Dr.S.Raghavendra Rao, Coimbatore V. ACIT, Coimbatore

ITA 1125/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57853 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: K RAGHU
• Keywords: Benefit of exemption
• Section: 54F; 54; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 1125/MDS/2011 ASSESSMENT YEAR : 2007-08 DR. S. RAGHAVENDRA RAO, HILL VIEW, 51, EAST PONNURANGAM ROAD, R.S. PURAM, COIMBATORE-641 002 V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-II, COIMBATORE. [PAN: ABUPR0581N] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAGHU, C.A. RESPONDENT BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 24-01-2012 DATE OF PRONOUNCEMENT : 27-01-2012 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED CIT(APPEALS)-I, COIMBATORE IN I.T. APPEAL NO. 133/0 9-10 DATED 28-03-2011 FOR THE ASSESSMENT YEAR 2007-08. I.T.A. NO.1125/MDS/2011 2 2. SHRI K. RAGHU, CA REPRESENTED ON BEHALF OF THE A SSESSEE AND SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL REPRESENTED ON BEH ALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION. IT WAS THE SUBMISSION T HAT THE ASSESSEE OWNED A HOUSE PROPERTY AT COIMBATORE WHICH CONSISTED OF SIX RESID ENTIAL UNITS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ENTERED INTO A DEV ELOPMENT AGREEMENT WITH M/S. PRESIDIUM CONSTRUCTIONS (COIMBATORE) (P) LTD. FOR T HE DEVELOPMENT OF THE SAID PROPERTY. THE ASSESSEE HAD IN CONSIDERATION OF THE DEVELOPMENT OF THE SAID PROPERTY AGREED TO TRANSFER 50% SHARE IN THE PROPER TY AND THE PROPORTIONATE PARKING SPACE IN THE NEW BUILDING TO BE CONSTRUCTED ON THE SCHEDULE PROPERTY. THIS AGREEMENT WAS ENTERED INTO ON 4 TH MAY, 2005. IT WAS THE SUBMISSION THAT AS A CONSEQUENCE OF THE DEVELOPMENT AGREEMENT THE ASSESS EE HAD RECEIVED EIGHT FLATS IN THE NEW BUILDING PUT UP. IT WAS THE SUBMISSION THAT AS THE ASSESSEE HAD SOLD THE PROPERTY WHICH CONSISTED OF SIX RESIDENTIAL UNITS, THE ASSESSEE HAD CLAIMED THE BENEFIT OF SECTION 54 OF THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT) IN RESPECT OF SIX OF THE FLATS WHICH WERE NEWLY CONSTRUCTED. IT WAS THE SUBMISSION THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAD SUBMITTED TH AT THE ASSESSEE WAS ENTITLED TO THE CLAIM OF EXEMPTION U/S 54 IN REGARD TO THE SIX FLATS WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE WORDS USED IN SECTION 54(1) WERE A RESIDENTIAL HOUSE AND THE BENEFIT COULD NOT BE GRA NTED TO ALL THE SIX OF THE UNITS. CONSEQUENTLY, THE ASSESSING OFFICER HAD DENIED THE CLAIM OF EXEMPTION UNDER I.T.A. NO.1125/MDS/2011 3 SECTION 54 IN RESPECT OF FIVE OF THE RESIDENTIAL UN ITS. IT WAS THE SUBMISSION THAT ON APPEAL BEFORE THE LEARNED CIT(A), THE LEARNED CIT(A ) WENT THROUGH THE DEVELOPMENT AGREEMENT AND HELD THAT THE PROPERTY WH ICH WAS TRANSFERRED BY THE ASSESSEE WAS NOT A RESIDENTIAL PROPERTY BUT ONLY LA ND. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) WAS OF THE VIEW THAT WHAT WAS TR ANSFERRED WAS NOT THE SIX RESIDENTIAL UNITS ON THE LAND BUT WAS ONLY 50% OF T HE UNDIVIDED INTEREST IN THE LAND IN FAVOUR OF THE DEVELOPERS OR THE NOMINEES. CONSE QUENTLY, THE LEARNED CIT(A) HAD DIRECTED THE ASSESSING OFFICER TO EXAMINE THE FACTS AGAIN AND TO CONSIDER THE ELIGIBILITY OF THE ASSESSEE IN REGARD TO THE GRANT OF EXEMPTION U/S 54F OF THE ACT. THE LEARNED AUTHORISED REPRESENTATIVE DREW OUR ATTE NTION TO THE DEVELOPMENT AGREEMENT WHICH WAS FOUND AT PAGES 1 TO 14 OF THE P APER BOOK. IT WAS THE SUBMISSION THAT AS PER CLAUSE 2(A) THE IN CONSIDERA TION OF THE 50% OF THE BUILT UP AREA AND PROPORTIONATE CAR PARKING SPACE IN THE NEW BUILDING THE ASSESSEE HAD AGREED TO TRANSFER AND CONVEY 50% SHARE IN THE SCHE DULE PROPERTY TO THE DEVELOPER. THE SCHEDULE PROPERTY REFERRED TO IN TH E AGREEMENT WAS FOUND AT PAGE 14 WHICH SPECIFIED AS FOLLOWS : ALL THAT PIECE OR PARCEL OF LAND KNOWN AS SITE NO. : 24 OF BLOCK NO.V IN THE OLD WARD NO.8, NEW WARD NO.13 OF COIMBA TORE CITY MUNICIPAL CORPORATION TOWN, R.S. PURAM, WEST PERIAS WAMY ROAD SITUATED IN COIMBATORE REGISTRATION DISTRICT, COIMBATORE SUB REGISTRATION DISTRICT, BEARING TOWN SURVEY NO. PARTS OF 348, 349 AND 366 OF WARD NO.8, NEW T.S. NO. 8/192, MEASU RING 142 FEET NORTH TO SOUTH ON THE EAST AND WEST AND 65 FEET EAST TO I.T.A. NO.1125/MDS/2011 4 WEST ON THE NORTH AND SOUTH, BOUNDED ON THE NORTH B Y THE WEST PERIASWAMY ROAD, ON THE EAST BY THE HOUSE OF M. S. SHEIK ROWTHER ON THE SOUTH BY SITE NO. 8 AND PART OF SITE NO.9 OF BLOCK NO.5 AND ON THE WEST BY THE HOUSE OF A.P. SAN KARAN (NOW JAIN MANOR) AND CONTAINING BY MEASUREMENT ABOU T 9088 SQ.FT. WITH ALL THE IMPROVEMENTS AND BUILDINGS THER EON BEARING DOOR NO.13/54 WITH ALL MUNICIPAL WATER AND ELECTRICI TY CONNECTIONS AND ALL OTHER EASEMENTS AND PRIVILEGES POSSESSED BY THE VENDOR. IT WAS THE SUBMISSION THAT WHAT WAS TRANSFERRED BY THE ASSESSEE WAS THE LAND AND THE BUILDING AND IN LIEU OF 50% SHARE IN T HE SCHEDULE PROPERTY THE ASSESSEE RECEIVED 50% OF THE BUILT UP AREA AND THE PROPORTIONATE CAR PARKING SPACE IN THE NEW BUILDING. IT WAS THE SUBMISSION T HAT THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT. 4. IN REGARD TO THE ISSUE OF THE DEDUCTION U/S 54 I T WAS THE SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SMT. K.G. RUKMINI AMMA REPORTED IN (2010) 48 DTR (KAR) 377. IT WAS ALSO SUBMITTED THAT SOMET IME IN THE MONTHS OF DECEMBER 2011-JANUARY 2012 THE HON'BLE JURISDICTION AL HIGH COURT HAD ALSO PASSED AN ORDER TO THE SIMILAR EFFECT. HOWEVER, TH E COUNSEL WAS UNABLE TO PLACE BEFORE US THE DECISION OF THE HON'BLE JURISDI CTIONAL HIGH COURT. IT WAS THE SUBMISSION THAT AS PER THE DECISION OF THE HON' BLE KARNATAKA HIGH COURT, THE WORD A USED IN SECTION 54 SHOULD NOT BE UNDER STOOD TO INDICATE TO A I.T.A. NO.1125/MDS/2011 5 SINGULAR NUMBER. IT WAS THE SUBMISSION THAT TO THE SAME EFFECT WAS THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. D. ANANDA BASAPPA (2009 223 CTR (KAR) 186. IT WAS THE SUBMIS SION THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE REVERSED. 5. IN REPLY, THE LEARNED JR. STANDING COUNSEL VEHEM ENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT EXEMPTION U/S 54F COULD HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER AS WHAT WAS TRANSFERRED WAS ONLY LAND AND NOT THE SIX RESIDENTIAL UNITS ON THE SAID LAND. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE CLAUSE 2(A) OF THE DEVELOPMENT AGREEMENT WHEN READ WITH TH E SCHEDULE OF THE PROPERTY CLEARLY SHOWS THAT THE SCHEDULE PROPERTY R EFERRED TO IN THE AGREEMENT CONTAINS ALL THE IMPROVEMENTS AND BUILDIN GS THEREON WHICH IS BEARING THE DOOR NO. 13/54 WITH ALL MUNICIPAL WATER AND ELECTRICITY CONNECTIONS. A PLAIN LAND WOULD NOT HAVE A DOOR NU MBER, NOR A MUNICIPAL WATER CONNECTION, NOR ELECTRICITY CONNECTION. IT W OULD SIMPLY HAVE BEEN REFERRED TO A SITE NUMBER. THE FACT THAT THE DOOR NUMBER HAD BEEN REFERRED TO THE SCHEDULE PROPERTY AND THE SCHEDULE ALSO CONT AINS THE WORDS BUILDINGS THEREON BEARING DOOR NUMBER SHOWS THAT THE BUILDIN G ALSO WAS CONSIDERED AS PART OF THE SCHEDULE PROPERTY. ONCE IT IS ACCEPTED THAT THERE IS A BUILDING ON THE LAND AND THAT IS PART OF THE SCHEDULE PROPERTY, THE EXEMPTION IS TO BE I.T.A. NO.1125/MDS/2011 6 CONSIDERED U/S 54 AND NOT U/S 54F OF THE ACT. CONS EQUENTLY, THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE STANDS REVERSED. 7. IN REGARD TO THE ISSUE AS TO WHETHER ONLY ONE O F THE RESIDENTIAL UNITS CAN BE CONSIDERED FOR THE EXEMPTION UNDER SEC. 54 OR AL L THE SIX UNITS CAN BE CONSIDERED FOR THE EXEMPTION UNDER SEC. 54, THE ANS WER IS VERY CLEARLY IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DECISION OF T HE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SMT. K.G. RUKMINIAMMA AS ALSO THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. D. ANANDA BASAPPA, REFERRED TO SUPRA. IN THE CIRCUMSTANCES, RESPECTFU LLY FOLLOWING THE DECISIONS OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SMT. RUKMINIAMMA AND D. ANANDA BASAPPA, REFERRED TO SUPRA, THE ASSESSING OF FICER IS DIRECTED TO GRANT THE ASSESSEE THE BENEFIT OF EXEMPTION UNDER SECTIO N 54 OF THE ACT IN RESPECT OF ALL THE SIX FLATS AS CLAIMED BY THE ASSESSE. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 27/01/2 012. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 27 TH JANUARY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE