Sri. S. Diwakar, V. ITO,

ITA 1591/BANG/2013

• Counselvise Citation: 159121114 RSA 2013
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 21-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: V SRINIVASAN
• Section: 54F; 147; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 1 591 / BANG/20 13 (ASSESSMENT YEAR: 20 08 - 09 ) SHRI S.DIWAKAR, FLAT NO.302, VASHISHTA APARTMENTS, NO.18, 5 TH TEMPLE STREE T , 1 ST CROSS, MALLESWARAM, BANGALORE - 560003. APPELLANT PAN:ARVPS2929Q VS. INCOME - TAX OFFICER, WARD 6(4), BANGALORE. RESPONDENT APPELLANT BY: SHRI V.SRINIVASAN, CA. RESPONDENT BY: DR. P.K.SRIHARI, ADDL.CIT(DR). DATE OF HEARING : 2 0 /10/2014. DATE OF PRONOUNCEMENT: 31 /10/2014. O R D E R PER SMT.P.MADHAVI DEVI, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - I I , BANGALORE, DATED 03/10/2013 FOR THE ASSESSMENT Y EAR 20 08 - 09 . THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN DENYING THE EXEMPTION CLAIMED U/S 54F OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'] IN RESPECT OF THE PROPERTY AT SANJAYNAGAR AMOUNTING TO RS.89,72,533/ - WHILE ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 2 OF 8 COMPUT ING THE LONG - TERM CAPITAL GAINS HOLDING THAT THE ASSESSEE HAS CLAIMED EXEMPTION IN RESPECT OF MORE THAN ONE RESIDENTIAL HOUSE. THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. HOWEVER, AT THE TIME OF HEAR ING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUND NO.2 RELATING TO THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. THEREFORE, THIS GROUND OF APPEAL IS REJECTED AS NOT PRESSED. 2. AS REG ARDS THE COMPUTATION OF CAPITAL GAINS AND THE CLAIM OF EXEMPTION U/S 54F OF THE ACT IS CONCERNED, BRIEF FACTS ARE THAT THE ASSESSEE, AN INDIVIDUAL, HAD SOLD HIS AGRICULTURAL LAND FOR A SUM OF RS.4 CRORE S ON 6 - 2 - 2008. THE ASSESSEE HAS PURCHASE D A RESIDENTI AL PROPERTY AT JAYANAGAR FOR A SUM OF RS.1,38,76,984/ - ON 18 - 2 - 2008 I.E. AFTER THE DATE OF TRANSFER. PRIOR TO THE DATE OF TRANSFER, I.E. WITHIN A PERIOD OF ONE YEAR BEFORE THE DATE OF TRANSFER, THE ASSESSEE HAD PURCHASED A PROPERTY AT SANJAYNAGAR ON 23 - 5 - 2007 FOR A SUM OF RS.89,72,533/ - . WHILE COMPUTING THE LONG - TERM CAPITAL GAINS ON SALE OF AGRICULTURAL LAND, THE ASSESSEE HAD CLAIMED EXEMPTION U/S 54F OF THE ACT OF THE INVESTMENT MADE BY THE ASSESSEE IN BOTH THE PROPERTIES I.E. THE PROPERTY AT JAYANAGAR A S WELL AS SANJAYNAGAR. THE A SSESSING O FFICER (AO) , HOWEVER, RESTRICTED THE EXEMPTION TO THE PROPERTY SITUATED AT JAYANAGAR BEING THE PROPERTY PURCHASED FOR A HIGHER ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 3 OF 8 CONSIDERATION. HE, THEREFORE, DISALLOWED THE CLAIM OF EXEMPTION U/S 54F OF THE ACT OF RS. 89,72,533/ - AND BROUGHT IT TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT(A) WHO CONFIRMED THE ASSESSMENT ORDER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. THE L EARNED COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMIS SIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, SUBMITTED THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS PRESCRIBED U/S 54F AS WELL AS THE PROVISO THEREUNDER AND THEREFORE WAS ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 54F OF THE ACT. HE SUBMITTED THAT THE EXPRESSION A RESIDENTIAL HOUSE USED IN SEC.54F OF THE ACT PARI MATERIA REFER S TO THE NATURE OF THE HOUSE AND NOT THE NUMBER OF RESIDENTIAL UNITS TO BE PURCHASED BY THE ASSESSEE AND THEREFORE THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION FO R BOTH THE HOUSES. IN SUPPORT OF HIS CONTENTION HE PLACED RELIANCE UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF K. G. RUKMINIAMMA REPORTED IN 48 DTR 377 AND ALSO THE DECISION IN THE CASE OF ANAND BASAPPA (223 CTR 186) . 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE EXEMPTION IS LIMITED TO A SINGLE RESIDENTIAL ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 4 OF 8 UNIT AND NOT TO MORE THAN ONE RESIDENTIAL UNIT. HE SUBMITTED THAT THE FINANCE ACT, 2014 HAS ALSO BROUGHT AN AMENDMENT TO SEC.54F CLARIFYING THAT A RESIDENTIAL UNIT MEANS ONE RESIDENTIAL UNIT. HE SUBMITTED THAT THOUGH THE SAME IS EFFECTIVE FROM 1 - 4 - 2005, IT BEING CLARIFICATORY IN NATURE, IS APPLICABLE TO THE FACTS OF THE CASE BEFORE US AND THEREFORE SHOULD BE READ AS ONE RESIDENTIAL HOUSE. HE DISTINGUISHED THE FACTS OF THE CASE BEFORE US FROM THE FACTS OF THE CASE BEFORE THE HON BLE KARNATAKA HIGH COURT IN THE CASES CITED SUPRA. 5A. IN THE REJOINDER, THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2014 IS APPLICABLE PROSPECTIVELY AND THIS HAS ALSO BEEN CONSIDERED BY THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V.R.KARPAGAM , IN TAX CASE (APPEAL) NO.302/2014 AND VIDE ORDER DATED 1 8 - 8 - 2014, THE HON BLE HIGH COURT HAS HELD THAT THE AMENDMENT IS APPLICABLE ONLY PROSPECTIVELY AND THAT PRIOR TO THE SAID AMENDMENT, IT WAS CLEAR THAT THE RESIDENTIAL HOUSE WOULD INCLUDE RESIDENTIAL MULTIPLE UNITS. HE PLACED A COPY OF THE SAID ORDER BEFORE US. 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT (I) IN THE CASE OF ANAND BASAPPA (CITED SUPRA) , THE ASSESSEE HAD PURCHASED TWO RESIDENTIAL FLATS ATTACHED TO EACH OTHER BY TAKIN G TWO SEPARATE REGISTERED SALE DEEDS IN RESPECT OF ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 5 OF 8 THE TWO FLATS SITUATED SIDE - BY - SIDE AND PURCHASED ON THE SAME DAY. IT WAS ALSO CERTIFIED BY THE VENDOR THAT HE HAD EFFECTED NECESSARY MODIFICATIONS TO THE TWO FLATS TO MAKE IT ONE RESIDENTIAL APARTMENT. IT WAS IN THESE CIRCUMSTANCES THAT THE HON BLE HIGH COURT HELD THAT THE TWO FLATS WERE MADE INTO A SINGLE RESIDENTIAL UNIT AND THEREFORE, THE ASSESSEE THEREIN WAS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. (II) IN THE CASE OF K. G .RUKMINIAMMA (CITED SUPR A) , THE ASSESSEE THEREIN HAD GIVEN HER RESIDENTIAL PROPERTY TO A BUILDER UNDER A JOINT DEVELOPMENT AGREEMENT UNDER WHICH THE ASSESSEE HAD RECEIVED FOUR FLATS SITUATED IN RESIDENTIAL BUILDING. IT WAS IN THESE CIRCUMSTANCES , THAT THE HON BLE HIGH COURT HEL D THAT THESE FOUR RESIDENTIAL FLATS CONSTITUTE A RESIDENTIAL HOUSE FOR THE PURPOSE OF SEC.54F OF THE ACT AND THE ASSESSEE IS ENTITLED TO THE BENEFIT ACCORDINGLY. (III) IN THE CASE OF V.R.KARPAGAM (CITED SUPRA) BEFORE THE HON BLE MADRAS HIGH COURT, THE AS SESSEE THEREIN HAD ENTERED INTO AN AGREEMENT WITH A DEVELOPER FOR DEVELOPMENT OF PIECE OF LAND IN RESPECT OF WHICH THE ASSESSEE HAD RECEIVED 5 FLATS AND THE HON BLE MADRAS HIGH COURT, BY FOLLOWING THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF K. G .RUKMINIAMMA (CITED SUPRA) HAS ALLOWED THE EXEMPTION U/S 54F OF THE ACT HOLDING THAT ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 6 OF 8 A RESIDENTIAL UNIT DOES NOT RESTRICT THE CLAIM OF EXEMPTION TO ONE RESIDENTIAL UNIT. (IV) IN THE CASE BEFORE US, THE ASSESSEE HAD SOLD THE ORIGINAL ASSET I.E. AGRICULTU RAL LAND AND HAS PURCHASED TWO PROPERTIES ONE PROPERTY WITHIN A YEAR BEFORE THE DATE OF TRANSFER OF THE ORIGINAL ASSET AND ANOTHER PROPERTY WITHIN A YEAR AFTER THE DATE OF TRANSFER AND THE TWO PROPERTIES ARE ALSO LOCATED AT TWO DIFFERENT LOCATIONS. THER EFORE, THE FACTS OF THE CASE BEFORE THE HON BLE KARNATAKA HIGH COURT AND ALSO THE HON BLE MADRAS HIGH COURT ARE TOTALLY DIFFERENT FROM THE FACTS OF THE CASE BEFORE US. IT IS NOT THE CASE OF THE ASSESSEE THAT THE HOUSE PROPERTIES PURCHASED BY THE ASSESSEE ARE TO BE CONSIDERED AS A SINGLE UNIT DUE TO THEIR POS ITION OR LOCATION N OR IS IT THE CASE THAT THE PROPERTIES ARE ACQUIRED IN VIEW OF JOINT DEVELOPMENT AGREEMENT. IN VIEW OF THE SAME, WE HOLD THAT THE FACTS OF THE CASE BEFORE US ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE S BEFORE THE HIGH COURTS. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO PLACED STRONG RELIANCE UPON THE FINDING OF THE HON BLE HIGH COURT IN THE CASE OF K.G. RUKIMINIAMMA (SUPRA) THAT THE CONTEXT IN WHICH THE TERM A RESIDENTIAL HOUSE IS USED IN SECTION 54 SH OULD NOT BE CONSTRUED AS MEANING SINGULAR , BUT , BEING AN INDEFINITE ARTICLE, THE SAID EXPRESSION SHOULD BE READ IN CONSONANCE WITH OTHER ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 7 OF 8 WORDS BUILDINGS AND LAND AND THEREFORE THE SINGLE RESIDENTIAL HOUSE ALSO PERMITS US E OF PLURAL BY VIRTUE OF SEC.13(2) OF THE GENERAL CLAUSES ACT. HOWEVER, T HE FINDING OF THE HON BLE HIGH COURT HAS TO BE UNDERSTOOD IN THE CONTEXT IN WHICH THE FINDING IS GIVEN. IN THE SAID CASE, THE ASSESSEE'S PIECE OF LAND WAS GIVEN FOR DEVELOPMENT U NDER JDA AND IN RETURN FOR TRANSFER OF PART THE LAND, THE ASSESSEE HAD RECEIVED A NUMBER OF MULTIPLE RESIDENTIAL UNITS AND IT WAS IN THESE CIRCUMSTANCES THAT THE ABOVE FINDING WAS GIVEN. BUT, AS THE FACTS IN THE CASE BEFORE US ARE TOTALLY DIFFERENT, THE SAID FINDING IS NOT APPLICABLE TO THE CASE BEFORE US. THEREFORE, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE AUTHORITIES BELOW THAT THE EXEMPTION U/S 54F IS TO BE LIMITED TO ONLY ONE PROPERTY AND THE AO HAS RIGHTLY ALLOWED THE EXEMPTION TO A SINGLE PROPERTY I N THE CASE OF WHICH THE INVESTMENT IS HIGHER. IN VIEW OF THE SAME, WE DO NOT SEE ANY MERIT IN THE ASSESSEE S GROUND OF APPEAL AND ACCORDINGLY, WE DISMISS THE SAME. PRON OUNCED IN THE OPEN COURT ON 31 ST OF OCTO BER, 201 4. SD/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU ITA NO . 1 5 91 /BANG/20 1 3 S.DIWAKAR PAGE 8 OF 8 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE