ACIT, CHENNAI V. Mary Zachariah, CHENNAI

ITA 416/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9144 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 24-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 25-02-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Principle of natural justice; Question of law; Benefit of exemption
• Section: 143(3); 54F; 133(6); 54

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 4 1 6 /MDS/2016 / ASSESSMENT YEAR :20 12 - 13 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON - CORPORATE CIRCLE 15, CHENNAI 600 034. VS. MRS. MARY ZACHARIAH, NO.432, 6 TH ROAD, KAPALESHWAR NAGAR, NEELANKARA I CHENNAI 600 04 1 . [PAN: A AHPZ1796K ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A.V. SREEKANTH , J CIT / RESPONDENT BY : S MT. PUSHYA SEETHARAMAN, SR. ADVOCATE FOR SMT. J. SREE VID YA, ADVOCATE / DATE OF HEARING : 2 4 . 0 5 .201 6 / DATE OF P RONOUNCEMENT : 10 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CO MMISSIONER OF INCOME TAX (APPEALS) 15 , C HENNAI DATED 2 4 . 0 9 .201 5 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 13 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. I.T.A. NO . 416 /M/ 1 6 2 2. THE LD. CIT(A) ERRED TO DIRECT THE AO TO ALLOW THE SALE CONSIDERATION FOR RS . 2,78,27,045/ - INSTEAD OF MARKET VALUE FOR THE SHARE OF LAND OF ASSESSEE FOR RS . 5,35,26,565/ - ON THE BASIS OF LACK OF CROSS EXAMINATION OF THE THIRD PARTY, VIOLATION OF PRIN CIPLES OF NATURAL JUSTICE DOES NOT RENDER ANY PROCEEDINGS NULL & VOID. 2.1 THE LD CIT(A) ERRED TO DIRECT THE ASSESSING OFFICER TO ALLOW THE SALE CONSIDERATION FOR RS.2,78,27,045/ - , EVEN THOUGH THE ASSESSING OFFICER VERIFIED THE BUILDER BOOKS STANDING IN THE NAME OF THE APPELLANT, SHOWING A TOTAL CREDIT OF RS. 5.35 CRORES ARRIVED BY THE BUILDER IS MARKET VALUE FOR THE SHARE OF LAND OF THE ASSESSEE. 2.2 THE LD. CIT (A) ERRED TO DIRECT THE AO TO ALLOW EXEMPTION CLAIMED BY THE ASSESSEE U/S 54F OF THE ACT. 2.3 THE LD CIT(A) ERRED TO DIRECT THE AO TO ALLOW EXEMPTION U/S 54F, EVEN THOUGH THE ASSESSEE WAS THE OWNER OF THE TWO UNITS IN BLOCK NO VI WITH A TOTAL AREA OF 966 SQ. FEET (483 SQ.FEET X 2) 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TI ME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE EARNED INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INTEREST FROM BANK, FILE D RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 ON 02.01.2013 ADMITTING INCOME OF .1,11,53,640/ - WHICH INCLUDES A SUM OF .92,76,519/ - OFFERED AS LTCG ON SALE OF LAND AT L.B. ROAD, THIRUVANMIYUR, CHENNAI. THE ASSESSEE IS ONE OF THE CO - OWNERS OF THE LAN DS HAVING L/4TH SHARE MEASURING ABOUT 17 GROUNDS AND 150 SQ. FT. (40950 S.F) AT THIRUVANMIYUR. ALL THE OWNERS OF THE LAND HAD EXECUTED A JOINT DEVELOPMENT AGREEMENT ON 20.12.2007 WITH M/S.RAMANIYAM SIMHAPURI ESTATES (P) LTD., AS PER WHICH THE ASSESSEE HAD I.T.A. NO . 416 /M/ 1 6 3 AGREED TO SELL HER 1/4TH SHARE IN THE AFORESAID PROPERTY ALONG WITH OTHER CO - OWNERS AND THE DEVELOPER HAD AGREED TO GIVE BUILT - UP AREA OF MINIMUM 40000 SQ. FT. TO BE SHARED BETWEEN THE CO - OWNERS OF THE PROPERTY INCLUDING THE ASSESSEE. THE ASSESSEE HAS OBTA INED A DUPLEX FLAT ADMEASURING 5590 SQ. FT. IN BLOCK I AND 2 UNITS IN BLOCK VI ADMEASURING 483 SQ. FT. EACH TOTALLING IN ALL TO 966 SQ. FT. FOR THE TWO UNITS IN BLOCK VI OF THE BUILDING. THE TOTAL CONSIDERATION RECEIVED BY THE ASSESSEE WAS .2,78,27,045/ - FOR THE THREE UNITS OWNED BY HER. IN THE RETURN OF INCOME, THE ASSESSEE HAS COMPUTED THE CAPITAL GAINS AT .92,76,519/ - AS UNDER: SALE CONSIDERATION 2,78,27,045 LESS: EXEMPTION U/S. 54EC 50,00,000 EXEMPTION U/S. 54F 88,94,056 1,39,94,056 LTCG 92,76,519 WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MADE AN ADDITION OF .2.56 CRORES BY SUBSTITUTING THE CONSTRUCTION COST OF .5,420/ - PER SQ. FT. INSTEAD OF .1,500/ - PER SQ. FT., AS CLAIMED BY THE ASSESSEE IN THE RETURN, ON THE BASIS OF ENTRIES AGAINST THE ASSESSEE IN THE LEDGER ACCOUNT MAINTAINED BY THE BUILDER M/S. RAMANIYAM SIMHAPURI ESTATES (P) LTD., WHICH AS STATED EARLIER HAD ENTERED INTO JOINT DEVELOPMENT AGREEMENT WITH THE ASSESSEE AND THREE OTHER OWNERS WITH THE ASSESSEE HAVING 1/4TH SHARE OF THE PROPERTY DEVELOPED. FURTHER THE ASSESSING OFFICER DID NOT ALLOW EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F OF THE ACT FOR THE REASON THAT THE ASSESSEE HAS CLAIMED IT AGAINST 3 RESIDENTIAL UNITS INSTEAD OF I.T.A. NO . 416 /M/ 1 6 4 JUST ON E AS PROVIDED FOR IN THE SAID SECTION. HE COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY ASSESSING THE INCOME AT .4,59,37,220/ - AS AGAINST .1,11,53,640/ - DETERMINING NET TAX PAYABLE AT .1,30,72,692/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND RAISED THE FOLLOWING GROUNDS OF APPEAL : (I) ADOPTION OF .5,420 PER SQ. FT. AS COST OF CONSTRUCTION INSTEAD OF .2,500/SQ. FT. (II) DENIAL OF EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT. AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE AND BY FOLLOWING VARIOUS DECISION, THE LD. CIT(A) ALLOWED BOTH THE GROUNDS RAISED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR, BY RELYING ON THE GROUNDS, SUPPORTED THE ORDER PASSE D BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE FIR ST GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE SALE CONSIDERATION FOR . 2,78,27,045/ - INSTEAD OF MARKET VALUE FOR THE SHARE OF LAND OF ASSESSEE FOR . 5,35,26,565/ - ON THE BASIS O F LACK OF CROSS EXAMINATION OF THE THIRD PARTY, VIOLATION OF PRINCIPLES OF NATURAL JUSTICE DOES NOT RENDER ANY PROCEEDINGS NULL AND VOID. IN THIS CASE, ON THE BASIS OF I.T.A. NO . 416 /M/ 1 6 5 ENTRIES IN THE LEDGER ACCOUNT MAINTAINED BY THE BUILDER M/S. RAMANIYAM SIMHAPURI ESTATES (P) LTD., THE ASSESSING OFFICER HAS MADE AN ADDITION OF .2.56 CRORES BY SUBSTITUTING THE CONSTRUCTION COST OF .5,420/ - PER SQ. FT. INSTEAD OF .1,500/ - PER SQ. FT., AS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. 6. THE ASSESSING OFFICER HAS ISSUE D A NOTICE UNDER SECTION 133(6) OF THE ACT ON 4.2.2015 TO M/S. RAMANIYAM SIMHAPURI ESTATE PVT. LTD., TO CLARIFY THE TOTAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE AS WELL AS DETAILS OF THE PROJECT. M/S. RAMANIYAM SIMHAPURI ESTATE PVT. LTD. REPLIED ON 5. 3.2015. ON VERIFICATION OF DETAILS SUBMITTED BY THE BUILDER, THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS RECEIVED TOTAL CONSIDERATION OF .5,35,26,565/ - BUT IN THE RETURN OF INCOME THE ASSESSEE HAS DISCLOSED THE TOTAL CONSIDERATION OF . 2,78,27,045/ - ONLY. THEREFORE, A SHOW CAUSE NOTICE WAS ISSUED TO ASSESSEE AS TO WHY RS.5,36,26,565/ - SHOULD NOT BE CONSIDERED AS TOTAL SALE CONSIDERATION. AR VIDE LETTER DATED 12.3.2015 REPLIED THAT M/S.RAMANIYAM SIMHAPURI ESTATES (P) LTD., THE BUILDER WHO CONSTRUCTED THE BUILDING IN THE LAND BELONGED TO THE ASSESSEE HAS GIVEN A DOCUMENTARY PROOF THAT THE TOTAL SALE CONSIDERATION FOR THE TRANSFER OF HER LA ND AS PER THE JOINT DEVELOPMENT AGREEMENT WAS RS.5,36,26,565/ - THIS IS NOT ACCEPTABLE AS THERE ARE SOME ERRORS IN THE DOCUMENTS SUBMITTED BY THE BUILDER. WE HAVE INFORMED THEM TO PROVIDE DETAILS FOR THE JOURNAL ENTRIES PASSED BY THEM AT THEIR I.T.A. NO . 416 /M/ 1 6 6 DISCRETION IN CONTRADICTION OF OUR AGREEMENT THAT APPEAR IN THE STATEMENT OF ACCOUNT PRODUCED BEFORE YOU. AFTER CONSIDERING THE SUBMISSIONS OF THE AR OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE BUILDER HAS CALCULATED THE MARKET VALUE OF THE TOTAL ASS ETS GIVEN TO THE ASSESSEE AS WELL AS CONSIDERATION IN CASH. THE TOTAL VALUE ARRIVED BY THE BUILDER IS MARKET VALUE FOR THE SHARE OF LAND OF ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER HAS CONSIDERED THE SAME AS TOTAL SALE CONSIDERATION RECEIVED BY THE ASS ESSEE. 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF B. RAMAKRISHNAIAH V. ITO [2010] 39 SOT 379 WITH REGARD TO OFFERING AN OPPORTUNITY FOR CROSS - EXAMINATION OF W ITNESS CLEARLY CONSTITUTES INFRACTION OF THE RIGHT CONFERRED ON THE ASSESSEE AND ALSO FOR NOT REFERRING TO THE DVO FOR DETERMINATION OF THE MARKET VALUE OF THE PROPERTY, THE LD. CIT(A) ALLOWED THE GROUND RAISED BY THE ASSESSEE BY OBSERVING AS UNDER: 4.1. I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS SEEN FROM THE ASSESSMENT ORDER THAT A NOTICE UNDER SECTION 133(6) WAS ISSUED TO M/S.RAMANIYAM SIMHAPURI ESTATES (P) LTD., TO CLARIFY THE TOTAL SALE CONSIDERATION RECEIVED BY THE APPELLANT AS WELL AS THE DETAILS OF THE PROJECT, IN RESPONSE TO WHICH M/S. RAMANIYAM SIMHAPURI ESTATES (P) LTD., HAD FURNISHED THE LEDGER ACCOUNT. IN THEIR BOOKS STANDING IN THE NAME OF THE APPELLANT, SHOWING A TOTAL CREDIT OF RS.5.35 CRORES WHICH THE AO HAS TREATED TO BE THE TOTAL CONSIDERATION RECEIVED BY THE APPELLANT. SINCE IN THE RETURN OF INCOME THE APPELLANT HAD DECLARED ONLY RS.2.78 CRORES, THE APPELLANT WAS SHOW - CAUSED BY I.T.A. NO . 416 /M/ 1 6 7 THE AO AS TO WHY RS.5.36 CRORES SHOULD NOT BE S UBSTITUTED AS THE SALE CONSIDERATION RECEIVED BY HER, INSTEAD OF RS.2.78 CRORES RETURNED. IN RESPONSE THE APPELLANT HAD STRONGLY OBJECTED STATING THAT THE HIGHER FIGURE ADOPTED BY THE AO WAS NOT ACCEPTABLE AS THERE WERE SOME ERRORS IN THE DOCUMENTS SUBMITT ED BY THE BUILDER, ON THE BASIS OF WHICH THE AO HAD COME TO THE CONCLUSION THAT THE TOTAL CONSIDERATION RECEIVED WAS RS.5.35 CRORES AND NOT RS.2.78 CRORES. IT IS FURTHER SEEN FROM THE RESPONSE OF THE APPELLANT THAT SHE HAD ASKED THE BUILDER M/S.RAMANIYAM S IMHAPURI ESTATES (P) LTD., TO PROVIDE DETAILS FOR THE JOURNAL ENTRIES PASSED BY THEM AT THEIR DISCRETION IN THEIR LEDGERS/BOOKS RELATING TO THE APPELLANT IN WHAT SHE TERMED AS 'CONTRADICTION OF THE AGREEMENT'. ON A PERUSAL OF THE SAID LEDGER ACCOUNT OF THE APPELLANT IN THE BOOKS OF THE BUILDER, IT IS CLEARLY SEEN THAT ONLY R.1.65 CRORE WAS PAID TO THE APPELLANT BY CHEQUES THROUGH AXIS BANK AND STATE BANK OF HYDERABAD. THE REST OF THE AMOUNT REFLECTED IN THE AFORESAID LEDGER EXTRACT WAS ON ACCOUNT OF EB/CWSS B DEPOSITS, CONTRACT INCOME AND PAYMENT RECONCILIATION MADE TO THE OTHER THREE LAND OWNERS AND WERE CLEARLY NOT PAYMENT RECEIVED BY THE APPELLANT, WHICH WAS ALSO VERIFIED FROM THE APPELLANT'S RELEVANT BANK ACCOUNT REFLECTING THE ABOVE AMOUNT OF RS.1.65 CRO RE. THE AO HAS NOT REBUTTED THE STATEMENT OF THE APPELLANT THAT THE SAID LEDGER ACCOUNT IN THE BOOKS OF THE BUILDER HAD ERRORS AND IN SPITE OF HER SPECIFICALLY ASKING THE BUILDER TO VERIFY THE DETAILS FROM THE SAID JOURNAL ENTRIES PASSED BY THEM AT THEIR D ISCRETION, THE SAME WAS NOT FURNISHED TO THE APPELLANT NOR OPPORTUNITY PROVIDED TO HER TO CROSS - EXAMINE THE BUILDER WHICH APPEARS TO BE CLEARLY AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND TO THAT EXTENT THE SAID DOCUMENT I.E. THE LEDGER EXTRACT OF THE AP PELLANT IN THE BOOKS OF THE BUILDER WOULD LOSE ITS EVIDENTIARY VALUE AND THEREFORE THE ACTION OF THE AO IN PROCEEDING TO ADOPT THE FIGURE ADOPTED BY THE BUILDER BLINDLY BECOMES LEGALLY UNTENABLE, PARTICULARLY IN THE LIGHT OF THE RULING IN THE CASE OF B. RA MAKRISHNAIAH V. ITO [2010] 39 SOT 379, WHEREIN THE HON'BLE HYDERABAD TRIBUNAL, ON WHICH THE AR HAS RELIED, HAS OBSERVED THAT NON - PROVIDING OF CROSS - EXAMINATION OF WITNESS CLEARLY CONSTITUTES INFRACTION OF THE RIGHT CONFERRED ON THE ASSESSEE, HOLDING AS UN DER: 'NATURAL JUSTICE REQUIRES CROSS - EXAMINATION OF WITNESSES AND IF ASKED FOR, MUST BE GRANTED. THE ASSESSEE SHOULD BE AFFORDED AN OPPORTUNITY TO DEAL WITH AND REBUT SUCH I.T.A. NO . 416 /M/ 1 6 8 MATERIAL. CROSS - EXAMINATION IS TO BE ALLOWED TO THE ASSESSEE WHEN THIRD PARTY ACCO UNTS ARE RELIED UPON BY THE DEPARTMENT. THE NORMAL PRINCIPLE IS THAT ORDINARY CROSS - EXAMINATION HAS TO BE GRANTED WHEN ASKED FOR. IF THE DEPARTMENT IS TO RELY ON ANY EXCEPTIONS, THE BURDEN IS ON THE DEPARTMENT TO ESTABLISH THE EXISTENCE OF ANY EXCEPTIONS. THE NON - PROVIDING OF CROSS - EXAMINATION OF WITNESS CLEARLY CONSTITUTES INFRACTION OF THE RIGHT CONFERRED ON THE ASSESSEE AND THAT VITIATED THE ORDER OF THE ASSESSMENT MADE AGAINST THE ASSESSEE. APART FROM THE ABOVE FAILURE ON THE PART OF THE AO TO PROVIDE AN OPPORTUNITY TO THE APPELLANT TO CROSS - EXAMINE THE BUILDER, THE AO HAS ALSO NOT MADE OUT ANY CONVINCING CASE ALONG WITH CORROBORATIVE EVIDENCE AS TO HOW THE APPELLANT HAD RECEIVED ANY AMOUNT IN CASH OVER AND ABOVE THE AMOUNTS PAID BY THE BUILDER BY CHEQ UES THROUGH AXIS BANK AND STATE BANK OF HYDERABAD AND DULY REFLECTED IN HER ACCOUNT AS CONTENDED BY HIM. NEITHER HAS HE REFERRED THE ISSUE TO THE DEPARTMENTAL VALUER TO ASCERTAIN THE LIKELY COST OF CONSTRUCTION, WHICH HE SHOULD HAVE, INSTEAD OF BLINDLY ADO PTING FIGURES MENTIONED IN THE BUILDER'S BOOKS WHICH WAS IN ANY CASE EXPRESSLY DISPUTED BY THE APPELLANT. THEREFORE, THE AO'S ACTION IN SUBSTITUTING THE AMOUNT WHICH HE DEEMED TO BE THE MARKET RATE FOR THE BUILDING CONSTRUCTED ON THE APPELLANT'S OWN LAND I NSTEAD OF APPLYING THE COST OF CONSTRUCTION OF RS.1 , 500/SQ. FT. WHICH WAS REFLECTED IN THE APPELLANT'S BOOKS, IS THEREFORE LEGALLY UNTENABLE, AND HENCE DIRECTED TO BE DELETED. THIS GROUND IS ALLOWED. 8. ON CAREFULLY PERUSING THE ASSESSMENT ORDER, WE FIN D THAT BY RELYING ON THE LEDGER ACCOUNT OF THE BUILDER, THE ASSESSING OFFICER HAS DETERMINED THE CONSTRUCTION COST OF .5,420/ - PER SQ. FT. INSTEAD OF .1,500/ - PER SQ. FT., AS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. EVEN THOUGH THE ASSESSEE HAS OBJECTED OVER THE DOCUMENTS FURNISHED BY THE BUILDER AS THERE ARE SOME ERROR IN THAT DOCUMENTS. ON PERUSAL OF THE LEDGE R ACCOUNT OF THE BUILDER, THE LD. CIT(A) HAS OBSERVED THAT ONLY .1.65 CRORES WAS PAID TO THE ASSESSEE BY I.T.A. NO . 416 /M/ 1 6 9 CHEQUES THROUGH AXIS BANK AND STATE BANK OF HYDERABAD. THE REST OF THE AMOUNT REFLECTED IN THE AFORESAID LEDGER EXTRACT WAS ON ACCOUNT OF EB/CWSSB DEP OSITS, CONTRACT INCOME AND PAYMENT RECONCILIATION MADE TO THE OTHER THREE LAND OWNERS AND WAS CLEARLY NOT PAYMENT RECEIVED BY THE ASSESSEE, WHICH WAS ALSO VERIFIED FROM THE ASSESSEE'S RELEVANT BANK ACCOUNT REFLECTING THE ABOVE AMOUNT OF .1.65 CRORES. THE LD. CIT(A) HAS FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS NOT REBUTTED THE STATEMENT OF THE ASSESSEE THAT THE SAID LEDGER ACCOUNT IN THE BOOKS OF THE BUILDER HAD ERRORS AND IN SPITE OF THE ASSESSEE SPECIFICALLY ASKING THE BUILDER TO VERIFY THE DETAILS FROM THE SAID JOURNAL ENTRIES PASSED BY THEM AT THEIR DISCRETION, THE SAME WAS NOT FURNISHED TO THE ASSESSEE NOR OPPORTUNITY PROVIDED TO HER TO CROSS - EXAMINE THE BUILDER WHICH APPEARS TO BE CLEARLY AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND TO THAT EXT ENT THE SAID DOCUMENT I.E. THE LEDGER EXTRACT OF THE ASSESSEE IN THE BOOKS OF THE BUILDER WOULD LOSE ITS EVIDENTIARY VALUE AND THEREFORE THE ACTION OF THE ASSESSING OFFICER IN PROCEEDING TO ADOPT THE FIGURE ADOPTED BY THE BUILDER BLINDLY BECOMES LEGALLY UN TENABLE, IN VIEW OF THE DECISION IN THE CASE OF B. RAMAKRISHNAIAH V. ITO (SUPRA) , WHEREIN THE TRIBUNAL HAS OBSERVED THAT NON - PROVIDING OF CROSS - EXAMINATION OF WITNESS CLEARLY CONSTITUTES INFRACTION OF THE RIGHT CONFERRED ON THE ASSESSEE. ONCE THE ASSESSEE HAS DISPUTED THE LEDGER ACCOUNT OF THE BUILDER, THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER TO THE DEPARTMENT VALUATION OFFICER TO DETERMINE THE CONSTRUCTION COST. HOWEVER, I.T.A. NO . 416 /M/ 1 6 10 THE ASSESSING OFFICER HAS FAILED TO DO SO. INSTEAD, THE ASSESSING OFFICE R HURRIEDLY CONCLUDED THE ASSESSMENT BY REJECTING THE OBJECTIONS OF THE ASSESSEE . UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE BUILDER TO AVOID DISPUTE OVER THE LEDGER ACCOUNT MAINTAINED BY THE BUILDER. MOREOVER, ANY AMOUNT APPEARS IN THE BOOKS OF THE BUILDER OR THE ASSESSEE CANNOT BE ENOUGH AUTHENTIC TO DETERMINE THE TRUE AND CORRECT VALUE OF THE COST OF CONSTRUCTION. THEREFORE, WE DIRECT THE ASSESSING OFFICE R TO REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER TO DETERMIN E THE COST OF CONSTRUCTION. THUS, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN VIEW OF OUR ABOVE OBSERVATIONS AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 9. THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT( A) HAS ERRED TO DIRECT THE ASSESSING OFFICER TO ALLOW EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F OF THE ACT. THE CRUX OF THE ISSUE IS THAT WHETHER THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 54F OF THE ACT SINCE THE ASSESSEE HAS ACQU IRED THREE RESIDENTIAL FLATS I.E., ONE AT BLOCK I AND OTHER TWO UNITS AT BLOCK VI. I.T.A. NO . 416 /M/ 1 6 11 10. ON THIS ISSUE, B EFORE THE ASSESSING OFFICER, THE ASSESSEE HAS SUBMITTED THAT THE TWO SMALL PORTIONS ACQUIRED ARE USED BY THE SERVANTS AND NO SEPARATE RENT IS CHARGED F ROM THE TENANT OF THE DUPLEX APARTMENT IN BLOCK 1. THIS SUBMISSION DOES NOT SUPPORT THE ASSESSEE'S CASE. ADMITTEDLY TWO SEPARATE RESIDENTIAL UNITS MEASURING 966 SQ. FT. OF BUILT - UP AREA WAS CONSTRUCTED BY THE ASSESSEE. THE ASSESSING OFFICER HAS OBSERVED TH AT S IMPLY BECAUSE NO RENT IS CHARGED, THE BUILDING CANNOT BE CONSIDERED AS NOT A BUILDING AND MOREOVER, T HE BUILDING IS NOT SMALL AS CLAIMED BY THE ASSESSEE. THE B UILT UP AREA OF 996 SQ. FT. IS SUFFICIENT FOR AN ORDINARY FAMILY TO LIVE IN AND THEY ARE INDE PENDENT RESIDENTIAL UNITS. SINCE THE ASSESSEE IS ADMITTEDLY THE OWNER OF THE TWO UNITS IN BLOCK VI WHICH IS SEPARATE FROM THE MAIN DUPLEX FLAT IN BLOCK I , THE ASSESSING OFFICER WAS OF THE OPINION THAT THERE IS CLEAR VIOLATION OF THE PROVISIONS OF SECTION 5 4F(2) AND THEREFORE REJECTED THE CLAIM OF THE ASSESSEE. 11. ON APPEAL, BY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION IN THE CASE OF IN THE CASE OF CIT V. V.R. KARPAGAM [373 ITR 127 (MAD)], THE LD. CIT(A) ALLOWED THE CLAIM O F THE ASSESSEE BY OBSERVING AS UNDER: 4.5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS MADE BY THE AR IN THIS REGARD. THE AO BASICALLY WAS OF THE VIEW THAT SINCE THE APPELLANT HAD ADMITTEDLY RECEIVED THREE UNITS I.E. ONE AT BLOCK NO. 1 WHICH WAS A DUPLEX FLAT OF 5590 SQ.FT. AND TWO SEPARATE UNITS IN BLOCK NO.VI ADMEASURING 483 SQ.FT. EACH, TOTALLING TO 966 SQ.FT. IN LIEU OF HER I.T.A. NO . 416 /M/ 1 6 12 LAND AS PER JOINT DEVELOPMENT AGREEMENT, IT DID NOT CONSTITUTE ONE RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54F BUT THREE DIFFERENT AND SEPARATE RESIDENTIAL HOUSES AND THEREFORE EXEMPTION U/S 54F WAS NOT ALLOWABLE TO THE APPELLANT UNDER THE CIRCUMSTANCES. NOW, WHETHER THE TWO UNITS IN BLOCK VI EACH ADMEASURING 483 SQ. FT. CONSTITUTED PART AND PARCEL OF THE DUPLEX FL AT OF 5590 SQ.FT. IN BLOCK 1 AND THEREFORE CLAIMED AS EXEMPT FROM CAPITAL GAIN U/S.54F, THOUGH SITUATED IN A SEPARATE BLOCK HAD TO BE SEEN / JUDGED FROM THE POINT OF VIEW OF THE APPELLANT'S INTERPRETATION THAT IT WAS PART AND PARCEL OF HER RESIDENTIAL HOUS E AND NOT ON THE SUBJECTIVE SATISFACTION OF THE AO TREATING IT OTHERWISE, PARTICULARLY WHEN, IT STOOD IN HER OWN NAME 'AND HER SERVANTS OCCUPIED IT AT HER WILL AND FOR HER SERVICE. 'RESIDENTIAL HOUSE' HAS NOT BEEN DEFINED IN THE ACT AND THEREFORE IT HAS TO BE SEEN AND APPRECIATED IN COMMON PARLANCE ACCORDING TO THE SOCIAL CLASS, STANDING AND STATUS OF THE APPELLANT BESIDES PREVALENT PRACTICES IN TODAY'S DAY AND AGE WHERE SEPARATE SERVANT QUARTERS ARE PROVIDED BY THE BUILDERS AS PART AND PARCEL OF A 'RESIDEN TIAL HOUSE' IN UP - MARKET RESIDENTIAL COLONIES AND CONSTRUCTIONS OFFERING BETTER LIFESTYLE CHOICES, AS IT WAS IN THE CASE OF THE INSTANT APPELLANT AND THEREFORE THE TWO SEPARATE SERVANT QUARTERS OWNED BY THE APPELLANT COULD NOT BE TREATED AS SEPARATE STANDA LONE 'RESIDENTIAL HOUSES' AS CONTENDED BY THE AO BUT VERY MUCH PART OF THE 5590 SQ.FT. DUPLEX 'RESIDENTIAL HOUSE' OF THE APPELLANT IN BLOCK 1 OF THE BUILDING. THEREFORE THE AO'S CONTENTION THAT SINCE THE APPELLANT WAS THE OWNER OF THE TWO UNITS IN BLOCK NO .VI WITH A TOTAL AREA OF 966 SQ.FT. (483 SQ.FT. X 2) WHICH WERE SEPARATELY SITUATED FROM THE DUPLEX FLAT IN BLOCK NO. I AND THEREFORE TO THAT EXTENT, THERE WAS CLEAR VIOLATION OF SECTION 54F AND AS SUCH THE APPELLANT WAS NOT ENTITLED TO THE CLAIM OF EXEMPT ION UNDER THE SAID SECTION, IS AGAIN NOT LEGALLY TENABLE. IT HAS BEEN HELD IN THE CASE OF CIT V. V.R.KARPAGAM [373 ITR 127] MADRAS HIGH COURT, THAT IN RESPECT OF EXEMPTION U/S.54F RELATING TO INVESTMENT IN RESIDENTIAL HOUSE THE WORD 'A' APPEARING IN SECT ION 54F SHOULD NOT BE CONSTRUED IN SINGULAR BUT ALSO INCLUDES PLURAL PRIOR TO THE AMENDMENT OF SECTION 54F BY THE FINANCE ACT (NO.2) 2014 W.E.F. 1.4.2015, WHICH HOLDS THAT ONLY POST AMENDMENT I.E. FROM 1.4.2015, BENEFIT OF THE SAID SECTION 54F WOULD BE APP LICABLE TO ONLY ONE RESIDENTIAL HOUSE IN INDIA, WHICH MEANS THAT PRIOR TO THE SAID AMENDMENT, A RESIDENTIAL HOUSE COULD INCLUDE MULTIPLE FIATS/RESIDENTIAL UNITS. THEREFORE THE AO'S BASIC CONTENTION THAT SINCE THE APPELLANT HAD THREE DIFFERENT UNITS BUT TWO OF WHICH ACCORDING TO THE AR WERE ONLY SERVANT QUARTERS OF 966 SQ.FT. AND SUPPOSED TO BE PART OF THE MAIN RESIDENTIAL HOUSE OF THE APPELLANT, ALSO, IN HER OWN NAME COULD NOT BE DEEMED TO BE A SINGULAR RESIDENTIAL UNIT WAS THEREFORE VIOLATING THE I.T.A. NO . 416 /M/ 1 6 13 PROVISION S OF SECTION 54F(2) WAS AGAIN NOT LEGALLY JUSTIFIABLE IN VIEW OF THE RATIO OF THE AFORESAID CASE. THE FACTS IN THE INSTANT CASE BEING MORE OR LESS SIMILAR TO THAT OBTAINED IN THE ABOVE CITED JURISDICTIONAL HIGH COURT CASE, RESPECTFULLY FOLLOWING THE RATIO OF THE SAME, THE AO IS DIRECTED TO ALLOW THE EXEMPTION CLAIMED BY THE APPELLANT U/S.54F IN RESPECT OF THE THREE UNITS WHICH CONSTITUTED ONE RESIDENTIAL HOUSE AND WHICH WERE CONSTRUCTED UNDISPUTABLY WITHIN THE PERIOD SPECIFIED U/S. 54F(2), IT WAS CLEARLY EL IGIBLE FOR THE SAID EXEMPTION. THIS GROUND OF APPEAL IS THEREFORE ALSO ALLOWED. 12. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO PERUSED RELEVANT PROVISIONS OF SECTION UNDER WHICH THE ASSESSI NG OFFICER MADE THE DISALLOWANCE. EVEN THOUGH THE ASSESSEE IS ENTITLED TO CLAIM MULTIPLE FLATS/RESIDENTIAL UNITS PRIOR TO AMENDMENT UNDER SECTION 54F OF THE ACT, THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. V.R. KARPAGAM (SUPRA) HAS OBSERVED AND HELD AS UNDER: 11. IN SIMILAR CIRCUMSTANCES, THIS COURT, BY ORDER DATED JANUARY 4, 2012, IN T.C.(A) NO. 656 OF 2005 HELD AS FOLLOWS : THE ABOVE PROVISION REFERS TO A RESIDENTIAL HOUSE MEANING THEREBY THAT EVEN IF THERE ARE F OUR DIFFERENT FLATS AN D IF IT IS CONSIDERED FOR THE PROPERTY ASSESSED AS ONE UNIT AND ONE DOOR NUMBER IS GIVEN, IT SHOULD BE CONSTRUED AS A RESIDENTIAL UNIT NAMELY, ONE UNIT. IN THAT SENSE, THE SAID PROVISION IS AVAILABLE TO THE ASSESSEE . 12. IN THE DECISION REPORTED IN SMT . DR. P.K. VASANTHI RANGARAJAN [2012] 75 DTR 56, THIS COURT, WHILE DEALING WITH THE BENEFIT OF EXEMPTION UNDER SECTION 54F, FOLLOWED THE ABOVE SAID DECISION OF THIS COURT IN T.C. (A) NO. 656 OF 2005 AND GRANTED THE BENEFIT TO THE ASSESSEE UNDER SECTION 54F OF THE INCOME TAX ACT ON THE INVESTMENT MADE IN THE FOUR FLATS. I.T.A. NO . 416 /M/ 1 6 14 13. HENCE, THE ABOVESAID DECISIONS OF THIS COURT MAKE IT CLEAR THAT THE PROPERTY SHOULD BE ASSESSED AS ONE UNIT EVEN THOUGH DIFFERENT FLATS ARE AVAILABLE. HERE ALSO, AS PER THE ASSESSMENT ORDER, ALL THE FLATS HAVE ONE DOOR NUMBER, NAMELY, DOOR NO. 29F, RACE COURSE, COIMBATORE. 14. IN THE LIGHT OF THE ABOVE, WE FIND NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION IN THIS TAX CASE (APPEAL). ACCORDINGLY , THIS TAX CASE (APPEAL) STANDS DISMISSED. NO COSTS. 13. IT IS VERY CLEAR IN THAT CASE THAT SINCE ALL THE FLATS HAVE COMMON/SAME DOOR NUMBER; THE PROPERTY OF THE ASSESSEE WAS CONSTRUED AS ONE RESIDENTIAL UNIT EVEN THOUGH THERE ARE FOUR DIFFERENT FLATS. THE ABOVE CASE LAW OF THE HON BLE MADRAS HIGH COURT HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE BECAUSE, IN THE PRESENT CASE, ASSESSEE HAS ACQUIRED THREE RESIDENTIAL FLATS ONE AT BLOCK I AND OTHER TWO UNITS AT BLOCK VI , WHICH ARE LOCATED IN DIFFER ENT PLACES . SO, IT HAS TO BE DECIDED WHETHER TWO DISPARATELY PLACED PROPERTIES SHALL BE HELD AS ONE RESIDENTIAL UNIT OR NOT. IN MORE OR LESS SIMILAR CLAIM OF EXEMPTION UNDER SECTION 54 OF THE ACT, THERE ARE A PLETHORA OF DECISIONS HOLDING THAT THE PROVISIO NS OF SECTION 54 ARE PARI MATERIA TO SECTION TO SECTION 54F OF THE ACT, IN THE CASE OF SHRI A. KODANDA RAMI REDDY V. ITO IN I.T.A. NO. 1865/MDS/2012 FOR THE ASSESSMENT YEAR 2009 - 10 DATED 04.07.2013, THE COORDINATE BENCH OF THE TRIBUNAL HAS OBSERVED AND HEL D AS UNDER: 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. NO DOUBT, THE PLETHORA OF DECISIONS RELIED ON BY THE LEARNED A.R. CLEARLY MENTION THAT THE TERM A RESIDENTIAL HOUSE USED IN SECTION 54 HAS TO BE CONSTRUED IN PLURALITY. BUT, AS HELD BY HON BLE HON'BLE APEX COURT IN THE CASE OF CIT V. SUN ENGINEERING WORKS PVT. LTD. (198 ITR 297), JUDGMENT OF A COURT CANNOT I.T.A. NO . 416 /M/ 1 6 15 BE SEEN DIVORCED FROM THE FACT SITUATION. ITS RELEVANCE IS ONLY WHEN FACTS ARE ON ALL FOUR SQUARES. IN EACH OF THE CASE, RELI ED ON BY THE LEARNED A.R., THE RESIDENTIAL UNITS WERE SITUATED IN THE SAME BUILDING OR WERE PART OF THE SAME RESIDENTIAL COMPLEX AND WERE FLATS. EITHER THEY WERE ADJACENTLY SITUATED OR WERE SITUATED AT UPPER AND LOWER FLATS OR SITUATED IN SUCH A MANNER THA T THE UNITS COULD BE CONSTRUED TOGETHER AS A RESIDENTIAL HOUSE . HON BLE DELHI HIGH COURT IN THE CASE OF CIT V. GITA DUGGAL IN ITA 1237/2011 DATED 21.02.2013, OBSERVED AT PARA 8 OF ITS ORDER, AS UNDER: - 8. THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/ 54F USES THE EXPRESSION A RESIDENTIAL HOUSE . THE EXPRESSION USED IS NOT A RESIDENTIAL UNIT . THIS IS A NEW CONCEPT INTRODUCED BY THE ASSESSING OFFICER INTO THE SECTION. SECTION 54/54F REQUIRES THE ASSESSEE TO ACQUIRE A RESIDENTIAL HOUSE AND SO LONG AS THE ASSESSEE ACQUIRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTLY AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTION SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN THESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE FOR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL US E. IF THERE IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS TO US THAT THE INCOME TAX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDING TO HIS PLAN S AND REQUIREMENTS. MOST OF THE HOUSES ARE CONSTRUCTED ACCORDING TO THE NEEDS AND REQUIREMENTS AND EVEN COMPULSIONS. FOR INSTANCE, A PERSON MAY CONSTRUCT A RESIDENTIAL HOUSE IN SUCH A MANNER THAT HE MAY USE THE GROUND FLOOR FOR HIS OWN RESIDENCE AND LET OU T THE FIRST FLOOR HAVING AN INDEPENDENT ENTRY SO THAT HIS INCOME IS AUGMENTED. IT IS QUITE COMMON TO FIND SUCH ARRANGEMENTS, PARTICULARLY POST - RETIREMENT. ONE MAY BUILD A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN THE SAME OR DIFFERENT FLOORS) IN SUCH A MAN NER THAT AN INDEPENDENT RESIDENTIAL UNIT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED OUT WITH AN INDEPENDENT ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARRANGE FOR HIS CHILDREN AND FAMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WH ICH CAN BE MUTUALLY SUPPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT IN CASE OF A FUTURE NEED HE MAY BE ABLE TO DISPOSE OF A PART THEREOF AS AN INDEPENDENT HOUSE. THERE MAY BE SEVERAL SUCH CONSIDERATIONS FOR A PERSON WHILE CONSTRUCTING A RE SIDENTIAL HOUSE. WE ARE THEREFORE, UNABLE TO SEE HOW OR WHY THE PHYSICAL STRUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTICAL, SHOULD COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. WE DO NOT THINK THAT THE FACT T HAT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CAN BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION I.T.A. NO . 416 /M/ 1 6 16 UNDER SECTION 54/54F. IT IS NEITHER EXPRESSLY NOR BY NECESSARY IMPLICATION PROHIBITED. THE ABOVE DECISION WAS RENDE RED BY THEIR LORDSHIPS AFTER CONSIDERING THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SMT. K.G. RUKMINIAMMA (SUPRA). TENOR OF THIS JUDGMENT WOULD CLEARLY SHOW THAT PLURALITY IN INTERPRETING A RESIDENTIAL HOUSE WOULD APPLY SO LONG AS THE UNITS WERE IN THE SAME BUILDING. 6. NO DOUBT, HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. SYED ALI ADIL (SUPRA), AT PARAS 9 AND 10 OF ITS ORDER, OBSERVED AS UNDER: - 9. HE CONTENDED THAT THE DEDUCTION UNDER SECTION 54 OF THE ACT IS ALL OWABLE ONLY FOR ONE RESIDENTIAL HOUSE AND NOT FOR MORE THAN ONE RESIDENTIAL HOUSE AND THAT THE TRIBUNAL ERRED IN HOLDING THAT THE DEDUCTION UNDER SECTION 54 OF THE ACT IS ALLOWABLE FOR TWO INDEPENDENT RESIDENTIAL FLATS IN THE SAME COMPLEX. HE ALSO PLACED R ELIANCE ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN I.T.O. VS. SUSEELA M.JHAVERI. 10. WE SEE NO FORCE IN THE SAID CONTENTION. AS HELD IN D.ANANDA BASAPPA'S CASE (1 SUPRA) BY THE KARNATAKA HIGH COURT, THE EXPRESSION 'A RESIDENTIAL HOUSE' IN S ECTION 54 (1) OF THE ACT HAS TO BE UNDERSTOOD IN A SENSE THAT THE BUILDING SHOULD BE OF RESIDENTIAL NATURE AND 'A' SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER AND WHERE AN ASSESSEE HAD PURCHASED TWO RESIDENTIAL FLATS, HE IS ENTITLED TO EXEMPTION UNDER SECTION 54 IN RESPECT OF CAPITAL GAINS ON SALE OF ITS PROPERTY ON PURCHASE OF BOTH THE FLATS, MORE SO, WHEN THE FLATS ARE SITUATED SIDE BY SIDE AND THE BUILDER HAS EFFECTED MODIFICATION OF THE FLATS TO MAKE IT AS ONE UNIT, DESPITE THE FACT THAT THE FLATS WERE PURCHASED BY SEPARATE SALE DEEDS. THIS DECISION WAS FOLLOWED BY THE KARNATAKA HIGH COURT IN CIT VS. SMT. K.G.RUKMINIAMMA6 WHERE A RESIDENTIAL HOUSE WAS TRANSFERRED AND FOUR FLATS IN A SINGLE RESIDENTIAL COMPLEX WERE PURCHASED BY THE ASSESSEE, IT WAS HELD THAT ALL FOUR RESIDENTIAL FLATS CONSTITUTED 'A RESIDENTIAL HOUSE' FOR THE PURPOSE OF SECTION 54 AND THAT THE FOUR RESIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSES FOR THE PURPOSE OF SECTION 54. ADMITTEDLY THE TWO FLATS PURCHASED B Y THE ASSESSEE ARE ADJACENT TO ONE ANOTHER AND HAVE A COMMON MEETING POINT. IN THE IMPUGNED ORDER, THE TRIBUNAL HAS ALSO RELIED UPON THE DECISIONS IN K.G.VYAS'S CASE (2 SUPRA), P.C.RAMAKRISHNA, HUF'S CASE (3 SUPRA) AND PRAKASH BHUTANI'S CASE (4 SUPRA) WHER EIN IT WAS HELD THAT EXEMPTION UNDER SECTION 54 ONLY REQUIRES THAT THE PROPERTY SHOULD BE OF RESIDENTIAL NATURE AND THE FACT THAT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CANNOT BE AN IMPEDIMENT TO GRANT RELIEF UNDER SECTION 54 EVEN IF S UCH INDEPENDENT UNITS WERE ON DIFFERENT FLOORS. THE DECISION IN SUSEELA I.T.A. NO . 416 /M/ 1 6 17 M.JHAVERI'S CASE (5 SUPRA) HOLDING THAT ONLY ONE RESIDENTIAL HOUSE SHOULD BE GIVEN THE RELIEF UNDER SECTION 54 DOES NOT APPEAR TO BE CORRECT AND WE DISAPPROVE OF IT. WE AGREE WITH THE INTERPRETATION PLACED ON SECTION 54 BY THE HIGH COURT OF KARNATAKA IN D.ANANDA BASAPPA'S CASE (1 SUPRA) AND SMT. K.G.RUKMINIAMMA'S CASE (6 SUPRA) AND THE DECISIONS OF THE MUMBAI, CHENNAI AND DELHI BENCHES OF THE TRIBUNAL IN K.G.VYAS (2 SUPRA), P.C.RAMAKRIS HNA, HUF (3 SUPRA) AND PRAKASH BHUTANI (4 SUPRA). WE THEREFORE HOLD THAT THE CIT (APPEALS) WAS CORRECT IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER AND THE TRIBUNAL RIGHTLY CONFIRMED THE DECISION OF THE CIT (APPEALS). THE ABOVE JUDGMENT DOES DISAP PROVE AND HOLD AS INCORRECT THE DECISION OF SPECIAL BENCH IN THE CASE OF MS. SUSHILA M. JHAVERI (SUPRA). NEVERTHELESS, IN THE CASE BEFORE HON BLE ANDHRA PRADESH HIGH COURT ALSO, THE FLATS WERE SITUATED SIDE - BY - SIDE AND THE BUILDER HAD EFFECTED MODIFICATION OF THE FLATS SO AS TO MAKE IT ONE UNIT. AS AGAINST THIS, IF WE LOOK AT THE CASE BEFORE US, THE TWO PROPERTIES PURCHASED WERE DISPARATELY SITUATED. THERE WAS NO WAY THEY COULD BE JOINED TOGETHER. CONSTRUCTION WAS TO BEGIN IN ONE OF THE PROPERTIES. BEING GE OGRAPHICALLY DISPARATE, THERE WAS NO POSSIBILITY OF JOINING THEM TOGETHER TO FORM A RESIDENTIAL HOUSE. THEREFORE, IN OUR OPINION, THE SAID DECISION OF HON BLE ANDHRA PRADESH WILL NOT HELP THE ASSESSEE S CASE IN ANY WAY. AS AGAINST THIS, HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PAWAN ARYA V. CIT (SUPRA), RELIED ON BY THE LD. CIT(APPEALS), HELD AT PARAS 2 TO 4 OF ITS ORDER, AS UNDER: - 2. THE ASSESSEE CLAIMED EXEMPTION ON CAPITAL GAINS ON SALE OF FLAT ON THE GROUND OF ACQUISITION OF TWO HOUSES. THE ASSESSING OFFICER SET OFF THE CAPITAL GAIN AGAINST ONE OF THE HOUSES BUT HELD THE CLAIM NOT TO BE ADMISSIBLE AGAINST SECOND HOUSE. HOWEVER, THE CIT(A) UPHELD THE CLAIM OF THE ASSESSEE RELYING UPON DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN D.ANAND BASAPPA VS. ITO (2005) 92 TTJ (BANG) 597: (2004) 91 ITD 53 (BANG). THE SAID VIEW HAS BEEN REVERSED BY THE TRIBUNAL AS FOLLOWS: - 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE FACTS IN THE PRESENT CASE ARE CLEAR. THE ASSESSEE IS CLAIMING EXEMPTION IN RESPECT OF TWO INDEPENDENT RESIDENTIAL HOUSES SITUATED AT DIFFERENT LOCATIONS; ONE IS IN DILSHAD COLONY, DELHI AND THE OTHER IS IN FARIDABAD. THE ASSESSEE IN THE SPECIAL BENCH CASE HAD ALSO PURCHASED TW O RESIDENTIAL HOUSES AGAINST SALE CON SIDERATION OF RESIDENTIAL FLAT AT GULISTAN SITUATED AT BHULABAI DESAI ROAD, MUMBAI. ONE RESIDENTIAL PROPERTY WAS AT VARUN APARTMENTS AT VARSOVA AND THE OTHER PROPERTY WAS AT ERLYN APARTMENTS, BANDRA AND IT WAS HELD BY THE SPECIAL BENCH IN THE AFOREMENTIO NED CASE I.E. ITO VS. MS. SUSHILA M. JHAVERI (SUPRA) THAT THE ASSESSEE IS ENTITLED TO GET EXEMPTION ONLY IN RESPECT OF ONE HOUSE I.T.A. NO . 416 /M/ 1 6 18 OF HER CHOICE. THEREFORE, THE DECISION OF SPECIAL BENCH IS FULLY APPLICABLE TO THE PRESENT CASE AND THE ASSESSEE CAN AVAIL EXEM PTION U/S 54 IN RESPECT OF ONE RESIDENTIAL HOUSE ONLY. THE FACTUAL ASPECT HAS NOT BEEN DISPUTED BY LD. AR. THE ONLY DISPUTE BEFORE US IS LEGAL PROPOSITION THAT WHETHER THE ASSESSEE IS ENTITLED TO GET EXEMPTION IN RESPECT OF TWO INDEPENDENT RESIDENTIAL HOUS ES PURCHASED OUT OF SALE CONSIDERATION OF ANOTHER RESIDENTIAL HOUSE. THEREFORE, THE ISSUE IS DECIDED IN FAVOUR OF THE DEPARTMENT AND IT IS HELD THAT THE ASSESSEE IS ENTITLED TO GET EXEMPTION U/S 54 IN RESPECT OF ONE PROPERTY ONLY AND NO QUESTION HAS BEEN R AISED BY LD. AR REGARDING THE CHOICE OF THE PROPERTY OR THE FACTUAL ASPECT OF THE MATTER. 7. SO IT RELATES TO THE DECISION RELIED UPON BY LD. AR OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. D. ANAND BASAPA, IT MAY BE MENTIONED THAT THE SAID CAS E CANNOT BE APPLIED TO THE CASE OF THE ASSESSEE ON THE GROUND THAT IN THAT CASE THE TWO HOUSES PURCHASED BY THE ASSESSEE WERE NOT INDEPENDENT PROPERTIES AND A FACTUAL FINDING HAS BEEN RECORDED THAT THE TWO APARTMENTS WHICH WERE CLAIMED TO BE EXEMPTED AGAIN ST SALE CONSIDERATION WERE SITUATED SIDE BY SIDE AND IT WAS ALSO STATED BY THE BUILDER IN THAT CASE THAT HE HAS EFFECTED MODIFICATION OF THE FLATS TO MAKE IT AS ONE UNIT BY OPENING THE DOOR IN BETWEEN TWO APARTMENTS. ON THESE FACTS, THE HON BLE HIGH COURT HAS OBSERVED THAT THE FACT THAT AT THE TIME WHEN INSPECTOR INSPECTED THE PREMISES, THE FLATS WERE OCCUPIED BY TWO DIFFERENT TENANTS IS NOT THE GROUND TO HOLD THAT APARTMENT IS NOT ONE RESIDENTIAL UNIT. THE FACT THAT THE ASSESSEE COULD HAVE PURCHASED BOTH T HE FLATS IN ONE SINGLE SALE DEED OR COULD BE NARRATED THE PURCHASE OF TWO PREMISES AS ONE UNIT IN THE SALE DEED IS NOT THE GROUND TO HOLD THAT THE ASSESSEE HAD NO INTENTION TO PURCHASE TWO FLATS AS ONE UNIT. FROM THESE OBSERVATIONS OF HON BLE HIGH COURT, I T IS CLEAR THAT WHILE RENDERING THE DECISION THEY HAVE KEPT IN MIND THAT THE PURCHASE OF TWO FLATS IN THE SAME BUILDING WHICH WERE UNITED FOR LIVING OF THE ASSESSEE BY MAKING NECESSARY MODIFICATIONS MADE THE RESIDENTIAL UNIT AS ONE AND, THUS, THAT CASE COU LD NOT BE APPLIED TO THE FACTS OF THE CASE OF THE ASSESSEE......... 3. WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT. 4. AS REGARDS CLAIM FOR EXEMPTION AGAINST ACQUISITION OF TWO HOUSES UNDER SECTION 54 OF THE ACT, THE SAME IS NOT ADMISSIBLE IN PLAI N LANGUAGE OF STATUTE. IN THE JUDGMENT OF KARNATAKA HIGH COURT IN CIT V. D. ANANDA BASAPPA [2009] 223 CTR (KAR) 186:(2009) 309 ITR 329 (KAR), REFERRED TO IN THE IMPUGNED ORDER, EXEMPTION AGAINST PURCHASE OF TWO FLATS WAS ALLOWED HAVING REGARD TO THE FINDIN G THAT BOTH THE FLATS COULD BE TREATED TO BE ONE HOUSE AS BOTH HAD BEEN COMBINED TO MAKE ONE RESIDENTIAL UNIT. THE SAID JUDGMENT, THUS, PROCEEDS ON A DIFFERENT FACT SITUATION. I.T.A. NO . 416 /M/ 1 6 19 WE ARE THUS OF THE OPINION THAT THE CIT(APPEALS) WAS JUSTIFIED IN CONFIRMING T HE VIEW TAKEN BY THE A.O. THAT ASSESSEE COULD NOT CLAIM EXEMPTION UNDER SECTION 54 ON TWO DISPARATELY PLACED PROPERTIES. 14. BY CONSIDERING VARIOUS DECISIONS , THE COORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT TO CLAIM EXEMPTION AGAINST ACQUISITION OF TWO HOUSES UNDER SECTION 54 OF THE ACT IS NOT ADMISSIBLE IN PLAIN LANGUAGE OF STATUTE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE COORDINATE BENCH AND ALSO THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SMT. V.R. KARPAGAM (SU PRA), THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT OF THREE FLATS LOCATED IN TWO DIFFERENT PLACES CANNOT BE HELD AS ONE RESIDENTIAL UNIT. THEREFORE, UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISS UE AND RESTORE THAT OF THE ASSESSING OFFICER. A CCORDINGLY, THE GROUND RAISED BY THE REVENUE IS ALLOWED. 1 5 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 10 TH JUNE , 20 16 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 10 . 0 6 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.