD - 1(2) , VIJAYAWADA SRI RAVURI KISHORE, L/R OF LATE SMT. RAVURI RAMAYAMMA VIJAYAWADA [PAN NO.APWPR3567G] ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 2 C.O. NO.129/VIZAG/2013 (ARISING OUT OF I.T.A.NO.499/VIZAG/2013) ( / ASSESSMENT YEAR: 2009-10) SRI RAVURI KISHORE, L/R OF LATE SMT. RAVURI RAMAYAMMA VIJAYAWADA ITO, WARD - 1(2), VIJAYAWADA ( % / APPELLANT) ( & '% / RESPONDENT) ./I.T.A.NO.500/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) ITO, WARD - 1(2), VIJAYAWADA SRI RAVURI KISHORE VIJAYAWADA [PAN NO.AMWPR0183P] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NO.130/VIZAG/2013 (ARISING OUT OF I.T.A.NO.500/VIZAG/2013) ( / ASSESSMENT YEAR: 2009-10) SRI RAVURI KISHORE VIJAYAWADA ITO, WARD - 1(2), VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI S.R.S. NARAYAN, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 21.03.2017 / DATE OF PRONOUNCEMENT : 28.03.2017 ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 3 / O R D E R PER SHRI MANJUNATHA, ACCOUNTANT MEMBER: THESE ARE THREE APPEALS FILED BY THE REVENUE AND S EPARATE CROSS OBJECTIONS FILED BY DIFFERENT ASSESSEES ARE D IRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE COMMISSIONER OF INCOME TAX (A), VIJAYAWADA DATED 16.4.2016 FOR THE ASSESSMENT YEAR 2009-10. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA N O.498/VIZAG/2013 ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INC OME FROM PROPERTY, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 22.10.2010 DECLARING TOTAL INCOME OF ` 4,28,780/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED AS 'THE ACT') ON 8.3.2011. SUBSEQUENTLY, TH E CASE HAS BEEN RE- OPENED U/S 147 OF THE ACT, FOR THE REASONS RECORDED THAT THE INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT WITHI N THE MEANING OF SECTION 147 OF THE ACT. THE FACTS WHICH ARE RELEVA NT FOR RE-OPENING OF ASSESSMENT ARE THAT DURING THE PREVIOUS YEAR RELEVA NT TO ASSESSMENT YEAR 2009-10, THE ASSESSEE LATE SMT. R. BHANUSRI AL ONG WITH 12 OTHERS ENTERED INTO DEVELOPMENT AGREEMENT WITH M/S. SRI SA I VENKATA RAMANA ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 4 CONSTRUCTIONS FOR DEVELOPMENT OF A PIECE OF LAND AD MEASURING 1.68 ACRES AT S.NO.93, GOLLAPUDI AND AGREED TO SHARE CON STRUCTED FLATS IN THE RATIO 17:23. THE AGREEMENT WITH THE BUILDER FOR DE VELOPMENT AND CONSTRUCTION OF FLATS IS IN THE NATURE OF TRANSFER WITHIN THE MEANING OF SECTION 2(47) R.W.S. 53A OF THE TRANSFER OF PROPERT Y ACT, 1882 AND ALSO FACT THAT THE ASSESSEE HAS NOT ADMITTED RESULTANT C APITAL GAIN ON TRANSFER OF LAND IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT IN THE RETURN OF INCOME FILED ON 22.2.2010, A NOTICE U/S 148 OF THE ACT, WAS ISSUED TO THE ASSESSEE ON 20.4.2011 REQUIRING THE ASSESSEE TO FIL E RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10. MEANWHILE, THE ASSESS EE HAS FILED A REVISED RETURN ON 18.5.2011 ADMITTING TOTAL INCOME OF ` 4,35,260/- AS AGAINST INCOME ADMITTED IN THE ORIGINAL RETURN OF ` 4,28,790/- BESIDES DECLARED AGRICULTURAL INCOME OF ` 1 LAKH. THE ASSESSEE ALSO FILED A LETTER ON 18.5.2011 STATING THAT THE RETURN FILED ON 18.5. 2011 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 14 8 OF THE ACT. 3. SUBSEQUENTLY, THE CASE HAS BEEN SELECTED FOR SCR UTINY AND ACCORDINGLY, NOTICE U/S 143(2) OF THE ACT WAS ISSUE D. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE APPEARED FROM TIME TO TIME AND FURNISHED THE INFORMATION AS CALLE D FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 5 DEVELOPER AMOUNTS TO TRANSFER OF PROPERTY WITHIN TH E MEANING OF SECTION 2(47)(V) R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT , 1882 AND HENCE ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN AS TO WHY CAPITAL GAIN SHALL NOT BE CHARGED IN RESPECT OF TRANSFER OF PROP ERTY IN PURSUANCE OF THE DEVELOPMENT AGREEMENT. IN RESPONSE TO SHOW CAU SE NOTICE, THE ASSESSEE HAS FILED ITS REPLY ON 5.11.2012 AND CONTE NDED THAT THERE IS NO TRANSFER OF PROPERTY WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT AS THE DEVELOPMENT AGREEMENT ENTERED INTO WITH THE DEV ELOPER IS A TEMPORARY PERMISSION EXTENDED TO THE BUILDER TO ENT ER AND CONSTRUCT, BUT NOT ALLOWING THE POSSESSION OF THE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF THE CONTRACT OF THE NATURE R EFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. THE ASS ESSEE FURTHER CONTENDED THAT MERELY ENTERING INTO A JOINT DEVELOP MENT AGREEMENT DOES NOT GIVE RISE TO ANY CAPITAL GAIN AS THE ASSES SEE NEITHER RECEIVED ANY CONSIDERATION NOR RECEIVED POSSESSION OF THE CO NSTRUCTED FLATS AS ON THE DATE OF JOINT DEVELOPMENT AGREEMENT AND HENCE C OMPUTATION OF CAPITAL GAIN AS ON THE DATE OF AGREEMENT DOES NOT A RISE. THE ASSESSEE FILED ONE MORE LETTER ON 31.12.2012 AND OPPOSED PRO POSED LEVY OF CAPITAL GAIN ON TRANSFER OF PROPERTY IN PURSUANCE O F JOINT DEVELOPMENT AGREEMENT. ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 6 4. THE ASSESSEE FURTHER CONTENDED THAT IN CASE THER E IS A LIABILITY ON ACCOUNT OF CAPITAL GAINS, IN PURSUANCE OF JOINT DEV ELOPMENT AGREEMENT, THE VALUE OF THE PROPERTY TRANSFERRED HAS TO BE TAK EN BASED ON THE COST OF CONSTRUCTION INCURRED BY THE DEVELOPER FOR CONST RUCTION OF FLATS, BUT NOT THE GUIDANCE VALUE OF THE PROPERTY AS PER THE S RO. THE ASSESSEE HAS FILED ONE MORE LETTER ON 28.2.2013 AND CLAIMED EXEMPTION U/S 54F OF THE ACT, ON TOTAL FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT BY CLAIMING THAT THE SAID FLATS ARE CONST RUCTED FOR RESIDENTIAL PURPOSE. IN SUPPORT OF HIS ARGUMENTS RELIED UPON T HE FOLLOWING CASE LAWS: 1) CIT VS. GITA DUGGAL (ITA NO.1237/2011) (DELHI HI GH COURT) 2) CIT VS. SMT. K.G. RUKMINIAMMA (2011) 239 CTR (KA R) 435 3) CIT VS. DR. P.K. VASANTHI RANGARAJAN (2012) 252 CTR (MAD) 336 4) CIT VS. SYED ALI ADIL (ITA NO.2012) (A.P. HIGH C OURT) THE ASSESSEE REFERRING TO THE ABOVE DECISIONS SUBM ITTED THAT IN CASE OF JOINT DEVELOPMENT AGREEMENTS, IF PROPERTY I S GIVEN FOR DEVELOPMENT, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT ON ALL THE FLATS RECEIVED IN PURSUANCE TO JOINT DEVELO PMENT AGREEMENT, EVEN IF THE FLATS ARE LOCATED IN DIFFERENT FLOORS. 5. THE A.O. AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE AND ALSO REFERRING TO CERTAIN JUDICIAL PRECEDENTS, HELD THAT AS PER THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT, TRANSFE R INCLUDES ANY TRANSFER INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMM OVABLE PROPERTY TO ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 7 BE TAKEN OR RETAINED IN PART PERFORMANCE OF THE CON TRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT, 1882. SINCE, THE DEVELOPMENT AGREEMENT ENTERED INTO WITH THE DEV ELOPER IS IN THE NATURE OF TRANSACTION ALLOWING POSSESSION OF ANY IM MOVABLE PROPERTY, WHICH COMES UNDER THE DEFINITION OF TRANSFER AS DEF INED U/S 2(47) R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 AND HENCE , CAPITAL GAIN IS CHARGEABLE ON THE TRANSACTION. THE A.O. FURTHER OB SERVED THAT IN SO FAR AS COMPUTATION OF CAPITAL GAIN ON FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT, THE A.O. HAS ADOPTED COST OF CONSTRUCTION @ ` 400/- PER SQ.FT. INCURRED BY THE BUILDER TO DETERM INE THE CONSIDERATION RECEIVED FOR TRANSFER OF LAND IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT AND REJECTED THE CLAIM OF THE ASSESSEE WI TH REGARD TO THE VALUE OF PARKING PLACE AND ADOPTED RATE OF ` 250/- PER SQ.FT. FOR PARKING PLACE. IN SO FAR AS CLAIM OF EXEMPTION U/S 54F OF THE ACT, THE A.O. REJECTED THE CLAIM OF EXEMPTION ON THE GROUND THAT THE ASSESSEE HAS CONSTRUCTED BUILDING AND LEASED OUT TO M/S. CHAITAN YA EDUCATIONAL SOCIETY FOR RUNNING EDUCATIONAL INSTITUTION FOR THE PURPOSE OF COMMERCIAL EXPLOITATION OF THE PROPERTY AND HENCE, THE ASSESSE E IS NOT ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. WITH THESE OBSERVATI ONS, COMPUTED LONG TERM CAPITAL GAIN OF ` 80,53,279/-. ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 8 6. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURTHER CONTENDED THAT THE A.O. WAS ERRED IN TREATING THE VALUE OF UN DIVIDED SHARE OF LAND ALLOTTED BY THE BUILDER AS CONSIDERATION RECEIVED B Y THE ASSESSEE, IGNORING THE FACT THAT THE LAND BELONGS TO THE ASSE SSEE HIMSELF AND THEREFORE CANNOT BE CONSIDERED AS CONSIDERATION REC EIVED FROM THE BUILDER. THE ASSESSEE FURTHER SUBMITTED THAT THE A .O. WAS ERRED IN DETERMINING THE STATUS OF THE ASSESSEE AS INDIVIDUA L AS AGAINST HUF STATUS, CLAIMED AT THE TIME OF ASSESSMENT, EVEN THO UGH THE A.O. HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE S SOURCE OF INCOME DERIVED FROM ANCESTRAL PROPERTY. IT WAS FURTHER SU BMITTED THAT THE A.O. WAS ERRED IN CONCLUDING THAT THE FLATS ALLOTTED TO THE ASSESSEE WERE COMMERCIAL PROPERTY, OVERLOOKING THE FACT THAT THE FLATS WERE CONSTRUCTED FOR PURELY RESIDENTIAL PURPOSE AND ALSO THE TENANT HAS USED THE PREMISES FOR ACCOMMODATING THE STUDENTS FOR THE IR RESIDENCE. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O. WAS ERRED IN REJECTING THE CLAIM OF EXEMPTION U/S 54F OF THE ACT, IGNORING THE DECIS ION OF THE KARNATAKA HIGH COURT, IN THE CASE OF CIT VS. K.G. RUKMINIAMMA (SUPRA), WHEREIN IT WAS HELD THAT SEVERAL FLATS RECEIVED BY THE SITE OW NER FROM THE ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 9 DEVELOPER SHOULD BE CONSIDERED AS A SINGLE RESIDENT IAL UNIT AND THEREFORE, ALL OF THEM WERE ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. 7. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMIS SIONS OF THE ASSESSEE, ACCEPTED THE CLAIM OF THE ASSESSEE WITH R EGARD TO THE STATUS AND OBSERVED THAT THE ASSESSEES FAMILY WAS CONSIST ING OF ASSESSEE AND HER TWO CHILDREN AND ACCORDINGLY, THE CLAIM OF HUF STATUS IS IN ORDER. THE CIT(A) FURTHER OBSERVED THAT THE A.O. WAS ERRED IN DETERMINING THE ASSESSEES STATUS AS INDIVIDUAL, IGNORING THE FACT THAT THE PROPERTY IN QUESTION WAS INHERITED FROM THE ASSESSEES ANCESTOR S AND HENCE THE ASSESSEE HAS RIGHTLY CLAIMED THE HUF STATUS. IN SO FAR AS COMPUTATION OF LONG TERM CAPITAL GAIN TOWARDS SHARE OF CONSTRUC TED FLATS, THE CIT(A) OBSERVED THAT AS THE LAND BELONGS TO THE ASSESSEE, IT WOULD NOT FORM PART OF THE CONSIDERATION RECEIVED FROM THE BUILDER , HENCE, ITS VALUE NEEDS TO BE DELETED FROM THE CAPITAL GAINS AS WORKE D OUT BY THE A.O. 8. IN SO FAR AS CLAIM OF EXEMPTION U/S 54F OF THE A CT, THE CIT(A) OBSERVED THAT IT HAS TO BE STATED HERE THAT IT IS N OT RELEVANT TO REFER TO THE AGREEMENT BETWEEN BUILDER AND THE FUTURE TENANT TO DECIDE WHETHER THE PROPERTY IS RESIDENTIAL OR COMMERCIAL. THE FLA TS WERE ALLOTTED TO SITE OWNER BY THE BUILDER ON THE BASIS OF AGREEMENT AND LET OUT BY THE OWNER TO THE TENANT. THE A.O. HAS NOT BROUGHT ON R ECORD ANY AGREEMENT BETWEEN THE ASSESSEE AND TENANT TO PROVE THAT THE ASSESSEE ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 10 HAS LET OUT ITS PREMISES TO THE EDUCATIONAL INSTITU TION FOR COMMERCIAL PURPOSES. THE CIT(A) FURTHER REFERRING TO THE DECI SION OF ITAT, HYDERABAD IN THE CASE OF SMT. M. SREEDEVI REDDY, HY DERABAD VS. CIT IN APPEAL NO.1009/HYD/2012, OBSERVED THAT RESIDENTIAL HOUSE USED U/S 54F OF THE ACT HAS NOT BEEN DEFINED IN THE INCOME T AX ACT. THE POPULAR MEANING OF THE HOUSE IS A PLACE USED FOR HABITATI ON OF PERSONS, THAT RESIDENTIAL HOUSE IS A DWELLING HOUSE AS DISTINGUIS HED FROM A HOUSE OF BUSINESS, WAREHOUSE, OFFICE, SHOP, ETC. APPLYING T HESE PARAMETERS AND ALSO FACT THAT THE FLATS WERE CONSTRUCTED FOR RESID ENTIAL PURPOSE AND THESE FLATS WERE USED TO ACCOMMODATE THE STUDENTS B Y THE TENANT, HELD THAT THE FLATS HAVE TO BE CONSIDERED AS A RESIDENT IAL HOUSE ONLY AND NOT AS A COMMERCIAL PROPERTY AND THUS THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. THE CIT(A) FURTHER H ELD THAT THE A.O. DENIED THE BENEFIT OF EXEMPTION ON THE SOLE GROUND THAT THE FLATS RECEIVED BY THE ASSESSEE ARE COMMERCIAL PROPERTY, B UT NOT RESIDENTIAL HOUSE WITHOUT GOING INTO THE ISSUE OF ELIGIBILITY O F EXEMPTION U/S 54F OF THE ACT. THEREFORE, BY RELYING UPON THE DECISION O F HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS. SYED ALI ADIL (SUPRA) AND THE DECISION OF HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. K.G. RUKMINIAMMA (SUPRA), HELD THAT THE PROPERTY IN QUESTION IS A RE SIDENTIAL PROPERTY AND HENCE THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54 F OF THE ACT, IN ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 11 RESPECT OF ALL THE FLATS ALLOTTED AND THAT THE EXEM PTION CANNOT BE RESTRICTED TO A SINGLE FLAT. AGGRIEVED BY THE CIT( A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 9. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) ERRED IN HOLDING THAT THE VALUE OF UNDIVIDED SHARE OF LAND ALLOTTED TO TH E ASSESSEE WOULD NOT FORM PART OF CONSIDERATION, SINCE THE ENTIRE LAND W AS HANDED OVER TO THE DEVELOPER AND THE SALE CONSIDERATION WAS RECEIVED I N THE FORM OF FLATS ALONG WITH UNDIVIDED SHARE OF LAND. THE LD. CIT(A) OUGHT NOT TO HAVE ACCEPTED THE ASSESSEES EXPLANATION FOR INCLUSION O F MINOR SHARE OF LAND IN THE HANDS OF THE ASSESSEE, SINCE THE SAME IS TAX ABLE IN THE HANDS OF THE ASSESSEE AS PER PROVISIONS OF SECTION 64(1) OF THE ACT. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE I S NOT ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT, AS THE CONSIDERATION RECEIVED WAS RE- INVESTED IN THE COMMERCIAL PROPERTY AND NOT IN THE RESIDENTIAL PROPERTY. THE D.R. FURTHER SUBMITTED THAT THE LD. CIT(A) ERRE D IN ALLOWING EXEMPTION U/S 54F OF THE ACT, AS THE ASSESSEE GOT HIS SHARE OF FLATS IN DIFFERENT BLOCKS AND EACH BLOCK CONSIST SEPARATE RE SIDENTIAL UNITS HAVING SEPARATE ENTRANCES AND BY NO STRETCH OF IMAGINATION , CONSTITUTE A SINGLE RESIDENTIAL UNIT. 10. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSE E STRONGLY SUPPORTED THE ORDER PASSED BY THE CIT(A). THE A.R. FURTHER SUBMITTED ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 12 THAT THE CIT(A) HAS RIGHTLY ALLOWED EXEMPTION U/S 5 4F OF THE ACT, IN RESPECT OF FLATS RECEIVED BY THE ASSESSEE IN PURSUA NCE OF JOINT DEVELOPMENT AGREEMENT, AS THE LEGAL POSITION PRIOR TO THE AMENDMENT OF SECTION 54F OF THE ACT BY THE FINANCE ACT, 2014 W.E .F. 1.4.2015 IS VERY CLEAR ON THE ELIGIBILITY OF EXEMPTION TOWARDS ALL F LATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT. THE A.R. REFERRING TO THE DECISION OF HONBLE HIGH COURT OF MADRAS, IN THE CA SE OF CIT VS. GUMANMAL JAIN IN TCA NO.33 OF 2017 (2017) 98 CCH 00 93 (CHENNAI HC) SUBMITTED THAT WHEN THE ASSESSEE RECEIVED HIS SHARE OF FLATS IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT, THE ASSES SEE IS ELIGIBLE FOR ALL THE FLATS, EVEN IF FLATS/APARTMENTS ARE IN DIFF ERENT BLOCKS AND DIFFERENT TOWERS AS LONG AS THEY ARE IN SAME ADDRESS/LOCATION AND IT DOES NOT DISENTITLE THE ASSESSEE FROM GETTING THE BENEFIT OF SECTION 54F OF THE ACT. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX WHICH LEADS TO THE DISPUTE IS THAT T HE ASSESSEE ALONG WITH OTHER 12 CO-OWNERS ENTERED INTO A DEVELOPMENT AGREE MENT WITH SHRI SAI VENKATA RAMANA CONSTRUCTIONS FOR DEVELOPMENT OF A P IECE OF LAND ADMEASURING 1.68 ACRES AT S.NO.93. AS PER THE SAID JOINT DEVELOPMENT AGREEMENT, THE ASSESSEE AND 12 OTHER FAMILY MEMBERS HAVE AGREED TO SHARE THE CONSTRUCTED FLATS IN THE RATIO OF 17:23. THE ASSESSEE HAS ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 13 CLAIMED EXEMPTION U/S 54F OF THE ACT ON TOTAL FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT. ACCORDIN G TO THE ASSESSEE, EXEMPTION U/S 54F OF THE ACT IS ALLOWABLE EVEN IF T HE FLATS/APARTMENTS ARE SITUATED IN DIFFERENT BLOCKS OR TOWERS. THE A. O. HAS DISALLOWED EXEMPTION CLAIMED U/S 54F OF THE ACT, ON THE GROUND THAT THE ASSESSEE HAS LET OUT THE APARTMENT TO EDUCATIONAL INSTITUTIO N FOR THE PURPOSE OF COMMERCIAL USE. THE A.O. FURTHER OBSERVED THAT EXE MPTION U/S 54F OF THE ACT IS AVAILABLE TO ONE RESIDENTIAL HOUSE, BUT NOT FOR ALL RESIDENTIAL FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AG REEMENT. 12. THE ONLY ISSUE TO BE DECIDED IS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT FOR ALL THE FLATS RECEIVED IN PURSUANCE OF A DEVELOPMENT AGREEMENT? THE ISSUE IS NO LONGER A RES INTEGRA. THE HONBLE HIGH COURT OF A.P., IN THE CASE OF CIT VS. SYED ALI ADIL (SUPRA), HAS CONSIDERED THE ISSUE AND AFTER ANALYZING THE PROVISIONS OF SEC TION 54F OF THE ACT, OBSERVED THAT THE EXPRESSION A RESIDENTIAL HOUSE IN SECTION 54F OF THE ACT HAS TO BE UNDERSTOOD IN A SENSE THAT BUILDING S HOULD BE OF RESIDENTIAL NATURE AND A SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGLE NUMBER AND WHERE AN ASSESSEE HAD PURCHASED TWO RESI DENTIAL FLATS, IS ENTITLED TO EXEMPTION U/S 54F OF THE ACT, IN RESPEC T OF CAPITAL GAINS ON SALE OF ITS PROPERTY ON PURCHASE OF BOTH FLATS. TH E HIGH COURT FURTHER ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 14 OBSERVED THAT DEDUCTION U/S 54F OF THE ACT, IS ALLO WABLE WITH RESPECT TO THE RESIDENTIAL HOUSE CONSISTING OF SEVERAL INDEPEN DENT UNITS. A SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE HIGH COURT O F MADRAS, IN THE CASE OF CIT VS. GUMANMAL JAIN (SUPRA), WHEREIN THE HONBLE HIGH COURT OBSERVED THAT ALL THE FLATS ARE A PRODUCT OF ONE DE VELOPMENT AGREEMENT OF THE SAME PIECE OF LAND BEING SAID LAND, HENCE EV EN IF FLATS ARE IN DIFFERENT BLOCKS AND DIFFERENT TOWERS, AS LONG AS T HEY ARE IN SAME ADDRESS/LOCATION, IT DOES NOT DISENTITLE THE ASSESS EE FROM GETTING THE BENEFIT OF SECTION 54F OF THE ACT. IN YET ANOTHER CASE, THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. V.R. KARPAGA M (2015) 373 ITR 127, HELD THAT PRIOR TO AMENDMENT U/S 54F BY FINANC E ACT, 2004 W.E.F. 1.4.2015, WITH REGARD TO WORD A, A RESIDENTIAL HO USE INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS, WHERE UNDER THE DEVELOPMEN T AGREEMENT ASSESSEE WAS ENTITLED TO RECEIVE CERTAIN BUILT-UP A REA, WHICH GOT TRANSLATED INTO FIVE FLATS, EXEMPTION U/S 54F IN R ESPECT OF FIVE FLATS IN A MULTI-STOREY CONSTRUCTION WOULD BE AVAILABLE. 13. THUS, THE LEGAL PROPOSITION BEFORE THE AMENDMEN T OF SECTION 54F OF THE ACT, BY THE FINANCE ACT, 2014 W.E.F. 1.4.201 5, IN THE CASE OF DEVELOPMENT AGREEMENT, IS VERY CLEAR THAT IF THE LA ND OWNER RECEIVES NUMBER OF FLATS, EVEN THOUGH THEY ARE LOCATED IN DI FFERENT BLOCKS AND DIFFERENT TOWERS, ONCE THEY ARE IN SAME ADDRESS/LOC ATION AND ALL THE FLATS ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 15 ARE A PRODUCT OF ONE DEVELOPMENT AGREEMENT, THEN TH E ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT, IN RESPE CT OF ALL THE FLATS. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT IN RESPECT OF ALL THE FLATS RECE IVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT. THE REVENUE HAS FAILE D TO BRING ON RECORD ANY CONTRARY DECISION AGAINST THE LAW LAID D OWN BY THE HONBLE A.P. HIGH COURT, IN THE CASE OF CIT VS. SYED ALI AD IL (SUPRA). CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE DECISION OF HONBLE A.P. HIGH COURT, IN THE CASE OF CIT VS. SYED ALI ADIL (SUPRA), WE ARE OF THE VIE W THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT, TOWARDS ALL THE FLATS RECEIVED IN PURSUANCE TO DEVELOPMENT AGREEMENT. 14. IN SO FAR AS THE ALLEGATION OF THE A.O., THAT T HE FLATS CONSTRUCTED BY THE ASSESSEE ARE COMMERCIAL PROPERTY BUT NOT RESIDE NTIAL HOUSE, WE FIND THAT THE ASSESSEE HAS FILED NECESSARY EVIDENCES TO PROVE THAT THE PROPERTY IN QUESTION IS A RESIDENTIAL FLAT. THE AS SESSEE HAS FURNISHED A COPY OF PLAN SANCTIONED BY THE MUNICIPAL AUTHORITIE S, WHICH CLEARLY SHOWS THAT THE APARTMENTS CONSTRUCTED BY THE BUILDE R ARE RESIDENTIAL HOUSES. THOUGH THE ASSESSEE HAS LEASED OUT THE PRE MISES TO AN EDUCATIONAL SOCIETY, THE TENANT HAS USED THE PREMIS ES FOR THE PURPOSE OF ACCOMMODATION OF STUDENTS. THEREFORE, WE ARE OF TH E VIEW THAT MERELY ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 16 BECAUSE THE HOUSE IS LEASED OUT TO AN EDUCATIONAL S OCIETY, IT CANNOT BE SAID THAT THE PROPERTY IN QUESTION IS A COMMERCIAL PROPERTY, WHICH IS NOT ENTITLED FOR EXEMPTION U/S 54F OF THE ACT. THE CIT (A), AFTER CONSIDERING THE RELEVANT FACTS, AND ALSO BY FOLLOWING CERTAIN J UDICIAL PRECEDENTS HAS RIGHTLY DIRECTED THE A.O. TO ALLOW EXEMPTION CLAIME D U/S 54F OF THE ACT. WE DO NOT FIND ANY REASONS TO INTERFERE WITH THE ORD ER OF THE CIT(A). HENCE, WE UPHOLD THE CIT(A) ORDER AND REJECT THE GR OUND RAISED BY THE REVENUE. 15. THE NEXT GROUND RAISED BY THE REVENUE IS WITH R EGARD TO COMPUTATION OF LONG TERM CAPITAL GAIN IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT AND ADOPTION OF CONSIDERATION FOR TRANSFE R OF PROPERTY. ONCE THE ISSUE HAS BEEN DECIDED THAT THE ASSESSEE IS ELI GIBLE FOR EXEMPTION U/S 54F OF THE ACT, IN RESPECT OF ALL THE FLATS, TH E OTHER ISSUES, I.E. COMPUTATION OF CAPITAL GAINS AND ADOPTION OF GUIDAN CE VALUE FOR THE PURPOSE OF DETERMINATION OF CAPITAL GAIN BECOMES AC ADEMIC, AS THE ASSESSEE IS ELIGIBLE FOR EXEMPTION TOWARDS ALL THE FLATS RECEIVED IN PURSUANCE OF A JOINT DEVELOPMENT AGREEMENT AND HENC E COMPUTATION OF CAPITAL GAIN AND ADOPTION OF GUIDANCE VALUE FOR THE PURPOSE OF DETERMINATION CONSIDERATION HAS NO IMPACT ON THE TO TAL INCOME. 16. IN SO FAR AS CLUBBING OF INCOME OF THE MINOR CH ILDREN IN THE HANDS OF THE ASSESSEE, WE ARE OF THE VIEW THAT EVEN THOUG H SECTION 64(1)(A) OF ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 17 THE ACT, APPLIES FOR CLUBBING OF INCOME OF MINORS I N THE HANDS OF THE ASSESSEE, BEFORE CLUBBING OF INCOME, THE NORMAL PRO CEDURE FOR COMPUTATION OF CAPITAL GAIN HAS TO BE ADOPTED. THE REFORE, BEFORE ARRIVING AT NET INCOME FOR THE PURPOSE OF CLUBBING IN THE HANDS OF THE ASSESSEE, THE DEDUCTION AVAILABLE U/S 54F OF THE AC T HAS TO BE CONSIDERED SEPARATELY IN THE HANDS OF THE MINOR CHI LDREN. THE CIT(A) HAS RIGHTLY CONSIDERED THE ISSUE AND WE DO NOT FIND ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGL Y, WE UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE RE VENUE. 17. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS.498, 499 & 500/VIZAG/2013 ARE DISMISSED. 18. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN SUPP ORT OF THE ORDER OF THE CIT(A). THEREFORE, FOR THE REASONS RECORDED IN THE PRECEDING PARAGRAPHS, WE DISMISS CROSS OBJECTIONS FILED BY TH E ASSESSEE AS NOT MAINTAINABLE. 19. IN THE RESULT, THE CROSS OBJECTIONS FILED BY T HE ASSESSEE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH MAR17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ITA NOS.498, 499 & 500/VIZAG/2013 & CO NOS.128 129 & 130/VIZAG/2013 SRI RAVURI SAI CHAITANYA, L/R OF LATE SMT. RAVURI B HANU SRI, VJA 18 # /VISAKHAPATNAM: ' /DATED : 28.03.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO WARD-1(2), VIJAYAWADA 2. / THE RESPONDENT (1) SRI RAVURI SAI CHAITANYA, L /R OF LATE SMT. RAVURI BHANUSRI, NO.6-4, ONE CENTRE, BESIDE SBI GOLLAPUDI, VIJAYAWADA 3. / THE RESPONDENT (2) SRI RAVURI KISHORE, L/R OF LATE SMT. RAVURI RAMAYAMMA, D/O SRI P. NAGESWARA RAO, NO.6-40, ONE C ENTRE, BESIDE SBI GOLLAPUDI, VIJAYAWADA 4. / THE RESPONDENT (3) SRI RAVURI KISHORE, S/O R. S ATYANARAYANA, NO.6-4, B/S SBI, GOLLAPUDI MAIN ROAD, VIJAYAWADA 5. + / THE CIT, VIJAYAWADA 6. + ( ) / THE CIT (A), VIJAYAWADA 7. # . , . , # / DR, ITAT, VISAKHAPATNAM 8 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM