ACIT, New Delhi V. Gita Duggal, New Delhi

ITA 3613/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6587 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-06-2011
• Assessment Year: misc
• Appeal Filed On: 28-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: RAVI GUPTA
• Keywords: Benefit of exemption
• Section: 54F; 54

Judgement Text

ITA NO. 3613/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3613/DEL/2010 A.Y. : 2007-08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-22(1), NEW DELHI VS. MS. GITA DUGGAL, A-22, WESTEND, NEW DELHI (PAN/GIR NO. : AAAPD1507F) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. RAVI GUPTA, ADVOCATE DEPARTMENT BY : SMT. MONA MOHANTY, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 12.5.2 010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE FIRST ISSUE RAISED READS AS UNDER:- ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND ON THE FACTS IN DELETING THE ADDITION OF ` 98,20,722/ - U/S. 54F OF THE IT ACT, 1961 WHICH THE ASSESSING OFFICER HAD ALLOW ED IN RESPECT OF ONLY ONE UNIT BY TREATING THE UNITS AS TWO SEPAR ATE RESIDENTIAL PROPERTIES. ITA NO. 3613/DEL/2010 2 3. IN THIS CASE THE ASSESSEE WAS OWNER OF THE PROP ERTY AT A-22, WESTEND COLONY, NEW DELHI. IT WAS HAVING A BASEME NT, GROUND FLOOR, FIRST FLOOR AND THE SECOND FLOOR. THE ASSESSEE DE RIVED RENTAL INCOME FROM THE PROPERTY. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE ENTERED INTO A COLLABORATION AGREEMENT WITH A DEVEL OPER, M/S THAPAR HOMES LTD. ON 8.5.2006 TO DEVELOP, CONSTRUCT AND BU ILD A FRESH BUILDING ON THE SAID PLOT OF LAND. THE ASSESSING OF FICER, WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 54 WERE NOT APPLICA BLE TO THE FACTS OF THE CASE. IT WAS ALSO HIS VIEWS THAT THE ENTIRE NEW PROPERTY WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 54F. IT IS MENT IONED IN THE ORDER AS FOLLOWS:- IN VIEW OF THE ABOVE DISCUSSION, THE ASSESSEE IS FOUND TO BE NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54. EVEN, UNDER SECTION 54F, IT WOULD BE ELIGIBLE FOR DEDUCTION WITH RESPECT TO COST OF CONSTRUCTION INCURRED ON THE UNIT RETAINED BY THE A SSESSEE PLUS ANY 1 UNIT OF THE REMAINING 2 UNITS (THE 2 UNITS AR E TREATED AS 2 SEPARATE RESIDENTIAL PROPERTIES). THE ASSESSEE HAS RETAINED THE GROUND FLOOR ALONG WITH THE BASEMENT. THEREFORE, THE TOTAL COST OF CONSTRUCTION OF ` 3,43,72,529/- IS ESTIMATED TO BE INCURRED IN THE FOLLOWING RATIO : 1:1:1:0:5 FOR SECOND FLOOR : FIRST FLOOR : GROUND F LOOR : BASEMENT OUT OF THE ABOVE, THE ASSESSEE IS ON THE POSSESSION OF GROUND FLOOR AND BASEMENT FOR SELF USE. HENCE, OUT OF THE REMAINING TWO FLOORS, EXEMPTION WOULD BE GRANTED ON ONLY 1 UNIT, A S IN ACCORDANCE WITH THE PROVISIONS OF SECTION 54F OF IN COME TAX ACT, 1961. ACCORDINGLY, THE CLAIM OF THE ASSESSEE TO THE TUNE OF ` 98,20,722/- (TOTAL COST INCURRED / 3.5 I.E. 3,43,72 ,529/3.5) IS ITA NO. 3613/DEL/2010 3 ADDED TO THE INCOME OF THE ASSESSEE AS CHARGEABLE UN DER THE LONG TERM CAPITAL GAINS. 4. UPON ASSESSEES APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS AND HELD AS UND ER:- IN THE CASE IN HAND, THE ASSESSING OFFICER HAS ON LY GIVEN THE BENEFIT OF EXEMPTION UNDER SECTION 54/54F TO THE ASS ESSEE FOR THE BASEMENT AND THE GROUND FLOOR. HE HAS NOT GIVEN EXEMPTION TO THE ASSESSEE FOR THE FIRST FLOOR AND THE SECOND FLOOR, AS THEY HAD BEEN GIVEN OUT ON RENT. CONSIDERING THE DECIS ION OF THE KARNATAKA HIGH COURT IN D. ANANDA BASSAPPA (SUPRA) A ND THE DECISION IN PREM PRAKASH BHUTANI (SUPRA), THE ASSESSIN G OFFICER SHOULD HAVE GIVEN THE EXEMPTION UNDER SECTION 54 TO THE ASSESSEE FOR THE BALANCE FLOORS. AS SUCH, IT IS H ELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54 FOR THE BASEMENT, GROUND FLOOR, FIRST FLOOR AND THE SECOND FLOOR. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND TH AT LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF C.I.T. & ANR. V. SMT. K.G. RUKMINIAMMA IN ITA NO. 783 OF 2008 VIDE ORDER DATED 27.8.2010 WHEREIN IT WAS HELD AS U NDER:- THE CONTEXT IN WHICH THE EXPRESSION A RESIDENTIAL HOUSE IS USED IN S. 54 MAKES IT CLEAR THAT IT WAS NOT THE INTENTI ON OF THE ITA NO. 3613/DEL/2010 4 LEGISLATION TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESIDENTIAL 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 PLURAL IN NUMBER AND TH AT IS REFERRED TO AS A RESIDENTIAL HOUSE, THE ORIGINAL ASSET. A N ASSET NEWLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE A RESIDENTIAL HOUSE. THEREFORE, THE LETTER A IN THE CONTEXT I T IS USED SHOULD NOT BE CONSTRUED AS MEANING SINGULAR. BUT, BEING AN INDEFINITE ARTICLE, THE SAID EXPRESSION SHOULD BE READ IN CONS ONANCE WITH THE OTHER WORDS BUILDINGS AND LANDS AND, THEREF ORE, THE SINGULAR A RESIDENTIAL HOUSE ALSO PERMITS USE OF P LURAL BY VIRTUE OF S. 13(2) OF THE GENERAL CLAUSES ACT. C.I.T. V. D. ANANDA BASSAPPA (2009) 223 (KAR) 186 : (2009) 20 DTR (KAR) 266 FOLLOWED. 7. UPON CAREFUL CONSIDERATION, WE FIND THAT THE C ONTENTIONS OF THE ASSESSEE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ARE CORRECT. 7.1 LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRO VERT THE ABOVE AND NO CONTRARY DECISION WAS CITED BEFORE US. 8. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY OR ILL EGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HENCE, UPHOLD THE SAME. 9. THE NEXT ISSUE RAISED IS THAT ON THE FACTS AND O N THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INC OME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS IN DEL ETING THE ADDITION OF ` 2,78,926/- TOWARDS PORTFOLIO MANAGEMENT FEES. ITA NO. 3613/DEL/2010 5 10. ON THIS ISSUE, LD. COUNSEL OF THE ASSESSEE CONC EDED THAT DISALLOWANCE HAS BEEN RIGHTLY MADE BY THE ASSESSING OFFICER. HENCE, WE ALLOW THIS ISSUE IN FAVOUR OF THE REVENUE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/6/2011 UPO N CONCLUSION OF HEARING. SD/- SD/- [ [[ [I.P. BANSAL I.P. BANSAL I.P. BANSAL I.P. BANSAL] ]] ] [SHAMIM [SHAMIM [SHAMIM [SHAMIM YAHYA] YAHYA] YAHYA] YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 07/6/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES