THE ITO WARD - 1, Tenali V. Sureddy Venkataramanamma, Tenali

ITA 231/VIZ/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8987 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Revised return
• Section: 50C; 54F; 147; 148; 54

Judgement Text

ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.231/VIZAG/2014 ( / ASSESSMENT YEAR: 2007-08) ITO, WARD - 1, TENALI SMT. SUREDDY VENKATA RAMANAMAMMA, REP. BY L/RS SRI SUREDDY VENKATESWARA RAO, SRI SUREDDY SURESH & SRI SUREDDY RAVI, TENALI, GUNTUR DIST. [PAN NO. AFDPS3646C ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI S.R.S. NARAYAN, DR / RESPONDENT BY : SHRI C. SUBRAHMANYAM, AR / DATE OF HEARING : 21.03.2017 / DATE OF PRONOUNCEMENT : 07.04.2017 / O R D E R PER SHRI MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A), GUNTUR DATED 25.2.2014 AND IT PERTAINS TO T HE ASSESSMENT YEAR 2007-08. ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 25.7.2007 DECLARING TOTAL INCOME OF RS.75,980/-, CO MPRISING INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE INCOME TAX A CT, 1961 (HEREINAFTER CALLED AS THE ACT). SUBSEQUENTLY, T HE CASE HAS BEEN RE- OPENED U/S 147 OF THE ACT, FOR THE REASONS THAT INC OME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THE FACTS, WHICH ARE RELEVANT FOR RE-OPEN ING OF ASSESSMENT ARE THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMEN T YEAR 2007-08, THE ASSESSEE ALONG WITH 7 CO-OWNERS ENTERED INTO A DEVE LOPMENT AGREEMENT-CUM-GENERAL POWER OF ATTORNEY WITH M/S. L AKSHMI ENTERPRISES, VIJAYAWADA FOR CONSTRUCTION OF APARTME NTS ON A PIECE OF LAND MEASURING 3386 SQ.YDS. AND AGREED TO SHARE CON STRUCTED APARTMENTS. AS PER THE SAID DEVELOPMENT AGREEMENT, THE ASSESSEE HAS GOT 3 CONSTRUCTED FLATS TO HER SHARE, WHICH WERE ID ENTIFIED AS PLOT NOS.203, 307 & 407. THE ASSESSING OFFICER HELD THA T HANDING OVER OF POSSESSION UNDER THE DEVELOPMENT AGREEMENT EXECUTED ON 31.7.2006 AMOUNTS TO TRANSFER U/S 2(47)(V) OF THE ACT, AND TH US PROFIT ARISING OUT OF SUCH TRANSFER WAS CHARGEABLE TO TAX UNDER THE HE AD CAPITAL GAINS AS PER THE PROVISIONS OF SECTION 45 OF THE ACT, ACCORD INGLY, ISSUED A NOTICE ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 3 U/S 148 OF THE ACT, REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08. IN RESPONSE TO NOTICE U/S 148 OF THE ACT, THE ASSESSEE HAS FILED A LETTER AND REQUESTED TO TREAT THE RETURN FILED ORIGINALLY ON 25.7.2007 AS RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT. 3. SUBSEQUENTLY, THE CASE HAS BEEN SELECTED FOR SCR UTINY AND ACCORDINGLY, NOTICE U/S 143(2) OF THE ACT WAS ISSUE D. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE APPEARED AND FILED NECESSARY DETAILS AS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT DEVELOPMENT AGR EEMENT ENTERED INTO BY THE ASSESSEE WITH THE DEVELOPER AMOUNTS TO TRANSFER OF PROPERTY WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT R .W.S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 AND HENCE LIABLE FOR CAPITAL GAINS U/S 45 OF THE ACT. ACCORDINGLY, ISSUED A SHOW CAUSE NOTIC E AND ASKED TO EXPLAIN AS TO WHY CAPITAL GAIN SHALL NOT BE CHARGED IN RESPECT OF TRANSFER OF PROPERTY IN PURSUANCE OF DEVELOPMENT AGREEMENT. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT MERE ENTERING INTO A DEVELOPMENT AGREEMENT DOES NOT PART WITH HER FROM O WNERSHIP OF THE SAID LAND AND THE OWNERSHIP REST WITH HER TILL THE AGREED BUILT UP AREA IS HANDED OVER BY THE DEVELOPER. THE ASSESSEE FURTHER STATED THAT SHE HAS PERMITTED THE DEVELOPER TO ENTER INTO PREMISES ONLY FOR THE PURPOSE OF ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 4 CONSTRUCTION AND THE TITLE OF THE PROPERTY REMAINS VEST WITH THEM. THE ASSESSEE FURTHER SUBMITTED THAT THE BUILDER HAS HAN DED OVER THE CONSTRUCTED APARTMENT IN THE FINANCIAL YEAR RELEVAN T TO ASSESSMENT YEAR 2009-10 & 2010-11 AND ACCORDINGLY, THE LIABILITY FO R CAPITAL GAIN ARISES IN THE ASSESSMENT YEAR 2009-10 & 2010-11, BUT NOT FOR THE ASSESSMENT YEAR 2007-08. 4. THE A.O. AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE AND ALSO REFERRING TO CERTAIN JUDICIAL PRECEDENTS, INCL UDING THE DECISION OF HONBLE HIGH COURT OF BOMBAY, IN THE CASE OF CHATUR BUJ DWARKA DAS KAPADIA VS. CIT (2003) 260 ITR 491 AND ALSO THE DEC ISION OF HIGH COURT OF KARNATAKA IN THE CASE OF CIT & OTHERS VS. DR. P. K. DAYALU 202 TAXMAN 531 (2011), HELD THAT AS PER THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT, TRANSFER INCLUDES ANY TRANSFER INVOLVIN G THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF THE CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. SINCE, THE DEV ELOPMENT AGREEMENT ENTERED INTO WITH THE DEVELOPER IS IN THE NATURE O F TRANSACTION ALLOWING POSSESSION OF ANY IMMOVABLE PROPERTY, WHICH COMES U NDER THE DEFINITION OF TRANSFER U/S 2(47)(V) R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 AND HENCE CAPITAL GAIN IS CHARGEABLE ON THE TRANSAC TION. WITH THESE OBSERVATIONS, RE-WORKED CAPITAL GAIN AND MADE ADDIT IONS BY ADOPTING ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 5 RS.12,500/- PER SQ.YDS. ON LAND TRANSFERRED AND COM PUTED LONG TERM CAPITAL GAIN OF RS. 76,44,645/- AFTER ALLOWING INDE XED COST OF ACQUISITION OF RS.4,92,855/-. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURTHER CONTENDED THAT THE A.O. WAS ERRED IN ADOPTING GUIDANCE VALUE OF THE LAND FOR THE PURPOSE OF DETERMINATION OF CONSIDERATION FOR TRANS FER OF LAND IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT. THE ASSE SSEE FURTHER SUBMITTED THAT WHAT WAS RECEIVED IN PURSUANCE OF JO INT DEVELOPMENT AGREEMENT IS CONSTRUCTED APARTMENTS AND THE VALUE O F THE CONSTRUCTED APARTMENTS HAS TO BE CONSIDERED FOR DETERMINATION O F CONSIDERATION FOR TRANSFER OF LAND, BUT NOT GUIDANCE VALUE OF LAND AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSEE ALSO RAISED A N ADDITIONAL GROUND OF APPEAL AND REQUESTED TO ALLOW EXEMPTION TOWARDS CAP ITAL GAIN U/S 54F OF THE ACT FOR RE-INVESTING SALE CONSIDERATION RECEIVE D IN PURSUANCE OF TRANSFER OF LAND IN ANOTHER RESIDENTIAL HOUSE PROPE RTY. THE ASSESSEE FURTHER SUBMITTED THAT SHE HAD RE-INVESTED SALE CON SIDERATION RECEIVED FOR TRANSFER OF PROPERTY FOR ACQUIRING 3 RESIDENTIA L APARTMENTS FOR WHICH SHE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. IN SUPPORT OF HER ARGUMENT, RELIED UPON THE DECISION OF HONBLE KARNA TAKA HIGH COURT, IN ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 6 THE CASE OF CIT VS. D. ANANDA BASAPPA (2009) 309 IT R 329 AS WELL AS CIT VS. K.G. RUKMINIAMMA (2011) 331 ITR 211. THE A SSESSEE ALSO RELIED UPON THE DECISION OF HONBLE A.P. HIGH COURT , IN THE CASE OF CIT VS. SYED ALI ADIL (2013) 352 ITR 418 AND SUBMITTED THAT SECTION 54F REQUIRES THAT THE PROPERTY SHOULD BE OF RESIDENTIAL NATURE AND THE FACT THAT RESIDENTIAL HOUSE CONSIST OF SEVERAL INDEPENDE NT UNITS CANNOT BE AN IMPEDIMENT TO GRANT RELIEF U/S 54 OF THE ACT, EVEN IF SUCH INDEPENDENT UNITS WERE ON DIFFERENT FLOORS. 6. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMIS SIONS OF THE ASSESSEE, HELD THAT CONSIDERATION RECEIVED BY THE L AND OWNER IN CASE OF A DEVELOPMENT AGREEMENT IS THE VALUE OF THE FLATS A ND NOT THE VALUE OF THE LAND FOREGONE. THUS, IN THE CASE OF THE ASSESS EE HER SHARE IS 3 FLATS MEASURING 5100 SQ.FT., THEREFORE, THE A.O. OUGHT TO HAVE DETERMINED SALE CONSIDERATION BY TAKING INTO ACCOUNT THE COST OF CONSTRUCTED FLATS ON TOTAL VALUE OF FLATS RECEIVED BY THE ASSESSEE. WITH THESE OBSERVATIONS, CIT(A) DIRECTED THE A.O. TO RE-WORK CAPITAL GAIN BY ADOPTING THE VALUE OF CONSTRUCTED APARTMENTS RECEIVED BY THE ASSESSEE IN PURSUANCE OF DEVELOPMENT AGREEMENT. IN SO FAR AS EXEMPTION U/S 54F OF THE ACT, THE CIT(A) OBSERVED THAT THE HONBLE KARNATAKA HIGH COU RT, IN THE CASE OF CIT VS. K.G. RUKMINIAMMA (SUPRA) OBSERVED THAT THE EXPRESSION RESIDENTIAL HOUSE USED IN SECTION 54 OF THE ACT, DOES NOT REFER TO A ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 7 SINGLE RESIDENTIAL HOUSE. IT WAS HELD THAT ALL THE FOUR FLATS RECEIVED BY THE ASSESSEE WERE SITUATED IN A RESIDENTIAL BUILDIN G AND CONSTITUTES RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54 O F THE ACT AND HENCE, THE ASSESSEE WAS HELD ENTITLED TO THE BENEFIT OF SE CTION 54F OF THE ACT. THEREFORE, CIT(A) DIRECTED THE A.O. TO ALLOW EXEMPT ION U/S 54F OF THE ACT TOWARDS ALL THE 3 FLATS RECEIVED IN PURSUANCE O F JOINT DEVELOPMENT AGREEMENT. THE CIT(A) FURTHER OBSERVED THAT SINCE THE LEGAL HEIRS OF THE ASSESSEE SOLD 2 FLATS OUT OF 3 FLATS WITHIN A P ERIOD OF 3 YEARS FROM THE DATE OF ACQUISITION, THE AMOUNT OF CAPITAL GAIN EXEMPTED U/S 54F OF THE ACT, IN RESPECT OF THESE 2 FLATS SHALL HAVE TO BE BROUGHT TO TAX IN THE ASSESSMENT YEAR 2009-10. WITH THESE OBSERVATIONS, CIT(A) DIRECTED THE A.O. TO BRING SHORT TERM CAPITAL GAINS TOWARDS 2 FL ATS TRANSFERRED IN THE ASSESSMENT YEAR 2009-10. AGGRIEVED BY THE CIT(A) O RDER, THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) ERRED IN ALLOWING EXEMPTION U/S 54F OF THE ACT, WHICH WAS NEVER CLAIM ED BEFORE THE A.O., IGNORING THE DECISION OF APEX COURT, IN THE CASE OF GOETZ (INDIA) LIMITED VS. CIT, 284 ITR 323. THE D.R. FURTHER SUBMITTED T HAT THE CIT(A) ERRED IN ALLOWING EXEMPTION U/S 54F OF THE ACT FOR 3 FLAT S UNDER DEVELOPMENT AGREEMENT IGNORING THE STATUTE, WHEREIN THE STATUTE PROVIDES FOR EXEMPTION TOWARDS ONE RESIDENTIAL HOUSE. THE D.R. FURTHER SUBMITTED ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 8 THAT THE CIT(A) ERRED IN COMING TO THE CONCLUSION T HAT THE ASSESSEE HAS MADE INVESTMENT IN NEW RESIDENTIAL HOUSE IN RESPECT OF 3 FLATS ON THAT VERY DATE ON WHICH DEVELOPMENT AGREEMENT WAS EXECUT ED, IGNORING THE FACT THAT OUT OF 3 FLATS, ONLY 2 FLATS WERE HANDED OVER TO THE ASSESSEE WITHIN THE STIPULATED TIME LIMIT. THE D.R. FURTHER SUBMITTED THAT THE CIT(A) ERRED IN ADOPTING THE COST OF CONSTRUCTION O F FLATS FOR THE PURPOSE OF DETERMINATION OF SALE CONSIDERATION, INSTEAD OF THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS. 8. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT TH E CIT(A) RIGHTLY ALLOWED EXEMPTION U/S 54F OF THE ACT, IN RESPECT OF 3 FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT, AS THE LE GAL POSITION PRIOR TO THE AMENDMENT TO SECTION 54F OF THE ACT, BY THE FIN ANCE ACT, 2014 W.E.F. 1.4.2015 IS VERY CLEAR ABOUT ELIGIBILITY OF EXEMPTION TOWARDS ALL FLATS RECEIVED IN PURSUANCE OF DEVELOPMENT AGREEMEN T. THE A.R. REFERRING TO THE PLETHORA OF JUDICIAL DECISIONS, IN CLUDING THE DECISION OF HONBLE HIGH COURT OF MADRAS, IN THE CASE OF CIT VS . GUMANMAL JAIN (2017) 98 CCH 93 (CHENNAI HC), SUBMITTED THAT WHEN THE ASSESSEE RECEIVED HIS SHARE OF FLATS IN PURSUANCE OF JOINT D EVELOPMENT AGREEMENT, THE ASSESSEE IS ELIGIBLE FOR ALL THE FLATS EVEN IF FLATS/APARTMENTS ARE IN DIFFERENT BLOCKS AND DIFFERENT TOWERS AS LONG AS TH EY ARE IN SAME ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 9 ADDRESS/LOCATION AND IT DOES NOT DISENTITLE THE ASS ESSEE FROM GETTING THE BENEFIT OF SECTION 54F OF THE ACT. THE A.R. FURTHE R SUBMITTED THAT ONCE THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF T HE ACT IN RESPECT OF ALL THE FLATS, THE OTHER ISSUES CHALLENGED BY THE REVEN UE IN RESPECT OF COMPUTATION OF LONG TERM CAPITAL GAIN AND ADOPTION OF MARKET VALUE OF THE LAND FOR THE PURPOSE OF DETERMINATION OF SALE C ONSIDERATION ARE MERELY ACADEMIC IN NATURE AND HAS NO IMPACT ON COMP UTATION OF CAPITAL GAINS. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE TO BE DECIDED IS WHETHER ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT, FOR ALL THE FLATS RECEIVED IN PURSUANCE OF A DEVELOPMENT AGREEMENT? THE ISSUE IS NO LONGER RES INTEGRA. TH E COORDINATE BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF ITO VS. RAVUR I KISHORE & OTHERS IN ITA NOS.498 TO 500/VIZAG/2013 DATED 28.3.2017, W HEREIN BOTH JUDICIAL MEMBER AS WELL AS ACCOUNTANT MEMBER ARE PA RTY TO THE DECISION, HAS CONSIDERED A SIMILAR ISSUE AND CONSIDERING THE PROVISIONS OF SECTION 54F OF THE ACT AND ALSO BY FOLLOWING THE DECISION O F HONBLE A.P. HIGH COURT, IN THE CASE OF CIT VS. SYED ALI ADIL (SUPRA) , HELD THE ISSUE IN ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 10 FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF TH E ORDER IS EXTRACTED BELOW: 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE M ATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX WHICH LEADS TO THE DISPUTE IS THAT T HE ASSESSEE ALONG WITH OTHER 12 CO-OWNERS ENTERED INTO A DEVELOPMENT AGREE MENT WITH SHRI SAI VENKATA RAMANA CONSTRUCTIONS FOR DEVELOPMENT OF A P IECE OF LAND ADMEASURING 1.68 ACRES AT S.NO.93. AS PER THE SAID JOINT DEVELOPMENT AGREEMENT, THE ASSESSEE AND 12 OTHER FAMILY MEMBERS HAVE AGREED TO SHARE THE CONSTRUCTED FLATS IN THE RATIO OF 17:23. THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54F OF THE ACT ON TOTAL FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT. ACCORDING TO THE A SSESSEE, EXEMPTION U/S 54F OF THE ACT IS ALLOWABLE EVEN IF THE FLATS/A PARTMENTS ARE SITUATED IN DIFFERENT BLOCKS OR TOWERS. THE A.O. HAS DISALLOWE D EXEMPTION CLAIMED U/S 54F OF THE ACT, ON THE GROUND THAT THE ASSESSEE HAS LET OUT THE APARTMENT TO EDUCATIONAL INSTITUTION FOR THE PURPOS E OF COMMERCIAL USE. THE A.O. FURTHER OBSERVED THAT EXEMPTION U/S 54F OF THE ACT IS AVAILABLE TO ONE RESIDENTIAL HOUSE, BUT NOT FOR ALL RESIDENTI AL FLATS RECEIVED IN PURSUANCE OF JOINT DEVELOPMENT AGREEMENT. 12. THE ONLY ISSUE TO BE DECIDED IS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT FOR ALL THE FLATS RECEIVED IN PURSUANCE OF A DEVELOPMENT AGREEMENT? THE ISSUE IS NO LONGER A RES INTEGRA. THE HONBLE HIGH COURT OF A.P., IN THE CASE OF CIT VS. SYED ALI ADIL (SUPR A), HAS CONSIDERED THE ISSUE AND AFTER ANALYZING THE PROVISIONS OF SECTION 54F OF THE ACT, OBSERVED THAT THE EXPRESSION A RESIDENTIAL HOUSE IN SECTION 54F OF THE ACT HAS TO BE UNDERSTOOD IN A SENSE THAT BUILDING SHOUL D BE OF RESIDENTIAL NATURE AND A SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGLE NUMBER AND WHERE AN ASSESSEE HAD PURCHASED TWO RESIDENTIAL FLA TS, IS ENTITLED TO EXEMPTION U/S 54F OF THE ACT, IN RESPECT OF CAPITAL GAINS ON SALE OF ITS PROPERTY ON PURCHASE OF BOTH FLATS. THE HIGH COURT FURTHER OBSERVED THAT DEDUCTION U/S 54F OF THE ACT, IS ALLOWABLE WITH RES PECT TO THE RESIDENTIAL HOUSE CONSISTING OF SEVERAL INDEPENDENT UNITS. A S IMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE HIGH COURT OF MADRAS, IN T HE CASE OF CIT VS. GUMANMAL JAIN (SUPRA), WHEREIN THE HONBLE HIGH COU RT OBSERVED THAT ALL THE FLATS ARE A PRODUCT OF ONE DEVELOPMENT AGREEMEN T OF THE SAME PIECE OF LAND BEING SAID LAND, HENCE EVEN IF FLATS ARE IN DIFFERENT BLOCKS AND DIFFERENT TOWERS, AS LONG AS THEY ARE IN SAME ADDRE SS/LOCATION, IT DOES NOT DISENTITLE THE ASSESSEE FROM GETTING THE BENEFIT OF SECTION 54F OF THE ACT. IN YET ANOTHER CASE, THE HONBLE HIGH COURT OF MADRA S IN THE CASE OF CIT VS. V.R. KARPAGAM (2015) 373 ITR 127, HELD THAT PRI OR TO AMENDMENT U/S 54F BY FINANCE ACT, 2004 W.E.F. 1.4.2015, WITH REGA RD TO WORD A, A RESIDENTIAL HOUSE INCLUDE MULTIPLE FLATS/RESIDENTIA L UNITS, WHERE UNDER THE DEVELOPMENT AGREEMENT ASSESSEE WAS ENTITLED TO RECE IVE CERTAIN BUILT-UP ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 11 AREA, WHICH GOT TRANSLATED INTO FIVE FLATS, EXEMPTI ON U/S 54F IN RESPECT OF FIVE FLATS IN A MULTI-STOREY CONSTRUCTION WOULD BE AVAILABLE. 13. THUS, THE LEGAL PROPOSITION BEFORE THE AMENDMEN T OF SECTION 54F OF THE ACT, BY THE FINANCE ACT, 2014 W.E.F. 1.4.2015, IN THE CASE OF DEVELOPMENT AGREEMENT, IS VERY CLEAR THAT IF THE LA ND OWNER RECEIVES NUMBER OF FLATS, EVEN THOUGH THEY ARE LOCATED IN DI FFERENT BLOCKS AND DIFFERENT TOWERS, ONCE THEY ARE IN SAME ADDRESS/LOC ATION AND ALL THE FLATS ARE A PRODUCT OF ONE DEVELOPMENT AGREEMENT, THEN TH E ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT, IN RESPECT OF ALL THE FLATS. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE FOR E XEMPTION U/S 54F OF THE ACT IN RESPECT OF ALL THE FLATS RECEIVED IN PURSUAN CE OF JOINT DEVELOPMENT AGREEMENT. THE REVENUE HAS FAILED TO BRING ON RECO RD ANY CONTRARY DECISION AGAINST THE LAW LAID DOWN BY THE HONBLE A .P. HIGH COURT, IN THE CASE OF CIT VS. SYED ALI ADIL (SUPRA). CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOL LOWING THE DECISION OF HONBLE A.P. HIGH COURT, IN THE CASE OF CIT VS. SYE D ALI ADIL (SUPRA), WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE FOR E XEMPTION U/S 54F OF THE ACT, TOWARDS ALL THE FLATS RECEIVED IN PURSUANCE TO DEVELOPMENT AGREEMENT. 10. IN THIS VIEW OF THE MATTER AND ALSO RESPECTFULL Y FOLLOWING THE DECISION OF COORDINATE BENCH, IN THE CASE OF ITO VS . RAVURI KISHORE & OTHERS IN ITA NOS.498, 499 & 500/VIZAG/2013 DATED 2 8.3.2017, WE ARE OF THE VIEW THAT THE ASSESSE IS ELIGIBLE FOR EXEMPT ION U/S 54F OF THE ACT, IN RESPECT OF 3 FLATS RECEIVED IN PURSUANCE OF DEVE LOPMENT AGREEMENT. THE CIT(A) AFTER CONSIDERING RELEVANT FACTS HAS RIG HTLY HELD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE A CT FOR 3 FLATS. THE CIT(A) FURTHER OBSERVED THAT, SINCE, THE LEGAL HEIR S HAS SOLD TWO FLATS WITHIN 3 YEARS FROM THE DATE OF ACQUISITION, THE AM OUNT OF CAPITAL GAIN EXEMPTED IN RESPECT OF TWO FLATS U/S 54F OF THE ACT SHALL BE BROUGHT TO TAX IN THE A.Y. 2009-10. WE DO NOT FIND ANY ERROR I N THE ORDER OF THE ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 12 CIT(A). HENCE, WE INCLINED TO UPHELD THE CIT(A) OR DER AND DISMISS GROUND RAISED BY THE REVENUE. 11. THE NEXT GROUND RAISED BY THE REVENUE IS WITH R EGARD TO THE COMPUTATION OF LONG TERM CAPITAL GAIN IN PURSUANCE OF DEVELOPMENT AGREEMENT AND ADOPTION OF CONSIDERATION FOR TRANSFE R OF PROPERTY. THE A.O. HAS ADOPTED GUIDANCE VALUE OF THE LAND TO DETE RMINE THE CONSIDERATION RECEIVED TOWARDS TRANSFER OF PROPERTY IN PURSUANCE OF DEVELOPMENT AGREEMENT. THE ASSESSEE CONTENDED THAT COST OF CONSTRUCTED APARTMENTS HAS TO BE CONSIDERED FOR DET ERMINATION OF CONSIDERATION BY TRANSFER OF PROPERTY BUT NOT THE G UIDANCE VALUE OF THE LAND. HAVING HEARD BOTH THE SIDES, WE FIND THAT ON CE THE ISSUE HAS BEEN DECIDED THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT AND IN RESPECT OF ALL THE FLATS, THE OTHER ISSUES R AISED BY THE ASSESSEE WITH REGARD TO THE COMPUTATION OF CAPITAL GAIN AND DETERMINATION OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAP ITAL GAIN BECOMES ACADEMIC, AS THE ASSESSEE IS ELIGIBLE FOR EXEMPTION TOWARDS ALL THE FLATS RECEIVED IN PURSUANCE OF A JOINT DEVELOPMENT AGREEM ENT AND THIS DOES NOT MATTER WHATEVER IS THE VALUE OF FLAT OR LAND TO DETERMINE THE CONSIDERATION RECEIVED FOR TRANSFER OF LAND. THERE FORE, WE ARE OF THE VIEW THAT DETERMINATION OF SALE CONSIDERATION AND C OMPUTATION OF CAPITAL GAIN HAS NO IMPACT ON THE TOTAL INCOME, ONCE EXEMPT ION IS ALLOWED ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 13 TOWARDS ALL FLATS RECEIVED IN PURSUANCE OF DEVELOPM ENT AGREEMENT. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. 12. IN SO FAR AS, ADMISSION OF CLAIM OF EXEMPTION U /S 54F OF THE ACT BY THE CIT(A), WE FIND THAT, THE HONBLE SUPREME COURT IN THE CAASE OF GOETZE (INDIA) LTD. VS. CIT, REPORTED IN 284 ITR 37 3 HAS MADE IT CLEAR THAT, THE A.O. CANNOT ENTERTAIN ANY CLAIM FOR DEDUC TION OTHERWISE THAN BY FILING A REVISED RETURN, HOWEVER, IT DOES NOT IN FRINGE ON THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE ACT. SINCE, THE CIT(A) IS AN APPELLATE AUTHORITY, IT CAN ENTERTAIN A FRESH CLAIM OF DEDUCTION AND HENCE, THE CASE RELIED UPON BY THE LD. D.R. IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (SUPRA) HAS NO APPLICATION AND HENCE, THE GROUND OF THE REVENUE IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH APR17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 07.04.2017 VG/SPS ITA NO.231/VIZAG/2014 SMT. SUREDDY VENKATA RAMANAMMA, TENALI 14 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1, TENALI 2. / THE RESPONDENT SUREDDY VENKATA RAMANAMMA, LATE SUREDDY VENKATESWARA RAO, D.NO.11-1-20, TILAK ROAD, CHENCHU PETA, TENALI. 3. + / THE CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM