Shri.T.A.V.Gupta , Turuvekere V. Income Tax Officer Ward-1 , Tiptur

ITA 209/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4849 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: B S BALACHANDRAN
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.209/BANG/ 2018 (ASST. YEAR 2014-15) SHRI. T.A.V. GUPTA, BIRLA CORNER, B.T. ROAD, TURUVEKERE 572227, PAN: ALBPG6202G. . APPELLANT VS. THE INCOME-TAX OFFICER, WARD 1, TIPTUR. . RESPONDENT APPELLANT BY : SHRI B.S. BALACHANDRAN, ADVOC ATE. RESPONDENT BY : SMT. PADMAMEENAKSHI, JCIT. DATE OF HEARING : 16-04-2018 DATE OF PRONOUNCEMENT : 25-04-2018 O R D E R PER SHRI N.V VASUDEVAN, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST TH E ORDER DATED 1/12/2017 OF COMMISSIONER OF INCOME-TAX (APPEALS) - 7, BENGALURU RELATING TO ASST. YEAR 2014-15. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS FOLLOWS:- ITA NO.209/B/18 2 1. THE ORDER OF THE LEARNED CIT (A) IS PREJUDICIA L TO THE INTEREST OF THE APPELLANT AND IS BAD AND UNSUSTAINA BLE IN THE EYE OF LAW. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE IN TERPRETATION OF JURISDICTIONAL HIGH COURT IN THE CASE OF K.G.RUK MINIAMMA SQUARELY COVERS THE ISSUE WHICH SHOULD BE UNDERSTOO D IN THE SENSE THAT THE ACQUISITION WAS IN THE SAME BUILDING AND THEREFORE, THE APPELLANT WAS ELIGIBLE FOR RELIEF. 3. CIT(A) GROSSLY ERRED IN IGNORING THAT EVEN THE A MENDMENT TO PROVISIONS OF S.54/54F WHICH RESTRICTS THE MEANING OF 'A' USED IN THE SECTIONS WOULD APPLY PROSPECTIVELY; THIS BEI NG A SUBSTANTIVE PIECE OF LEGISLATION CAN NEVER BE CLARI FICATORY IN NATURE AS MISUNDERSTOOD BY THE AO AND HENCE, THE CL AIM OF THE APPELLANT COULD NEVER HAVE BEEN DENIED. 4. WITHOUT PREJUDICE, THE CIT(A) OUGHT TO HAVE APPR ECIATED THAT THE APPELLANT HAVING REINVESTED THE ENTIRE SAL E CONSIDERATION IN ACQUIRING NEW ASSET, APPELLANT'S C LAIM FOR DEDUCTION UNDER S.54F OF THE ACT WAS IN ORDER. 5. THE APPELLANT CRAVES THE LEAVE OF THE COURT TO A DD, AMEND, ALTER, AND/OR WITHDRAW ANY OR ALL GROUNDS BEFORE OR DURING THE HEARING. PRAYER 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APP EAL MAY BE ALLOWED BY DIRECTING THE AO TO DELETE THE DENIAL OF DEDUCTION UNDER S.54F OF THE ACT, IN THE INTEREST OF JUSTICE AND EQUITY . 3. THE ASSESSEE IS AN INDIVIDUAL. HE OWNED RE SIDENTIAL SITE AT BANGALORE. THE ASSESSEE ENTERED INTO JOINT VENTURE AGREEMENT (JDA) DATED 24/6/2005 WITH M/S.SAI VISHWAS CONSTRUCTION, (DULY REGISTERED) FOR CARRYIN G OUT DEVELOPMENT OVER THE LAND OWNED BY HER BY CONSTRUCTION OF FLATS. AS PER THE JDA WITH M/S SAI VISHWAS CONSTRUCTION, THE DEVELOPER HAS TO CONSTRUCT 16 RES IDENTIAL FLATS ON THE ABOVE MENTIONED SITE OWNED BY THE ASSESSEE. AS PER THE T ERMS OF THE JDS, THE ASSESSEE WAS ITA NO.209/B/18 3 ENTITLED FOR 37.5% OF THE SUPER BUILT UP AREA IN TH E FORM OF 6 FLATS IN CONSIDERATION CONVEYING PROPORTIONATE UNDIVIDED SHARE OF THE LAND TO THE DEVELOPER OR TO HIS NOMINEE OR NOMINEES. IT IS NOT IN DISPUTE THAT THE CAPITAL GAIN ON TRANSFER UNDER THE JDA WAS A SUM OF RS.1,20,77,526/- AND THE CAPITAL G AIN WAS LONG TERMS CAPITAL GAIN. THE CAPITAL GAIN COMPUTED IS BASED ON THE VALUE OF 6 FLATS WHICH THE ASSESSEE GOT AS HIS SHARE OF BUILT UP AREA UNDER THE JDA. THE ASSESSEE CLAIMED DEDUCT ION U/S 54F OF THE ACT IN RESPECT OF ALL THE 6 FLATS. THE AO REFUSED TO ALLOW THE CLAIM FOR DEDUCTION FOR ON THE GROUND THAT U/S.54F OF THE ACT, DEDUCTION IS ALLOWED ONLY ON INVESTMENT IN ACQUIRING A RESIDENTIAL HOUSE AND 6 FLATS GOT BY THE ASSESSEE FROM THE BUILDER CANNOT BE SAID TO BE ONE RESIDENTIAL HOUSE. ACCORDING T O THE AO, INVESTMENT IN 6 RESIDENTIAL FLATS IS A CLEAR VIOLATION OF THE CONDITIONS STIPUL ATED IN SECTION 54F AND IT WAS AS GOOD AS INVESTMENT IN MORE THAN ONE RESIDENTIAL HOUSE AN D THE INCOME FROM SUCH HOUSE IS CHARGEABLE UNDER INCOME FROM HOUSE PROPERTY, THE AO ALSO HELD THAT THE ASSESSEES CONTENTION THAT ALL THE 6 FLATS REPRESENT ONE RESID ENTIAL PROPERTY IS NOT CORRECT. IN THIS REGARD THE AO REFERRED TO THE FACT THAT AN AMENDMEN T WAS CARRIED OUT TO SEC.54F OF THE ACT BY THE FINANCE (NO.2) ACT, 2014 W.E.F 1.4.2015 WHEREBY THE EXPRESSION A RESIDENTIAL HOUSE IN SEC.54F OF THE ACT WAS AMENDE D TO READ ONE RESIDENTIAL HOUSE. THE ASSESSEE HAD CONTENDED THAT THE AFORESAID AMEND MENT MADE TO SECTION 54F IS NOT APPLICABLE TO THE A.Y. UNDER CONSIDERATION AND WAS PROSPECTIVE AND APPLICABLE ONLY FROM AY 2015-16. THE ASSESSEE RELIED ON THE DECISIO N OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SMT. V.R KARPAGAM TAX APPEAL NO.301 OF 2014 JUDGMENT DATED 18/8/2014 WHEREIN ON FACTS IDENTICAL TO THE CASE OF THE ASSESSEE, IT WAS ITA NO.209/B/18 4 HELD THAT DEDUCTION U/S.54F OF THE ACT WAS TO BE AL LOWED AND THAT THE AMENDMENT TO SEC.54F BY THE FINANCE (NO.2) ACT, 2014 WAS APPLICA BLE ONLY FROM AY 2015-16. THE AO HOWEVER HELD THAT THE ASSESSEE'S CONTENTION WAS NOT ACCEPTABLE SINCE THE INTENTION OF THE LEGISLATURE WAS TO GIVE DEDUCTION IN RESPECT OF INVESTMENT IN ONE RESIDENTIAL HOUSE IN INDIA AND THE AMENDMENT TO SEC.54F OF THE ACT WAS ONLY CLARIFICATORY AND APPLICABLE RETROSPECTIVELY. WHEN DIFFERENT INTERPRE TATIONS WERE MADE TO THE SECTION, AMENDMENT WAS MADE TO SECTION 54F IN THE FINANCE AC T 2014. THE INTENTION OF LEGISLATURE IS EVIDENT FROM THE EXPLANATORY NOTES T O THE PROVISIONS OF THE FINANCE (NO.2) ACT, 2014. THE AMENDMENT MADE TO SECTION 54F IS CLARIFICATORY IN NATURE. ACCORDING TO HIM THERE WAS NO JURISDICTIONAL HIGH C OURT DECISION IN FAVOUR OF THE ASSESSEE ON THE ISSUE OF DEDUCTION U/S 54F. HE THER EFORE HELD THAT EACH OF THE 6 UNITS IS CONSIDERED AS A SEPARATE HOUSE PROPERTY FOR THE PUR POSE OF ASSESSMENT OF PROPERTY TAX BY THE STATE ADMINISTRATION. THE AO THEREFORE HELD THAT ASSESSEE DOES NOT FULFILL THE CONDITIONS LAID DOWN IN SECTION 54F IN ORDER TO BE ELIGIBLE FOR DEDUCTION. ACCORDINGLY, CLAIM OF DEDUCTION U/S 54F AMOUNTING TO RS.1,36,34, 526/- WAS DISALLOWED BY THE AO. 4. ON APPEAL BY THE ASSESSEE, THE CIT(A) CONFIRMED THE ORDER OF THE AO. THE ASSESSEE BEFORE CIT(A) RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K.G RUKMINIAMMA 331 ITR 221, WHEREIN THE HONBLE KARNATAKA HIGH COURT HELD ON THE FACTS OF THE CASE WHICH ARE IDENTICAL TO THE CASE OF THE ASSESSEE (THOUGH IN THE CONTEXT OF SEC. 54 OF T HE ACT WHICH IS PARI MATERIA THE SAME AS SEC. 54F OF THE ACT) AS FOLLOWS:- 8. FOR A PROPER APPRECIATION OF THE AFORESAID CON TENTION, IT IS NECESSARY TO HAVE A CAREFUL LOOK AT SECTION 54 OF THE INCOME TAX ACT, WHICH READS AS UNDER: ITA NO.209/B/18 5 '54. PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE: - (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, BEING. B UILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOU SE PROPERTY' (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIG INAL ASSET), AND THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE AIR WHICH THE TRANSFER TOOK PLACE PURCHASED, O R HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISI ONS 01 THIS SECTION, THAT IS TO SAY- 2. 9. A READING OF THE AFORESAID PROVISION MAKES IT V ERY CLEAR THAT THE PROPERTY SOLD IS REFERRED TO AS ORIGINAL ASSET IN T HE SECTION. THAT ORIGINAL ASSET IN DESCRIBED AS BUILDINGS OR LANDS APPURTEN ANT THERETO AND BEING A RESIDENTIAL HOUSE. THEREFORE, IT IS NOT MERE A RES IDENTIAL HOUSE. ' THE RESIDENTIAL HOUSE MAY' INCLUDE BUILDINGS OR LANDS APPURTENANT THERETO. THE STRESS IS ON THE USE TO WHICH THE PROPERTY IS PUT T O. ONLY WHEN THAT ASSET WAS USED AS A RESIDENTIAL HOUSE, WHICH MAY CONSIST OF BUILDINGS OR LANDS APPURTENANT THERETO, THE INCOME DERIVED FROM THE SA LE OF SUCH A RESIDENTIAL HOUSE IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOU SE PROPERTY.' IF THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOU SE, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WI TH IN ACCORDANCE WITH THE AFORESAID PROVISIONS. IN THIS PART OF THE SECTION A LSO, THE WORDS 'A RESIDENTIAL HOUSE' IS AGAIN USED. THE SAID RESIDEN TIAL HOUSE NECESSARILY HAS TO INCLUDE BUILDINGS OR LANDS APPURTENANT THER ETO. IT CANNOT BE CONSTRUED AS ONE RESIDENTIAL HOUSE IN THIS CONTEXT IT IS USEFUL TO REFER TO SECTION 13 OF THE GENERAL CLAUSES ACT, 1987 WHICH R EADS AS UNDER:- 13. GENDER AND NUMBER. - IN ALL CENTRAL ACTS AND REGULATIONS, UNLESS THERE IS ANYTHING REPUGNANT IN THE SUBJECT OR CONT EXT (1) WORDS IMPORTING THE MASCULINE GENDER SHALL BE TAKEN TO INCLUDE FEMALES; AND (2) WORDS IN THE SINGULAR SHALL INCLUDE THE PLURAL , AND VICE VERSA' ITA NO.209/B/18 6 10. THE CONTEXT IN WHICH THE EXPRESSION 'A RESIDENT IAL HOUSE' IS USED IN SECTION 54 MAKES IT CLEAR THAT, IT WAS NOT THE INTE NTION 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 'ONE.' AS IN THE EARLIER PART, THE WORDS USED ARE BUILDINGS OR LANDS WHICH ARE PLU RAL IN NUMBER AND THAT IS REFERRED TO AS 'A RESIDENTIAL HOUSE', THE ORIGIN AL ASSET. AN ASSET NEWLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WINCH ALSO SHOULD BE 'A RESIDE NTIAL HOUSE.' THEREFORE THE LETTER 'A' IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANING 'SINGULAR.' BUT, BEING AN INDEFINITE ARTICLE, HE SA ID EXPRESSION SHOULD BE READ III CONSONANCE WITH THE OTHER WORDS 'BUILDINGS ' AND 'LANDS' AND, THEREFORE, THE SINGULAR 'A RESIDENTIAL HOUSE ALSO PERMITS USE OF PLURAL BY VIRTUE OF SECTION 13(2) OF THE GENERAL CLAUSES ACT. THIS IS THE VIEW WHICH IS TAKEN BY THIS COURT IN THE AFORESAID ANAND BASAP PA'S CASE IN IT.A.NO. 113/2004, DISPOSED OF ON 20.9.2008. 11. WE, THEREFORE, DO NOT SEE ANY MERIT IN THE SUBM ISSION OF THE LEARNED COUNSEL FOR THE REVENUE. 12. IN THE INSTANT CASE, THE FACTS ARE NOT IN DISPU TE. ON A SITE MEASURING 30' X 110', THE ASSESSEE HAD RESIDENTIAL PREMISES. UNDE R A JOINT DEVELOPMENT AGREEMENT, SHE GAVE THAT PROPERTY TO A BUILDER FOR PUTTING III. FLATS. UNDER THE AGREEMENT EIGHT FLATS ARE TO BE PUT UP IN THAT PROPERTY AND FOUR FLATS REPRESENTING 48% IS THE SHARE OF THE ASSESSEE AND T HE REMAINING 52% REPRESENTING ANOTHER FOUR FLATS WAS THE SHARE OF TH E BUILDER. SO THE CONSIDERATION FOR SELLING 52% OF THE SITE IS FOUR F LATS REPRESENTING 48/O. ALL THE FOUR FLATS ARE SITUATE IN A RESIDENTIAL BU ILDING. THESE FOUR RESIDENTIAL FLATS CONSTITUTE A RESIDENTIAL HOUSE' FOR THE PURPOSE OF SECTION 54. PRO-IT ON SALE OF PROPERTY IS USED FOR RESIDENC E. THE FOUR RESIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSE S FOR THE PURPOSE OF SECTION 54. IT HAS TO BE CONSTRUED ONLY AS 'A RESID ENTIAL HOUSE' AND THE ASSESSEE IS ENTITLED TO THE BENEFIT ACCORDINGLY. 13. IN THAT VIEW OF THE MATTER, THE TRIBUNAL AS WEL L AS THE APPELLATE AUTHORITY WERE JUSTIFIED IN HOLDING THAT THERE IS NO LIABILITY TO PAY CAPITAL GAIN TAX AS THE CASE SQUARELY FALLS UNDER SECTION 5 4 OF THE INCOME TAX ACT. HENCE, WE DO NOT SEE ANY SUBSTANTIAL QUESTION OF LA W ARISING FOR CONSIDERATION IN THIS APPEAL. ACCORDINGLY, THE APPE AL IS DISMISSED. 5. THE ASSESSEE ALSO POINTED OUT THAT THE D ECISION OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GITA DUGGAL 357 ITR 153 (DEL) AND THE HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. SYED ALI ADIL (2013) 3 52 ITR 418(AP). ITA NO.209/B/18 7 6. THE CIT(A) HOWEVER RELIED ON THE DECISION OF TH E KARNATAKA HIGH COURT IN THE CASE OF CIT VS. LATE KHHBCHAND M MAKHIJA IN ITA NO. 496/BAN G/2007 JUDGMENT DATED 18/12/2013 AND HELD THAT THE HONBLE KARNATAKA HIGH COURT TOOK THE VIEW CONTRARY TO THE VIEW TAKEN BY THE HONBLE HIGH COURT IN THE CASE OF K.G RUKMINIAMMA (SUPRA). HE HELD THAT IN THE INSTANT C ASE THE UNITS ARE SEPARATE FROM EACH OTHER AND THEY DO NOT HAVE ANYTHING COMMON WHI CH CAN GIVE IT THE STATUS OF THE PART OF A HOUSE. A FLAT CAN BE A PART OF THE HOUSE BUT CANNOT BE INDEPENDENT OF THE HOUSE. HE HELD THAT IN THE CASE OF THE ASSESSEE THE FLATS WERE SEPARATE FROM EACH OTHER AND DO NOT FORM PART OF THE HOUSE. THEREFORE, THE A SSESSEE CANNOT CLAIM THAT ALL THE 6 FLATS CONSTITUTE ON HOUSE. THE CIT(A) THEREFORE AGR EED WITH THE VIEW OF THE AO AND HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 54F OF THE ACT AND HENCE CANNOT BE ELIGIBLE FOR DEDUCTION U/S 54F. 7. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESS EE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMI SSIONS. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). THE LEARNED CUNSEL FOR TH E ASSESSEE REITERATED STAND OF THE ASSESSEE AS PUT FORTH BEFORE THE LOWER AUTHORITIES. 8. WE HAVE GIVEN CAREFUL CONSIDERATION TO THE RIVA L SUBMISSIONS. WE FIND THAT THE FACTS OF THE ASSESSEES CASE ARE SIMILAR TO THE CAS E OF SMT.K.G.RUKMINIAMMA (SUPRA) DECIDED BY THE HONBLE KARNATAKA HIGH COURT. IN THE CASE OF K.G.RUKMINIAMMA, THE FACTS WERE ON A SITE MEASURING 30 X 110' THE A SSESSEE HAD A RESIDENTIAL PREMISES. UNDER A JOINT DEVELOPMENT AGREEMENT SHE G AVE THAT PROPERTY TO A BUILDER FOR PUTTING UP FLATS. UNDER THE AGREEMENT 8 FLATS ARE TO BE PUT UP IN THAT PROPERTY AND 4 FLATS REPRESENTING 48% IS THE SHARE OF THE ASSESSEE AND THE REMAINING 52% REPRESENTING ANOTHER 4 FLATS IS THE S HARE OF THE BUILDER. SO THE CONSIDERATION FOR SELLING 52% OF THE SITE WAS 4 FLA TS REPRESENTING 48% OF BUILT UP AREA AND THE 4 FLATS ARE SITUATED IN A RESIDENT IAL BUILDING. THE COURT HELD THAT THE 4 FLATS CONSTITUTE 'A RESIDENTIAL HOUSE' FOR TH E PURPOSE OF SEC 54. THE 4 ITA NO.209/B/18 8 RESIDENTIAL FLATS CANNOT BE CONSTRUED AS 4 RESIDENT IAL HOUSES FOR THE PURPOSE OF SEC 54. IT HAS TO BE CONSTRUED AS 'A RESIDENTIAL HO USE' AND THE ASSESSEE IS ENTITLED TO THE BENEFIT ACCORDINGLY. IN THAT VIEW OF THE MAT TER, THE COURT HELD THAT THE TRIBUNAL AS WELL AS THE APPELLATE AUTHORITY WERE JU STIFIED IN HOLDING THAT THERE IS NO LIABILITY TO PAY CAPITAL GAINS TAX AS THE CASE S QUARELY FALLS UNDER SEC. 54 OF THE INCOME TAX ACT, 1961. 9. AS FAR AS THE DECISION OF THE HONBLE MADRAS HI GH COURT IN THE CASE OF V.R. KARPAGAM (SUPRA) IS CONCERNED THE FACTS WERE SIMILA R TO THE CASE OF THE ASSESSEE. THE ASSESSEE IN THE CASE OF V.R.KARPAGAM ENTERED INTO AN AGREEMENT WITH M FOR DEVELOPMENT OF A PIECE OF LAND OWNED BY IT. AS PER AGREEMENT, ASSESSEE WAS TO RECEIVE 43.75% OF BUILT UP AREA AFT ER DEVELOPMENT, WHICH WAS TRANSLATED INTO FIVE FLATS. THE ASSESSEE CLAIMED EX EMPTION U/S 54F ON THE VALUE OF FIVE FLATS. THE AO GRANTED BENEFIT OF CAPITAL GA INS IN RESPECT OF ONE FLAT AND THE CIT( A) AFFIRMED FINDINGS OF AO HOLDING THAT CL AIM OF ASSESSEE U/S 54F FOR ALL FIVE FLATS COULD NOT BE ADMITTED, BUT HOWEVER, HE TOOK THE VIEW THAT THE ASSESSEE WOULD BE ENTITLED TO BENEFIT OF S 54F IN R ESPECT OF ONE SINGLE FLAT WITH LARGEST AREA. IN APPEAL, TRIBUNAL HELD THAT ASSESSE E WAS ELIGIBLE FOR EXEMPTION U/S 54F ON ALL FIVE FLATS RECEIVED BY HER IN LIEU OF LA ND SHE HAD PARTED WITH AND WORD 'A' APPEARING IN S 54F SHOULD NOT BE CONSTRUED IN SINGULAR, BUT SHOULD BE UNDERSTOOD IN PLURAL. THE MADRAS HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL. IT WAS ALSO HELD THAT AMENDMENT WAS MADE TO S 54F W ITH REGARD TO WORD 'A' BY FINANCE (NO.2) ACT, 2014 W.E.F ONLY FROM 01.04.2015 WITHDRAWING DEDUCTION FOR MORE THAN ONE FLAT (RESIDENTIAL HOUSE). POST AM ENDMENT, VIZ., FROM 01.04.2015, BENEFIT OF S 54F WILL BE APPLICABLE TO ONE RESIDENTIAL HOUSE IN INDIA. HOWEVER, PRIOR TO SAID AMENDMENT, A RESIDENTIAL HOU SE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS. ITA NO.209/B/18 9 10. SIMILAR DECISIONS WERE RENDERED ON IDENTICAL F ACTS BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS GUMANMAL JAIN [20 17] 80 TAXMANN.COM 21 (MDS). THEREFORE IT CANNOT BE SAID THAT THE AMENDM ENT TO SEC.54F OF THE ACT BY THE FINANCE (NO.2) ACT, 2014 WHICH WAS APPLICABLE O NLY W.E.F 1.4.2015 I.E., FOR AY 2015-16 ONWARDS WAS CURATIVE AND APPLICABLE RETR OSPECTIVELY IN THE LIGHT OF THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF V.R.KARPAGAM (SUPRA). THE FACT THAT THERE WAS NO JURISDICTIONAL HIGH COURT DECISION ON THE POINT IS NO GROUND FOR THE AO NOT TO FOLLOW THE JUD GMENT OF HIGH COURT THOUGH IT IS NOT JURISDICTIONAL. 11. AS FAR AS THE DECISION OF THE HONBLE KARNATAK A HIGH COURT IN THE CASE OF KHUBCHAND MAKHIJA (SUPRA) IS CONCERNED, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE THE FACTS OF THE AFORESAID CASE ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE CASE OF THE A SSESSEE AND THE FACTS OF THE CASE OF K.G.RUKMANIAMMA (SUPRA) DECIDED BY THE HON BLE KARNATAKA HIGH COURT. IN THE CASE OF THE LATE KHUBCHAND M MAKHIJA (SUPRA), T HE FACTS WERE THAT ONE RESIDENTIAL HOUSE WAS SOLD AND THE LONG TERM CA PITAL GAIN ON SUCH SALE WAS USED TO BUY TWO INDEPENDENT RESIDENTIAL HOUSES. THIS ASP ECT HAS BEEN NOTICED BY THE HONBLE COURT IN PARAGRAPH 15 & 16 OF THE JUDGMENT IN THE CASE OF KHUBCHAND M.MAKHIJA (SUPRA) WHEREIN THE DISTINGUISHING FACTS BETWEEN THE FACTS OF K.G.RUKMINIAMMAL(SUPRA) AND THE FACTS OF THE CASE K HUBCHAND M.MAKHIJA (SUPRA) WERE BROUGHT OUT BY THE HONBLE KARNATAKA HIGH COUR T. IN THE PRESENT CASE ALL THE 6 FLATS WERE SITUATE IN THE SAME PREMISES AND, THEREF ORE, THE DECISION RENDERED IN THE CASE OF SMT. K.G RUKMINIAMMA (SUPRA) WILL APPLY. IN THE LIGHT OF ABOVE JUDICIAL PRONOUNCEMENTS ON IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.54F OF THE ACT ON ALL THE 13 FLATS AND THERE WAS NO CAPITAL GAIN C HARGEABLE TO TAX IN THE HANDS OF ITA NO.209/B/18 10 THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY AND AL LOW THE APPEAL OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2018 . SD/- SD/- (JASON P BOAZ) (N.V VASUDEVAN) ACCOUNTANT MEMBER JUD ICIAL MEMBER BANGALORE DATED : 25/4/2018 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVAT E SECRETARY, ITAT, BANGALORE ITA NO.209/B/18 11 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR. P. S... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..