ACIT, Circle-4(1), Hyderabad, Hyderabad V. Fazlunnisa Begum, Hyderabad, Hyderabad

ITA 66/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2715 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P VINOD
• Assessee Lawyers: DR DIVYA K J
• Keywords: Capital asset; Benefit of exemption
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA. NO.66/HYD/2017 ASSESSMENT YEAR: 2012 - 2013 ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 4(1), HYDERABAD. VS. SMT. FAZLUNNISA BEGUM, HYDERABAD. PAN: ABJPF 0159 M (APPELLANT) (RESPONDENT) FOR ASSESSEE: SMT. DR. DIVYA K.J - DR FOR REVENUE : SHRI P. VINOD DATE OF HEARING : 09.01.2018 DATE OF PRONOUNCEMENT : 09.01.2018 ORDER PER D. MANMOHAN , VP. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) - 8, HYDERABAD AND IT PERTAINS TO A.Y. 2012 - 2013. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. ASSESSEE DECLARED LONG TERM CAPITAL GAINS UPON TRANSFER OF HOUSE PROPERTY AT HIMAYATHNAGAR, HYDERABAD. IN FACT S HE ENTERED INTO A DEVELOPMENT AGREEMENT WITH A BUILDER WHEREBY THE ASSESSEE WAS ENTITLED TO 51% OF THE TOTAL BUILD UP AREA I.E., 8 RESIDENTIAL FLATS. 3. ASSESSEE CLAIMED EXEMPTION U/S 54 OF THE ACT ON THE GROUND THAT 8 RESIDENTIAL FLATS ALLOTTED TO H E R ARE MEANT FOR H E R RESIDENTIAL PURPOSE AND THEY SHOULD BE TREATED AS ONE RESIDEN TIAL ACCOMMODATION. A.O. WAS OF THE OPINION THAT SECTION 54 LIMITS THE CLAIM OF DEDUCTION IN RESPECT OF 2 PURCHASE OF ONE RESIDENTIAL FLAT ONLY AND ACCORDINGLY RE - WORKED OUT THE CAPITAL GAINS. 4. ON AN APPEAL FILED BY THE ASSESSEE, LD. CIT(A) ALLOWED THE C LAIM OF ASSESSEE BY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SYED ALI ADIL (260 CTR 219) AND ALSO TOOK NOTE OF THE AMENDMENT TO SECTION 54 OF THE ACT BY FINANCE BILL 2014 - 15 W.E.F 01.04.2015, TO CONCLUDE THAT THE EMPHASIS ON RESTRICTION OF DEDUCTION TO ONE INDEPENDENT RESIDENTIAL UNIT AT THE TIME OF REINVESTMENT CANNOT BE EXTENDED TO DIFFERENT FLATS THOUGH THEY ARE MEANT FOR RESIDENTIAL USE, WAS ONLY PROSPECTIVE IN NATURE AND IT IS NOT APPLICABLE TO T HE YEAR UNDER CONSIDERATION. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT (SUPRA) AND ALSO RELIED UPON THE LATEST DECISION OF THE ITAT, HYDERABAD B BENCH IN THE CASE OF SMT. MANJULA L/R OF JAIPAL (ITA NOS. 1188/HYD/2015 AND BATCH, DATED 20.11.2015) WHEREIN THE BENCH CONSIDERED AN IDENTICAL ISSUE AND OBSERVED AS UNDER: - 7. WE HAVE CONSIDERED THE ISSUE AND PERUS ED THE VARIOUS ORDERSPLACED ON RECORD. THE DISPUTE IS WHETHER A RESIDENTIAL HOUSE STATED IN S.54/S.54F FOR ALLOWING DEDUCTION MEANS A SINGLE RESIDENTIAL HOUSE OR ONE CONSISTING OF MULTIPLE UNITS. AS FOR THE FACTS INVOLVED HEREIN, THE ASSESSEE HAS RECEIVED FIVE FLATS IN DIFFERENT FLOORS OF THE SAME BUILDING. THE ASSESSING OFFICER RESTRIC TED THE DEDUCTION TO ONE SUCH UNIT/FLAT, WHEREAS THE ASSESSEE CLAIMED DEDUCTION FOR ALL THE FLATS RECEIVED IN TERMS OF DEVELOPMENT AGREEMENT. THEREFORE, THE QUESTION TO BE DECIDED IS WHETHER A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UN ITS AS WELL. THIS ISSUE WAS DECIDED BY THE HON'BLE HIGH COURT OF MARAS IN ITS DECISION IN CIT V/S. SMT. V.R.KARPAGAM (SUPRA), WHEREIN THE AMENDMENT BROUGHT TO S.54 AND 54F WAS ALSO CONSIDERED AND HELD AS UNDER - 8. WE HAVE HEARD THE LEARNED STANDING COUNS EL APPEARING FOR THE REVENUE AT LENGTH AND PERUSED THE MATERIALS PLACED BEFORE THIS COURT AND THE DECISION RELIED ON BY THE TRIBUNAL IN THE CASE OF CIT V. SMT. K.G.RUKMINIAMMA REPORTED IN 331 ITR 211. WE FIND THAT THE RELEVANT PROVISION IS THIS CASE IS SEC TION 54F OF THE INCOME TAX ACT, WHICH READS AS FOLLOWS: 3 54F. CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. (1) SUBJECT TO THE PROVISIONS OF SUB - SECTION (4), WHERE, IN THE CASE OF AN ASS ESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG - TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PER IOD OF ONE YEAR BEFORE TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SH ALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, -- (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45: (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45: PROVIDED THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY WHERE - (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL A SSET ; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET ; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS A FTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY 9. IT IS RELEVANT TO NOTE HEREIN THAT AN AMENDMENT WAS MADE TO THE ABOVE - SAID PROVISION WITH REGARD TO THE WORD 'A' BY THE FINANCE (NO.2) ACT, 2014, WHICH WILL COME INTO EFFECT FROM 01.04.2015. THE SAID AMENDMENT READS AS FOLLOWS: '32A. WORDS CONSTRUCTED, ONE RES IDENTIAL HOUSE IN INDIA SHALL BE SUBSTITUTED FOR CONSTRUCTED, A RESIDENTIAL HOUSE BY THE FINANCE (NO.2) ACT, 2014, WITH EFFECT FROM 01.04.2015.' 10. THE ABOVE - SAID AMENDMENT TO SECTION 54F OF THE INCOME TAX ACT, WHICH WILL COME INTO EFFECT ONLY FROM 01 .04.2015, MAKES IT VERY CLEAR THAT THE BENEFIT OF SECTION 54F OF THE INCOME TAX ACT WILL BE APPLICABLE TO CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA AND THAT CLARIFIES THE SITUATION IN THE PRESENT CASE, I.E, POST AMENDMENT, VIZ., FROM 01.04.2015, THE BENE FIT OF SECTION 54F WILL BE APPLICABLE TO ONE RESIDENTIAL HOUSE IN INDIA. PRIOR TO THE SAID AMENDMENT, IT IS CLEAR THAT A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS AS IN THE PRESENT CASE WHERE THE ASSESSEE HAS GOT FIVE RESIDENTIAL FLA TS. WE MAY ALSO MENTION HERE THAT ALL THE AUTHORITIES BELOW HAVE CLEARLY UNDERSTOOD THAT THE AGREEMENT SIGNED BY THE ASSESSEE WITH M/S. MOUNT HOUSING INFRASTRUCTURE LTD., IS THAT THE ASSESSEE WILL RECEIVE 43.75% OF THE BUILT - UP AREA AFTER DEVELOPMENT, WHIC H IS CONSTRUED AS ONE BLOCK, WHICH MAY BE ONE OR MORE FLATS. IN THAT VIEW OF 4 THE MATTER WHAT WAS BEFORE THE ASSESSING OFFICER IS ONLY EQUIVALENT OF 56.25% OF LAND TRANSFERRED, EQUIVALENT TO 43.75% OF BUILT UP AREA RECEIVED BY THE ASSESSEE. THIS BUILT UP AR EA GOT TRANSLATED INTO FIVE FLATS. HENCE, WE ARE OF THE OPINION THAT THE TRANSACTION IN THIS CASE WAS NOT WITH REGARD TO THE NUMBER OF FLATS BUT WITH REGARD TO THE PERCENTAGE OF THE BUILT UP AREA, VIS - A - VIS, THE UNDIVIDED SHARE OF LAND. 11. IN SIMILAR CIR CUMSTANCES, THIS COURT, BY ORDER DATED 04.01.2012 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 FOUR DIFFERENT FLATS AND 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 (2012) 75 DTR 56 (DR.(SMT.) P.K.VASANTHI RANGARAJAN, T HIS 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. 13. HENCE, THE ABOVE - SAID DECISIONS OF THIS COURT MAKE IT CLEAR THAT THE PROPERTY SHOULD BE ASSESSED AS ONE UNIT, EVEN THOUGH DIFFERENT FLATS ARE AVAILABLE 8. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. VITTAL KRISHNA CONJEEVARAM (SUPRA), FOLLOWING THE DECISION IN THE CASE OF CIT V/S. SYED ALI ADIL (SUPRA) AND THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V/S.GITA DUGGAL (SUPRA) DISMISSED THE APPEAL OF THE REVENUE, CONFIRMING THE ORDER OF THE ITAT. THE ABOVE J UDGMENTS LAY DOWN A PRINCIPLE THAT MERELY BECAUSE A RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT RESIDENTIAL UNITS, DEDUCTION UNDER S.54/S.54F COULD NOT DISALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT V/S. SYED ALI ADIL (SUPRA) AS APPROVED IN THE CASE OF CIT V/S. VITTAL KRISHNA CONJEEVARAM (SUPRA) AND THE PRINCIPLES LAID DOWN BY THE HON'BLE HIGH COURT OF DELHI AND MADRAS DISCUSSED ABOVE, WE HAVE NO OPTION THAN TO CONFIRM THE ORDER OF THE CIT(A ), WHICH IS IN CONSONANCE WITH THE PRINCIPLES LAID DOWN ON THE ISSUE IN DISPUTE. 9. WE ARE ALSO AWARE THAT THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PAWAN ARYA V/S.CIT (SUPRA) HAS NOT APPROVED THE ABOVE PROPOSITION, BUT THE BINDING DECISIONS OF THE JURISDICTIONAL HIGH COURT IN THE CASES DISCUSSED ABOVE ARE IN FAVOUR OF THE ASSESSEE, AND THEREFORE, THE CONTENTIONS RAISED BY THE REVENUE IN THIS APPEAL CANNOT BE ACCEPTED. 7. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND VEHEMENTLY CONTENDED THAT ONE HAS TO UNDERSTAND THE INTENTION OF THE PARLIAMENT IN ENACTING A BENEFICIAL LEGISLATION SUCH AS SECTION 54 OF THE ACT. IT WAS MAINLY INTENDED TO ENSURE THAT THE CITIZE NS OF INDIA SHOULD OWN ONE RESIDENTIAL HOUSE FOR THEIR OWN USE AND SUCH A PURPOSE WOULD BE ACHIEVED ONLY WHEN NEW ASSET IS MEANT FOR RESIDENTIAL USE OF THE ASSESSEE I.E., IF IT IS SELF - CONTAINED IN ALL RESPECTS BY A COMMON PASSAGE 5 OR A COMMON ENTRANCE ETC. , WHEREAS IN THE INSTANT CASE, THERE ARE MULTIPLE RESIDENTIAL UNITS AND IF THE PHRASE RESIDENTIAL USE IS PROPERLY APPRECIATED, THE PRESENT ASSESSEE IS NOT ENTITLED TO EXEMPTION IN RESPECT OF ALL THE 8 FLATS. THE WRITTEN SUBMISSIONS OF THE LD DR ARE EXTR ACTED AS UNDER: - THE SOLE ISSUE IN THE PRESENT CASE IS WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54 OF THE IT ACT FOR THE VALUE OF ONE RESIDENTIAL UNIT AS HELD BY THE A.O. OR FOR THE VALUE OF THE 8 FLATS AS OBSERVED BY THE LD. CIT(A) IN HIS APPELL ATE ORDER. THE CIT (A) RELYING ON D. ANANDA BASAPPAS CASE (309 ITR 329) AND FEW OTHER DECISIONS HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN RESPECT OF ALL 8 UNITS AS CLAIMED BY THE ASSESSEE. THE DECISION OF CIT (A) CANNOT BE ACCEPTED FOR THE FOL LOWING REASONS: (I) A PLAIN READING OF SECTION 54 MAKES IT CLEAR THAT DEDUCTION IS ALLOWABLE IF THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET BEING BUILDINGS OR LANDS APPURTENANT THERETO AND BEING A RESIDENTIAL HOUSE AND THE ASSESSEE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER PURCHASED OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER CONSTRUCTED A RESIDENTIAL HOUSE, THE CAPITAL GAINS SHALL BE DEALT WITH IN ACCORDANCE WITH. THUS, THE DED UCTION IS ADMISSIBLE FROM CAPITAL GAINS IN RESPECT OF PURCHASE / CONSTRUCTION OF A RESIDENTIAL HOUSE AND NOT MULTIPLE INDEPENDENT RESIDENTIAL UNITS. IN THE INSTANT CASE, EACH OF THE EIGHT FLATS RECEIVED BY THE ASSESSEE TOWARDS HER SHARE IS INDEPENDENT A ND SELF - CONTAINED IN ALL RESPECTS. A SIMPLE TEST IS SUCH CASE IS WHETHER ALL EIGHT FLATS CAN BE COMBINED AND SOLD AS SINGLE RESIDENTIAL UNIT. THE ANSWER IS EMPHATIC NO. THE INDIVISIBILITY AND SIMULTANEOUS TRANSFERABILITY IS THE CRITERIA TO DECIDE WHET HER IT IS A RESIDENTIAL HOUSE FOR THE PURPOSE OF DEDUCTION U/S 54. FURTHER, AS PER THE PROVISO TO SECTION 54, IF THE AMOUNT DEPOSITED UNDER SUB - SECTION 2 IS NOT UTILIZED WHOLLY OR PARTLY FOR THE PURPOSE OF CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIODS S PECIFIED IN SUB - SECTION (1), THEN THE AMOUNT NOT SO UTILIZED SHALL BE CHARGED U/S 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET EXPIRES. THE USE OF THE EXPRESSION THE NEW ASSET C LEARLY INDICATES THAT THE NEW ASSET SHOULD BE ONE INDIVISIBLE UNIT AND HAD THE LEGISLATURE INTENDED TO PROVIDED DEDUCTION U/S 54 TO MORE THAN ONE UNIT HOLDING THEM TO BE WITHIN THE UMBRELLA OF A RESIDENTIAL HOUSE IT WOULD HAVE USED THE EXPRESSION NEW AS SETS BEFORE THE WORD PURCHASE OR CONSTRUCTION. (II) THE CASE LAW CITED BY THE CIT (A) ARE NOT APPLICABLE TO THE ASSESSEES CASE FOR THE REASON THAT IN THOSE CASES TWO FLATS ARE ADJACENT TO EACH OTHER AND CAN BE COMBINED OR MERGED INTO ONE UNIT WITH A COMMON ME ETING POINT ETC. FOR IN STANCE, IN THE CASE OF SYED ALI ADIL (352 ITR 418), THE FLATS ARE S IT U A TED SIDE BY SIDE AND THE BUILDER HAS AFFECTED MODIFICATION OF THE FLATS TO MAKE IT AS ONE UNIT, DESPITE THE FACT THAT THE FLATS WERE PURCHASED BY SEPARATE SALE D EEDS AND IN THAT CONTEXT HONBLE ANDHRA PRADESH HIGH COURT HELD THAT THE FACT THAT THE RESIDENTIAL HOUSE CONSISTED OF SEVERAL INDEPENDENT UNITS COULD NOT BE AN IMPEDIMENT FOR GRANTING RELIEF UNDER SECTION 54. IN THE CASES REFERRED BY THE LD. CIT(A), BY AN D LARGE ALL THE UNITS PURCHASE D BY THE 6 ASSESSEE ON THE DISPOSAL OF ORIGINAL ASSET HAD SOME COMMON THREAD EITHER THERE WAS A COMMON KITCHEN OR THEY WERE JOINTED TOGETHER OR FAMILIES OF THE ASSESSEE WERE LIVING IN ALL OF THEM OR HAD A COMMON RATIO CARD, IE SOME COMMON POINT, WHICH WAS KEEPING ALL THE UNITS TOGETHER AS ONE RESIDENTIAL HOUSE. HOWEVER, IN THE PRESENT CASE, NO MATERIAL IS FURNISHED BY THE ASSESSEE TO SHOW THAT THERE WAS COMMON POINT IN THE 8 UNITS LOCATED IN DIFFERENT FLOORS TO CONSTITUTE A R ESIDENTIAL HOUSE. (III) IN THIS CONTEXT REFERENCE CAN BE MADE TO THE UNREPORTED DECISION OF AP HIGH COURT IN THE CASE OF SRI K. SIVA REDDY (LR) VS. ITO IN ITA NO. 76 OF 2000 DATED 11.08.2006 WHEREIN IT IS HELD THE REQUIREMENT UNDER SECTION 54F OF THE ACT IS TH AT THE ASSESSEE SHOULD HAVE CONSTRU CT ED A RESIDENTIAL HOUSE 24 FLATS WOULD NOT HAVE BEEN SHOWN AUTHORITIES ON THE BASIS OF WHICH THIS COURT CONCLUDE THAT THE ASSESSEE WAS ENTITLED TO RELIEFS UNDER SECTION 54F OF THE ACT AS HE HAD CONSTRU CT ED 24 FLATS FROM THE CONSIDERATION RECEIVED BY SELLING THE LONG TERM CAPITAL ASSET. THEREFORE, THE QUESTIONS ARE ANSWERED AGAINST THE ASSESSEE. (IV) RELIANCE IS ALSO PLACED IN THE DECISION OF ITAT, CHENNAI IN THE CASE OF SHRI A. KODANDA RAMI REDDY VS. ITO IN ITA NO. 1865/MDS/2012 WHEREIN IT WAS HELD THAT ASSESSEE CANNOT CLAIM DEDUCTION U/S 54 ON TWO D ISPARATELY PLACED PROPERTIES. (IV) THUS, IN CONTEXT OF DEDUCTION U/S 54F IT CANNOT BE SAID THAT ALL THE 8 UNITS RECEIVED BY THE ASSESSEE FROM TH E DEVELOPER CONSTITUTE SINGLE TRANSFERABLE UNIT. THIS LEGAL POSITION WAS MADE CLEAR BY THE FINANCE (NO.2) ACT, 2014, AND IN THE MEMORANDUM TO THE FINANCE BILL (NO.2) 2014, WHERE IT IS CLEARLY MENTIONED THAT THE BENEFIT WAS INTENDED FOR INVESTMENT IN ONE R ESIDENTIAL HOUSE WITHIN INDIA. (V) IN THE LIGHT OF THE FOREGOING, AS OBSERVED BY THE A.O., DEDUCTION U/S 54 IS NOT ALLOWABLE ON THE AGGREGATE VALUE OF EIGHT UNITS AND IT WAS RIGHTLY RESTRICTED TO THE VALUE OF ONE UNIT IN THE ASSESSMENT ORDER. HENCE, THE ORDER OF CIT (A) MAY BE SET ASIDE AND THE ORDER OF THE A.O. BE RESTORED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE LIMITED ISSUE FOR CONSIDERATION IS AS TO WHETHER DIFFERENT FLATS ALLOTTED TO THE ASSESSEE ARE MEANT FOR RESIDE NTIAL USE OF THE ASSESSEE AND IF SUCH TEST IS FULFILLED, ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION U/S 54 OF THE ACT, PARTICULARLY FOR THE YEAR UNDER CONSIDERATION. LD. CIT(A) WAS OF THE OPINION THAT THE 8 FLATS ALLOTTED TO THE ASSESSEE ARE MEANT F OR UTILISATION OF THE JOINT FAMILY COMPRISING OF 3 SONS AND 4 DAUGHTERS. NOTHING WAS PLACED ON RECORD BY THE LD DR TO CONTRADICT THE FINDINGS OF THE LD. CIT(A). SINCE THE FINDING OF THE LD. CIT(A) WAS NOT CONTRADICTED BY PLACING ANY MATERIAL ON RECORD, W E ARE UNABLE TO APPRECIATE THE CONTENTION OF THE REVENUE PARTICULARLY IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT (SUPRA) AS WELL AS THE RECENT DECISION OF THE ITAT, HYDERABAD BENCH (SUPRA). HAVING 7 REGARD TO THE FACTUAL MATRIX OF THE CASE , WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 09 TH JANUARY, 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 09 TH JANUARY, 2018. OKK, SR.PS COPY TO 1. SMT. FAZLUNNISA BEGUM, 3 - 5 - 883, HIMAYATNAGAR, HYDERABAD. 2. ACIT, CIRCLE - 4(1), ROOM NO.742, D - BLOCK, 7 TH FLOOR, IT TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 3. CIT (A) - 8, HYDERABAD. 4. PR. CIT - 1, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE