Smt. Shobha Venugopal, Bangalore V. Income Tax Officer, Ward- 6(2)(4), Bangalore

ITA 1066/BANG/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9426 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-11-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 15-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R. PREMI
• Assessee Lawyers: V. SRINIVASAN
• Keywords: Valuation report; Capital Gains
• Section: 54; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BENGALURU BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER I.T.A NO.1066/BANG/2019 (ASSESSMENT YEAR: 2015-16) SMT. SHOBHA VENUGOPAL, U4-201, ROSEWOOD REGENCY, NEXT TO ST. PETER SCHOOL, KAIKONDRAHALI, SARJAPUR ROAD, BENGALURU 560 035. [PAN: ACZPV 7119G] VS. THE INCOME TAX OFFICER, WARD-6(2)(4), BENGALURU. ( /APPELLANT ) ( /RESPONDENT ) / APPELLANT BY : SHRI V. SRINIVASAN, ADVOCATE / RESPONDENT BY : SMT. R. PREMI, JCIT / DATE OF HEARING : 27.11.2019 /DATE OF PRONOUNCEMENT : 05.12.2019 O R D E R PER D.S. SUNDER SINGH, A.M. : THIS APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, BENGALURU ( HEREAFTER REFERRED AS CIT(A)) IN ITA NO.10392/CIT(A)-6/BENGALURU/201 7-18 DATED 08/04/2019 FOR THE ASSESSMENT YEAR 2015-16. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE DEDUCT ION U/S.54F OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.10,11,750/- AND THE CASE WAS SELECTED FOR SCRUTI NY. DURING THE COURSE ITA NO.1066/BANG/2019 :- 2 -: OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAS ADMITTED THE LONG TERM CAPITAL GAINS ( LTCG) OF RS. 1,17,82,561/- AND CLAIMED THE DEDUCTION U/S. 54F OF THE ACT, HAVING REINVESTED THE SALE CONSIDERATION IN RESIDENTIAL PR OPERTY. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THE SITE BEARING NO.12(OLD SITE NO,12,SITE NO.13,SITE NO.1,SITE NO3A), SITUATED AT 14 TH MAIN ROAD, BRINDAVAN NAGAR, JALLAHALLI, BANGALORE, PID NO.2-92 -12 ADMEASURING 3611 SFT, FOR A CONSIDERATION OF RS.1,26,70,000/- A ND THE GUIDELINE VALUE OF THE SAID PROPERTY WAS RS. 1,39,03,000/- AS PER STA MPS AND REGISTRATION AUTHORITY. THE ASSESSING OFFICER(AO) PROPOSED TO T AKE THE GUIDELINE VALUE FOR THE PURPOSE OF CAPITAL GAINS FOR WHICH THE ASSE SSEE DID NOT OBJECT, HENCE THE AO ADOPTED THE SALE CONSIDERATION AT RS.1 ,39,03,000/-. 2.1 DURING THE PROCEEDINGS THOUGH THE ASSESSEE HAD STATED THAT SHE HAS PURCHASED THE HOUSE SITE FOR CONSIDERATION OF RS.75,00,000/- AND CONSTRUCTED A RESIDENTIAL HOUSE AND CLAIMED DEDUCTI ON U/S. 54F OF THE ACT, SHE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE FOR HAVING RE-INVESTED THE SALE PROCEEDS IN ACQUIRING THE NEW RESIDENTIAL HOUSE WITHIN THE TIME LIMIT ALLOWED UNDER SECTION 54F OF THE ACT. THEREF ORE, THE AO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F OF THE ACT. AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 2.2. BEFORE THE LD.CIT(A) THE ASSESSEE PRODUCED THE PHOTOGRAPHS OF THE NEW RESIDENTIAL HOUSE AS A PROOF OF ACQUIRING T HE NEW ASSET AND STATED ITA NO.1066/BANG/2019 :- 3 -: THAT SHE HAD SUBMITTED THE PHOTOGRAPHS OF THE NEW R ESIDENTIAL HOUSE BEFORE AO AND THE AO HAS NOT CONSIDERED THE EVIDE NCES PLACED BEFORE HIM AT THE TIME OF COMPLETION OF ASSESSMENT. SHE AL SO SUBMITTED THE VALUATION REPORT DETERMINING THE VALUE OF THE RESID ENTIAL HOUSE AS ON 31/03/2018 AT RS.1,26,77,000/-. THE LD. CIT(A) FORW ARDED THE SUBMISSIONS MADE BY THE ASSESSEE ALONG WITH THE VA LUATION REPORT AND THE PHOTOGRAPHS TO THE AO AND THE AO IN REPLY SUBMI TTED THE REMAND REPORT STATING THAT THE ASSESSEE DID NOT FURNISH PH OTOGRAPHS OF NEW HOUSE BEFORE HIM AT THE TIME OF ASSESSMENT PROCEEDINGS AN D HENCE THE QUESTION OF NON CONSIDERING THE PHOTOGRAPHS DOES NOT ARISE. HE FURTHER STATED THAT THE SAME WAS FURNISHED ONLY ALONG WITH THE VALUATIO N REPORT BEFORE THE LD. CIT(A). THE ASSESSEE ALSO SUBMITTED THE COPY OF BAN K ACCOUNT BEFORE THE LD. CIT(A) SHOWING THE SALE CONSIDERATION RECEIVED AND THE PAYMENT OF PURCHASE CONSIDERATION THROUGH THE BANK. IN ADDITIO N TO THE ABOBVE, THE ASSESSEE ALSO FURNISHED THE PHOTO COPIES OF RECEIPT S FOR ELECTRICITY DEPOSITS FOR CONNECTION DATED 03/04/2017 AND COPY OF THE GRUHA PRAVESHAM INVITATION CARD DATED 19/03/2017 BEFORE THE CIT(A) AS AN EVIDENCE FOR ACQUIRING THE NEW ASSET. THE LD. CIT(A ) ACCEPTED THE ASSESSEES CONTENTION REGARDING THE CONSTRUCTION OF THE HOUSE AND OBSERVED THAT THERE WAS NO EVIDENCE FURNISHED BY TH E ASSESSEE REGARDING THE CONSTRUCTION OF HOUSE SUCH AS PLAN APPROVAL AND COMPLETION CERTIFICATE ETC. HOWEVER, OBSERVED FROM THE VALUATION REPORT DA TED 31 ST MARCH, 2018 AND THE REPORT OF THE INCOME TAX INSPECTOR THAT THE TOTAL AREA OF SITE WAS ITA NO.1066/BANG/2019 :- 4 -: 3000 SQ. FT. ON WHICH THE ASSESSEE HAD CONSTRUCTED SIX RESIDENTIAL HOUSES WITH AC SHEET ROOF HAVING SEPARATE ENTRANCE TO EACH HOUSE WITH A COMMON PASSAGE AREA AND SEPARATE ELECTRIC METERS FO R EACH DWELLING UNIT. FROM THE VALUATION REPORT AND THE INSPECTION REPORT OF THE INCOME TAX INSPECTOR, THE LD. CIT(A) FURTHER FOUND THAT THE AS SESSEE HAS CONSTRUCTED SIX SEPARATE HOUSES AND NOT ONE RESIDENTIAL HOUSE. SINCE, THERE WAS AN AMENDMENT W.E.F 1 ST APRIL, 2015 AND THE PROVISIONS OF SECTION 54F OF T HE ACT PERMITS DEDUCTION OF ONLY ONE RESIDENTIAL HOUSE , THE LD. CIT(A) HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION ONLY ON E HOUSE BUT NOT ALL THE SIX RESIDENTIAL HOUSES. THEREFORE THE LD. CIT(A) AL LOWED 1/6 TH OF INVESTMENT AMOUNTING TO RS. 21,61,739/- IN THE NEW RESIDENTIAL HOUSE AND CONFIRMED THE BALANCE AMOUNT OF ADDITION. HENCE, TH E ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. DURING THE APPEAL OF HEARING, THE LD. AR ARGUED THAT THE ASSESSEE HAS CONSTRUCTED ONLY ONE RESIDENTIAL HOUSE WITH SIX RESIDENTIAL UNITS. THOUGH THERE WERE SIX RESIDENTIAL UNITS, THE HOUSE IS ALLOTTED ONE KATHA NUMBER ISSUED BY BBMP, HENCE, ARGUED THAT SIX RESID ENTIAL UNITS OF THE HOUSE WITH MULTIPLE ENTRANCES CANNOT MAKE ONE RESID ENTIAL HOUSE IN TO SIX HOUSES. THE LD.AR FURTHER ARGUED THAT THE ASSESSEE IS PERMITTED TO CONSTRUCT THE DIFFERENT UNITS IN A SINGLE LARGE RES IDENTIAL HOUSE SO AS TO ALLOW MULTIPLE TENEMENTS. THE LD. AR FURTHER ARGUED THAT TO TREAT EACH UNIT AS A SEPARATE RESIDENTIAL HOUSE THE UNDIVIDED SHARE OF LAND REQUIRED TO BE ALLOTTED TO EACH UNIT. IN THE INSTANT CASE THE ENTI RE LAND IS HELD BY THE ITA NO.1066/BANG/2019 :- 5 -: ASSESSEE. THEREFORE, SUBMITTED THAT ALL THE SIX RE SIDENTIAL UNITS REQUIRED TO BE CONSIDERED AS A SINGLE HOUSE AND ACCORDINGLY SUB MITTED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54 F OF THE ACT, THUS, ARGUED THAT THE LD. CIT(A) ERRED IN ALLOWING ONLY 1 /6 TH OF CONSTRUCTED AREA AND THE LD.CIT(A) OUGHT TO HAVE ALLOWED THE ENTIRE INVESTMENT MADE BY THE ASSESSEE IN THE RESIDENTIAL HOUSE. THE LD. AR RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF ITAT IN THE CASE OF SHRI B HATKAL RAMARAO PRAKASH VS. ITO IN ITA NO.2692/BANG/ 2018 DATED 04/ 01/2019. 4. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSEE CONSTRUCTED SIX DIFFERENT RESIDENTIAL HOUSES WITH D IFFERENT ENTRANCES, INDEPENDENT ELECTRIC METERS AND SIX SEPARATE KITCHE NS. THE LD. DR FURTHER SUBMITTED THAT WHEN EACH RESIDENTIAL UNIT IS HAVING THE SEPARATE ENTRANCE, SEPARATE ELECTRICITY METER AND SEPARATE KITCHEN EAC H UNIT CONSTITUTE INDEPENDENT RESIDENTIAL HOUSE AND THE SAME CANNOT B E HELD AS A SINGLE RESIDENTIAL HOUSE. THEREFORE, ARGUED THAT THE LD. C IT(A) HAS RIGHTLY HELD THAT THE ASSESSEE HAD CONSTRUCTED SIX INDEPENDENT R ESIDENTIAL HOUSES AND ALLOWED 1/6 TH OF DEDUCTION AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). THE LD. DR REQUESTED TO UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS SOLD THE PROPERTY OF HOUSE SITE BEARING NO.12 (OLD SITE NO.12, SITE N O.13, SITE NO.2, SITE ITA NO.1066/BANG/2019 :- 6 -: NO.3A) SITUATED AT 14 TH MAIN ROAD, BRINDAVAN NAGAR, WARD-2, JALLAHALI, BANGALORE AND MEASURING 3611 SQ. FT. FOR A CONSIDER ATION OF RS. 1,28,70,000/- AND THE MARKET VALUE OF THE SAID PROP ERTY WAS RS. 1,39,03,000/-. WITH THE SAID SALE CONSIDERATION, T HE ASSESSEE HAS PURCHASED THE NEW RESIDENTIAL HOUSE SITE FOR AN AMO UNT OF RS. 75,00,000/- BEARING NO.D-14,KHATA NO.26/9 IN THE JURISDICTION O F BBMP WARD NO.150,BELLANDUR WARD LAYOUT KNOWN AS GREEN VILLE S ECTOR-4 ON 17/04/2014 AND CONSTRUCTED A RESIDENTIAL HOUSE ON T HE SAID HOUSE SITE AND CLAIMED THE DEDUCTION UNDER SECTION 54F OF THE ACT. BEFORE THE AO THE ASSESSEE DID NOT PRODUCE THE PROOF FOR PURCHASE OF HOUSE SITE AS WELL AS FOR CONSTRUCTION OF RESIDENTIAL HOUSE. DURING THE A PPEAL HEARING THE ASSESSEE HAS SUBMITTED THE PHOTOS OF NEW HOUSE ALON G WITH COPIES OF ELECTRICITY DEPOSIT RECEIPTS AND VALUATION REPORT. THE LD.CIT(A) FOUND FROM THE VALUATION REPORT THAT THE ASSESSEE HAD CONSTRUC TED A BUILDING COMPRISING GROUND WITH FLOOR 4 ONE BHK UNITS AND T WO RESIDENTIAL UNITS WITH HALL AND KITCHEN IN ADDITION TO ONE STORE ROOM . ALL THE UNITS WERE OCCUPIED BY DIFFERENT TENANTS. THE TOTAL SITE AREA WAS 3000 SQ. FT. WITH AC SHEET ROOF HAVING SEPARATE ENTRANCE TO EACH HOUSE A ND A COMMON PASSAGE WITH SIX TO SEVEN ELECTRIC METERS. EACH UNI T IS HAVING SEPARATE ELECTRIC METERS. FROM THE VALUATION REPORT, IT IS F URTHER OBSERVED BY THE LD. CIT(A) THAT IT WAS NOT ONE RESIDENTIAL HOUSE AND MU LTIPLE RESIDENTIAL UNITS. THESE FACTS ARE NOT DISPUTED BY THE ASSESSEE. THE LD. AR ARGUED THAT THESE SIX RESIDENTIAL UNITS CANNOT CONSTITUTE SIX I NDEPENDENT RESIDENTIAL ITA NO.1066/BANG/2019 :- 7 -: HOUSES. IN THE INSTANT CASE, EACH UNIT HAS SEPARATE METER, SEPARATE KITCHEN AND SEPARATE ENTRANCE WHICH CONSTITUTES A S EPARATE RESIDENTIAL HOUSE. WHATEVER MAY BE THE SIZE OF THE HOUSE IF THE HOUSE IS CAPABLE OF SERVING THE FAMILY THE SAME REQUIRED TO BE CONSIDER ED AS SEPARATE RESIDENTIAL HOUSE, EVEN THOUGH IT IS HAVING ONE KHA TA. THE QUESTION OF ATTACHING THE UNDIVIDED SHARE OF LAND COMES IN TO P ICTURE ONLY WHEN THE HOUSE IS SOLD. W.E.F 1 ST APRIL, 2015 AS PER THE AMENDMENT MADE TO THE ACT, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54F OF T HE ACT ONLY FOR ONE HOUSE. IN THE INSTANT CASE, AS PER THE INFORMATION PLACED BEFORE US, THE ASSESSEE HAD CONSTRUCTED SIX DIFFERENT RESIDENTIAL HOUSES WITH SEPARATE ENTRANCES, SEPARATE ELECTRIC METERS AND THE SEPARAT E KITCHEN. 6. THE LAND AR RELIED ON THE DECISION OF CO-ORDINAT E BENCH OF ITAT A BENCH, BANGALORE IN THE CASE OF SHRI BHATKAL RAMARA O PRAKASH SUPRA, WHERE THE ASSESSEE HAS PURCHASED RESIDENTIAL HOUSE CONSISTING OF GROUND FLOOR AND FIRST FLOOR WHICH CONSTITUTES SINGLE HOUS E AND BIFURCATED INTO TWO DOOR NUMBERS FOR GROUND FLOOR AND FIRST FLOOR WITH COMMON ENTRANCE ONLY TO EARMARK THE SHARE OF EACH BENEFICIARY. THE PROPERTY OTHERWISE CONSTITUTED A SINGLE PROPERTY WITH TWO DIFFERENT DOOR NUMBERS. IN THE CIRCUMSTANCES, THE ITAT HELD THAT THE ASSESSEE HAD PURCHASED ONLY ONE PROPERTY AND NOT TWO RESIDENTIAL HOUSES, THUS THE FACTS OF THE CASE RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE FROM THE ASSESSEES CA SE. IT CANNOT BE HELD THAT SIX RESIDENTIAL HOUSES WHICH ARE CAPABLE OF BE ING INHABITED INDEPENDENTLY BY EACH FAMILY WITH ALL AMENITIES SUC H AS SEPARATE ITA NO.1066/BANG/2019 :- 8 -: ENTRANCE, KITCHEN AND SEPARATE ELECTRIC METER AS ON E SINGLE RESIDENTIAL HOUSE. WE ARE UNABLE TO ACCEPT THE ARGUMENT OF THE LD.AR THAT ALL THE SIX RESIDENTIAL HOUSES SHOULD BE TAKEN AS SINGLE RESIDE NTIAL HOUSE. THEREFORE WE HOLD THAT ASSESSEE IS ENTITLED FOR DEDUCTION UND ER SECTION 54F OF THE ACT ONLY FOR ONE RESIDENTIAL HOUSE AND THE LD. CIT( A) RIGHTLY ALLOWED THE DEDUCTION UNDER SECTION 54F OF THE ACT FOR ONE RESI DENTIAL HOUSE AND DISALLOWED THE BALANCE AMOUNT. ACCORDINGLY WE UPHOL D THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DECEMBER, 2019. SD/- SD/- (N.V. VASUDEVAN) (D.S. SUNDER SINGH) VICE PRESIDENT ACCOUN TANT MEMBER BENGALURU, DATED: 05-12-2019 EDN COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE