M/s. Saritha Anand Shetty, Mangalore V. Assistant Commissioner of Income Tax, International Taxation, Mangalore

ITA 1886/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4095 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KARUPPUSAMY S R
• Assessee Lawyers: V SRINIVASAN
• Keywords: Gift
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL BANGALORE BENCH SMC-A, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NO. 1886 (BANG) 2018 (ASSESSMENT YEAR : 2010 11) MS. SARITHA ANAND SHETTY, APPELLANT D. NO. 3 30 2481, PACIFIC KADRI KAMBALA ROAD, MANGALORE 575004. PAN. AFKPS1502A VS THE ACIT, INTERNATIONAL TAXATION, MANGALORE. RESPONDENT ASSESSEE BY : SHRI V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI KARUPPUSAMY S. R., ADDL. CIT (DR) DATE OF HEARING : 01-08-2018 DATE OF PRONOUNCEMENT : 10-08-2018 O R D E R PER A. K. GARODIA, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIR ECTED AGAINST THE ORDER OF CIT (A) 12 BANGALORE DATED 27.03.2018 FOR A. Y. 2 010 11. 2. LEARNED AR OF THE ASSESSEE SUBMITTED THAT OUT OF SEVEN GROUNDS RAISED BY THE ASSESSEE, HE IS PRESSING ONLY GROUND NO. 5. ACCORDI NGLY, REMAINING GROUNDS ARE REJECTED AS NOT PRESSED. GROUNDS NO. 5 IS AS UN DER:- 5. THE LEARNED CIT (A) IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED TO EXEMPTION U/S 54 IN RESPECT OF 2 OT HER FLATS THAT WERE GIFTED BY THE APPELLANT AFTER THE END OF THE YEAR U NDER APPEAL WHICH WAS NOT RELEVANT TO JUDGE THE MAINTAINABILITY OF TH E CLAIM FOR THE YEAR UNDER APPEAL AND HENCE, THE LEARNED CIT (A) OUGHT TO HAVE ALLOWED ENTIRE EXEMPTION FOR ALL THE 3 FLATS TO BE RECEIVED BY THE APPELLANT. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT IT IS NOTED BY CIT (A) IN PARA 9.1 ON PAGE 21 OF HIS ORDER THAT 3 APARTMENTS ARE ALLOCATE D TO THE ASSESSEE AND FOR THESE THREE APARTMENTS, THE ASSESSEE HAS CLAIMED DE DUCTION U/S 54. HE POINTED OUT THAT IN THE SAME PARA, THIS FACT IS ALS O NOTED THAT OUT OF THESE THREE FLATS, ONE FLAT IS ON GROUND FLOOR (G1) AND REMAINI NG TWO FLATS ARE ON THIRD FLOOR (T1 & T2). HE FURTHER POINTED OUT THAT LEARNED CIT (A) HAS ALSO NOTED IN THE ITA NO. 1886(BANG)2018 2 SAME PARA THAT TWO FLATS BEARING NOS. G1 AND T2 WE RE TRANSFERRED BY THE ASSESSEE TO HER BROTHER AND SISTER BY WAY OF GIFT D EEDS AND THEREFORE, THESE TWO FLATS WERE NOT USED BY THE ASSESSEE FOR HER OWN RESIDENTIAL PURPOSE. THEREAFTER, HE SUBMITTED THAT IN PARA 9.2 OF HIS OR DER, LEARNED CIT (A) HAS TAKEN NOTE OF A JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF ENGEE INDUSTRIAL SERVICES VS. UOI, 2004 (164) E.L.T . 242 (KAR.) AND REPRODUCED PARA 17 OF THAT JUDGMENT IN WHICH, HONB LE KARNATAKA HIGH COURT TOOK NOTE OF THREE JUDGMENTS OF HONBLE APEX COURT I.E. (1) HEYDONS CASE (1584) 76 ER 637, (2) KANAILAL SUR VS. PARAMNIDHI S ADHUKHAN, AIR 1957 SC 307 AND (3) ANDERTON VS. RYAN, 1985 (2) ALL. ER 355 . THEREAFTER HE SUBMITTED THAT IN PARA 9.3 OF HIS ORDER, LEARNED CIT (A) HAS NOTED THE TRIBUNAL ORDER RENDERED IN THE CASE OF ARUN KUMAR NATHAN IN ITA NO . 1041/BANG/2017 DATED 25.10.2017. HE SUBMITTED A COPY OF THIS TRIBUNAL OR DER AND POINTED OUT THAT AS PER PARA 8 OF THIS TRIBUNAL ORDER, THE TRIBUNAL HAS NOTED A JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. NATHU HANSRAJ AS REPORTED IN 105 ITR 43 AND BY RELYING ON THIS JUDGMENT, IT W AS HELD BY THE TRIBUNAL THAT IF THE RESIDENTIAL HOUSE IS NOT PURCHASED FOR OWN RESI DENTIAL USE OF THE ASSESSEE, THEN THE BENEFIT U/D 54/54F IS NOT ALLOWABLE IN RES PECT OF SUCH RESIDENTIAL HOUSE. HE SUBMITTED A COPY OF THIS JUDGMENT OF HON BLE GUJARAT HIGH COURT AND POINTED OUT THAT IN THAT CASE, THE ASSESSMENT YEAR INVOLVED WAS A. Y. 1968 69 AND THERE IS AMENDMENT IN THE PROVISIONS OF SECTION 54. HE POINTED OUT THAT HONBLE GUJARAT HIGH COURT HAS REPRODUCED THE PROVI SIONS OF SECTION 54 AS WAS ON THE STATUTE BOOK IN THAT PERIOD AND POINTED OUT THAT AS PER THE SAME, THERE WAS A SPECIFIC CONDITION IN SECTION 54 THAT THE NEW RESIDENTIAL HOUSE ACQUIRED BY THE ASSESSEE FOR CLAIMING DEDUCTION U/S 54 SHOUL D BE FOR THE PURPOSE OF THE ASSESSEES OWN RESIDENCE. HE SUBMITTED THAT THIS VI TAL DIFFERENCE IN THE PROVISIONS OF SECTION 54 WAS NOT POINTED OUT TO THE TRIBUNAL IN THE CASE OF ARUN KUMAR NATHAN (SUPRA) AND THEREFORE, THIS TRIBUNAL O RDER IS NOT LAYING DOWN A BINDING PRECEDENCE. HE SUBMITTED COPY OF A TRIBUNAL ORDER RENDERED IN THE CASE OF SMT. NETHRAVATHI VS. ITO IN ITA NO. 2630/BANG/20 17 DATED 25.04.2018 AND POINTED OUT THAT IN THIS CASE, THE TRIBUNAL HAS FOL LOWED A JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF K. G. RUKMMINIAMMA AS REPORTED IN 331 ITR 211. HE POINTED OUT THAT IT WAS HELD BY HONBLE KARNATAKA ITA NO. 1886(BANG)2018 3 HIGH COURT IN THIS CASE THAT THE A APPEARING IN S ECTION 54F SHOULD NOT BE CONSTRUED IN SINGULAR BUT SHOULD BE UNDERSTOOD IN P LURAL. HE ALSO SUBMITTED THAT SECTION 54 AND 54F ARE PARI MATERIA. HE ALSO SUBMIT TED THAT THE AMENDMENT IN SECTION 54 (1) BY FINANCE (NO. 2) ACT, 2014 W.E.F. 01.04.2015 IS NOT RETROSPECTIVE. AS AGAINST THIS, LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT (A). HE ALSO SUBMITTED A COPY OF A RECENT JU DGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. DILIP KUMAR & CO. A ND OTHERS AS REPORTED IN 2018 TIOL-302-SC-CUS-CB AND PLACED RELIANCE ON TH E SAME IN SUPPORT OF HIS CONTENTION THAT IN CASE OF AMBIGUITY IN EXEMPTI ON PROVISION, BENEFIT SHOULD GO THE REVENUE AND NOT TO THE ASSESSEE BECAUSE AS P ER THIS JUDGMENT, EXEMPTION NOTIFICATION SHOULD BE INTERPRETED STRICT LY AND THE BURDEN IS ON THE ASSESSEE TO PROVE ITS APPLICABILITY. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I FI ND FORCE IN THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE BECAUSE I FIND THAT AS PER THE PROVISIONS OF SECTION 54 IN THE PRESENT YEAR, THERE IS NO SUCH RE QUIREMENT OF LAW THAT THE NEW RESIDENTIAL HOUSE ACQUIRED BY THE ASSESSEE FOR CLAI MING DEDUCTION U/S 54 SHOULD BE FOR THE PURPOSE OF THE ASSESSEES OWN RES IDENCE. THE TRIBUNAL ORDER FOLLOWED BY CIT (A) HAVING BEEN RENDERED IN THE CAS E OF ARUN KUMAR NATHAN (SUPRA) DOES NOT LAY DOWN A BINDING PRECEDENCE BECA USE IN THIS TRIBUNAL ORDER, A JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED I N THE CASE OF CIT VS. NATHU HANSRAJ (SUPRA) WAS FOLLOWED WITHOUT NOTICING THE C HANGES IN THE PROVISIONS OF SECTION 54 IN A. Y. 1958 69 AND 2013 14 WHICH W AS BEFORE THE TRIBUNAL IN THIS CASE. HENCE, ON THIS ASPECT OF THE OBJECTION O F THE LOWER AUTHORITIES THAT THE NEW TWO FLATS ARE NOT FOR OWN RESIDENTIAL USE OF TH E ASSESSEE, I FIND NO MERIT BECAUSE THERE IS NO SUCH REQUIREMENT OF LAW AT PRES ENT ALTHOUGH IT WAS EARLIER AS PER THE PROVISIONS OF SECTION 54 IN AY 1968 69 AS REPRODUCED BY HONBLE GUJARAT HIGH COURT. 5. NOW I EXAMINE THE MERIT IN THIS OBJECTION OF THE LOWER AUTHORITIES THAT DEDUCTION U/S 54 IS ALLOWABLE FOR ONLY ONE FLAT IN VIEW OF TH E WORD A RESIDENTIAL HOUSE. ON THIS ASPECT, THE ISSUE IS SQUARELY COVERED IN FAVOU R OF THE ASSESSEE BY THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED I N THE CASE OF K. G. ITA NO. 1886(BANG)2018 4 RUKMMINIAMMA (SUPRA). RELEVANT PARA OF THIS JUDGMEN T IS PARA 10 AND THE SAME IS REPRODUCED HEREIN BELOW FOR READY REFERENCE . 10. THE CONTEXT IN WHICH THE EXPRESSION 'A RESIDEN TIAL HOUSE' IS USED IN S. 54 MAKES IT CLEAR THAT, IT WAS NOT THE INTENT ION OF THE LEGISLATION TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESID ENTIAL HOUSE. IF THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD 'O NE'. AS IN THE EARLIER PART, THE WORDS USED ARE BUILDINGS OR LANDS WHICH ARE PLURAL IN NUMBER AND THAT IS REFERRED TO AS 'A RESIDENTIAL HO USE', THE ORIGINAL ASSET. AN ASSET NEWLY ACQUIRED AFTER THE SALE OF TH E ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WHIC H ALSO SHOULD BE 'A RESIDENTIAL HOUSE'. THEREFORE THE LETTER 'A' IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANING 'SINGULAR''. BUT , BEING AN INDEFINITE ARTICLE, THE SAID EXPRESSION SHOULD BE R EAD IN CONSONANCE WITH THE OTHER WORDS 'BUILDINGS' AND 'LANDS' AND, T HEREFORE, THE SINGULAR 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VIRTUE OF S. 13(2) OF THE GENERAL CLAUSES ACT. THIS IS THE VIEW WHICH IS TAKEN BY THIS COURT IN THE AFORESAID CASE IN IT APPEAL NO. 1 13 OF 2004, DISPOSED OF ON 20TH SEPT., 2008 [REPORTED AS CIT VS . D. ANANDA BASAPPA (2009) 223 CTR (KAR) 186 : (2009) 20 DTR (K AR) 266 ED.] 6. RESPECTFULLY FOLLOWING THIS JUDGMENT, THE ISSUE IN DISPUTE IS DECIDED IN FAVOUR OF THE ASSESSEE. THIS GROUND IS ALLOWED. 7. REGARDING THE JUDGMENT OF HONBLE APEX COURT REN DERED IN THE CASE OF CIT VS. DILIP KUMAR & CO. (SUPRA) ON WHICH RELIANCE IS PLAC ED BY THE LEARNED DR OF THE REVENUE, WE FIND THIS JUDGMENT HAS RELEVANCE IN A C ASE WHERE THERE IS AN AMBIGUITY IN THE PROVISIONS OF EXEMPTION BUT IN THE PRESENT CASE, NO AMBIGUITY IS POINTED OUT BY THE LEARNED DR OF REVENUE IN SECT ION 54. HENCE, THIS JUDGMENT IS NOT RENDERING ANY HELP TO THE REVENUE IN THE PRE SENT CASE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (A. K. GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED: 10.08.2018. /MS/ ITA NO. 1886(BANG)2018 5 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.