Smt. V.R.Karpagam, CHENNAI V. ITO, Coimbatore

ITA 1082/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1156 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 28-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 02-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANRIRUDH RAI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER .. ITA NO.1082/MDS./2010 ASSESSMENT YEAR:2007-08 SMT.V.R.KARPAGAM, 29-B,RACE COURSE ROAD, COIMBATORE 641 018. VS. THE INCOMETAX OFFICER, WARD III(1) COIMBATORE. PAN AAXPK 8809 N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.VIJAYARAGHAVAN ADVOCATE RESPONDENT BY : SHRI ANRIRUDH RAI CIT D.R. DATE OF HEARING : 28.02.13 DATE OF PRONOUNCEMENT : 07 .03.13 O R D E R PER ABRAHAM P GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, IT HAS RAI SED TWO GRIEVANCES THROUGH ITS SIX GROUNDS. FIRST GRIEVANCE IS REGARDING SALE PRICE ADOPTED BY THE ASSESSING OFFICER AT ` 1,20,44,512/- AGAINST ` 1,09,75,620/- CONSIDERED BY THE ASSESSEE WHILE WORKING OUT CAPITAL GAINS. SECOND IS SUE IS ITA. 1082/MDS/10 2 REGARDING RESTRICTION OF ITS CLAIM FOR EXEMPTION UN DER SECTION 54F TO A SINGLE FLAT. 2. FACTS APROPOS ARE THAT ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH ONE M/S.MOUNT HOUSING AND INFRASTRUC TURE LTD., FOR DEVELOPMENT OF A PIECE OF LAND MEASURING 13,059 SQ. FT. OWNED BY HER AT DOOR NO.29F, RACE COURSE, COIMBATOR E. AS PER THE AGREEMENT, ASSESSEE WAS TO RECEIVE 43.75% OF BU ILT UP AREA AFTER THE DEVELOPMENT. THIS 43.75% OF THE BUILT UP AREA TRANSLATED TO FIVE FLATS. ASSESSEE, WHILE FILING HER RETURN, CALCULATED THE CAPITAL GAINS BASED ON A SALE CONSIDERATION OF ` 1,09,75,620/-. AS PER ASSESSEE, THIS WAS THE VALUE OF THE FLATS, WHIC H WERE TO BE RECEIVED BY HER AND WAS EQUIVALENT TO 56.25% OF THE UNDIVIDED SHARE OF LAND GIVEN BY HER TO M/S.MOUNT HOUSING AN D INFRASTRUCTURE LTD., ASSESSEE ALSO CLAIMED EXEMPTI ON UNDER SECTION 54F OF THE ACT ON THE VALUE OF THE FIVE FLA TS. AS PER ASSESSEE, THERE WERE NO CAPITAL GAINS WHATSOEVER LE FT FOR ASSESSMENT. HOWEVER, THE ASSESSING OFFICER MADE EN QUIRIES WITH M/S.MOUNT HOUSING AND INFRASTRUCTURE LTD., AND FOUND FROM THEM THAT THE TOTAL COST OF CONSTRUCTION OF THE PRO JECT CAME TO ` 2,75,30,313/- . THEREFORE, ACCORDING TO HIM, SALE VALUE THAT WAS TO BE CONSIDERED WAS 56.25% OF THE SUM OF ` 2,75,30,313/-. ITA. 1082/MDS/10 3 ACCORDINGLY, HE SUBSTITUTED THE FIGURE OF ` 1,09,75,620/- CONSIDERED BY THE ASSESSEE WITH ` 1,54,85,801/- . FURTHER, ASSESSING OFFICER RESTRICTED THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT TO ONE FLAT AND THE VALUE OF SUCH ON E FLAT WAS FIXED CONSIDERING ITS AREA. 3. ASSESSEE MOVED IN APPEAL BEFORE THE CIT(A). IN SO FAR AS THE QUESTION OF SALE CONSIDERATION WAS CONCERNED, L D. CIT(A) HELD THAT ASSESSING OFFICER WAS JUSTIFIED IN TAKING THE COST OF CONSTRUCTION PROVIDED BY M/S.MOUNT HOUSING AND INFR ASTRUCTURE LTD. HOWEVER, HE WAS OF THE OPINION THAT ASSESSEE BEING ENTITLED ONLY TO 43.75% OF THE CONSTRUCTED AREA IN LIEU OF 5 6.25% OF THE LAND TRANSFERRED, SALE CONSIDERATION COULD ONLY BE TAKEN AS 43.75% OF THE COST OF ` 2,75,30,313/-. IN OTHER WORDS AGAINST ` 1,54,85,801/- CONSIDERED BY THE ASSESSING OFFICER AS SALE CONSIDERATION, THE CIT(A) DIRECTED ADOPTION OF ` 1,20,44,512/-. HOWEVER, LD.CIT(A) WAS NOT APPRECIATIVE OF THE CLA IM OF ASSESSEE THAT ALL THE FIVE FLATS SHOULD BE CONSIDE RED AS A RESIDENTIAL HOUSE ELIGIBLE FOR EXEMPTION UNDER SECT ION 54F OF THE ACT . ACCORDING TO HIM, RELIANCE PLACED BY THE ASS ESSEE ON THE DECISION OF BANGALORE BENCH, THIS TRIBUNAL IN THE C ASE OF D.ANAND BASAPPA VS. ITO (2004) 91 STD 053 WAS MISPLACED. A CCORDING ITA. 1082/MDS/10 4 TO HIM, THE SAID CASE WAS IN RELATION TO AN EXEMPTI ON CLAIMED UNDER SECTION 54 OF THE ACT AND NOT UNDER SECTION 5 4F OF THE ACT. LD. CIT(A) RELYING ON PARA 7.2 OF THE SAID JUDGEME NT, HELD THAT TRIBUNAL ITSELF HAD MADE OUT A DISTINCTION BETWEEN A DEDUCTION CLAIMED UNDER SECTION 54 AND A DEDUCTION CLAIMED UN DER SECTION 54F OF THE ACT. AS PER LD. CIT(A), SEC.54F PLACED A CLEAR BAR ON CLAIMING DEDUCTION ON MORE THAN ONE RESIDENTIAL HOU SE. IN THIS VIEW OF THE MATTER, HE WAS OF THE OPINION THAT ASSE SSING OFFICER WAS JUSTIFIED IN RESTRICTING THE EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT TO ONE FLAT. 4. NOW BEFORE US, LD. A.R FAIRLY ADMITTED THAT WIT H REGARD TO SUBSTITUTION OF THE SALE CONSIDERATION BASED ON THE COST OF CONSTRUCTION OF THE DEVELOPER, M/S.MOUNT HOUSING AN D INFRASTRUCTURE LTD., THE ORDER OF THE LD. CIT(A) CO ULD NOT BE FAULTED. HOWEVER, ACCORDING TO HIM, VIEW OF LD. C IT(A) AS WELL AS ASSESSING OFFICER WITH REGARD TO CLAIM OF EXEMPTIO N UNDER SECTION 54F WAS NOT JUSTIFIED. FOR THIS, HE RELIE D ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF DR. (SM T.) P.K.VASANTH RANGARAJAN VS. CIT IN [2012] 75 DTR 56. ACCORDING TO HIM, IN THE SAID CASE A SIMILAR CLAIM UNDER SECTION 54F WAS ORIGINALLY DECLINED BY THE ASSESSING OFFICER ON THE VERY SAME REASON AS ITA. 1082/MDS/10 5 GIVEN HERE IN ASSESSEES CASE. HOWEVER THEIR LORDS HIPS FOLLOWING AN EARLIER DECISION IN THE CASE OF CIT VS. G.SAROJA ( TCA NO.656 OF 2005 DATED 04.01.12) HAD HELD THAT THERE WAS NO INHIBITION IN THE ASSESSEE CLAIMING BENEFIT OF INVESTMENTS MADE I N FOUR FLATS FOR GIVING BENEFITS UNDER SECTION 54F OF THE ACT. ACCORDING TO HIM, THE FACTS HERE WERE PARI MATERIA WITH THE CASE BEFO RE THE HONBLE JURISDICTIONAL HIGH COURT. THEREFORE, ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 54F OF THE ACT ON ALL THE FIVE FLATS. 5. PER CONTRA LD. D.R STRONGLY ASSAILING THE ORDER OF THE CIT(A) SUBMITTED THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF G.SAROJA (SUPRA) HAD GIVEN RELIEF TO THE ASSESSEE F OR FOUR FLATS RECEIVED BY THE ASSESSEE IN EXCHANGE OF OWNERSHIP O VER PART OF THE LAND WITH BUILDING, BASED ON A FINDING THAT TH ESE FOUR FLATS WERE ASSESSED AS ONE UNIT WITH ONE DOOR NUMBER. ON THE OTHER HAND, IN ASSESSEES CASE HERE, FIVE FLATS WERE DIF FERENT RESIDENTIAL UNITS WITH DIFFERENT DOOR NUMBERS. THEREFORE, ACC ORDING TO HIM, ASSESSEE COULD NOT TAKE REFUGE UNDER SAID DECISION AND CLAIM THAT EXEMPTION UNDER SECTION 54F SHOULD BE GIVEN TO ALL THE FLATS. 6. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORI TIES AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE TH AT ASSESSEE ITA. 1082/MDS/10 6 WAS ALLOTTED FIVE FLATS IN LIEU OF HER FORGOING 56 .75 % OF THE RIGHTS IN 13,059 SQ FT LAND AND BUILDING THEREIN. NONE OF THE AUTHORITIES BELOW HAS DOUBTED THE ELIGIBILITY OF THE ASSESSEE FOR CLAIMING AN EXEMPTION UNDER SECTION 54F OF THE ACT. THEIR ONLY QUALM IS THAT ASSESSEE HAD PREFERRED SUCH CLAIM FOR ALL THE FIVE FLATS WHEREAS ACCORDING TO THEM, SUCH EXEMPTION COULD ONLY BE FOU NDED TO A SINGLE FLAT. AS PER CIT(A) PROVISIONS OF SEC 54 AN D SEC.54F WERE NOT PARI MATERIA, FOR COMING TO THIS CONCLUSION, LD. CIT(A) RELIED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF D. ANAND BASAPPA (SUPRA). NO DOUBT, IN D. ANAND BASAPPA (SU PRA), THIS TRIBUNAL HAD OBSERVED AS UNDER:- 7.2. WE THEREFORE, EXAMINE AS TO WHETHER A RESIDEN TIAL HOUSE SHOULD BE TREATED AS ONE RESIDENTIAL HOUSE OR WHE THER MORE THAN ONE RESIDENTIAL HOUSE CAN BE CONSIDERED ELIGIBLE F OR DEDUCTION UNDER SECTION 54. READING THE PROVISIONS OF S.54 IT CAN BE HELD THAT THERE IS NO BAR LIKE S.54F DEDUCTION FOR MORE THAN ONE RESIDENTIAL HOUSE. HOWEVER, WE HAVE TO KEEP IN MIND THAT TRIBUNAL WAS CONSIDERING A CLAIM OF EXEMPTION UNDER SECTION 54 AND NOT ONE U NDER SECTION 54F. THEREFORE, IN OUR OPINION, ITS OBSERVATION RE GARDING SEC.54F CANNOT BE CONSIDERED AS A FINDING, WHICH WILL RENDER IT, NOT ONE, WHICH IS RES INTEGRA. ITA. 1082/MDS/10 7 7. A LOOK AT SEC.54F IS NECESSARY AT THIS JUNCTURE . THE SAID SECTION IS REPRODUCED HEREUNDER:- SEC.54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), W HERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL A SSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENT IAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAP ITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN T HE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CA PITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPIT AL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION A S THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THA N THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF TH E ORIGINAL ASSET; OR ITA. 1082/MDS/10 8 (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER T HAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY THE PROVISO WHICH DISABLES THE ASSESSEE FROM CLAIMI NG EXEMPTION UNDER SECTION 54F MENTIONS AT CLAUSE (I) THAT ASSESSEE CONCERNED SHOULD NOT OWN MORE THAN ONE R ESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET. OTHER CLAUSES ALS O RESTRICT A CLAIM UNDER SECTION 54F, IF AN ASSESSEE PURCHASED A HOUSE OR CONSTRUCTED ANY RESIDENTIAL HOUSE OTHER THAN A NEW ASSET. IN OUR OPINION, SUB-PROVISO (I) OF PROVISO (A), I.E. OWNIN G MORE THAN ONE RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF THE OR IGINAL ASSET WILL COME INTO PLAY ONLY WHERE ASSESSEE HAD WITHIN A PE RIOD OF ONE YEAR BEFORE THE DATE OF TRANSFER CONSTRUCTED A RESI DENTIAL HOUSE AS MENTIONED IN SUBSTANTIVE PORTION OF SUB-SECTION( 1). NEW ASSET IS CLEARLY DEFINED IN THE SUBSTANTIVE PORTION , TO MEAN A RESIDENTIAL HOUSE. WHETHER A RESIDENTIAL HOUSE CAN INCLUDE ONLY ONE FLAT OR MORE THAN ONE FLAT WAS THE ISSUE CONSIDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SMT. K.G.RUKMINIAMMA (331 ITR 211). RELYING ON SEC.13 OF THE ITA. 1082/MDS/10 9 GENERAL CLAUSES ACT, 1897, IT WAS HELD AS UNDER BY THEIR LORDSHIPS AT PARA 10 OF THE JUDGEMENT: (2) WORDS IN THE SINGULAR SHALL INCLUDE THE PLURA L, AND VICE VERSA THE CONTEXT IN WHICH THE EXPRESSION A RESIDENTIAL HOUSE IS USED IN SEC.54 MAKES IT CLEAR THAT, IT WAS NOT THE INTEN TION OF THE LEGISLATION TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESIDENTIAL HOUSE. IF THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD ONE. AS IN E EARLIER PART, THE WORDS USE D ARE BUILDINGS OR LANDS WHICH ARE PLURAL IN NUMBER AND THAT IS REFERR ED TO AS A RESIDENTIAL HOUSE, THE ORIGINAL ASSET. AN ASSET NE WLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDING S OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE A RESIDE NTIAL HOUSE. THEREFORE THE LETTER A IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANING SINGULAR. BUT BEING AN INDE FINITE ARTICLE, THE SAID EXPRESSION SHOULD BE READ IN CONSONANCE WITH T HE OTHER WORDS BUILDINGS AND LANDS AND THEREFORE, THE SINGULAR A RESIDENTIAL HOUSE ALSO PERMITS USE OF PLURAL BY VIRTUE OF SEC. 13(2) OF THE GENERAL CLAUSES ACT. THIS IS THE VIEW WHICH IS TAK EN BY THIS COURT IN THE AFORESAID ANAND BASAPPAS CASE IN ITA NO.113 /2004 , DISPOSED OF ON SEPTEMBER 20, 2008 [2009] 309 ITR 32 9 (KAR.) 8. THEIR LORDSHIPS HAS CLEARLY HELD IN THE ABOVE J UDGEMENT THAT A RESIDENTIAL HOUSE IN THE CONTEXT COULD NOT BE CONSTRUED AS A SINGULAR. IN THE SAID CASE ALSO, CLAIM FOR EXEMP TION WAS WITH ITA. 1082/MDS/10 10 REGARD TO FOUR FLATS IN LIEU OF SHARE IN LAND, BUT THE CLAIM WAS UNDER SECTION 54 OF THE ACT AND NOT UNDER SECTION 5 4F OF THE ACT. HOWEVER, IN OUR OPINION THE MEANING GIVEN TO THE EX PRESSION A RESIDENTIAL HOUSE WILL APPLY PARIPASSU TO SEC.5 4F ALSO, SINCE THE EXPRESSION USED HERE IS ALSO A RESIDENTIAL HOU SE. NEW ASSET DEFINED IN THE SEC.54F, AS A RESIDENTIAL HO USE HAS ALSO TO BE UNDERSTOOD IN THE PLURAL. IT IS NOT NECESSARY TH AT ALL RESIDENTIAL UNITS SHOULD HAVE A SINGLE DOOR NUMBER ALLOTTED TO IT AS ARGUED BY THE LD. D.R. NO DOUBT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF G.SAROJA(SUPRA) DID CONSIDER THE FACT THA T DIFFERENT FLATS WERE HAVING ONE DOOR NUMBER. HOWEVER, THIS ALONE W AS NOT THE REASON WHY ASSESSEE WAS HELD TO BE ELIGIBLE FOR CLA IMING OF EXEMPTION UNDER SECTION 54F OF THE ACT. THEIR LORD SHIPS TOOK CUE FROM THE DECISION OF HONBLE KARNATAKA HIGH COU RT IN THE CASE OF SMT. K.G.RUKMINIAMMA(SUPRA). SIMILAR EXEMPT ION WAS GIVEN BY THE HONBLE JURISDICTIONAL HIGH COURT AGAI N IN THE CASE OF DR.(SMT.) P.K.VASANTHI RANGARAJAN(SUPRA) WHEREIN TH ERE WAS NO CLAIM THAT FLATS ALLOTTED IN LIEU WERE HAVING SINGL E NUMBER. WE ARE THEREFORE OF THE OPINION THAT ASSESSEE WAS ELIG IBLE FOR CLAIMING EXEMPTION UNDER SECTION 54F OF THE ACT ON THE FIVE FLATS RECEIVED BY HER IN LIEU OF THE LAND SHE HAD PARTED WITH. ITA. 1082/MDS/10 11 9. IN THE RESULT, GROUND NOS. 4 & 5 OF THE ASSESSE E STANDS ALLOWED WHEREAS GROUND NOS.2 & 3 ARE DISMISSED. 10. TO SUMMARISE, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 7 TH MARCH, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 7 TH MARCH, 2013 . K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 1082/MDS/10 12