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Shri P. Jaya Prasad Raja Versus Addl. Commissioner of Income-tax, Range 8, Hyderabad.

2015 (9) TMI 434 - ITAT HYDERABAD

Benefit of deduction u/s 54F - whether the AO is right in restricting the benefit for the one property, when two properties are adjacent? - Held that:- Assessee had sold two commercial properties and had invested the capital gain within the stipulated period in a Group Housing Complex at Bangalore, in the ground floor and first floor of the same property, numbered as IC-1 and IC-2. Before the AO, the assessee, on query, had contended that both the premises in fact constituted one residential uni .....

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ased just one day after the purchase of the ground floor. The house thus was a duplex or two storied house, comprising one single residential unit. As per the grounds of appeal raised before the CIT(A), the assessee had, during the assessment proceedings, verbally requested the AO to get the house physically inspected by his counter part in Bangalore. This the AO did not do. It cannot be gainsaid that the AO is amply empowered to get such an inspection done.

Apropos the AO’s observati .....

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also, the assessment order does not evince any query in this regard having ever been raised by the AO to the assessee

The facts of the present case and the facts of the case relied upon by the AR on Addl. CIT vs. Narendra Mohan Uniyal [2009 (8) TMI 825 - ITAT, DELHI] are slightly different. The issue before the Hon’ble Delhi bench was whether benefit of exemption u/s 54F can be given to two flats situated in ground and first floor, when the assessee used both the flats for own residen .....

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require examination whether the building is one or two units. Therefore, the issue needs further examination by the assessing officer in the light of the above discussion. - Decided in favour of assessee for statistical purpose. - ITA No.1093/Hyd/2014 - Dated:- 31-7-2015 - SHRI B.RAMAKOTAIAH,J For The Assessee : Shri A.V.Raghuram For The Revenue : Shri Rajat Mitra, DR ORDER This appeal filed by the assessee is directed against the order of the learned Commissioner of Incometax( Appeals) III, Hy .....

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from other source. Besides, he declared agricultural income of ₹ 1,92,300/-. During the financial year relevant to A.Y. 2007-08, the assessee has received ₹ 35 lakhs upon relinquishment of his right in the property at Sy. No. 335, Puppalaguda Village, Rajendra Nagar Mandal, Ranga Reddy district consequent a court settlement, which he had entered in to an agreement of sale dated 24-09-2000 by paying an advance of ₹ 2,50,000/-. During the same financial year he had purchased anot .....

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deration of ₹ 35 lakhs by taking cost of acquisition of ₹ 3 lakhs to arrive at capital gain of ₹ 31.16 lakhs and claimed exempt u/s 54F on reinvestment in the residential house properties. During the course of assessment u/s 143(3), the AO was of the opinion that the assessee has purchased two separate houses through two different sale deeds. He further held that Plot No. 63 and 64 are two distinct houses purchased through separate sale deeds and retained the characteristics as .....

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63 & 64 at Diamond hills, Puppalaguda, Hyderabad to make it single residential house for his self- occupation. The AR, further submitted that the house is remodeled/reconstructed as single residential house after obtaining plan approval from the civic authorities vide plan sanction copy dated 28-12-2006 along with letter of permission for construction, which was available in the file. The AR, claimed that the house was assessed to municipal tax as a single unit bearing no. 3-28/63/64 and mu .....

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in (2011) 7 ITR 653, ACIT vs. Sudha Gurtoo. 4. The Departmental representative, on the other hand strongly depended the orders of lower authorities. He further, argued that the evidences available clearly shows that the assessee has purchased two residential houses, though adjacent by two separate sale deeds and both properties were distinct residential houses. He further, argued that this is not a case where two plots have been purchased and a single residential house has been constructed. The .....

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n buying two separate residential houses at plot No. 63 & 64, Diamond hills, Puppalaguda, Hyderabad. Admittedly these two houses were purchased by two separate sale deeds dated 16-09-2006 and 12-10-2006. The sale deed copies of two properties clearly shoes that these are two independent houses as per the schedule appended to the sale deed. But, the claim of the assessee is that, he had remodeled/reconstructed the house by making single residential unit after obtaining plan sanction and permi .....

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claimed by him within the stipulated time frame as per section 54F. The AO, just plainly observed that, the assessee has purchased two houses, hence not eligible for exemption as per the provisions of section 54F, without examining any of the conditions including the stated fact of being one building after re-construction. Without doing so, the AO just concluded the assessment based on the sale deeds, which is in my opinion not correct. 6. Now it is worthwhile to mention here the proviso to sect .....

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ter the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] 7. A plain reading of the section shows that there is no bar in purchasing two separate plots and construct a single residential unit. All that section restricts is that the assessee should not own more than one house, other than new house on t .....

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o plots. In the present case on hand, the assessee claims that he has purchased two adjacent plots and made into a single residential house by obtaining single plan sanction from the local authorities. The assessee has furnished the copies of sanction plan copy and building construction permission letter which was before the lower authorities. None of the lower authorities through light on the real issue of whether the assessee has constructed or made it into a single house. 8. The authorized re .....

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tituted one residential unit, inasmuch as the ground floor thereof comprised one bed room, dining room, hall, kitchen, toilet and servant room and the first floor consisted of two bed rooms, hall, kitchen and two toilets. There was only one staircase, which was internal and led to the first floor. There was no independent entry to the first floor. There was only one kitchen in the entire house. It did not matter that the two floors had been purchased vide separate agreements. In fact, IC-2, i.e. .....

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Apropos the AO s observation that no approval was shown to have been obtained by the assessee, nor any payment of statutory dues had been shown to have been made by the assessee, concerning the modification to the house, it is available from the statement of facts filed before the CIT(A), that there was no question of the assessee obtaining any approval or making any payment, since the modification was done by the developer himself, as per the plans, the approval whereof was obtained directly by .....

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