Sakthi Pavithra, CHENNAI V. ITO, CHENNAI

ITA 2242/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8897 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K N DHANDA
• Assessee Lawyers: T N SEETHARAMAN
• Section: 143(3); 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2242/MDS/2015 ( / ASSESSMENT YEAR: 2012-13) MRS. SAKTHI PAVITHRA, FLAT 1-A, OLD NO.17, NEW NO.8 R.K.SHANMUGHAM SALAI, K.K.NAGAR, CHENNAI-600 078. VS THE INCOME TAX OFFICER, BUSINESS WARD-V(1) CHENNAI. PAN: BZGPS5539G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. T.N.SEETHARAMAN, ADVOCATE /RESPONDENT BY : MR. K.N.DHANDAPANI, JCIT /DATE OF HEARING : 2 ND MAY, 2016 /DATE OF PRONOUNCEMENT : 1 ST JULY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 14, CHENNAI DATED 13.10.2015 IN ITA NO.165/CIT(A)- 14/2014-15 PASSED UNDER SECTION 143(3) & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOW S:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD RESTRICTED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER 2 ITA NO.2242/MDS/2015 SECTION 54F OF THE ACT TO ONE RESIDENTIAL UNIT AS AGAINST TWO RESIDENTIAL UNITS. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDIVIDU AL HAVING NO SOURCE OF INCOME OTHER THAN CAPITAL GAIN DUE TO TRANSFER OF HER UNDIVIDED SHARE IN LAND THROUGH JOINT VENTURE A GREEMENT, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 23.07.2012 ADMITTING NIL INCOME. THE CASE WAS SE LECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 17.12.2015. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED ASSESSING O FFICER NOTICED THAT THE ASSESSEE ALONG WITH HER MOTHER MRS . K.SHANTHI AND HER SISTER MRS. V.SAKTHI SANGEETHA EN TERED INTO JOINT VENTURE AGREEMENT ON 14.12.2011 WITH M/S . RAMANIAM REAL ESTATES P.LTD., FOR CONSTRUCTING RESI DENTIAL BUILDING COMPLEX IN THEIR PLOT NO.17, R.K.SHANMUGA M SALAI, K.K.NAGAR, CHENNAI-78 MEASURING 6820 SQ.FT. THIS L AND WAS INITIALLY ALLOTTED TO HER MOTHER MRS. K.SHANTHI BY TAMILNADU HOUSING BOARD ON 27.10.281 VIDE DOCUMENT NO.4487/19 82 FOR ` 59,074/-. THE ASSESSEE WAS ENTITLED FOR THE ABOVE S TATED PLOT THROUGH A DEED OF SETTLEMENT VIDE DOC. NO.2794 /2011 DATED 5.12.2011 WHEREIN 1/3 RD OF SHARE OF LAND WITH BUILDING 3 ITA NO.2242/MDS/2015 WAS ASSIGNED TO THE ASSESSEE BY HER MOTHER. ACCORDI NG TO THE JOINT DEVELOPMENT AGREEMENT WITH THE PROMOTER, THE ASSESSEE WAS ALLOTTED FLAT NO.3A & 3B MEASURING 185 7 SQ.FT. & 1851 SQ.FT , RESPECTIVELY ALONG WITH ONE COVERED CAR PARK FOR EACH FLAT IN LIEU OF RELINQUISHING HER RIGHT I N HER OWNERSHIP OF 2556.12 SQ.FT. OF UDS TO THE DEVELOPERS. WHIL E COMPUTING THE CAPITAL GAIN, THE ASSESSEE CLAIMED EX EMPTION UNDER SECTION 54 OF THE ACT AGAINST THE ALLOTMENT O F BOTH THE FLATS. HOWEVER, SINCE THERE WERE CONTRARY VIEWS AMO NG VARIOUS COURTS AS REGARDS TO WHETHER TWO FLATS CAN BE CLAIMED AS DEDUCTION UNDER SECTION 54 OF THE ACT OR ONE FLA T, THE LEARNED ASSESSING OFFICER ALLOWED EXEMPTION UNDER S ECTION 54 WITH RESPECT TO ONE FLAT HAVING BUILT UP AREA OF 1857 SQ.FT. AS IT WAS BENEFICIAL TO THE REVENUE. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- I HAVE GONE THROUGH THE FACTS OF THE CASE, GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS MADE DURING THE. COURSE OF APPELLANT PROCEEDINGS THE ASSESSEE CLAIMS THAT SECTION 54F EXEMPTION IS APPLICABLE FOR BOTH RESIDENTIAL UNITS IN THE SAME FLAT. HE RELIES ON SECTION 54F AND GENERAL CAUSES A CT {SECT 13(2)} AND VARIOUS COURT'S INTERPRETATION THAT 'A R ESIDENTIAL HOUSE PHRASE APPEARING IN SECTION 54 F CAN MEAN MO RE 4 ITA NO.2242/MDS/2015 THAN ONE RESIDENTIAL UNIT. FURTHER, CONTENDS THAT A SSESSING OFFICER HAS HELD THAT AMENDMENT SECTION 54F WHICH I S EFFECTIVE FROM 01.04.2015 IS PROSPECTIVE IN NATURE. MOREOVER HE PLEADS THAT ASSESSING OFFICER HAS MISSED TO LIBE RALLY INTERPRET THE EXEMPTION PROVISION CONTRARY TO THE J UDICIAL RULINGS. APPELLANT HAS MORE PARTICULARLY RELIED THE CASE LAW S OF MARDAS HIGH COURT V KARPAGAM VS. ITO [2014] 226 TAXMAN 197 WHEREIN THE HON'BLE MADRAS HIGH COURT HA S HELD THAT POST AMENDMENT FROM 01.04.2015 THE BENEFI T OF SECTION 54F WILL BE APPLICABLE TO ONE HOUSE IN INDIA. PRIOR TO THE SAID AMENDMENT, IT IS CLEAR THAT A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS AND ACCORD INGLY PLEADS THAT ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTI ON 54F OF THE ACT. APART FROM THIS ASSESSEE COULD NOT PUT BEFORE ME THE EVIDENCE THAT FLAT ON 3 RD FLOOR AT 3A AND 3B ARE ONE UNIT ONLY. THE EVIDENCE PRODUCED BEFORE AO SHOWS THAT TH ERE ARE TWO PROPERTY RECEIPTS AND THE FLATS ARE IDENTIF IED BY TWO DOOR NOS. 17 / 3A AND 17 / 3B THAT IS TO SHOW EACH FLAT IS AN INDEPENDENT UNIT, AS PER THE PROVISIONS OF SEE 54F THE EXEMPTION IS AVAILABLE IN RESPECT OF A RESIDENTIAL UNIT I.E. ONE RESIDENTIAL UNIT WHICH IS VERY MUCH CLEAR IN TH E ACT ITSELF. MOREOVER THE DECISIONS QUOTED AND REFERRED ABOVE ARE DISTINGUISHABLE THEREFORE DEDUCTIONS U/S 54F IS RESTRICTED TO CINE FLAT I.E. ONE RESIDENTIAL UNIT O NLY ACCORDINGLY ACTION OF ASSESSING' OFFICER RESTRICTIN G DEDUCTIONS U/S 54F TO ONE RESIDENTIAL UNIT IS UPHELD AND THEREFORE THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE CHENNAI BENCH OF THIS TRIBUNAL IN THE CASE OF ITO V S. SMT. R.BHUVANESWARI IN ITA NO.1426/MDS/2015 VIDE ORDER DATED 20.11.2015. HENCE IT WAS PLEADED THAT DEDUCTION FOR BOTH THE FLATS MAY BE ALLOWED TO THE ASSESSEE UNDER SECTION 54F OF THE ACT. 5 ITA NO.2242/MDS/2015 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T CONTROVERT TO THE SUBMISSIONS OF THE LEARNED AUTHOR IZED REPRESENTATIVE. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE CONTENTION OF THE LEARNED AUTHORIZED REPRESENTATIVE . THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.1426/MDS/20 15 VIDE ORDER DATED 20.11.2015 HAS HELD THAT THE BENEFIT OF SECTION 54 WOULD BE AVAILABLE FOR ACQUIRING MORE THAN ONE RESI DENTIAL UNIT. THE RELEVANT PORTION OF THE DECISION IS EXTRA CTED HEREIN BELOW:- 2. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE SOLD IMMOVABLE PROPERTY AND ACQUIRED THREE RESIDENTIAL UNITS IN THE SAME APARTM ENT. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. HOWEVER, THE ASSESSING OFFICER RESTRICTED THE CLAIM OF THE ASSESSEE TO ONE RESIDENTIAL UNIT AND FOUND T HAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION EITHER UNDER SECTION 54 OR 54F OF THE ACT IN RESPECT OF THE OTHER TWO RE SIDENTIAL UNITS. HOWEVER, THE CIT(APPEALS), BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN I.T.A. NO. 907/MDS/2001 DATED 28.07.2006, ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 54 IN RESPECT OF THE THREE RESIDENTIAL UNIT S OF THE ASSESSEE. REFERRING TO PROVISIONS OF SECTION 54 OF THE ACT, THE LD. D.R. SUBMITTED THAT THE ASSESSEE CANNOT HAV E MORE THAN ONE RESIDENTIAL HOUSE FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 54 OF THE ACT. 6 ITA NO.2242/MDS/2015 THEREFORE, THE CIT(APPEALS) MAY NOT BE CORRECT IN A LLOWING THE CLAIM OF THE ASSESSEE. 3. ON THE CONTRARY, SHRI V.S. JAYAKUMAR, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT AN IDENTIC AL ISSUE CAME BEFORE THE MADRAS HIGH COURT IN CIT V. V.R. KARPAGAM (2014) 90 CCH 34 AND SUBMITTED THAT THE WO RD ONE RESIDENTIAL HOUSE IN INDIA WAS DELETED BY FIN ANCE ACT, 2014 WITH EFFECT FROM 01.04.2015 AND THE PARLI AMENT INTRODUCED A RESIDENTIAL HOUSE INSTEAD OF ONE RE SIDENTIAL HOUSE. THE CIT(APPEALS) BY FOLLOWING THE BINDING JUDGMENT OF THE MADRAS HIGH COURT IN V.R. KARPAGAM (SUPRA), ALLOWED THE CLAIM OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL AVAIL ABLE ON RECORD. THE AMENDMENT MADE BY PARLIAMENT BY FINANC E ACT, 2014 WAS CONSIDERED BY MADRAS HIGH COURT AND I T WAS FOUND THAT A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS. MOREOVER, A CO-ORDINATE BENCH OF THIS TRIBUNAL IN I.T.A. NO. 907/MDS/2001 DATED 28.0 7.2006 FOUND THAT THERE WAS NO BAR IN ACQUIRING MORE THAN ONE RESIDENTIAL UNIT FOR CLAIMING DEDUCTION UNDER SECTI ON 54 OF THE ACT. IN FACT THE CIT(APPEALS) BY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LOWER AUTHO RITY AND ACCORDINGLY THE SAME IS CONFIRMED. 8. THEREFORE, FOLLOWING THE AFORESAID DECISION OF T HE CHENNAI BENCH OF THE TRIBUNAL WHEREIN ONLY THE DECI SION OF THE JURISDICTIONAL HONBLE HIGH COURT OF MADRAS WAS FOLLOWED, WE HEREBY HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DE DUCTION UNDER SECTION 54 OF THE ACT FOR BOTH THE HOUSES ALL OTTED TO HER BY THE PROMOTER OF THE FLAT. HENCE WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO GRANT THE BENEFIT OF D EDUCTION 7 ITA NO.2242/MDS/2015 UNDER SECTION 54F OF THE ACT TO THE ASSESSEE TOWARD S BOTH THE FLATS ALLOTTED TO HER. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 1 ST JULY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 1 ST JULY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF