INCOME TAX – CASE LAW – SMT. V. R. KARPAGAM VERSUS THE INCOMETAX OFFICER, WARD III(1)COIMBATORE. 2013 – ITAT CHENNAI: Exemption u/s 54F - Sale consideration - purchase of five flats - claim of deduction as one house property - Held that - None of the authorities below has doubted the eligibility of the assessee for claiming an exemption.......... Income Tax - Case Law: ABRAHAM P GEORGE AND S.S.GODARA , JJ. For the Appellant R. Vijayaraghavan. For the Respondent Anrirudh Rai. ORDER - PER Abraham P. George In this appeal filed by the assessee, it has raised two grievances through its six grounds. First grievance is regarding sale price adopted by the Assessing Officer at Rs. 1,20,44,512/- against Rs. 1,09,75,620/- considered by the assessee while working out capital gains. Second issue is regarding restriction of its claim for exemption under section 54F to a single flat. 2. Facts apropos are that assessee had entered into an agreement with one M/s. Mount Housing and Infrastructure Ltd., for development of a piece of land measuring 13,059 sq. ft. owned by her at door No.29F, Race Course, Coimbatore. As per the agreement, assessee was to receive 43.75 of built up area after the development. This 43.75 of the built up area translated to five flats. Assessee, while filing her return, calculated the capital gains based on a sale consideration of Rs. 1,09,75,620/-. As per assessee, this was the value of the flats, which were to be received by her and was equivalent to 56.25 of the undivided share of land given by her to M/s. Mount Housing and Infrastructure Ltd., Assessee also claimed exemption under section 54F of the Act on the value of the five flats. As per assessee, there were no capital gains whatsoever left for assessment. However, the Assessing Officer made enquiries with M/s. Mount Housing and Infrastructure Ltd., and found from them that the total cost of construction of the project came to Rs. 2,75,30,313/- . Therefore, according to him, sale value that was to be considered was 56.25 of the sum of Rs. 2,75,30,313/-. Accordingly, he substituted the figure of Rs. 1,09,75,620/- considered by the assessee with Rs. 1,54,85,801/-. Further, Assessing Officer restricted the claim of exemption under section 54F of the Act to one flat and the value of such one flat was fixed considering its area. 3. Assessee moved in appeal before the CIT(A). In so far as the question of sale consideration was concerned, Ld. CIT(A) held that Assessing Officer was justified in taking the cost of construction provided by M/s. Mount Housing and Infrastructure Ltd. However, he was of the opinion that assessee being entitled only to 43.75 of the constructed area in lieu of 56.25 of the land transferred, sale consideration could only be taken as 43.75 of the cost of Rs. 2,75,30,313/-. In other words against Rs. 1,54,85,801/- considered by the Assessing Officer as sale consideration, the CIT(A) directed adoption of Rs. 1,20,44,512/-. However, Ld. CIT(A) was not appreciative of the claim of assessee that all the five flats should be considered as a residential house eligible for exemption under section 54F of the Act. According to him, reliance placed by the assessee on the decision of Bangalore bench, this Tribunal in the case of D. Anand Basappa v. ITO 2004 91 ITD 53 was misplaced. According to him, the said case was in relation to an exemption claimed under section 54 of the Act and not under section 54F of the Act. Ld. CIT(A) relying on para 7.2 of the said judgement, held that Tribunal itself had made out a distinction between a deduction claimed under section 54 and a deduction claimed under section 54F of the Act. As per Ld. CIT(A), Sec.54F placed a clear bar on claiming deduction on more than one residential house. In this view of the matter, he was of the opinion that Assessing Officer was justified in restricting the exemption claimed under section 54F of the Act to one flat. 4. Now before us, Ld. A.R fairly admitted that with regard to substitution of the sale consideration based on the cost of construction of the developer, M/s. Mount Housing and Infrastructure Ltd., the order of the Ld. CIT(A) could not be faulted. However, according to him, view of Ld. CIT(A) as well as Assessing Officer with regard to claim of exemption under section 54F was not justified. For this, he relied on the decision of jurisdictional High Court in the case of Dr. Smt. P.K. Vasanthi Rangarajan v. CIT 2012 75 DTR 56. According to him, in the said case a similar claim under section 54F was originally declined by the Assessing Officer on the very same reason as given here in assessee s case. However their Lordships following an earlier decision in the case of CIT v. G. Saroja (TCA No.656 of 2005 dated 04.01.12) had held that there was no inhibition in the assessee claiming benefit of investments made in four flats for giving benefits under section 54F of the Act. According to him, the facts here were pari materia with the case before the Hon ble jurisdictional High Court. Therefore, assessee was entitled to claim exemption under section 54F of the Act on all the five flats. 5. Per contra Ld. D.R strongly assailing the order of the CIT(A) submitted that Hon ble jurisdictional High Court in the case of G. Saroja (supra) had given relief to the assessee for four flats received by the assessee in exchange of ownership over part of the land with building, based on a finding that these four flats were assessed as one unit with one door number. On the other hand, in assessee s case here, five flats were different residential units with different door numbers. Therefore, according to him, assessee could not take refuge under said decision and claim that exemption under section 54F should be given to all the flats. 6. We have perused the orders of the lower authorities and heard the rival contentions. There is no dispute that assessee was allotted five flats in lieu of her forgoing 56.75 of the rights in 13,059 sq ft land and building therein. None of the authorities below has doubted the eligibility of the assessee for claiming an exemption under section 54F of the Act. Their only qualm is that assessee had preferred such claim for all the five flats whereas according to them, such exemption could only be founded to a single flat. As per CIT (A) provisions of Sec 54 and Sec.54F were not pari materia, for........
Posted on: Thu, 22 Aug 2013 07:23:08 +0000
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