ACIT Vs Shri Narayanappa Ramanna (ITAT Bangalore)
Introduction: In a landmark ruling, the Income Tax Appellate Tribunal (ITAT) Bangalore allowed the deduction claimed under Section 54F of the Income Tax Act for all apartment units received by the assessee pursuant to a Joint Development Agreement (JDA). This decision dismissed the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had granted the deduction for multiple residential units. The relevant assessment year for this case was 2008-09.
Detailed Analysis
Background of the Case
The assessee, along with four brothers, entered into a JDA with M/s. Nagarjuna Construction Co. Ltd. (NCC). Through this agreement, the assessee received 15 constructed apartment units. During the assessment under Section 143(3) read with Section 147 of the Income Tax Act, the Assessing Officer (AO) allowed the deduction under Section 54F for only one apartment unit, interpreting the term “a residential house” to mean a single unit.
Aggrieved by this decision, the assessee appealed to the CIT(A), who allowed the deduction for all 15 apartment units based on various judicial precedents. The Revenue then appealed to the ITAT Bangalore.
Arguments and Judicial Precedents
The Revenue’s counsel argued that the term “a residential house” should be interpreted as a single unit, citing the amendment to Section 54F effective from April 1, 2015, which restricts the deduction to one residential unit. The assessee’s counsel, however, presented several judicial decisions supporting the claim for multiple units, emphasizing that the amendment is prospective and not applicable to the assessment year in question.
