Smt. G N Lakshmi, Bangalore V. Income Tax Officer, Ward-5(2)(3), Bangalore

ITA 2008/BANG/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1232 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Set aside
• Section: 50C; 54F; 13; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, AM AND SHRI PAVAN KUMAR GADALE, JM ITA NO. 2008/BANG/2017 ASSESSMENT YEAR : 2012 13 SMT. G. N. LAKSHMI, REPRESENTED BY POA HOLDER SRI G. R. NAGARAJ, NO. 11, RAJATHAGIRI, RANGARAO ROAD, BENGALURU 560004 PAN: AOCPG8316F VS. ITO, WARD 5 (2) (3), BENGALURU APPELLANT RESPONDENT ASSESSEE BY : SHRI PRASHANTH G. S., C. A. REVENUE BY : S HRI SUNIL KUMAR AGARWAL, ADDL. CIT DR DATE OF HEARING : 27 . 1 1 .2019 DATE OF PRONOUNCEMENT : 13 .1 2 .2019 O R D E R PER SHRI A.K. GARODIA, AM: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER OF LEARNED CIT (A) 5, BENGALURU DATED 24.07.2017. 2. THE ASSESSEE HAS RAISED AS MANY AS 14 GROUNDS OF APPEAL BUT THE EFFECTIVE GRIEVANCES ARE TWO ONLY. FIRST EFFECTIVE GRIEVANCE IS ABOUT DISALLOWANCE OF THE CLAIM OF RS. 78 LACS U/S 54F OF I. T. ACT. THE SECOND GRIEVANCE IS ABOUT INVOKING OF SECTION 50C OF I. T. ACT TO ADOPT SALE CONSIDERATION OF RS. 17.30 LACS IN PLACE OF SALE PROCEEDS OF RS. 5.50 LACS FOR RELINQUISHMENT OF DEVELOPMENT RIGHTS. 3. IN COURSE OF HEARING, IT IS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT AS NOTED BY THE AO IN PARA 5, PAGE 2 OF THE ASSESSMENT ORDER, THE ASSESSEE SOLD HOSUR PROPERTY ON 17.02.2011 ITA NOS.2008(B)/2017 PAGE 2 OF 4 FOR A CONSIDERATION OF RS. 78 LACS AND INVESTED RS. 82.41 LACS IN A PROPERTY AND CLAIMED DEDUCTION U/S 54F. HE POINTED OUT THAT ON THE SAME PAGE OF THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT THE PROPERTY PURCHASED BY THE ASSESSEE IS MEASURING 1755 SQ. FT. TOGETHER WITH GROUND FLOOR + THREE FLOORS BUILDING MEASURING 4400 SQ. FT. HE FURTHER POINTED OUT THAT ON NEXT PAGE OF THE ASSESSMENT ORDER, THE AO NOTED THAT ON ENQUIRY, IT IS SEEN THAT THE ASSESSEE HAD PURCHASED THE PROPERTY CONSISTING OF FOUR-STORY BUILDING, EACH FLOOR CONSISTING OF THREE RESIDENTIAL UNITS TOTALING TO 12 RESIDENTIAL UNITS. HE SUBMITTED THAT THERE IS NO DISPUTE IN RESPECT OF THESE FACTS. THEREAFTER, HE SUBMITTED THAT AS PER THE AO, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54F FOR ONLY ONE UNIT OUT OF 12 UNITS AND THEREAFTER, THE AO HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 54F AT ALL BECAUSE THE ASSESSEE PURCHASED 11 MORE UNITS OTHER THAN THE NEW UNIT. HE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. K. G. RUKMINIAMMA AS REPORTED IN 331 ITR 211, COPY AVAILABLE ON PAGES 25 TO 29 OF THE CASE LAW PAPER BOOK. HE POINTED OUT THAT IN THIS JUDGMENT, IT WAS HELD THAT ALL FOUR FLATS ACQUIRED IN THAT CASE CONSTITUTE A RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54 AND BENEFIT OF SECTION 54 IS AVAILABLE FOR THESE FOUR FLATS. HE SUBMITTED THAT AS PER THE SAME LOGIC, 12 RESIDENTIAL UNITS ACQUIRED IN THE PRESENT CASE IS ALSO A RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54 AND BENEFIT OF SECTION 54F IS AVAILABLE FOR THESE 12 RESIDENTIAL UNITS. 4. REGARDING SECOND ISSUE IN RESPECT OF APPLICABILITY OF SECTION 50C, HE SUBMITTED THAT ALTHOUGH, AS PER THE ASSESSEE, SECTION 50C IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BUT THERE IS ONE MORE ASPECT BECAUSE AFTER HOLDING THAT SECTION 50C IS APPLICABLE, THE AO SHOULD HAVE OBTAINED THE REPORT OF DVO U/S 50C (2) OF I. T. ACT. THIS IS NOT DONE BY HIM. HE SUBMITTED THAT THE MATTER MAY BE RESTORED TO AO TO OBTAIN THE REPORT OF DVO U/S 50C (2) OF I. T. ACT. ITA NOS.2008(B)/2017 PAGE 3 OF 4 5. LEARNED DR OF THE REVENUE SUPPORTED THE IMPUGNED ORDER OF CIT (A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND FORCE IN THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE ON BOTH ISSUES. REGARDING THE FIRST ISSUE, WE FIND THAT AS PER THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. K. G. RUKMINIAMMA (SUPRA), IT WAS HELD BY HONBLE KARNATAKA HIGH COURT THAT BY THE TERM A RESIDENTIAL HOUSE USED IN SECTION 54, IT WAS NOT THE INTENTION OF THE LEGISLATURE TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESIDENTIAL HOUSE. IT WAS SPECIFICALLY OBSERVED IN PARA 10 OF THIS JUDGMENT THAT IF THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD ONE. WE ALSO FIND THAT BY THE FINANCE ACT, (NO. 2) 2014 W.E.F. 01.04.2015, AMENDMENT IS MADE IN SECTION 54 AND SECTION 54F AND IN PLACE OF THE TERM A RESIDENTIAL HOUSE, THE TERM ONE RESIDENTIAL HOUSE IS INSERTED. THIS AMENDMENT IS PROSPECTIVE AND NOT RETROSPECTIVE. IN THE PRESENT CASE, THE ASSESSMENT YEAR INVOLVED IS A. Y. 2012 13 AND HENCE, THE PRE AMENDMENT PROVISIONS ARE APPLICABLE AND THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. K. G. RUKMINIAMMA (SUPRA) IS ALSO APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT ALL 12 RESIDENTIAL UNITS ARE ELIGIBLE FOR DEDUCTION U/S 54F. 7. NOW WE DEAL WITH THE SECOND OBJECTION OF THE AO THAT THE ASSESSEE PURCHASED 11 MORE UNITS OTHER THAN THE NEW UNIT. THIS OBJECTION OF THE AO DOES NOT SURVIVE AFTER THIS DECISION THAT ALL 12 RESIDENTIAL UNITS ARE ELIGIBLE FOR DEDUCTION U/S 54F. IN FACT, THIS OBJECTION OF THE AO IS IN VIEW OF THE PROVISO TO SECTION 54F WHICH SAYS THAT DEDUCTION U/S 54F IS NOT ALLOWABLE IF THE ASSESSEE PURCHASES ANY RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET. SINCE, ALL 12 RESIDENTIAL UNITS ARE PART OF NEW ASSET, THE PROVISO IS NOT APPLICABLE BECAUSE NO OTHER RESIDENTIAL HOUSE IS PURCHASED BY THE ASSESSEE IN THIS PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET. ITA NOS.2008(B)/2017 PAGE 4 OF 4 8. IN VIEW OF ABOVE DISCUSSION, FIRST ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 9. REGARDING THE SECOND ISSUE, WE SET ASIDE THE ORDER OF CIT 9A) AND RESTORE THE MATTER BACK TO AO WITH THE DIRECTION THAT HE SHOULD OBTAIN THE REPORT OF DVO AND DECIDE THE ISSUE AFRESH AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 17 TH DECEMBER, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT (A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.