ITO, Ward-6(3), Hyderabad V. Syed Ali Adil, Hyderabad

ITA 284/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53582 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: ISMAIL AHMEDI
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.284/HYD/2011 ASSESSMENT YEAR 2007-08 THE ITO WARD 6(3), HYDERABAD VS SHRI SYED ALI ADIL, BANJARA HILLS, HYDERABAD (PAN AJEPA 3962 R) APPELLANT RESPONDENT APPELLANT BY : SHRI B.V. PRASAD REDDY RESPONDENT BY : SHRI ISMAIL AHMEDI DATE OF HEARING : 30.08.2011 DATE OF PRONOUNCEMENT : ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) GUNTUR DATE D 13.10.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2007 -08. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 2. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEES CASE IS FULLY COVERED IN THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ANANDA BASAPPA (309 ITR 329). 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACT TH AT TWO FLATS PURCHASED ARE INDEPENDENT, DISTINCT AND HAVIN G SEPARATE KITCHES WITHOUT ANY PASSAGE TO TWO FLATS. 4. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACTS O F THE CASE AND CONFIRMED THE DISALLOWANCE OF DEDUCTION U/S 54 OF THE SECOND FLAT. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54 OF THE IT ACT, 1961 AT ITA NO.284 OF 2011 SHRI SYED ALI ADIL, HYDERABAD 2 RS.93,80,192/- TOWARDS PURCHASE OF TWO FLATS IN MAY FAIR APARTMENT, BANJARA HILLS, HYDERABAD. ON VERIFICATI ON OF THE DOCUMENTS FURNISHED BY THE ASSESSEE, IT IS OBSERVED THAT THE ASSESSEE HAD PURCHASED TWO SEPARATE FLATS, FLAT NO.5E AND FLAT NO.5F IN MAYFAIR APARTMENT, BANJARA HILLS, HYDERABAD. ACCORDING TO THE ASSESSING OFFICER THE A SSESSEE IS ENTITLED FOR DEDUCTION U/S 54 ONLY ONE FLAT. FU RTHER, HE DEPUTED THE INSPECTOR OF ITI TO EXAMINE THE ACTUAL POSSESSION OF THE FLATS. THE ITI INSPECTOR HAS GIV EN A REPORT DATED 18.8.2009 WHEREIN HE HAS STATED THAT THE ASSE SSEE HAS PURCHASED TWO FLATS AS CLAIMED BY THE ASSESSEE AND IN ONE OF THE FLATS THE ASSESSEE HIMSELF IS RESIDING A ND IN THE SECOND FLAT FRIEND OF THE ASSESSEE IS RESIDING WHIC H IS A SEPARATE FAMILY AND IN NO WAY RELATED WITH THE ASSE SSEE. IT WAS ALSO SUBMITTED BY THE INSPECTOR THAT THE TWO FL ATS ARE DISTINCT AND SEPARATE AND ARE HAVING TWO DIFFERENT KITCHENS AND THERE IS PASSAGE EXISTS IN BETWEEN. THEREFORE, ACCORDING TO THE ITI WHAT HAS BEEN PURCHASED BY THE ASSESSEE ARE TWO RESIDENTIAL UNITS AS THE TWO FLATS ARE SEPARATED BY A STRONG WALL. ON THE BASIS OF THE IT I INSPECTORS REPORT, THE ASSESSING OFFICER HAS GRANT ED DEDUCTION U/S 54 ONLY IN RESPECT OF ONE FLAT AT RS.45,52,860/- AS AGAINST THE CLAIM OF THE ASSESSE E AT RS.93,80,192/-. ON APPEAL, THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE PLACING RELIANCE ON THE JUDGE MENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. D. ANANDA BASAPPA (309 ITR 329) (KARNATAKA HC) WHEREIN IT WAS HELD THAT: IT WAS SHOWN BY THE ASSESSEE THAT THE APARTMENTS W ERE SITUATED SIDE BY SIDE. THE BUILDER HAS ALSO STATED THAT HE HAD EFFECTED MODIFICATION OF THE FLATS TO MAKE THEM ONE UNIT ITA NO.284 OF 2011 SHRI SYED ALI ADIL, HYDERABAD 3 BY OPENING THE DOOR IN BETWEEN THE TWO APARTMENTS. THE FACT THAT AT THE TIME WHEN THE INSPECTOR INSPECTED THE PREMISES, THE FLATS WERE OCCUPIED BY TWO DIFFERENT TENANTS WAS NOT A GROUND TO HOLD THAT THE APARTMENT WAS NOT ONE RESIDENTIAL UNIT. THE FACT THAT THE ASSESSEE COULD HAVE PURCHASED BOTH THE FLATS IN ONE SINGLE SALE DEED OR COULD HAVE NARRATED THE PURCHASE OF TWO PREMISES AS ONE U NIT IN THE SALE DEED WAS NOT A GROUND TO HOLD THAT THE ASS ESSEE HAD NO INTENTION TO PURCHASE TWO FLATS AS ONE UNIT. THE ASSESSEE WAS ENTITLED TO THE EXEMPTION U/S 54. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR OPINION, THI S ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE J UDGEMENT CITED SUPRA. FURTHER, THE TRIBUNAL HAS CONSISTENTL Y HOLDING THAT THOUGH FLATS ARE LOCATED AT DIFFERENT FLOOR WH EN THEY COULD BE COMBINED EACH OTHER, IT SHOULD BE CONSTRUE D AS A SINGLE RESIDENTIAL ACCOMMODATION ONLY. FOR THIS PU RPOSE, WE RELY ON THE FOLLOWING JUDGEMENTS: 1. K.G. VYAS VS ITO (26 ITJ 491)(BOM) WHEREIN THE TRIBUNAL HAD ALLOWED EXEMPTION U/S 54 FOR PURCHASE OF 4 FLATS TWO OF WHICH WERE ON GROUND FLOOR AND ON E EACH ON THE FIRST AND SECOND FLOOR. 2. ITO VS. P.C. RAMAKRISHNA HUF (107 ITJ 351) (CHENNAI) WHEREIN THE TRIBUNAL HAD ALLOWED EXEMPTION U/S 54 EVEN WHEN THE ASSESSEE HAD ACQUIRED TWO FLATS ONE ON THE GROUND FLOOR AND THE OTHER ON THE THIRD FLOOR. ITA NO.284 OF 2011 SHRI SYED ALI ADIL, HYDERABAD 4 3. PRE PRAKESH BHUTANI VS. ACIT (110 ITJ 440) (DELHI) WHERE THE TRIBUNAL OBSERVED THAT EXEMPTION U/S 54 ONLY REQUIRES THAT THE PROPERTY SHOULD BE OF RESIDENTIAL NATURE. THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CANNOT BE AN IMPEDIMENT TO THE RELIEF U/S 54. 5. IN VIEW OF THE ABOVE JUDGEMENTS, WE ARE OF THE OPINION THAT THE JUDGEMENTS RELIED BY THE DEPARTMENT IN THE CASE OF DR. A.S. ATWAL VS. CIT (277 ITR 462) (P&H) IS NOT A PPLICABLE TO THE PRESENT CASE. IN THAT CASE THE ASSESSEE HAD SOLD A PLOT WITH A TIN SHED AND SALE PROCEEDS WERE UTILISE D IN PURCHASING A HOUSE AND THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54. THAT THE TIN SHED ON THE PLOT CO ULD NOT BE CONSIDERED AS A RESIDENTIAL HOUSE AND THEREFORE THE CAPITAL GAINS ARISING OUT OF TRANSFER OF THE SAID P LOT ALONG WITH THE TIN SHED DID NOT QUALIFY FOR EXEMPTION U/S 54. THE FACTS OF THIS CASE ARE TOTALLY DIFFERENT FROM THE F ACTS OF THE PRESENT CASE AND HENCE ARE NOT APPLICABLE TO THE FA CTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE, WE ARE INCLINE D TO DISMISS THE APPEAL OF THE REVENUE. ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT 9.9.2011 S D/ - ( G.C. GUPTA) S D/ - (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 9 TH SEPT, 2011 ITA NO.284 OF 2011 SHRI SYED ALI ADIL, HYDERABAD 5 COPY FORWARDED TO: 1. THE INCOME TAX OFFICER, WARD 6(3), HYDERABAD 2. SHRI SYED ALI ADIL, 8-2-269/2, MAYFAIR APARTMENTS, ROAD NO.2, BANJARA HILLS, HYDERABAD 3. THE CIT(A) GUNTUR 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/