Case Law Details
Late Susan Cherian Vs ITO (ITAT Bangalore)
The issue under consideration is whether the capital gain deduction benefit is restricted to only one residential property under section 54F of the Income Tax Act?
In the present case, as per JDA registered on 23/05/2005, assessee received 35% of total built up area, i.e, 35% of apartments constructed along with 35% of car parking and 35% of terrace and garden rights earmarked for private use as against common use in consideration for transferring 65% of undivided interest. Assessee claimed exemption under section 54F on the value of the 35% of constructed area which was denied by Ld. AO and confirmed by Ld. CIT(A). Before us assessee urges that, she is eligible for exemption under section 54F on the 35% of constructed area received in view of the land she had parted with.
ITAT states that, in decisions of Hon’ble Madras High Court, Hon’ble Karnataka High Court has categorically held that amendment to section 54F with regard to ‘a” by Finance (No.2) Act, 2014 w.e.f. 01/04/2015 withdrawing deduction for more than one flat (residential house). Courts have consistently held that post amendment benefit of section 54F will be applicable only to one residential house in India whereas prior to the amendment residential house would include multiple residential house/units. In view of consistent view taken by jurisdictional High Court, as well as other High Courts, we are of the opinion that assessee is entitled to deduction under section 54F of the act in respect of 35% of constructed property received by her. Accordingly, this ground raised by assessee stands allowed.
FULL TEXT OF THE ITAT JUDGEMENT
Present appeal has been filed by assessee against order dated 20/09/2018 passed by Ld. CIT(A)-9, Bangalore for assessment year 2006-07 on following grounds of appeal:
1. The order of the authorities below in so far as they are against the appellant are opposed to law, equity,weight, of evidence, probabilities, facts and circumstances of the case.
2. The order of re-assessment is bad in law and void-ab-initio for want of requisite jurisdiction especially, the mandatory, requirements to assume jurisdiction u/s 148 of the Act did not exist and have not been complied with and consequently, the re-assessment made requires to be cancelled.
Brief facts of the case are as under:
2. Assessee is an individual represented by legal representative. She did not file her return of income for year under consideration. Ld.AO observed that, assessee entered into joint development agreement on 23/05/2005 with M/s. Venus Homes, for development of land, by transferring 1 acre 0.6 guntas of vacant land situated at SY No. 20/1, Munnekolla Village, Varthur Hobli, Bangalore. In return, assessee received 10815 sft. of super built up area of Villa and 14407 sft. of super built up area from the apartment. Ld.AO was of the opinion that, assessee did not reflect all these details in her return of income and therefore, there was escapement of income chargeable to tax under the head capital gains. Subsequently, notice under section 147 was issued to assessee. Assessee, after number of opportunities, filed return of income for year and under consideration on 24/03/2014, followed by which, notice under section 143 (2) of the Act was issued. As there was no response, Ld.AO passed order under section 144 of the Act, by computing long term capital gains in the hands of assessee at Rs.2,38,93,444/-. Ld.AO also denied benefit under section 54F of the Act claimed by assessee by holding that assessee had more than one residential house as on the date of transfer.
3. Aggrieved by order of Ld.AO, assessee preferred appeal before Ld. CIT(A), wherein, assessee relied upon decision of Hon’ble Karnataka High Court in case of Anand Basappa reported in 309 ITR 329 and K. G. Rukminiamma reported in 331 ITR 221. It was submitted that, on identical facts of case of assessee claim under section 54 was granted which is pari materia with section 54F of the Act.
4. CIT(A) was of the opinion that, assessee cannot seek any benefit due to decision of Special Bench of this Tribunal in case of Suseela M Zaveri reported in 110 ITD 327. Ld. CIT (A) was of the view that, residential houses received by assessee under JDA cannot be termed to constitute ‘a residential house’ for purpose of 54F of the Act.
Aggrieved by observations of Ld. CIT(A) assessee is in appeal before us now.
At the outset, Ld.AR submitted that Ground No.1 is general in nature and therefore do not require any adjudication.
He submitted that, Ground No.2-3 are not pressed at the instructions of assessee.
Accordingly, these grounds are dismissed as not pressed. Ld.AR argued on Ground No.6 being the claim denied under section 54F.
- decision of Hon’ble Karnataka High Court in case of Anand Basappa reported in 309 ITR 329;
- decision of Hon’ble Madras High Court in case of CIT vs Smt. R. Karpagam in Tax case (appeals) No. 301 of 2014 dated 18/08/2014, decision of this Tribunal in case of Smt. Nethravathi in ITA No. 2630/Bang/2017 dated 25/04/2018;
Ld. AR submitted that, prior to amendment, section 54F was liberally construct ‘a residential house’ to be interpreted as applying to each and every one of residential houses and villas received by assessee. He placed reliance on decisions relied upon by him.
On the contrary, Ld. Sr. DR placed reliance upon orders passed by authorities below.
We have perused submissions advanced by both sides in the basis of records placed before us.
5. As per JDA registered on 23/05/2005, assessee received 35% of total built up area, i.e, 35% of apartments constructed along with 35% of car parking and 35% of terrace and garden rights earmarked for private use as against common use in consideration for transferring 65% of undivided interest. Assessee claimed exemption under section 54F on the value of the 35% of constructed area which was denied by Ld. AO and confirmed by Ld. CIT(A). Before us assessee urges that, she is eligible for exemption under section 54F on the 35% of constructed area received in view of the land she had parted with.
6. It is observed that in decisions relied upon by Ld.AR reproduced hereinabove, Hon’ble Madras High Court, Hon’ble Karnataka High Court has categorically held that amendment to section 54F with regard to ‘a” by Finance (No.2) Act, 2014 w.e.f. 01/04/2015 withdrawing deduction for more than one flat (residential house). Courts have consistently held that post amendment benefit of section 54F will be applicable only to one residential house in India whereas prior to the amendment residential house would include multiple residential house/units.
7. In view of consistent view taken by jurisdictional High Court, as well as other High Courts, we are of the opinion that assessee is entitled to deduction under section 54F of the act in respect of 35% of constructed property received by her.
Accordingly, this ground raised by assessee stands allowed.
Ground Nos. 4-5, now becomes academic in nature and therefore do not require adjudication.
Ground No.7 is consequential and Ground No.8 is general in nature.
In the result, appeal filed by assessee stands partly allowed.
