DCIT CIR 23(2), MUMBAI V. DEEPA S BHEDA, MUMBAI

ITA 5011/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62574 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVRAMSANJAY R PARIKH
• Keywords: Capital asset; Cost of acquisition; Competent authority
• Section: 80C; 54F; 10B; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI G E VEERABHADRAPPA, PRESIDENT & SHRI V IJAY PAL RAO, JM ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) THE ASST COMMR OF INCOME TAX CR 23(2), MUMBAI VS SHRI DEEPAK S BHEDA 61/B AISHWARYA CHS LTD GOSHALA LANE MULUND (W) MUMBAI 81 (APPELLANT ) (RESPONDENT) PAN NO. AGKPB 9160G ASSESSEE BY DR K SHIVRAM/SANJAY R PARIKH REVENUE BY SH C G K NAIR DT.OF HEARING 14 TH JUNE 2012 DT OF PRONOUNCEMENT 15 TH ,JUNE 2012 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.3.2010 OF COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSM ENT YEAR 200708. 2 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN T HIS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE DISALLOWANCE OF CLAIM OF THE ASSESS EE MADE U/S 54EC IGNORING THE FACT THAT AN ASSESSEE CLAIMING BENEFIT OF SECTI ON 54F HAS TO COMPLY WITH BOTH SUB- SECTION(1) AND SUB-SECTION(4) OF THE SECT ION 54FAND THEREBY CANNOT AVAIL THE BENEFIT OF SECTION 54EC. 2.(I) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING ASSESSEAS CLAIM FOR EXEMPTION U/ S 54F IGNORING THE FACT THAT PLAN OF THE RESIDENTIAL HOUSE .AS APPROVED BY THE M UNICIPAL CORPORATION OF GREATER BOMBAY CONSISTED OF FOUR INDEPENDENT UNITS, THAT MODIFICATION OF THE PLAN SUBSEQUENTLY WAS NOT APPROVED BY THE COMPETENT AUTHORITY, AND THAT THE ASSESSEE HAD FAILED TO SUBMIT THE COPY OF THE D ESIGN OF THE FLAT AND LAYOUT OF THE PROJECT. SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 2 2(U) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE ID. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR EXE MPTION UNDER SECTION 54F IGNORING THE OBSERVATION OF THE AO AT PARA 3 ON PAG E 2 OF THE ASSESSMENT ORDER THAT THE ENTIRE BUILDING WAS YET TO BE CONSTR UCTED THOUGH THE ASSESSEE HAD PAID FULL AMOUNT OF RS. 2.60 CRORES 2(III) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AN D IN LAW THE ID CIT (A) ERRED ON ALLOWING THE CLAIM OF THE ASSESSEE FOR EXE MPTION U/S 54F WITHOUT INSISTING ON THE ASSESSEE TO PRODUCE EVIDENCE OF PU RCHASE OR CONSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THE PERIOD STIPULATED U/ S 54F AND ERRED IN ACCEPTING THE AGREEMENT FOR PURCHASE DATED 07.07.2007 AS THE EVIDENCE OF PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE WHEN IT WAS PHYSICAL NOT IN EXISTENCE 3 GROUND NUMBER 1 REGARDING THE EXEMPTION UNDER SEC TION 54 EC OF I T ACT. 3.1 THE ASSESSEE HAS SOLD HIS ANCESTRAL PROPERTY ON 13.12. 2006 FOR A CONSIDERATION OF RS. 3, 40, 00, 000/-. THE COST OF THE ANCESTRAL PROPERTY WAS TAKEN AT NIL THEREFORE THE ENTIRE CONSIDERATION WAS TAKEN AS LONG TERM CAP ITAL GAIN. OUT OF THE TOTAL CAPITAL GAIN OF RS. 3.40 CRORES, THE ASSESSEE INVES TED A SUM OF RS. 2.60 CRORES FOR THE PURCHASE OF HOUSING UNIT AND RS. 50 LAKH INVESTED I N REC BONDS. APART FROM CLAIMING EXEMPTION UNDER SECTION 54F, THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 54 EC ON ACCOUNT OF INVESTMENT IN REC BONDS . 3.2 THE ASSESSING OFFICER DENIED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT WHEN THE ASSESSEE AVAILED THE EXEMPTION UNDER SECTI ON 54F, THE BALANCE AMOUNT CAN ONLY BE INVESTED IN THE BANKS OR FINANCIAL INST ITUTIONS AS NOTIFIED IN THE CAPITAL GAIN ACCOUNT SCHEME 1988 AND NOT FOR ANY INVESTMENT MADE UNDER SECTION 54 EC. IN SUPPORT OF HIS DECISION, THE ASSESSING OFFICER R EFERRED SUB. SECTION 4 OF SECTION 54F AND VIEWED THAT THE AMOUNT CAN NOT APPROPRIATE TO T OWARDS PURCHASE OF RESIDENTIAL HOUSE ON SALE OF FLAT WILL NOT BE ELIGIBLE FOR EXEM PTION. 3.3 ON APPEAL THE COMMISSIONER OF INCOME TAX(APPEAL S) ALLOWED THE CLAIM OF THE ASSESSEE. SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 3 4 BEFORE US THE LD DR HAS SUBMITTED THAT IN VIEW OF SUB SECTION (1) AND SUB. SECTION (4) OF SECTION 54F, THE EXEMPTION IS AVAI LABLE ONLY TO THE EXTENT OF AMOUNT OF CAPITAL GAIN WHICH HAS BEEN INVESTED IN PURCHASE OF RESIDENTIAL HOUSE AND THE BALANCE AMOUNT WHICH IS NOT APPROPRIATED BY THE AS SESSEE TOWARDS PURCHASE OF NEW ASSET WITHIN THE PERIOD AS PRESCRIBED UNDER SEC TION 54F AND ALSO NOT DEPOSITED BY THE ASSESSEE PRIOR TO THE DUE DATE OF FURNISHING OF RETURN OF INCOME UNDER SECTION 139 (1) IN THE ACCOUNT IN SUCH BANK OR INSTITUTIO N AS MAY BE SPECIFIED IN AND UTILISE IN ACCORDANCE WITH ANY SCHEME WITH THE CENTRAL GOVERNM ENT AND MAY BE NOTIFIED IN THE GAZETTE. THE LD DR HAS RELIED UPON THE ORDE R OF THE ASSESSING OFFICER AND SUBMITTED THAT AFTER AVAILING THE EXEMPTION UNDER S ECTION 54F, NO FURTHER EXEMPTION CAN BE AVAILED ON SAME CAPITAL GAIN UNDER SECTION 5 4 EC. 4.1 ON THE OTHER HAND, THE LD A.R OF THE ASSESSEE HAS SUBMITTED THAT THERE IS NO RESTRICTION UNDER THE PROVISIONS OF SECTION 54 THAT AN EXEMPTION IS CLAIMED UNDER SECTION 54 FOR A PART OF CAPITAL GAIN, THEN NO EXEM PTION CAN BE AVAILED FOR THE AMOUNT OF CAPITAL GAIN, WHICH WAS INVESTED IN THE R EC BONDS AS PER SECTION 54 EC. HE HAS SUPPORTED THE ORDER OF COMMISSIONER OF INCOM E TAX(APPEALS). 5 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER DENIED THE BENEFIT CL AIMED BY THE ASSESSEE UNDER SECTION 54 EC TOWARDS THE INVESTMENT MADE IN REC BO NDS FOR A SUM OF RS. 50 LAKH OUT OF TOTAL LONG-TERM CAPITAL GAIN OF RS. 3.40 CRORES. THE ASSESSING OFFICER WAS OF THE VIEW THAT ONCE THE EXEMPTION HAS BEEN CLAIMED UNDER SECTION 54F AND THE ENTIRE CAPITAL GAIN HAS NOT BEEN UTILISED FOR THE PURCHAS E OF RESIDENTIAL HOUSE, THEN THE NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF NEW ASSET AND ALSO NOT DEPOSITED IN THE BANKS OR INSTITUTION AS SPECIFIED AND SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 4 NOTIFIED IN THE OFFICIAL GAZETTE BY THE CENTRAL GOV ERNMENT AS PER THE PROVISIONS OF SUB SECTION (4) OF SECTION 54F, THE ASSESSEE CANNOT AVAIL THE EXEMPTION UNDER SECTION 54 EC. IT IS TO BE NOTED THAT IT IS NOT A CASE OF AVAILING DOUBLE EXEMPTION ON THE SAME AMOUNT BUT THE ASSESSEE HAS CLAIMED EXEMPT ION UNDER SECTION 54F AS WELL AS UNDER SECTION 54 EC FOR THE RESPECTIVE AMOUNT OF CAPITAL GAIN INVESTED IN PURCHASE OF NEW HOUSE AND REC BONDS. WHEREVER ANY S UCH RESTRICTION IS DEEMED FIT, THE LEGISLATURE HAS PROVIDED IN THE STATUTE A SUFFI CIENT CHECK UNDER CHAPTER VI-A OF THE INCOME TAX ACT. AS FAR AS THE CLAIM OF EXEMPTI ON UNDER SECTION 54F AND UNDER SECTION 54 EC, THERE IS NO SUCH RESTRICTION IN THE STATUTE THAT THE ASSESSEE CANNOT CLAIM THE EXEMPTION UNDER BOTH SECTIONS, EVEN IF TH E CONDITIONS PROVIDED UNDER THE RESPECTIVE SECTIONS ARE COMPLIED WITH AND THE SAME DOES NOT RESULT IN AVAILING DOUBLE EXEMPTION ON THE SAME AMOUNT. FOR READY REFERENCE BE QUOTED SECTION 54 EC AS UNDE R: 54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEI NG HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFE R, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED AS SET, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISI ONS OF THIS SECTION, THAT IS TO SAY, ( A ) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTIO N 45; ( B ) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSE T, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL G AIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG-T ERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT B E CHARGED UNDER SECTION 45 : [ PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1ST DAY O F APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSE E DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES.] SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 5 (2) WHERE THE LONG-TERM SPECIFIED ASSET IS TRANSFER RED OR CONVERTED (OTHERWISE THAN BY TRANSFER) INTO MONEY AT ANY TIME WITHIN A P ERIOD OF THREE YEARS FROM THE DATE OF ITS ACQUISITION, THE AMOUNT OF CAPITAL GAINS ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SE CTION 45 ON THE BASIS OF THE COST OF SUCH LONG-TERM SPECIFIED ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ) OF SUB-SECTION (1) SHALL BE DEEMED TO BE THE INCO ME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' RELATING TO LONG-TERM CAPITAL ASSET OF THE PREVIOUS YEAR IN WHICH THE LONG-TERM SPECIFI ED ASSET IS TRANSFERRED OR CONVERTED (OTHERWISE THAN BY TRANSFER) INTO MONEY. EXPLANATION. IN A CASE WHERE THE ORIGINAL ASSET IS TRANSFERRED A ND THE ASSESSEE INVESTS THE WHOLE OR ANY PART OF THE CAPIT AL GAIN RECEIVED OR ACCRUED AS A RESULT OF TRANSFER OF THE ORIGINAL ASS ET IN ANY LONG-TERM SPECIFIED ASSET AND SUCH ASSESSEE TAKES ANY LOAN OR ADVANCE O N THE SECURITY OF SUCH SPECIFIED ASSET, HE SHALL BE DEEMED TO HAVE CONVERT ED (OTHERWISE THAN BY TRANSFER) SUCH SPECIFIED ASSET INTO MONEY ON THE DA TE ON WHICH SUCH LOAN OR ADVANCE IS TAKEN. [(3) WHERE THE COST OF THE LONG-TERM SPECIFIED ASSE T HAS BEEN TAKEN INTO ACCOUNT FOR THE PURPOSES OF CLAUSE ( A ) OR CLAUSE ( B ) OF SUB-SECTION (1), ( A ) A DEDUCTION FROM THE AMOUNT OF INCOME-TAX WITH R EFERENCE TO SUCH COST SHALL NOT BE ALLOWED UNDER SECTION 88 FOR ANY ASSESSMENT YEAR ENDING BEFORE THE 1ST DAY OF APRIL, 2006; ( B ) A DEDUCTION FROM THE INCOME WITH REFERENCE TO SU CH COST SHALL NOT BE ALLOWED UNDER SECTION 80C FOR ANY ASSESSMENT YEA R BEGINNING ON OR AFTER THE 1ST DAY OF APRIL, 2006.] EXPLANATION. FOR THE PURPOSES OF THIS SECTION, ( A ) 'COST', IN RELATION TO ANY LONG-TERM SPECIFIED A SSET, MEANS THE AMOUNT INVESTED IN SUCH SPECIFIED ASSET OUT OF CAPI TAL GAINS RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ORIG INAL ASSET; [( B ) 'LONG-TERM SPECIFIED ASSET' FOR MAKING ANY INVEST MENT UNDER THIS SECTION DURING THE PERIOD COMMENCING FROM THE 1ST D AY OF APRIL, 2006 AND ENDING WITH THE 31ST DAY OF MARCH, 2007, MEANS ANY BOND, REDEEMABLE AFTER THREE YEARS AND ISSUED ON OR AFTER THE 1ST DAY OF APRIL, 2006, BUT ON OR BEFORE THE 31ST DAY OF MARCH , 2007, ( I ) BY THE NATIONAL HIGHWAYS AUTHORITY OF INDIA CONS TITUTED UNDER SECTION 3 OF THE NATIONAL HIGHWAYS AUTHORITY OF INDIA ACT, 1988 (68 OF 1988); OR ( II ) BY THE RURAL ELECTRIFICATION CORPORATION LIMITED , A COMPANY FORMED AND REGISTERED UNDER THE COMPANIES ACT, 1956 (1 OF 1956),AND NOTIFIED 14 BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE FOR THE PURPOSES OF THIS SECTION WITH SUCH CONDITIONS SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 6 (INCLUDING THE CONDITION FOR PROVIDING A LIMIT ON T HE AMOUNT OF INVESTMENT BY AN ASSESSEE IN SUCH BOND) AS IT THINK S FIT:] [ PROVIDED THAT WHERE ANY BOND HAS BEEN NOTIFIED BEFORE THE 1S T DAY OF APRIL, 2007, SUBJECT TO THE CONDITIONS SPECIFIED IN THE NO TIFICATION, BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE UNDER THE PROVIS IONS OF CLAUSE ( B ) AS THEY STOOD IMMEDIATELY BEFORE THEIR AMENDMENT BY THE FIN ANCE ACT, 2007, SUCH BOND SHALL BE DEEMED TO BE A BOND NOTIFIED UNDER TH IS CLAUSE;] [( BA ) 'LONG-TERM SPECIFIED ASSET' FOR MAKING ANY INVEST MENT UNDER THIS SECTION ON OR AFTER THE 1ST DAY OF APRIL, 2007 MEANS ANY BO ND, REDEEMABLE AFTER THREE YEARS AND ISSUED ON OR AFTER THE 1ST DAY OF APRIL, 2007 BY THE NATIONAL HIGHWAYS AUTHORITY OF INDIA CONSTITUTED UNDER SECTI ON 3 OF THE NATIONAL HIGHWAYS AUTHORITY OF INDIA ACT, 1988 (68 OF 1988) OR BY THE RURAL ELECTRIFICATION CORPORATION LIMITED, A COMPANY FORM ED AND REGISTERED UNDER THE COMPANIES ACT, 1956 (1 OF 1956).] 5.1 THE EXPRESSION 'THE WHOLE OR ANY PART OF CAPITA L GAINS IN THE LONG TERM SPECIFIED ASSETS' MAKES IT CLEAR THAT THE EXEMPTION UNDER SECTION 54 EC IS AVAILABLE EVEN WHEN THE PART OF CAPITAL GAIN IS INVESTED IN S PECIFIED LONG-TERM ASSET. THERE IS NO DISPUTE THAT THE ASSESSEE HAS INVESTED OUT OF TH E TOTAL CAPITAL GAIN IN REC BONDS WITHIN THE PRESCRIBED PERIOD OF TIME AS PROVIDED UN DER SECTION 54 EC. THEREFORE, ONCE THE CONDITIONS AS PRESCRIBED UNDER SECTION 54 EC ARE COMPLIED WITH, THAN THE DEDUCTION CANNOT BE DENIED ON THE GROUND THAT THE A SSESSEE HAS ALSO AVAILED THE EXEMPTION UNDER SECTION 50 4F AGAINST THE PART OF T HE CAPITAL GAIN. 6 IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO REASO N TO INTERFERE WITH THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS), QUA THIS IS SUE AND THE SAME IS UPHELD. 7 THE NEXT ISSUE IS REGARDING EXEMPTION UNDER SECTI ON 54F: 7.1 OUT OF THE TOTAL CAPITAL GAIN OF RS. 3.40 CRORE S ARISING FROM SALE OF ANCESTRAL PROPERTY, THE ASSESSEE INVESTED RS. 2.60-CRORES FOR THE PURCHASE OF 4 FLATS BEARING NUMBER 9A,9B, 10A AND 10 B. THE ASSESSEE CLAIMED EX EMPTION UNDER SECTION 54F AGAINST THIS AMOUNT OF RS. 2.60 CRORES INVESTED TOW ARDS PURCHASE OF FLATS; BUT THE ASSESSING OFFICER ALLOWED THE EXEMPTION ONLY IN RES PECT OF ONE FLAT BY HOLDING THAT SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 7 THESE ARE SEPARATE AND INDEPENDENT RESIDENTIAL UNIT S HAVING SEPARATE KITCHEN AND ENTRANCE; THEREFORE, CANNOT BE SAID AS ADJACENT FL ATS; EVEN THOUGH THE BUILDER HAS REFERRED THEM AS COMPOSITE UNIT. 7.2 ON APPEAL THE COMMISSIONER OF INCOME TAX(APPEAL S) ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 54F IN RESPECT OF THE CO NSIDERATION OF RS. 2.60 CRORES TOWARDS PURCHASE OF 4 FLATS BY FOLLOWING THE DECISI ON OF SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF ITO VS MS SUSHILA M JHAVERI REPORTED IN 107 ITD 327. 8 BEFORE US THE LD DR HAS REFERRED THE GROUNDS OF A PPEAL AND SUBMITTED THAT AT THE TIME OF PURCHASE AGREEMENT DATED 11.7,2007 THES E NEW RESIDENTIAL HOUSES WERE NOT PHYSICALLY IN EXISTENCE; THEREFORE, WHEN THE FL ATS WERE NOT CONSTRUCTED, THEN THE TRANSACTION OF PURCHASE WAS NOT COMPLETED AND THE E XEMPTION UNDER SECTION 54F CANNOT BE ALLOWED. 9 AT THE THRESHOLD, WE FIND THAT THE GROUND NUMBER 2 (I) TO 2 (III) DO NOT EMANATE FROM THE IMPUGNED ORDER. EVEN, THE ASSESSI NG OFFICER HAS NOT DISPUTED THE FACT OF PURCHASE OF 4 FLATS IN QUESTION WITHIN THE STIPULATED PERIOD AND ALSO ALLOWED THE EXEMPTION IN RESPECT OF ONE FLAT INSTEAD OF 4 F LATS AS CLAIMED BY THE ASSESSEE. THEREFORE, THE GROUND NUMBER 2 (1) TO 2 (III) DO NO T ARISE FROM THE IMPUGNED ORDER AND EVEN ARE CONTRARY TO THE ACCEPTED FACTUAL PROPO SITION BY THE ASSESSING OFFICER. ACCORDINGLY THESE GROUNDS OF THE REVENUE'S APPEAL A RE REJECTED AS NOT ARISING FROM THE ORDERS OF THE AUTHORITIES BELOW. 10 EVEN OTHERWISE, THE PROPOSITION ADVANCED BY THE REVENUE UNDER GROUND NUMBER 2 WOULD AMOUNT TO SEEK ENHANCEMENT OF ASSESS MENT, WHICH IS NOT PERMISSIBLE UNDER THE PROCEEDINGS BEFORE THIS TRIBU NAL AS THIS TRIBUNAL HAS NO JURISDICTION TO DO SO. SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 8 11 HOWEVER, IRRESPECTIVE OF THE GROUNDS RAISED BY T HE REVENUE, IF WE GO TO THE REAL DISPUTE OF DISALLOWANCE OF EXEMPTION UNDER SEC TION 54F, THE QUESTION ARISES FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER THESE 4 FLATS PURCHASED BY THE ASSESSEE CAN BE TREATED AS ONE RESIDENTIAL UNIT AS HELD BY THE SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF MS SUSHILA M JHAVER (SUPRA). 11.1 THE AGREEMENT BY WHICH THE ASSESSEE HAS PURCHA SED THESE FLATS, CLEARLY STIPULATES THAT THE BUILDING IN QUESTION CONSISTING OF DUPLEX HOUSES ON TOP TWO FLOORS OF 9TH AND 10TH FLOORS OF THE BUILDING. THE FLAT N UMBER 9A, 9B, 10 A AND 10 B ARE SO SITUATED THAT THE FLAT NUMBER 9A AND 9B AT 9 TH FLOOR ARE JUST BELOW THE FLAT NUMBER 10A AND 10B AT 10 TH FLOOR. THE AGREEMENT CLEARLY MENTIONS THAT ONE D UPLEX FLAT WAS CONVERTED FROM 4 UNITS. THIS FACT HAS NOT BEEN DISP UTED THAT THE BUILDER HAS AGREED TO CONVERT ORIGINALLY PLANED TO 4 FLATS INTO ONE DU PLEX FLAT AS BORNE OUT FROM THE AGREEMENT BETWEEN THE ASSESSEE AND THE BUILDER FOR THE PURCHASE OF THESE FLATS. THUS, IF THE REQUIREMENT OF THE ASSESSEE FAMILY IS MET-OUT ONLY BY ENLARGING THE RESIDENTIAL UNIT BY MERGING OF 4 FLATS ORIGINALLY P LANED INTO ONE UNIT AND THAT TOO PRIOR TO HANDING OVER OF THE POSSESSION OF THE SAID RESI DENTIAL UNIT, THEN THE SAID CONVERTED RESIDENTIAL UNIT WILL BE TREATED AS A RES IDENTIAL HOUSE AS STIPULATED UNDER SECTION 54F. 11.2 THE CASE OF THE ASSESSEE IS BETTER THEN WHERE MORE THAN ONE UNITS ARE PURCHASED WHICH ARE ADJACENT TO EACH OTHER AND ARE CONVERTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDENCE BY HAVING COMMON PASSAGE, COMMON KITCHEN BECAUSE IN THE CASE OF THE ASSESSEE THE CONVERSION WAS AGREED BY THE BUILDER PRIOR TO PURCHASE. SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 9 12 THE SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF MS SUSHILA M JHAVER (SUPRA) HELD IN PARA 11 AS UNDER: 11. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD TH AT EXEMPTION UNDER SS. 54 AND 54F OF THE ACT WOULD BE ALLOWABLE IN RESPECT OF ONE RESIDENTIAL HOUSE ONLY. IF THE ASSESSEE HAS PURCHASED MORE THAN ONE RESIDENTIAL HOUSE, THEN THE CHOICE WOULD BE WITH ASSESSEE TO AVAIL THE EXEMPTIO N IN RESPECT OF EITHER OF THE HOUSES PROVIDED THE OTHER CONDITIONS ARE FULFILLED . HOWEVER, WHERE MORE THAN ONE UNIT ARE PURCHASED WHICH ARE ADJACENT TO EACH OTHER AND ARE CONVERTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDEN CE BY HAVING COMMON PASSAGE, COMMON KITCHEN, ETC., THEN, IT WOULD BE A CASE OF INVESTMENT IN ONE RESIDENTIAL HOUSE AND CONSEQUENTLY, THE ASSESSEE WOULD BE ENTITLED TO EXEMPTION. 13 HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF MS SUSHILA M JHAVER (SUPRA), WE ARE IN AGREEMENT WITH THE VIEW AND THE FINDINGS OF THE COMMISSIONER OF INCOME TAX(APPEALS) ON THIS ISSUE. 14 IN THE RESULT, THE APPEAL OF THIS REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 15 TH ,DAY OF JUNE 2012 SD/- SD /- ( G E VEERABHADRAPPA ) PRESIDENT ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 15 TH , JUNE 2012 RAJ* SHRI DEEPAK S BHEDA ITA NO. 5011/MUM/2010 (ASSESSMENT YEAR 2007-08) 10 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI