Kokkalera Medappa Thammiah , Bangalore V. Income Tax Officer Ward-5(3)(5), Bangalore

ITA 580/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3615 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 01-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: B SUDHEENDRA
• Keywords: Cost of acquisition
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 580 / BANG/201 8 ASSESSMENT YEA R : 2013 - 14 MR. KOKKALERA MEDAPPA THAMMIAH, C-602, BAIRAVI CRUZ LUXOR, CHELEKERE MAIN ROAD, KALYAN NAGAR, BENGALURU 560 043. PAN : A EDPT 7288 Q VS. THE INCOME-TAX OFFICER, WARD 5(3)(5), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. B. SUDHEENDRA, ADVOCATE REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT DATE OF HEARING : 19 . 0 7 .201 8 DATE OF PRONOUNCEMENT : 21 . 0 8 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON THE SOLITARY GROUND THAT CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT TO THE EXTENT OF RS.90,25,529/- OUT OF RS.2,23,06,683/- CLAIMED BY THE ASSESSEE. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, HE HAS ADMITTED LONG TERM CAPITAL GAIN AT RS.31,12,505/- ON SALE OF LAND AT MYSORE AND CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT FOR REINVESTMENT IN A FLAT. THE APPELLANT HAD SOLD AN UNDEVELOPED RESIDENTIAL CONVERTED LAND THROUGH REGISTERED SALE DEED ON 07.07.2012 TO M/S. PRIMIA CONSTRUCTIONS, MYSORE FOR A SALE CONSIDERATION OF RS.3,56,85,000/- OUT OF WHICH APPELLANTS SHARE IS RS.2,46,85,000/- ITA NO. 580/BANG/2018 PAGE 2 OF 3 AGAINST WHICH DEDUCTION WAS CLAIMED AT RS.2,23,06,683/- BUT IT WAS RESTRICTED TO BY THE AO TO RS.1,32,81,153/- WITHOUT CONSIDERING THE UPGRADING AGREEMENT ENTERED UPON WITH THE BUILDER. WHILE DOING SO, THE AO HAS NOT CONSIDERED THE INTERIOR WORK UNDERTAKEN TO THE VALUE OF RS.26,65,036/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) RE-EXAMINED THE CLAIM OF THE ASSESSEE BUT WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND HE ACCORDINGLY CONFIRMED THE ORDER OF THE AO. 2. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT HE HAS FILED ALL THE RELEVANT EVIDENCES BEFORE THE AO WITH REGARD TO COST OF ACQUISITION AND INVESTMENT MADE THEREIN TO MAKE THE FLAT INHABITABLE. BUT THE AO HAS SIMPLY ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT TO THE EXTENT OF RS.1,33,99,741/- AND MADE DISALLOWANCE OF RS.91,07,194/-. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE LOWER AUTHORITIES HAVE NOT PROPERLY CONSIDERED THE UPGRADATION AGREEMENT AND THE INVESTMENTS MADE BY THE ASSESSEE IN THE FLAT TO MAKE IT INHABITABLE. IT WAS FURTHER CONTENDED THAT HE HAS FILED ALL THE RELATED EVIDENCES IN SUPPORT OF HIS CONTENTIONS BUT THE REVENUE HAS NOT PROPERLY EXAMINED THE SAME. 3. THE LEARNED DR ON THE OTHER HAND HAS CONTENDED THAT THE AO HAS CATEGORICALLY MENTIONED IN HIS ORDER THAT ASSESSEE HAS NOT FILED THE COMPLETE EVIDENCES IN SUPPORT OF THE EXPENDITURE INCURRED BY IT IN RENOVATION OR OTHERWISE. HE HAS FILED FEW EVIDENCES WHICH WERE TAKEN INTO ACCOUNT BY THE AO WHILE COMPUTING THE LONG TERM CAPITAL GAIN. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT AO HAS NOT TAKEN INTO ACCOUNT THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE RENOVATION OF THE FLAT WHEREAS LEGAL POSITION IN THIS REGARD IS VERY CLEAR THAT THE EXPENDITURE INCURRED IN RENOVATION OF THE FLAT SHOULD BE CONSIDERED AS PART OF COST OF ACQUISITION AND BENEFIT OF DEDUCTION UNDER SECTION 54F IS TO BE ALLOWED. THE JURISDICTIONAL HIGH COURT IN THE CASE OF MRS. RAHANA SIRAJ VS. CIT (2015) 58 TAXMANN.COM 333 (KARNATAKA) HAS HELD THAT WHERE ASSETS ACQUIRED BY THE ASSESSEE IS HABITABLE BUT REQUIRES ADDITION, ALTERATION, MODIFICATIONS AND IMPROVEMENTS, MONEY SPENT ON THOSE ASPECTS WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF THE ACT. IN THE CASE OF ITA NO. 580/BANG/2018 PAGE 3 OF 3 G. SIVA RAMA KRISHNA VS. DCIT IN ITA NO. 755/HYD/2013, THE TRIBUNAL HAS HELD THAT THE INVESTMENT IN RESIDENTIAL HOUSE WOULD NOT ONLY INCLUDE THE COST OF PURCHASE OF THE HOUSE BUT ALSO INCLUDE THE COST INCURRED IN MAKING THE HOUSE HABITABLE. AN INHABITABLE PREMISES CANNOT BE EQUATED WITH THE RESIDENTIAL HOUSE. AGAIN THIS BENCH OF THE TRIBUNAL IN THE CASE OF S. TEJRAJ RANKA VS. ACIT IN ITA NO. 82/BANG/2014 HAS HELD THAT TERM RESIDENTIAL HOUSE SHOULD BE UNDERSTOOD AS A HOUSE HABITABLE WITH ALL AMENITIES IN PLACE. THEREFORE, THE ENTIRE AMOUNT INCLUDING THE AMOUNT PAID TO THE BUILDER FOR AMENITIES LIKE CAR PARKING ETC., QUALIFIES FOR DEDUCTION. IN THE INSTANT CASE, IT IS ALSO NOTICED THAT AO HAS NOT CONSIDERED CERTAIN INVESTMENTS WHICH WERE MADE TO MAKE THE FLAT INHABITABLE THOUGH THE ASSESSEE HAS FILED THE EVIDENCE OF INCURRING SUCH EXPENDITURE. THEREFORE, WE ARE OF VIEW THAT LET THE ISSUE BE RE-EXAMINED BY THE AO IN THE LIGHT OF THE AFORESAID JUDGMENTS AND TO ALLOW THE OTHER EXPENDITURES INCURRED TO MAKE THE FLAT INHABITABLE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE AO WITH A DIRECTION TO READJUDICATE THE ISSUE AFRESH IN TERMS INDICATED ABOVE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST, 2018. SD/- SD/- BANGALORE. DATED: 21 ST AUGUST, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. DR 5. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER