Case Law Details
Sanjay S. Dutt Vs ACIT (ITAT Mumbai)
The solitary issue urged in the present appeal by the ld. Representative for the assessee is with regard to assessee’s claim of exemption under section 54F of the Act. Undisputedly, the assessee was joint owner of property having 27% share. The 73% share in property was that of assessee’s father.We find that the issue of exemption under section 54F of the Act had cropped up in the appeal of assessee’s father before the Tribunal in ITA No.2972/Mum/2012. The Co-ordinate Bench decided the issue in favour of the assessee by observing as under:
“23. With regard to exemption u/s 54F, we notice that assessee has modified the development agreement for construction of the flats from 40 flats to 36 flats and 2 penthouses and distributed between them as per terms of original agreement. Therefore, the modified agreement and its schedule, which is placed on record at page no. 43 of the paper book clearly indicates that the intention of the developer and the assessee to make 2 penthouses in 11th and 12th floor as penthouses and assessee was regularly pleading that these 2 penthouses were constructed by combining 4 flats at floors 11th and 12th. However, we notice that AO has rejected the contention of the assessee with the observation that there is no record that this combing of flats were made during the impugned assessment year. We cannot accept the contention of the AO for the reason that the purpose of modification of the development agreement was to combine 4 flats and to make 2 penthouses. Therefore, we are in agreement with the submission of Ld. AR that there exist 2 penthouses at the site developed by the developer as per the terms of agreement in modified development agreement.
24. Coming to the exemptions, we notice that the development agreement was entered by the assesse along with his son with share of 73:2 7 between them and it is clear that there exist 2 penthouses and two individual assessees. Therefore, each assessee will get separate exemption u/s 54F of the Act. This benefit is legally available to both the assessees. There are catena of cases in which courts have held that when there exists two portion of flats with one kitchen then the whole combined portion of the area will be treated as one single unit for the purpose of granting exemption u/s 54 as well as 54F. Accordingly, we direct the AO to grant exemption u/s 54F of the Act to each assessee and as per their choice. On record, assessee prefers to get penthouse occupied by his daughter as exemption u/s 54F and by legally AO should allow this penthouse as exemption u/s 54F of the Act. Accordingly, this ground raised by the assessee is allowed.”
Taking into consideration undisputed facts of the case and the decision of Coordinate Bench, we hold that the assessee is eligible for exemption under section 54F of the Act, hence, ground No.7 of appeal by assessee is allowed for parity of reasons.
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