Case Law Details
Maurice Patrick De Rebello Vs ITO (ITAT Bangalore)
The facts of the assessee’s case are similar to the case of Smt.K.G.Rukminiamma reported in 331 ITR 221 (Kar.) In the case of K.G.Rukminiamma (supra) the assessee on a site measuring 30′ x 110′ had a residential premises. Under a joint development agreement the assessee gave that property to a builder for construction of residential units. Under the agreement, eight flats are to be put up in that property. Four flats representing 48% is the share of the assessee and the remaining 52% representing another four flats is the share of the builder. So the consideration for selling 52% of the site was four flats representing 48% of built up area and the four flats are situated in a residential building. The Hon’ble Court held that the four flats constitute ‘a residential house’ for the purpose of deduction u/s 54 of the I.T.Act. In that view of the matter, the Hon’ble Court concluded that the Tribunal as well as the appellate authority were justified in holding that there is no liability to pay Capital Gains tax as the case squarely falls under sec. 54 of the Income Tax Act, 1961.
The Hon’ble Madras High Court in the case of CIT Vs. Smt. V.R Karpagam reported in 373 ITR 127 (Mad.) on identical facts have decided the issue of deduction u/s 54F of the I.T.Act for five flats in favour of the assessee. The assessee in the case of V.R.Karpagam (supra) entered into an agreement with M for development of a piece of land owned by it. As per agreement, assessee was to receive 43.75% of built-up area after development, which was translated into five flats. The Assessee claimed exemption u/s 54F on the value of five flats. The AO granted benefit of capital gains in respect of one flat and the CIT(A) affirmed findings of AO holding that claim of assessee u/s 54F of the I.T.Act for all five flats could not be admitted. However, the CIT(A) took the view that the assessee would be entitled to benefit of section 54F of the I.T.Act in respect of one single flat with largest area. In appeal, tribunal held that assessee was eligible for exemption u/s 54F on all five flats received by her in lieu of land she had parted with. It was held by the Tribunal that the word ‘a’ appearing in section 54F of the I.T.Act should not be construed in singular, but should be understood in plural. The Madras High Court upheld the order of the Tribunal. It was also held that amendment was made to s 54F of the I.T.Act with regard to word ‘a’ by Finance (No.2) Act, 2014 w.e.f only from 01.04.2015 withdrawing deduction for more than one flat (residential house). Post amendment, viz., from 01.04.2015, benefit of s 54F will be applicable to one residential house in India. However, prior to said amendment, a residential house would include multiple flats/residential units. Similar decisions were rendered by the Hon’ble Madras High Court in the case of CIT vs Gumanmal Jain reported in 394 ITR 666 (Mad.)
In the present case, all the flats for which the assessee is claiming exemption u/s 54 of the I.T.Act are situated in the same premises. Therefore, the judgment rendered in the case of Smt. K. G. Rukminiamma (supra) will squarely apply. In the light of the above judicial pronouncements on identical facts, we are of the view that the assessee is entitled to deduction u/s 54 of the I.T.Act on the entire built-up area received from the builder as per the JDA dated 28.04.2008. Since we have decided the issue of claim of deduction u/s 54 of the I.T.Act, in favour of the assessee, the other issues raised by the assessee in the grounds of appeal are not adjudicated. It is ordered accordingly.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
Please become a Premium member. If you are already a Premium member, login here to access the full content.
