Smt.Bayya Madhuram, Bangalore V. Income Tax Officer, Bangalore

ITA 457/BANG/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8442 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 54F; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 457/BANG/2017 ASSESSMENT YEAR : 2007-08 SMT. BAYYA MADHURAM, FLAT NO. A-0, GOLDEN PEBBLES, NO. 33 & 34, GULMOHAR ENCLAVE ROAD, KUNDALAHALLI GATE, MUNNEKOLALA, BANGALORE 560 037. PAN: ABOPB 9902D VS. THE INCOME TAX OFFICER, WARD 7(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI G.S. PRASHANTH, CA RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT (DR) DATE OF HEARING : 21.03.2017 DATE OF PRONOUNCEMENT : 31.03.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 24.11.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2007-08. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS. ITA NO.457/BANG/2017 PAGE 2 OF 7 ITA NO.457/BANG/2017 PAGE 3 OF 7 ITA NO.457/BANG/2017 PAGE 4 OF 7 2. AT THE TIME OF HEARING THE LD. AR OF THE ASSESSEE H AS POINTED OUT THAT IF THE GROUND NOS. 5 AND 6 OF THE ASSESSEES APPEAL ON THE ISSUE OF EXEMPTION U/S. 54F IS DECIDED IN FAVOUR OF THE ASSESSEE THEN THE O THER GROUNDS BECOMES ACADEMIC IN NATURE. HENCE THE GROUND NOS. 5 AND 6 ARE TAKEN UP FOR HEARING AND ADJUDICATION. 3. THE ASSESSEE IS AN INDIVIDUAL AND ENTERED INTO JOIN T DEVELOPMENT AGREEMENT (JDA) ON 18.05.2006 WITH M/S. BVR CONSTRUCTIONS ON SHARING OF 55% TO THE DEVELOPER AND 45% TO THE LAND OWNERS. WHILE COMPLE TING THE ASSESSMENT U/S. 143(3), THE AO HAS RESTRICTED THE CLAIM OF DEDUCTIO N U/S. 54F ONLY TO ONE FLAT INSTEAD OF FOUR FLATS CLAIMED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SU CCEED. BEFORE THE TRIBUNAL, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT ALL THESE FOUR FLATS WERE RECEIVED BY THE ASSESSEE AS PER THE JDA AND THEREFO RE WHEN THE SALE CONSIDERATION FOR TRANSFER OF THE LAND TO THE DEVEL OPER HAS BEEN RECEIVED IN THE FORM OF THESE FOUR FLATS THEN THE ASSESSEE IS ELIGI BLE FOR DEDUCTION U/S. 54F FOR THE ENTIRE SALE CONSIDERATION. IN SUPPORT OF HIS C ONTENTION, HE HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN CASE OF CIT VS K.G. RUKMINIAMMA (331 ITR 211) AS WELL AS THE DECISION OF THE HONBLE MADRAS HIGH COURT IN CASE OF CIT VS GUMANMAL JAIN (2017) (98 CCH 0093) . ITA NO.457/BANG/2017 PAGE 5 OF 7 4. ON THE OTHER HAND THE LD. DR HAS RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE LANGUAGE OF SECTION 54 F IS UNAMBIGUOUS REGARDING A RESIDENTIAL HOUSE AND THEREFORE MORE TH AN ONE RESIDENTIAL HOUSE CANNOT BE ALLOWED FOR THE PURPOSE OF DEDUCTION U/S. 54F. HE HAS FURTHER SUBMITTED THAT THE AO AND CIT(A) HAS CLEARLY MADE O UT THE FACT THAT EXCEPT ONE FLAT THE ASSESSEE HAS ALREADY LET OUT THE OTHER THREE FLATS AND OFFERED THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROP ERTY. THEREFORE EACH FLAT IS A SEPARATE RESIDENTIAL UNIT. THUS THE AO H AS JUSTIFIED TO RESTRICT THE CLAIM U/S. 54F ONLY TO THE EXTENT OF ONE FLAT. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSEE RECEIVED FOUR FLATS A S A SALE CONSIDERATION AGAINST THE TRANSFER OF 55% OF SHARE IN THE LAND IN FAVOUR OF THE DEVELOPER. THUS THESE FLATS ARE RECEIVED AS THE CONSIDERATION FOR TRANSFE R OF THE LAND. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE JURISDICTI ONAL HIGH COURT IN CASE OF CIT VS K.G. RUKMINIAMMA (SUPRA) IN PARA 12 AS UNDER. 12. IN THE INSTANT CASE, THE FACTS ARE NOT IN DISPUTE. ON A SITE MEASURING 30' 110', THE ASSESSEE HAD A RESID ENTIAL PREMISES. UNDER A JOINT DEVELOPMENT AGREEMENT, SHE GAVE THAT PROPERTY TO A BUILDER FOR PUTTING UP FLATS. UN DER THE AGREEMENT EIGHT FLATS ARE TO BE PUT UP IN THAT PROP ERTY AND FOUR FLATS REPRESENTING 48 PER CENT IS THE SHARE OF THE ASSESSEE AND THE REMAINING 52 PER CENT REPRESENTING ANOTHER FOUR FLATS IS THE SHARE OF THE BUILDER. SO, THE CONSIDERATION FOR SELLING 52 PER CENT OF THE SITE I S FOUR FLATS REPRESENTING 48 PER CENT. ALL THE FOUR FLATS ARE SI TUATE IN A ITA NO.457/BANG/2017 PAGE 6 OF 7 RESIDENTIAL BUILDING. THESE FOUR RESIDENTIAL FLATS CONSTITUTE A RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54. P ROFIT ON SALE OF PROPERTY IS USED FOR RESIDENCE. THE FOUR RE SIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSE S FOR THE PURPOSE OF SECTION 54. IT HAS TO BE CONSTRUED ONLY AS A RESIDENTIAL HOUSE AND THE ASSESSEE IS ENTITLED TO THE BENEFIT ACCORDINGLY. THUS THE HONBLE HIGH COURT IN THE IDENTICAL FACTS HAS HELD THAT ALL THE FOUR FLATS SITUATED IN THE SAME RESIDENTIAL BUILDING CON STITUTE THE RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54. SIMILARLY, THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS GUMANMAL JAIN (SUPRA) HAS HELD IN PARA 7 AS UNDER. ITA NO.457/BANG/2017 PAGE 7 OF 7 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT AS WE LL AS HONBLE MADRAS HIGH COURT CITED ABOVE THE CLAIM U/S. 54F IS ALLOWED FOR IN RESPECT OF THE FOUR FLATS. 7. SINCE THE ASSESSEES CLAIM U/S. 54F IS ALLOWED THER EFORE THE OTHER GROUNDS RAISED BY THE ASSESSEE BECOMES ACADEMIC IN NATURE A ND ARE NOT PRESSED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MARCH, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 31 ST MARCH, 2017. / MS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.