Shri D. Ranga Rao, Hyderabad V. Income Tax Officer, Ward-7(1), Hyderabad

ITA 1235/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2869 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 13-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Question of law
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A : HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO. 1234 & 1235/HYD/2012 ASSESSMENT YEARS 2005-2006 & 2007-2008 D.RANGA RAO HYDERABAD. PAN AEUPD1297C VS. ITO, WARD 7 (1) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.V. RAGHURAM RESPONDENT BY: SHRI M.H.NAIK DATE OF HEARING: 0 4 .04.2013 DATE OF PRONOUNCEMENT: 17 .0 6 .2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 15.05.2012 FOR THE ASSES SMENT YEARS 2005-06 AND 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME FOR THE A.Y. 2005-2006 ON 24.12.2007 AND FOR THE A. Y. 2007-2008 ON 11.1.2008 DECLARING NIL INCOME FOR BOTH THE YEARS. FOR THE A.Y. 2005-2006 THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT O N 3.8.2004 WITH M/S. SRI SAI LAXMI CONSTRUCTIONS TO DEVELOP PLANT ON 827 SQ. YARDS. THE ASSESSMENT WAS COMPLETED BRINGING LONG TERM CAPITAL GAINS OF RS.34,39,448/- TO TAX. 3. FOR THE A.Y. 2007-2008 THE ASSESSING OFFICER BRO UGHT SHORT TERM CAPITAL GAINS AND BROUGHT TO TAX A SUM OF RS.5,59,2 00/- ON SALE OF FLAT NO. 102 SRI SAI GANGA ENCLAVE, ONE OF THE FLATS RECEIVE D AS PART OF THE DEVELOPMENT AGREEMENT. AGGRIEVED, THE ASSESSEE FIL ED APPEAL BEFORE THE CIT(A). FOR THE A.Y. 2005-2006, THE ASSESSEE IN THE FIRST THREE GROUNDS OF 2 APPEAL BEFORE THE CIT(A) CHALLENGED THE ASSESSING O FFICERS DECISION IN HOLDING THAT TRANSFER OF PROPERTY CHARGEABLE TO CAP ITAL GAINS TOOK PLACE AND THE ASSESSEE ENTERED INTO DEVELOPMENT AGREEMENT. TH E ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT CONSTRUCTION WORK WAS IN PRO GRESS AND THE ASSESSEES SHARE OF APARTMENT HAS NOT BEEN HANDED OVER TO HIM DURING THE A.Y. 2005- 06. IT WAS, THEREFORE, SUBMITTED THAT THE DATE OF D EVELOPMENT AGREEMENT COULD NOT BE TREATED AS THE DATE OF TRANSFER. THE C IT(A) HELD AT PARA 6.4 OF HIS ORDER AS FOLLOWS : I HAVE DULY CONSIDERED THE FACTS ON RECORD, THE AS SESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE. ACTUAL P AYMENT OF CONSIDERATION IS NOT A REQUIREMENT FOR TRANSFER TO BE COMPLETED UNDER SEC. 53A OF THE TRANSFER OF PROPERTY ACT; ALL THAT IS REQUIRED IS THAT THE PROPERTY SHOULD HAVE BEEN CONT RACTED TO BE TRANSFERRED FOR CONSIDERATION, AND THE TRANSFEREE ( IN THIS CASE, THE DEVELOPER) TO BE WILLING TO PERFORM HIS PART OF THE CONTRACT (IN THIS CASE, CONSTRUCTION OF AND HANDING OVER OF THE ASSESSEES SHARE OF THE FLATS). THERE IS NO DENYING THAT THESE CONDITIONS WERE SATISFIED IN THE ASSESSEES CASE. THE CRUCIAL ASPECT, THEN, TO BE SEEN IN THE MATTER IS THE DATE ON WHICH POSSE SSION OF THE TRANSFERRED PROPERTY HAD BEEN HANDEDOVER BY THE ASS ESSEE TO THE DEVELOPER. A REFERENCE TO THE DEVELOPMENT AGREE MENT IS RELEVANT IN THIS REGARD : THE PARTIES OF THE SECOND PART ARE HEREBY HANDED O VER POSSESSION OF THE SCHEDULE PROPERTY AND AUTHORISED TO ENTER UPON THE SCHEDULE PROPERTY BY THE PARTY OF THE FIRS T PART FOR THE PURPOSE OF DEVELOPMENT AS AFORESAID, SURVEY, DEMARC ATE AND MAKE PLANS FOR SUBMISSION TO THE LOCAL AUTHORITIES FOR SANCTION. 4. THE CIT(A) CONCLUDED THAT THE AGREEMENT IS UNAMB IGUOUS THAT THE POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER BY THE ASSESSEE TO THE DEVELOPER ON THE DATE OF THE AGREEMENT I.E., 30.08. 2004. THEREFORE, THE 3 LEARNED CIT(A) HELD THAT THE TRANSFER HAD TAKEN PLA CE ON 30.08.2004 AND DISMISSED THE GROUND RAISED BY THE ASSESSEE. 5. IN GROUND NOS. 4 AND 5 RAISED BEFORE THE CIT(A), THE ASSESSEE ALTERNATIVELY CLAIMED THAT IN THE EVENT THAT IT IS HELD THAT THE DEVELOPMENT AGREEMENT IS TO BE TREATED AS TRANSFER OF ASSET, DE DUCTION UNDER SECTION 54 OF THE I.T. ACT HAS TO BE GIVEN. THE ASSESSING OFFICER HAD NOT DISCUSSED THE ASSESSEES CLAIM IN HIS ORDER AND NO DEDUCTION UNDE R SECTION 54 HAD BEEN ALLOWED BY HIM. THE LEARNED A.R. RELIED ON THE FOLL OWING JUDICIAL DECISIONS IN HIS FAVOUR. 1. KODANDAS CHANCHOLMAL (1985) 155 ITR 273 (GUJ.) 2. SHIV NARAIN CHOUDHARY VS. CWT 108 ITR 104 (ALL. ) 3. NEVILLE J. PEREIRA VS. ITO 8 TAXMAN.COM 68 (MUM . ITAT) 5.1. THE LEARNED A.R. ALSO SUBMITTED BEFORE THE CIT (A) WHICH READS AS FOLLOWS : WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED TH AT IN THE EVENT OF TREATING DEVELOPMENT AGREEMENT ENTERED WITH BUIL DER FOR CONSTRUCTING APARTMENTS AS TRANSFER AS PER SEC.2(47 ) OF THE I.T. ACT, 1961 I HAVE CONSTRUCTED 10 DWELLING UNITS BY D ISMANTLING EXISTING RESIDENTIAL HOUSE WITHIN THE STIPULATED PE RIOD OF 3 YEARS FROM THE DATE OF ENTERING INTO THE DEVELOPMEN T AGREEMENT AND IT IS INVESTMENT U/S. 54 OF INCOME TAX ACT, 196 1 AND CAPITAL GAINS ARISEN, IF ANY, WILL BE EXEMPTED. 6. THE CIT(A) WAS OF THE OPINION THAT THE DECISIONS RELIED ON BY THE ASSESSEE WERE MEANT FOR RESIDENTIAL HOUSE WHEREAS , THERE IS NO REFERENCE IN THE SCHEDULE TO THE TRANSFERRED ASSET AS RESIDENTIA L HOUSE AND IT IS ONLY THE EXPENDITURE OF PLANT THAT HAS BEEN DESCRIBED IN THE SCHEDULE IN DETAIL. THE CIT(A) OBSERVED THAT THERE IS ONLY A REFERENCE IN T HE AGREEMENT TO THE EXISTING RESIDENTIAL HOUSE. THE AGREEMENT SPECIFIES THAT SALE PROCEEDS OF THE DISMANTLED MATERIAL FROM THE HOUSE ARE TO BE APPROP RIATED BY THE DEVELOPER AND NOT THE ASSESSEE. HENCE, HE WAS OF THE OPINION THAT IT IS ONLY BECAUSE THE HOUSE IS NOT PART OF THE TRANSFERRED ASSET THAT THE ASSESSEE WAS REQUIRED 4 TO SERVE HIS LIABILITY TO INCUR COST OF THE DEMOLIT ION AND HIS RIGHT OVER THE SALE PROCEEDS OF THE DISMANTLED MATERIAL AND IN OTHERWOR DS, THE BUILDING IS NOT PART OF THE TRANSFERRED SCHEDULED PROPERTY BUT IS DISTINCT FROM IT. THE CIT(A), THEREFORE, HELD THAT THE TRANSFERRED ASSET MERELY CONSISTED OF LAND AND NOT OF RESIDENTIAL HOUSE AND CONSEQUENTLY, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 54 OF THE TRANSFERRED ASSET AND HAS DISMISSED THE ASSESSEES GROUNDS. 7. THE LEARNED COUNSEL OBJECTED TO THE ASSESSING OF FICER AND CIT(A) IN RELYING ON THE DECISION IN THE CASE OF DR. MAYA SHE NOY VIDE ITA.NO.266/HYD/2005 DATED 24.10.2008. WITHOUT PREJU DICE TO GROUND NO. 1 TO 3, THE ASSESSEE FURTHER RAISED GROUND NO. 4, 5, 6 AS BELOW : 4. THAT CIT(A) SHOULD HAVE DIRECTED TO ADOPT COST OF CONSTRUCTION TO THE BUILDER BUT BASED ON REVERSE INDEXATION OF SUCH COST TO THE BASE YEAR; 5. THAT CIT(A) OUGHT TO HAVE ALLOWED COST OF CONS TRUCTION OF EXISTING BUILDING AND INDEXATION THEREON; AND 6. THAT CIT(A) SHOULD HAVE ALLOWED DEDUCTION UNDER SECTION 54 OF THE ACT IN RESPECT OF ALL FLATS BASED ON THE JUDGEMENT OF KARNATAKA AND DELHI HIGH COURTS. 8. WE CONFIRM THE ORDER OF LOWER AUTHORITIES AND GR OUND NOS. 1, 2, 3 ARE DECIDED AGAINST THE ASSESSEE. IN RESPECT O F 4 TH GROUND THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE CIT(A) HAD ONLY DIRECTED TO ADOPT THE VALUE OF LAND BASED ON THE COST OF CONSTRUCTION TO THE BUILDER. HOWEVER, THE C IT(A) FAILED TO APPRECIATE THAT SUCH CONSTRUCTION WAS OVER ONLY AFT ER 3 YEARS AND BY THAT TIME THERE WAS INFLATION WHICH WOULD GO TO INCREASE THE COST. WHEREAS THE TERMS AGREED WERE IN THE F.Y.2004 -05. SO ACCORDING TO THE LEARNEC COUNSEL FOR THE ASSESSEE, THE COST TO THE BUILDER SHOULD BE FURTHER SUBJECTED TO REVERSE INDE XATION TO ARRIVE AT THE CORRECT COST OF LAND SURRENDERED IN THE DEVE LOPMENT AGREEMENT. ON THIS ISSUE, THE LEARNED COUNSEL FOR T HE ASSESSEE RELIES UPON THE DECISION OF KARNATAKA HIGH COURT IN N.SREERAMA 5 REDDY REPORTED IN 328 ITR 71 UPHOLDING THE ACTION O F AO IN ADOPTING DISCOUNTING FROM 1988 TO 1980. IN THE ALTE RNATE THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO BE DIRECTED TO ADOPT THE VALUE OF LAND AS PER SRO ON T HE DATE OF TRANSFER AS HELD IN THE CASE OF SRI RAVINDER SINGH ARORA BY THIS TRIBUNAL IN ITA.NO.58/H/2011 & ITA.355/HYD/2011, DA TED 20/7/2012. 9. WE DIRECT THE ASSESSING OFFICER TO ADOPT THE SRO VAL UATION ON THE DATE OF TRANSFER RESPECTFULLY FOLLOWING THE DECISI ON OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CIT V S. RAVINDER SINGH ARORA IN ITA.355/HYD/2011 A.Y. 2007-2008 (SUP RA). HENCE, GROUND NO. 4 IS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.5 IS IN RESPECT OF NOT ALLOWING THE COST OF CONSTRUCTION OF THE EXISTING BUILDING AND INDEXATIO N THEREON ON ALLEGED GROUND THAT DETAILS OF BUILDING WERE NOT ME NTIONED IN THE SCHEDULE TO THE DEVELOPMENT AGREEMENT. IN THIS REGA RD THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACT TH AT THE BUILDING WAS I N EXISTENCE WAS NOT IN DOUBT BUT THE DETAILS WERE NOT MENTIONED IN THE DEVELOPMENT AGREEMENT. AS A MATTER OF FACT CLAUSE 3 OF THE DEVELOPMENT AGREEMENT CONTAINED A C LAUSE WHICH CLEARLY STATES THAT THE BUILDING WILL BE DEMOLISHED BY THE DEVELOPER AT HIS OWN COST AND THAT THE DEVELOPER WOULD BE ENT ITLED FOR THE SALE PROCEEDS OF THE DISMANTLED MATERIAL. THAT BEIN G THE CASE THE ORDER OF THE CIT(A) DENYING COST OF CONSTRUCTION OF THE EXISTING BUILDING AND INDEXATION THEREON IS INCORRECT. THE LEARNED COUNSEL FOR THE ASSESSEE RELIES UPON THE ORDER OF THIS HON BLE TRIBUNAL IN THE CASE OF PRABHANDAM PRAKASH VS. ITO (ITA.NO.147/H/200 7) DATED 25 TH JANUARY, 2008 AND REPORTED AS (2008) 22 SOT 58 (HYD .). IN THE SAID ORDER SIMILAR ISSUE WAS DEALT AND WAS ALLOWED IN FAVOUR OF ASSESSEE. 6 11. IN SO FAR AS THE VALUE OF STRUCTURE IS CONCERNE D, THE AO AND CIT(A) HAVE NOT GIVEN ANY DEDUCTION FOR THE SAME. TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THE APPROVED PLAN WHICH IS PLACED AT PAGE 49 OF PAPER B OOK BEFORE THE HON'BLE TRIBUNAL THE PLINTH AREA OF THE CONSTRUCTED A REA IS ABOUT 5000 SQ. FT. THIS PLAN APPROVAL WAS OBTAINED JUST B EFORE ENTERING INTO DEVELOPMENT AGREEMENT WHICH DEPICTS THE TRUE P ICTURE WITH REGARD TO THE AREA OF CONSTRUCTION. SO FAR AS THE VALUE OF THE SUPER STRUCTURE OF THE BUILDING FOR A BUI LDING AS ON 1.4.1981 HAS BEEN ADOPTED BY THIS HON'BLE TRIBUNAL A T RS.90 PER SQUARE FOOT IN THE CASE OF SRI NARSIMHA RAO (HUF) A ND RS.I00 PER SQUARE FOOT IN THE CASE OF SRI VENKAT REDDY. 12. WE ARE OF THE OPINION THAT THE BUILDING WAS IN EXISTENCE. FROM THE PERUSAL OF CLAUSE 3 OF THE DEVELOPMENT AGREEMENT, W E OBSERVE THAT DEVELOPER WILL BE ENTITLED TO SALE PROCEEDS OF THE DISMANTLED MATERIAL. HENCE, COST OF CONSTRUCTION OF EXISTING BUILDING AND INDEX ATION THEREON IS TO BE ALLOWED WHILE WORKING OUT THE CAPITAL GAINS. THE BU ILDING CONSISTS OF PLINTH CONSTRUCTED AREA OF ABOUT 5000 SQ. FT. FOLLOWING TH E CASE OF ACIT, CIRCLE 5 (1) HYDERABAD VS. SHRI NARASIMHA RAO (HUF) VIDE ITA.NO. 1240/HYD/2007 DATED 26 TH SEPTEMBER, 2008, VALUE OF THE BUILDING AS ON 1.4.1 981 SHALL BE ADOPTED AT RS.100/- SQ. FT. HENCE, WE SET ASIDE THE ISSUE T O THE FILE OF ASSESSING OFFICER TO RE-WORK THE CAPITAL GAINS AS PER OUR DIR ECTIONS. 13. WITH RESPECT TO GROUND NO.6, THE LOWER AUTHORIT IES HAVE NOT GRANTED ANY DEDUCTION UNDER SECTION 54 OF THE ACT. THE CIT( A) HAS STATED THAT THE ASSESSEE TRANSFERRED ONLY LAND. THIS HAS BEEN FOUND FACTUALLY INCORRECT BY US AS CLAUSE 3 OF DEVELOPMENT AGREEMENT CLEARLY STATES THE EXISTENCE OF BUILDING OF PLINTH AREA OF 5000 SQ. FEET. HENCE, WE ARE OF THE OPINION THAT ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 5 4 OF THE ACT. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION IN RESPECT OF ALL THE FL ATS THAT FELL TO HIS SHARE AS PER THE DEVELOPMENT AGREEMENT. HONBLE KARNATAKA HI GH COURT AND HONBLE DELHI HIGH COURT HAVE CONSIDERED THIS ISSUE AND HEL D THAT WHEN THE ASSESSEE DELIVERS RESIDENTIAL PROPERTY IN A DEVELOP MENT AGREEMENT, THE 7 ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION IN RE SPECT OF ALL THE UNITS DELIVERED TO HIM AS A SINGLE UNIT. BOTH THE COURTS HAVE GONE INTO THE LANGUAGE USED IN SECTION 54 AND HELD THAT THE SECTI ON HAD USED THE WORD A BUILDING AND HAVING REGARD TO THE BACK GROUND OF THE LEGISLATION, THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION IN RE SPECT OF ALL THE FLATS DELIVERED TO HIM UNDER THE DEVELOPMENT AGREEMENT. T HE JUDGMENTS OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. B. ANAN DA BASAPPA IS REPORTED AS 309 ITR 329 AND THAT OF CIT VS. SMT. K.G. RUKMIN IAMMA IS REPORTED IN 331 ITR 211. THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. GITA DUGGAL IN ITA.NO.1237/2011 VIDE ORDER DATED 21.02.2 013 HELD AS FOLLOWS : 8. THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/ 54F USES THE EXPRESSION A RESIDENTIAL HOUSE. THE EXPRESSION US ED IS NOT A RESIDENTIAL UNIT. THIS IS A NEW CONCEPT INTRODUCED BY THE ASSESSING OFFICER INTO THE SECTION. SECTION 54/54F REQUIRES THE ASSESSEE TO ACQUIRE A RESIDENTIAL HOUSE AND SO LO NG AS THE ASSESSEE ACQUIRES A BUILDING, WHICH MAY BE CONSTRUC TED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTL Y AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTION SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN THESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE FOR THE RESID ENTIAL USE AND NOT FOR COMMERCIAL USE. IF THERE IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS TO US THAT THE INCOME TAX AUTHORIT IES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUC T A HOUSE ACCORDING TO HIS PLANS AND REQUIREMENTS. MOST OF TH E HOUSES ARE CONSTRUCTED ACCORDING TO THE NEEDS AND REQUIREMENTS AND EVEN COMPULSIONS. FOR INSTANCE, A PERSON MAY CONSTRUCT A RESIDENTIAL HOUSE IN SUCH A MANNER THAT HE MAY USE THE GROUND F LOOR FOR HIS OWN RESIDENCE AND LET OUT THE FIRST FLOOR HAVING AN INDEPENDENT ENTRY SO THAT HIS INCOME IS AUGMENTED. IT IS QUITE COMMON TO FIND SUCH ARRANGEMENTS, PARTICULARLY POST-RETIREMENT. ON E MAY BUILD 8 A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN THE SAM E OR DIFFERENT FLOORS) IN SUCH A MANNER THAT AN INDEPENDENT RESIDE NTIAL UNIT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED O UT WITH AN INDEPENDENT ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARRANGE FOR HIS CHILDREN AND FAMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WHICH CAN BE MUTUALLY SU PPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THA T IN CASE OF A FUTURE NEED HE MAY BE ABLE TO DISPOSE OF A PART T HEREOF AS AN INDEPENDENT HOUSE. THERE MAY BE SEVERAL SUCH CONSID ERATIONS FOR A PERSON WHILE CONSTRUCTING A RESIDENTIAL HOUSE . WE ARE THEREFORE, UNABLE TO SEE HOW OR WHY THE PHYSICAL ST RUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTICAL, SHOULD COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. WE DO NOT THINK THAT THE FACT TH AT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT U NITS CAN BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UNDER SECTION 54/54F. IT IS NEITHER EXPRE SSLY NOR BY NECESSARY IMPLICATION PROHIBITED. FOR THE ABOVE REASONS WE ARE OF THE VIEW THAT THE T RIBUNAL TOOK THE CORRECT VIEW. NO SUBSTANTIAL QUESTION OF LAW AR ISES FOR OUR CONSIDERATION. THE APPEAL IS ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS. 14. LEARNED DR SHRI MH NAIK RELIED ON THE ORDER OF THE ITAT IN THE CASE OF M/S. KRISHNAKUMAR & OTHERS VS. DCIT ITA.NO.1164/HYD /2010, A.Y. 2006- 2007 AND THE CASE OF ITO VS. SMT. ROHINI REDDY (201 0) 313 ITR 346. 15. WE HAVE HEARD BOTH THE PARTIES. RESPECTFULLY FO LLOWING THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. GITA DU GGAL (SUPRA), WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54 OF THE INCOME TAX ACT. 16. THE ASSESSEES APPEAL IN ITA.NO.1235/HYD/2012 F OR A.Y. 2006-07 IS MUTANTIS MUTANDIS AND FOLLOWING THE OBSERVATIONS MA DE IN ITA.NO. 1234/HYD/2012, THE APPEAL IN ITA.1235/HYD/2012 IS P ARTLY ALLOWED. 9 ITA.NO. 1234 & 1235/HYD/2012 D.RANGA RAO 17. IN THE RESULT, ASSESSEES APPEALS ITA.NO.1234/H YD/2012 FOR THE A.Y. 2005-2006 AND ITA.NO. 1235/HYD/2012 ARE PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2013. SD / - / - (CHANDRA POOJARI) ACCOUNTANT MEMBER SD / - / - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED 17 TH JUNE, 2013 VBP/- COPY TO 1. D.RANGA RAO, H.NO.11 - 3 - 934/6, NEW MALLEPALLY, HYDERABAD. PAN AEUPD1297C 2. ITO, WARD 7 ( 1 ), HYDERABAD 3. CIT(A) - VI , 6A, I.T.TOWERS, A.C.GUARDS, HYDERABAD - 500 004. 4. CIT - V I , HYDERABAD 5. DR A BENCH, ITAT, HYDERABAD