ARUN KUMAR TELANG, DURG(CG) V. ITO, WARD- 4, BHILAI(CG)

ITA 39/BIL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2588 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 19-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RITUPARAN NAMDEO
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Depreciation; Opportunity of being heard; Fair market value; Valuation report; Tax effect
• Section: 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.39/RPR/2015 ASSESSMENT YEAR : 2011-12 ARUN KUMAR TELANG, H.NO. A-127, PHASE- II, JUNWANI, SURYA VIHAR, NEHRU NAGAR, BHILAI, DURG (CG). VS. ITO, WARD- 4, BHILAI (CG). PAN : ABKPT8378B (APPELLANT) (RESPONDENT) ITA NO.44/RPR/2015 ASSESSMENT YEAR : 2011-12 ITO, 1(3), BHILAI (CG). VS. ARUN KUMAR TELANG, H.NO. A-127, PHASE- II, JUNWANI, SURYA VIHAR, NEHRU NAGAR, BHILAI, DURG (CG). PAN : ABKPT8378B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL KR. AGRAWAL, CA MS. LAXMI SHARMA, CA DEPARTMENT BY : SHRI RITUPARAN NAMDEO, DR DATE OF HEARING : 08-08-2018 DATE OF PRONOUNCEMENT : 17-08-2018 O R D E R PER R. K. PANDA, AM : THESE ARE CROSS APPEALS. FIRST ONE FILED BY THE AS SESSEE AND SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AGAINST THE O RDER DATED 24.12.2014 OF 2 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 CIT(A)- II, RAIPUR (CG) RELATING TO ASSESSMENT YEAR 2011-12. FOR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS COMMON ORDER. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 09.08.2011 DECLARING TOTAL INCOME OF RS.3,20,800/- WHICH INCLUDED LONG TERM CAPITAL GAIN AMOUNTING TO RS.1,47,458/-. THE ASSESSEE HAS DERIVED INCOME BY WAY OF CONSULTANCY FEE RECEIP TS FROM CECON CONSULTANTS PVT. LTD. AND INCOME FROM OTHER SOURCES WHICH INCLUDES INCOME BY WAY OF INTEREST RECEIPTS ON S.B. ACCOUNT AND TDRS W ITH STATE BANK OF INDIA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT AS PER THE INFORMATION AVAILABLE ON RECORD BY WAY OF AIR, THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY FOR RS.1,32,52,500/- ON 30.12.2010. PERUSAL OF THE COMPUTATION OF INCOME APPENDED TO THE RETURN FILED FOR THE ASSESSMENT YEAR REVEALED THAT THE ASSESSEE HAD DECLARED LONG TERM C APITAL GAIN ON SALE OF RESIDENTIAL HOUSE PROPERTY AT RS.63,89,382/-. AFTE R CLAIMING THE DEDUCTION AMOUNTING TO RS.62,41,924/- U/S 54, THE ASSESSEE HA S OFFERED LONG TERM CAPITAL GAIN AMOUNTING TO RS.1,47,458/- FOR TAXATION. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS TAKEN THE SALE CONSIDER ATION OF RESIDENTIAL HOUSE PROPERTY FOR COMPUTING THE LONG TERM CAPITAL GAIN A T RS.95,00,000/- AND THEREFROM HE HAS DEDUCTED INDEXED COST OF ACQUISITI ON AND INDEXED COST OF 3 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 IMPROVEMENTS TOTALING TO RS.31,10,618/-. ON THE BA SIS OF LETTER ISSUED BY THE ASSESSING OFFICER TO THE SUB-REGISTRAR, DURG CALLIN G FOR A COPY OF THE SALE DEED IN RESPECT OF THE PROPERTY TRANSACTION UNDERTAKEN B Y THE ASSESSEE, IT WAS REPLIED THAT THE STAMP DUTY VALUATION AUTHORITY HAD ADOPTED THE MARKET VALUE OF THE PROPERTY AT RS.1,32,52,500/-. THE ASSESSING OFFICE R BROUGHT TO THE NOTICE OF THE ASSESSEE THE PROVISIONS OF SECTION 50C AND ASKED HI M WHY THE SAID PROVISIONS SHOULD NOT BE APPLIED TO THE ASSESSEE FOR COMPUTATI ON OF THE LONG TERM CAPITAL GAIN. REJECTING THE VARIOUS EXPLANATION GIVEN BY T HE ASSESSEE, THE ASSESSING OFFICER ADOPTED THE VALUE OF RS.1,32,52,500/- AS AD OPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. 3. THE ASSESSING OFFICER ON THE BASIS OF VARIOUS RE PLIES GIVEN BY THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS PURCHASED T WO RESIDENTIAL HOUSES AGAINST THE SALE OF THE OLD HOUSE AND HAS CLAIMED DEDUCTION U/S 54 OF THE ACT. REFERRING TO THE PROVISIONS OF SECTION 54, THE ASSESSING OFFI CER ASKED THE ASSESSEE TO EXPLAIN AS TO HOW HE IS ENTITLED TO CLAIM DEDUCTION U/S 54 ON ACCOUNT OF INVESTMENT IN TWO PROPERTIES. REJECTING THE VARIOU S EXPLANATIONS GIVEN BY THE ASSESSEE AND RELYING ON VARIOUS DECISIONS, THE ASSE SSING OFFICER HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 54 ONLY IN RESPECT OF ONE PROPERTY. HE ACCORDINGLY ALLOWED SUCH DEDUCTION AT RS.34,73,5 41/- IN RESPECT OF 4 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 INVESTMENT IN ONE HOUSE PROPERTY. ACCORDINGLY, THE ASSESSING OFFICER DETERMINED THE LONG TERM CAPITAL GAIN OF THE ASSESS EE AT RS.66,68,341/- AFTER ALLOWING THE DEDUCTION U/S 54 OF THE I.T. ACT. 4. BEFORE THE LD. CIT(A), THE ASSESSEE MADE ELABORA TE SUBMISSIONS BASED ON WHICH LD. CIT(A) RESTRICTED THE FAIR MARKET VALUE O F THE PROPERTY AT RS.1,07,00,000/- FOR THE PURPOSE OF CALCULATING THE LONG TERM CAPITAL GAIN ON THE BASIS OF THE REPORT OF THE DVO. HE FURTHER ALLOWED THE ENHANCED CLAIM OF DEDUCTION U/S 54 AT RS.29,03,970/-. HE HOWEVER REJ ECTED THE CLAIM OF DEDUCTION U/S 54 IN RESPECT OF THE SECOND HOUSE PROPERTY. 5. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE LD. CIT(A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE THE TRIBUN AL. ITA NO.44/RPR/2015 (BY REVENUE) : 6. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN REFERRING THE MATTER TO DISTRICT V ALUATION OFFICER FOR THE PURPOSE OF CALCULATION OF DEEMED CAPITAL GAINS U/S 50C OF THE INCOME TAX ACT, 1961 WHEN THE ASSESSEE HAS FAILED TO ASK THE A.O. TO REFER THE MA TTER TO THE DVO DURING ASSESSMENT PROCEEDINGS. 2. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING FAIR MARKET VALUE OF T HE PROPERTY AT RS.1,07,00,000/- FOR THE PURPOSE OF CALCULATION OF LONG TERM CAPITAL GAIN. 3. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 54 OF THE I NCOME TAX ACT, 1961 FOR THE INVESTMENTS OF RS.8,66,240/- AND RS.20,37,730/- TOT ALING TO RS.29,03,970/-. 4. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH I N LAW AND ON FACTS. 5. ANY OTHER GROUND THAT MAY BE DEDUCTED AT THE TI ME OF HEARING. 5 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 7. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE TAX EFFECT INVOLVED IN THE GROUNDS RAISED BY THE REVENUE IS BE LOW RS.20 LAKHS. THEREFORE, IN VIEW OF THE LATEST CBDT CIRCULAR NO.03/2018 [F.N O.279/MISC.142/2007-ITJ (PT)] DATED 11 TH JULY, 2018 WHICH IS APPLICABLE EVEN TO PENDING APP EALS, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 8. THE LD. DR ON THE OTHER HAND FAIRLY CONCEDED THA T THE TAX EFFECT INVOLVED IN THE GROUNDS RAISED BY THE REVENUE IS ADMITTEDLY BELOW RS.20 LAKHS. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES. IT IS AN ADMITTED FACT THAT THE TAX EFFECT INVOLVED IN THE G ROUNDS RAISED BY THE REVENUE IS LESS THAN RS.20 LAKHS. THEREFORE, IN VIEW OF THE L ATEST CBDT CIRCULAR CITED (SUPRA) RAISING THE MONETARY LIMITS FOR FILING OF T HE APPEALS BEFORE THE TRIBUNAL WHICH IS APPLICABLE EVEN TO PENDING APPEALS, THE AP PEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.39/RPR/2015 (BY ASSESSEE) : 10. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN APPLYING THE DVO REPORT AS IT IS (I.E., ONLY ACCEPT ED THE TYPOGRAPHICAL ERROR IN THE REPORT), WHILE IT IS NOT BINDING ON THE APPELLATE A UTHORITY. IT HAS TO BE DECIDED ON MERITS AFTER CONSIDERING THE OBJECTIONS RAISED BY T HE APPELLANT AND BY GIVING PROPER OPPORTUNITY FOR HEARING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE OBJECTION POINTED OUT BY THE AP PELLANT AGAINST THE VALUATION REPORT AS IN RESPECT TO THE DEPRECIATION WORKED OUT (I.E., DEPRECIATION TAKEN FOR 35 YEARS INSTEAD OF 50 YEARS). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN INVOKING SEC.50C(2), UNLESS THE RE IS EVIDENCE FOR UNDERSTATEMENT 6 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 OF THE CONSIDERATION, IN RESPECT OF THE TRANSFER, A ND THE BURDEN OF SHOWING THAT THERE IS SUCH UNDERSTATEMENT, IS ON THE REVENUE, WHICH IS NO T THE CASE OF THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE METHOD OF COMPUT ING CAPITAL GAIN U/S 48 BY APPLYING FMV TAKEN BY THE DVO, AS EXPRESSION FULL VALUE OF CONSIDERATION MENTIONED IN THE SEC.48, DOES NOT HAVE ANY REFERENC E TO THE MARKET VALUE, BUT ONLY TO THE CONSIDERATION REFERRED TO IN THE SALE DEED AS THE SALE PRICE OF THE ASSETS, WHICH HAVE BEEN TRANSFERRED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN NOT GIVING EXEMPTION U/S 54 FOR THE 2 ND RESIDENTIAL HOUSE (I.E., LIG-164, JUNWANI, DURG) PURCHASED BY THE APPELLANT, STATING THAT, APPELLANT IS ENTITLED TO CLAIM EXEMPTION U/S 54 ON ONE HOUSE O NLY. 6. THE ASSESSEE CRAVES LEAVE TO ADD, URGE, ALTER, M ODIFY AND WITHDRAW ANY GROUND/GROUNDS BEFORE OR AT THE TIME OF HEARING OF APPEAL. 11. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND OF APPEAL NO.1 AND 2 FOR WHICH LD. DR HAS NO OBJECTION. ACCORDINGLY, TH ESE GROUNDS ARE DISMISSED AS NOT PRESSED. 12. SO FAR AS GROUND NO.3 AND 4 BY THE ASSESSEE ARE CONCERNED, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACTUAL SALE CONSIDE RATION RECEIVED AT RS.95,00,000/- SHOULD BE CONSIDERED AS FULL VALUE O F CONSIDERATION AS REQUIRED U/S 54 AND BE APPLIED FOR COMPUTING CAPITAL GAIN U/ S 48 AND THE FAIR MARKET VALUE CONSIDERED BY THE LD. CIT(A) AS ESTIMATED BY THE DV O OF RS.1,07,00,000/- U/S 50C(2) MAY BE IGNORED. ACCORDING TO HIM, THE PROVI SIONS OF SECTION 50C(2) CANNOT BE INVOKED BY THE REVENUE UNLESS THERE IS UN DERSTATEMENT OF THE CONSIDERATION IN RESPECT OF THE TRANSFER OF ALLEGED ASSET AND THE BURDEN SHOWING THAT THERE IS UNDERSTATEMENT IS ON REVENUE. SINCE THE REVENUE IN THE INSTANT CASE HAS NOT DISCHARGED THAT BURDEN, THEREFORE, THE ADDITION SUSTAINED BY THE LD. 7 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 CIT(A) SHOULD BE DELETED. HE SUBMITTED THAT THE EX EMPTION U/S 54 OF RS.62,41,924/- AND RS.4,05,855/- FOR INVESTMENT IN TWO RESIDENTIAL HOUSES WAS CLAIMED BY THE ASSESSEE AS PER LANGUAGE OF THE PROV ISIONS OF SECTION 54 OF THE I.T. ACT. HE SUBMITTED THAT FOR COMPUTING THE CAPI TAL GAIN U/S 48, THERE IS NO PROVISION IN THE INCOME TAX ACT TO APPLY FMV OF THE ASSET TRANSFERRED AND THE FULL VALUE OF SALE CONSIDERATION RECEIVED OR ACCRUE D TO THE ASSESSEE AS PER THE SALE DEED HAS TO BE APPLIED IN ABSENCE OF FINDING B Y THE REVENUE THAT ASSESSEE HAS RECEIVED MORE THAN THE AMOUNT MENTIONED IN THE SALE DEED. REFERRING TO THE PROVISIONS OF SECTION 48, HE SUBMITTED THAT THE SAI D SECTION PROVIDES THAT AMOUNTS TAXABLE AS CAPITAL GAIN IS THE FULL VALUE O F THE CONSIDERATION RECEIVED AND IT DOES NOT REFER TO THE CONSIDERATION AS DEEME D U/S 50C OR FAIR MARKET VALUE. REFERRING TO THE VARIOUS DECISIONS, HE SUBM ITTED THAT FOR THE PURPOSE OF WORKING OUT EXEMPTION U/S 54 CAPITAL GAIN IS TO BE DETERMINED BY REFERRING TO SECTION 48 BY ACTUAL SALE CONSIDERATION AND NOT DEE MED CONSIDERATION. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF NAND LAL SHARMA VS. ITO REPORTED IN (2015) 61 TAXMANN.COM 271, DECISION OF THE HONBLE DELHI HIGH COURT IN TH E CASE OF CIT VS. SMT. NILOFER I. SINGH REPORTED IN 309 ITR 233 AND THE DE CISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF GYAN CHAND BATRA VS. IT O REPORTED IN (2010) 8 TAXMANN.COM 22. RELYING ON VARIOUS OTHER DECISIONS , HE SUBMITTED THAT FOR THE 8 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 PURPOSE OF COMPUTING THE DEDUCTION U/S 54, THE CAPI TAL GAIN THAT HAS TO BE CONSIDERED IS THE ACTUAL SALE VALUE AND NOT THE DEE MED SALE CONSIDERATION U/S 50C OF THE ACT. 13. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY TAKEN THE VALUE DETERMINED BY THE DVO AS THE ACTUAL CONSIDERATION RECEIVED FOR THE PU RPOSE OF COMPUTATION OF CAPITAL GAIN U/S 48 AND THEREBY THE DEDUCTION U/S 5 4 OF THE ACT. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON CORED. THE ISSUE THAT HAS TO BE DECIDED IN THE IMPUGNED GROUND OF APPEAL IS THAT WHILE COMPUTING T HE EXEMPTION U/S 54, WHETHER ACTUAL SALE CONSIDERATION HAS TO BE TAKEN I NTO CONSIDERATION OR THE STAMP DUTY VALUATION ADOPTED BY THE STAMP VALUATION AUTHO RITIES AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. WE FIND THE JAIPUR BENC H OF THE TRIBUNAL IN THE CASE OF NAND LAL SHARMA (SUPRA) WHILE ADJUDICATING THE I DENTICAL ISSUE HAS HELD THAT WHILE COMPUTING EXEMPTION U/S 54, ACTUAL SALE CONSI DERATION IS TO BE TAKEN INTO CONSIDERATION AND NOT THE STAMP DUTY VALUATION U/S 50C OF THE ACT. THE TRIBUNAL WHILE DECIDING THE ABOVE ISSUE HAS RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SMT. NILOFE R I. SINGH (SUPRA) AND THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF GYAN CHAND BATRA (SUPRA) HAS OBSERVED AS UNDER :- 9 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 13. APROPOS GROUND NO. 2(B), THE HON'BLE DELHI HIGH CO URT IN THE CASE OF SMT. NILOFER I. SINGH (SUPRA) HAS CATEGORICALLY HELD THA T MODE OF COMPUTATION OF CAPITAL GAIN IS STATUTORILY DEFINED UNDER SECTION 48 OF THE ACT WHICH USES THE WORDS ACTUAL COST OF 'CONSIDERATION' AND NOT THE DEEMED COST OF CONSIDERATION UNDER SECTION 50C. WE FIND MERIT IN THE ARGUMENTS OF THE LEARNED AUTHO RISED REPRESENTATIVE THAT SECTION 50C IS A DEEMING FICTION BY WHICH STAMP DUTY VALUE OF THE ASSET SOLD IS TO BE SUBSTITUTED FOR ACTUAL CONSIDERATION. THIS BEING PU RELY A FICTION, ITS SCOPE IS LIMITED TO SECTION 50C ONLY AND CANNOT BE ENLARGED WITHOUT A S PECIFIC REFERENCE. IN THE ABSENCE OF ANY ENABLING STATUTORY PROVISION, A FICTION CANN OT BE IMPORTED IN OTHER SECTION. THIS VIEW HAS BEEN SQUARELY ADOPTED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF SMT. NILOFER I. SINGH(SUPRA) AND FOLLOWED IT BY THIS INC OME-TAX APPELLATE TRIBUNAL BENCH IN THE CASE OF GYAN CHAND BATRA (SUPRA). RESPECTFUL LY FOLLOWING THE SAME, WE HOLD THAT WHILE COMPUTING EXEMPTION UNDER SECTION 54, TH E ACTUAL SALE CONSIDERATION IS TO BE TAKEN INTO CONSIDERATION AND NOT THE STAMP DUTY VALUATION UNDER SECTION 50C. THUS, THE ASSESSEE'S CLAIM OF EXEMPTION AS MADE IN THE RE TURN OF INCOME AS RAISED IN GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 15. HOWEVER, THE FACTS IN THE INSTANT CASE ARE NOT COMING OUT PROPERLY, WE THEREFORE DEEM IT PROPER TO RESTORE THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE ASSESSING OFFICER WHILE DECIDING THE ISSUE SHALL KEEP IN MIND THE DEC ISION CITED ABOVE. THE GROUNDS ARE ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. 16. SO FAR AS GROUND NO.5 IS CONCERNED, THE SAME RE LATES TO THE CLAIM OF EXEMPTION U/S 54 IN RESPECT OF TWO HOUSE PROPERTIES . 17. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSES SEE CLAIMED EXEMPTION U/S 54 IN RESPECT OF INVESTMENT IN TWO HOUSE PROPERTIES I.E. ONE HOUSE PROPERTY AT RS.62,41,924/- AND THE OTHER HOUSE PROPERTY AT RS.4 ,05,855/-. THE ASSESSING OFFICER WHILE COMPUTING THE DEDUCTION U/S 54 REJECT ED THE CLAIM OF DEDUCTION 10 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 U/S 54 IN RESPECT OF THE SECOND HOUSE PROPERTY AT R S.4,05,855/- WHICH WAS UPHELD BY THE LD. CIT(A) BY OBSERVING AS UNDER :- THE APPELLANT PURCHASED HOUSE NO.A-27, PHASE-II, J UNWANI, SURYA VIHAR OUT OF SALE CONSIDERATION RECEIVED FROM SALE OF LAND AND BUILDI NG LOCATED AT PLOT NO.1, OLD MOTILAL NEHRU NAGAR, BHILAI. HE HAS INVESTED RS.4, 05,855/- OUT OF THE SALE CONSIDERATION FOR PURCHASE OF HOUSE NO.LIG-164, JUN WANI, DURG. THE HOUSE AT A-27, SURYA VIHAR HAS BEEN USED BY THE APPELLANT FOR HIS RESIDENTIAL PURPOSE AND THE OTHER HOUSE WAS RENTED OUT AND SUBSEQUENTLY SOLD AS PER T HE INFORMATION GATHERED BY THE A.O. THE TWO HOUSES ARE INDEPENDENT HOUSE AND ARE L OCATED IN SEPARATE LOCALITY. IN THE GIVEN FACTS ARE CIRCUMSTANCES OF THE CASE, PLAC ING RELIANCE IN THE CASE OF SHRI PAWAN ARYA VS. CIT 2011-TIOL-O1-HC-P&H-IT, IT IS HE LD THAT THE APPELLANT IS ENTITLED TO CLAIM EXEMPTION U/S 54 ON ONE HOUSE ONL Y. THE FACTS OF THE CASE RELIED ON BY LD. AR ARE DIFFERENT AND EXEMPTION WAS CLAIMED O N TWO HOUSES LOCATED IN SAME. APARTMENT AND WHICH COULD BE MADE ONE HOUSE AFTER M AKING SOME MODIFICATION IN THE FLATS. LIKEWISE, SINCE THE 2 ND HOUSE WAS SOLD WITHIN 3 YEARS FROM THE PURCHASE, PLACING RELIANCE IN CASE OF CIT VS. P.K. RAGHAVAN N AIR 224 ITR 404 (KER), IT IS HELD THAT THE APPELLANT IS NOT ENTITLED FOR CLAIMING DED UCTION U/S 54 OF THE ACT ON INVESTMENT IN 2 ND HOUSE. ACCORDINGLY, THE GROUND OF APPEAL IS REJEC TED. 18. IT IS THE SUBMISSIONS OF THE LD. COUNSEL FOR TH E ASSESSEE THAT VARIOUS HIGH COURTS HAVE OBSERVED THAT A RESIDENTIAL HOUSE AS AP PEARING IN SECTION 54/54F CANNOT BE CONSTRUED TO MEAN A SINGLE RESIDENTIAL HO USE. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. GITA DUGGAL REPORTED IN (2014) 15 TAXMANN.COM 46, HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS DISMISSED THE SLP FI LED AGAINST THE ORDER OF THE DELHI HIGH COURT WHERE IT WAS HELD THAT MERELY BECA USE A RESIDENTIAL HOUSE IS CONSIDERED OF SEVERAL INDEPENDENT RESIDENTIAL UNITS , DEDUCTION U/S 54/54F COULD NOT BE DISALLOWED. HE SUBMITTED THAT FINANCE (NO.2 ), 2014 HAS MADE SUBSTANTIVE AMENDMENT TO THE PROVISIONS OF SECTION 54/54F W.E.F. 01.04.2015 11 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 WHERE WORDS CONSTRUED ONE RESIDENTIAL HOUSE IN IN DIA SHALL BY SUBSTITUTED FOR CONSTRUCTED A RESIDENTIAL HOUSE. THEREFORE, FROM 01.04.2015 ONLY, THE EXEMPTION U/S 54 WILL NOT BE ALLOWED FOR MORE THAN ONE INDEPENDENT RESIDENTIAL UNIT. HOWEVER, THIS AMENDMENT HAS TO BE APPLIED ON LY FROM ASSESSMENT YEAR 2015-16 BEING PROSPECTIVE IN NATURE AND WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE WHICH IS FOR ASSESSMENT YEAR 2011-12. REL YING ON VARIOUS OTHER DECISIONS, HE SUBMITTED THAT THE ASSESSEE IS ENTITL ED TO CLAIM OF DEDUCTION U/S 54F IN RESPECT OF THE SECOND RESIDENTIAL UNIT. 19. THE LD. DR HEAVILY RELIED ON THE ORDER OF THE L D. CIT(A). 20. AFTER HEARING BOTH THE SIDES, WE FIND THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SMT. GITA DUGGAL (SUPRA) WHERE THE HONBLE HIGH COU RT HAS HELD THAT MERELY BECAUSE A RESIDENTIAL HOUSE IS CONSISTS OF SEVERAL INDEPENDENT RESIDENTIAL UNITS, DEDUCTION U/S 54/54F COULD NOT BE DISALLOWED. THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. F URTHER, THE PROVISIONS OF SECTION 54/54F HAVE BEEN AMENDED BY THE FINANCE (NO .2) ACT, 2014 W.E.F. 01.04.2015 ACCORDING TO WHICH NO EXEMPTION U/S 54 W ILL BE ALLOWED FOR MORE THAN ON INDEPENDENT RESIDENTIAL UNIT. THIS AMENDME NT, IN OUR OPINION, IS PROSPECTIVE IN NATURE. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT DENIAL OF EXEMPTION U/S 54F IN RESPECT OF THE SECOND RESIDENTIAL UNIT 12 ITA NO.39/RPR/2015 ITA NO.44/RPR/2015 BY THE LD. CIT(A) IS NOT JUSTIFIED. ACCORDINGLY, T HE SAME IS SET-ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH AUGUST, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17-08-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., RAIPUR. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, RAIPUR