Income Tax officer Ward-5(2)(3), Bangalore V. Shri Bhatkal Ramarao Prakash , Bangalore

MA 8/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7037 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 54; 54F; 254(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN, ACCOUNTANT MEMBER MP NO.08/BANG/2020 [IN ITA NO. 2692/BANG/2018] ASSESSMENT YEAR : 2015-16 THE INCOME TAX OFFICER, WARD-5(2)(3), BANGALORE. VS. SHRI BHATKAL RAMARAO PRAKASH, NO.8, DVG ROAD, BASAVANGUDI, BENGALURU 560004. PAN: AHNPP 4864F APPELLANT RESPONDENT APPELLANT BY : SHRI S.R. SUNDAR RAJAN, ADDL. CIT(DR)(ITAT), BENGALURU. RESPONDENT BY : NONE. DATE OF HEARING : 04.09.2020 DATE OF PRONOUNCEMENT : 09.09.2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS A MISCELLANEOUS PETITION FILED BY THE RE VENUE U/S. 254(2) OF THE INCOME-TAX ACT, 1961 [THE ACT] PRAYING FOR RECT IFICATION OF CERTAIN APPARENT ERRORS IN THE ORDER OF TRIBUNAL DATED 04.0 1.2014 PASSED IN THE AFORESAID APPEAL. MP NO.08/BANG/2020 PAGE 2 OF 6 2. IN THE AFORESAID APPEAL, ONE OF THE GROUNDS RAI SED BY THE ASSESSEE WAS WITH REGARD TO, WHETHER THE ASSESSEE WAS ENTITL ED TO CLAIM DEDUCTION U/S. 54F OF THE INCOME-TAX ACT, 1961 [THE ACT] IN R ESPECT OF CAPITAL GAIN ON SALE OF A PROPERTY AT HSR LAYOUT, BANGALORE, WHICH CAPITAL GAIN WAS INVESTED IN PURCHASE OF A PROPERTY AT N.R. COLONY. 3. THE CASE OF REVENUE WAS THAT FOR CLAIMING DEDUCT ION U/S. 54F OF THE ACT, THE ASSESSEE SHOULD NOT OWN MORE THAN ONE HOUS E, OTHER THAN THE NEW ASSET. THE N.R. COLONY PROPERTY WAS A SINGLE P IECE OF PROPERTY, BUT GROUND FLOOR WAS OWNED BY ONE PERSON AND 1 ST FLOOR WAS OWNED BY ANOTHER PERSON. IT WAS THE CASE OF REVENUE THAT SI NCE THE OWNERS WERE DIFFERENT, IT HAS TO BE CONSTRUED THAT THE ASSESSEE PURCHASED TWO PROPERTIES AND SINCE THE ASSESSEE ALREADY OWNED ANOTHER PROPER TY, DEDUCTION U/S. 54F OF THE ACT COULD NOT BE GIVEN. THIS ASPECT HAS BEEN DEALT WITH BY THE TRIBUNAL IN PARA 20 OF THE ITS ORDER WHICH READS AS FOLLOWS:- 20. AS FAR AS THE CASE OF THE AO THAT ASSESSEE HAS PURCHASED TWO PROPERTIES UNDER SALE DEED DATED 28.06.2014 IS CONCERNED, WE HAVE PERUSED THE SCHEDULE OF THE PROPERTY THAT W AS PURCHASED. ACTUALLY THIS WAS A SINGLE PIECE OF PROPERTY VIZ., SITE NO.1 OWNED BY SMT. JANAKI IYENGAR, SMT. JANAKI IYENGAR CONSTRU CTED A RESIDENTIAL HOUSE IN GROUND FLOOR IN THE YEAR 1937 AND THE FIRST FLOOR IN THE YEAR 1962-63 WITH THE GROUND FLOOR OF THE PROPERTY RE- NUMBERED AS NO.37 AND THE FIRST FLOOR AS DOOR NO.37 /1 OF 1ST MAIN ROAD, N.R.COLONY. JANAKI IYENGAR EXECUTED A WI LL ON 28.5.1975 WHEREIN SHE BEQUEATHED TO HER SISTER DR.M .VAIDHEI WITH DOOR NO.37 WHICH IS SCHEDULE-A OF THE SALE DEE D UNDER WHICH THE ASSESSEE PURCHASED THIS PROPERTY AND THE FIRST FLOOR BEARING DOOR NO.37/1, DESCRIBED IN SCHEDULE B IN TH E SALE DEED UNDER WHICH ASSESSEE PURCHASED THE NEW ASSET TO HER NEPHEW P.RAMANUJA CHARI. JANAKI IYENGAR DIED ON 6.6.1975 A ND THE LEGATEES UNDER THE WILL SOLD THEIR RESPECTIVE SHARE S IN ONE PROPERTY TO THE ASSESSEE. THE ENTIRE PROPERTY CONST ITUTES SINGLE HOUSE BUT WAS BIFURCATED WITH TWO DOOR NUMBERS FOR THE GROUND AND FIRST FLOOR WITH COMMON ENTRANCE IN THE GROUND FLOOR ONLY TO EARMARK THE SHARE OF EACH BENEFICIARIES. THE PROPER TY OTHERWISE MP NO.08/BANG/2020 PAGE 3 OF 6 CONSTITUTES A SINGLE PROPERTY, THOUGH THEY HAVE TWO DIFFERENT DOOR NOS. IN SUCH CIRCUMSTANCES, THE ASSESSEE HAS PURCHA SED ONLY ONE PROPERTY AND NOT TWO PROPERTIES. IN THIS REGARD, TH E DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US SUPPO RTS THE PLEA OF THE ASSESSEE VIZ., THE DECISION OF THE DELHI HIGH C OURT IN THE CASE OF CIT VS. GITA DUGGAL (2013 30 TAXMANN.COM 230 (DE LHI). IN THE AFORESAID DECISION, THE FACTS WERE THAT THE ASS ESSEE ENTERED INTO A DEVELOPMENT AGREEMENT PURSUANT TO WHICH THE DEVELOPER DEMOLISHED THE PROPERTY AND CONSTRUCTED A NEW BUILD ING COMPRISING OF THREE FLOORS. IN CONSIDERATION OF GRA NTING THE DEVELOPMENT RIGHTS, THE ASSESSEE RECEIVED RS. 4 CRO RES AND TWO FLOORS OF THE NEW BUILDING. THE AO HELD THAT IN COM PUTING CAPITAL GAINS, THE COST OF CONSTRUCTION OF RS. 3.43 CRORES INCURRED BY THE DEVELOPER ON THE DEVELOPMENT OF THE PROPERTY HAD TO BE ADDED TO THE SUM OF RS. 4 CRORES RECEIVED BY THE ASSESSEE. T HE ASSESSEE CLAIMED THAT AS THE SAID CAPITAL GAINS WAS INVESTED IN THE SAID TWO FLOORS, SHE WAS ELIGIBLE FOR EXEMPTION U/S 54. THE AO REJECTED THE CLAIM ON THE BASIS THAT THE UNITS ON THE SAID FLOOR S WERE INDEPENDENT & SELF-CONTAINED AND NOT A RESIDENTIAL HOUSE AND GRANTED EXEMPTION FOR ONLY ONE UNIT. THE CIT(A) AND TRIBUNAL UPHELD THE ASSESSEES CLAIM BY RELYING ON B.ANANDA BASAPPA 309 ITR 329 (KAR) AND K.G. RUKMINIAMMA 331 ITR 211 (KAR ). ON APPEAL BY THE DEPARTMENT, THE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE. THE HONBLE COURT OBSERVED THAT AS HEL D IN B.ANANDA BASSAPPA (SLP DISMISSED) & K G RUKMINIAMMA , THE REVENUES CONTENTION THAT THE PHRASE A RESIDENTIA L HOUSE WOULD MEAN ONE RESIDENTIAL HOUSE IS NOT CORRECT. THE EX PRESSION A RESIDENTIAL HOUSE SHOULD BE UNDERSTOOD IN A SENSE T HAT BUILDING SHOULD BE OF RESIDENTIAL IN NATURE AND A SHOULD N OT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER. ALSO, SEC TION 54/54F USES THE EXPRESSION A RESIDENTIAL HOUSE AND NOT A RESIDENTIAL UNIT. SECTION 54/54F REQUIRES THE ASSESSEE TO ACQU IRE A RESIDENTIAL HOUSE AND SO LONG AS THE ASSESSEE ACQ UIRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVERAL UNITS WHI CH CAN, IF THE NEED ARISES, BE CONVENIENTLY AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTI ON SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN T HESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCT ED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE FOR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. IF THERE IS NOTHING MP NO.08/BANG/2020 PAGE 4 OF 6 IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS TO US THAT T HE INCOME TAX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDING TO HIS PLANS, REQUIREME NTS AND COMPULSIONS. A PERSON MAY CONSTRUCT A RESIDENTIAL H OUSE IN SUCH A MANNER THAT HE MAY USE THE GROUND FLOOR FOR HIS O WN RESIDENCE AND LET OUT THE FIRST FLOOR HAVING AN INDEPENDENT E NTRY SO THAT HIS INCOME IS AUGMENTED. IT IS QUITE COMMON TO FIND SUC H ARRANGEMENTS, PARTICULARLY POST-RETIREMENT. ONE MAY BUILD A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN THE SAME OR DIFFERENT FLOORS) IN SUCH A MANNER THAT AN INDEPENDENT RESIDE NTIAL UNIT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED O UT 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 WHICH CAN BE MUTUALLY SUPPOR TIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT I N CASE OF A FUTURE NEED HE MAY BE ABLE TO DISPOSE OF A PART THE REOF AS AN INDEPENDENT HOUSE. THERE MAY BE SEVERAL SUCH CONSID ERATIONS FOR A PERSON WHILE CONSTRUCTING A RESIDENTIAL HOUSE. TH E PHYSICAL STRUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETHER I T IS LATERAL OR VERTICAL, CANNOT COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. THE FACT THAT THE RESIDENTIAL HO USE CONSISTS OF SEVERAL INDEPENDENT UNITS CANNOT BE PERMITTED TO AC T AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION U/S 54 /54F. IT IS NEITHER EXPRESSLY NOR BY NECESSARY IMPLICATION PROH IBITED. 4. IN THIS MISCELLANEOUS PETITION, THE REVENUE HAS CONTENDED THAT SINCE THE TRIBUNAL HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA RENDERED IN THE CASE OF B. ANANDA BASSAPPA (SUPRA) AND K G RUKMINIAMMA (SUPRA) AND SINCE BY THE FINANCE ACT, 2014, SECTION 54F WAS AMENDED BY SUBSTITUTING THE WORDS A RESIDENTIAL HOUSE WITH ONE RESIDENTIAL HOUSE AND SINCE THE ASSESSMENT YEAR IN THIS APPEAL IS A FTER THE AFORESAID AMENDMENT, THE CONCLUSIONS DRAWN BY THE T RIBUNAL ARE INCORRECT AND SUFFERS FROM AN APPARENT MISTAKE ON THE FACE OF RECORD AND SHOULD BE RECTIFIED SUITABLY. MP NO.08/BANG/2020 PAGE 5 OF 6 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. DR REITERATED THE STAND OF REVENUE AS CONTAINED IN THE PETITION. 6. WE ARE OF THE VIEW THAT THERE IS NO MISTAKE, MUC H LESS AN APPARENT MISTAKE, IN THE ORDER OF THE TRIBUNAL. THE TRIBUNA L IN PARA 20 OF ITS ORDER HAS CLEARLY GIVEN A FINDING THAT THE PROPERTY AT N. R. COLONY BELONGED TO ONE OWNER, SMT. JANAKI IYENGAR AND AS PER THE WILL OF S MT. JANAKI IYENGAR, THE GROUND FLOOR OF THE PREMISES WHICH WAS NUMBERED AS DOOR NO.37 WAS GIVEN TO SMT. JANAKIS SISTER, DR. M. VAIDEHI AND T HE 1 ST FLOOR NUMBERED AS DOOR NO.37/1 WAS GIVEN TO SMT. JANAKIS NEPHEW, SHR I P. RAMANUJA CHARI. BOTH THESE OWNERS OF GROUND FLOOR AND 1 ST FLOOR SOLD THE PROPERTY TO THE ASSESSEE. THE TRIBUNAL IN PARA 20 OF THE ORDER CLEA RLY OBSERVED THAT THE ENTIRE PROPERTY CONSTITUTES ONE RESIDENTIAL HOUSE, BUT WAS BIFURCATED WITH TWO DOOR NOS. FOR GROUND FLOOR AND 1 ST FLOOR WITH COMMON ENTRANCE IN GROUND FLOOR ONLY TO EARMARK THE SHARE OF EACH BENE FICIARY AND THAT OTHERWISE THE PROPERTY CONSTITUTES A SINGLE PROPERT Y, THOUGH IT HAS TWO DIFFERENT DOOR NOS. THE TRIBUNAL HAS REACHED THE C ONCLUSION THAT ASSESSEE HAS PURCHASED ONLY ONE PROPERTY AND NOT TW O PROPERTIES. THOUGH THE TRIBUNAL HAS MADE A REFERENCE TO THE DEC ISIONS RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF GITA DU GGAL (2013) 30 TAXMANN.COM 230(DELHI) IN WHICH FLATS LOCATED IN TW O DIFFERENT FLOORS WERE REGARDED AS ONE PROPERTY. THE TRIBUNAL ALSO REFERR ED TO DECISIONS OF HIGH COURT OF KARNATAKA REFERRED TO BY THE HONBLE DELHI HIGH COURT AND THOSE DECISIONS WERE ONLY PURELY SUPPORTIVE, BUT THE REAL CONCLUSION OF THE TRIBUNAL ON FACTS IS THAT THE ASSESSEE PURCHASED ON LY ONE HOUSE PROPERTY. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO MISTAKE, MUCH LESS AN APPARENT MISTAKE, IN THE ORDER OF TRIBUNAL. 7. THE LAW IS WELL SETTLED THAT THE POWERS U/S. 254 (2) OF THE ACT ARE NOT TO BE EXERCISED FOR THE PURPOSE OF REVIEWING THE DE CISION OF THE TRIBUNAL AND THAT POWER CAN BE EXERCISED ONLY FOR THE PURPOS E OF RECTIFYING MISTAKES MP NO.08/BANG/2020 PAGE 6 OF 6 THAT ARE APPARENT ON THE FACE OF RECORD OF THE TRIB UNALS ORDER. WE THEREFORE FIND NO MERIT IN THIS MISCELLANEOUS PETIT ION FILED BY THE REVENUE AND DISMISS THE SAME. PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF SEPTEMBER, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRE SIDENT BANGALORE, DATED, THE 09 TH SEPTEMBER, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.