TMI Blog2015 (10) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax (Appeals) in allowing exemption u/s. 54 in respect of two residential houses - AR of the assessee has stated that expression ‘a residential house’ does not mean one residential house - Held that:- The Tribunal has been consistently taking a view that ‘a residential house’ does not mean one residential house. The expression ‘a residential house’ used in the section 54 does not restrict the exemption for investment in one residential house. This issue has been decided by the Co-ordinate Bench of Tribunal in the case of Shri Narsing Gopal Patil Vs. Asst. Commissioner of Income (2013 (5) TMI 837 - ITAT PUNE). In this view of the matter, we do not find any justification on the part of the Revenue to deny exemption under Section 54F of the Act merely on the ground that the residential building constructed by the assessee consisted of several independent residential units. Assessee is eligible to claim benefit of section 54 on both the flats in the same building.- Decided against revenue. - ITA No. 1708/PN/2013 - - - Dated:- 8-9-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Sunil Ganoo For The Revenue : Shri B.C. Malakar ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandan Ventures on 10-08-2007. As per the Sale Deed the sale consideration of the building was fixed at ₹ 2.75 Crores. Subsequently, after more than 3 years a Deed of Rectification to Sale Deed was executed on 08-12-2010, wherein, the sale consideration to be received by the assessee in respect of the aforesaid building was reduced from ₹ 2.75 Crores to ₹ 1.50 Crores. The reason for reducing sale consideration as mentioned in Deed of Rectification was, shifting of liability from vendors to vendee for getting the property vacated from various tenants/occupants and other claimants. In this regard affidavits were also executed immediately after the Registration of Sale Deed. The affidavit dated 10-08-2007 was executed by the Co-owners of the property and affidavit dated 13-09-2007 was executed on behalf of M/s. Chandan Ventures. All the documents viz Development Agreement, Sale Deed, Rectification Deed and Affidavits are placed on record in the form of paper book. The Assessing Officer rejected the contentions of the assessee with respect to reduction of sale consideration from ₹ 2.75 Crores to ₹ 1.50 Crores. The Assessing Officer held that nothing has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants for vacating the premises. The ld. DR further submitted that the affidavits filed by the assessee stating that the sale consideration has been wrongly mentioned in the sale deed are self serving documents and an afterthought. The affidavits and the Deed of Rectification have been executed in an attempt to reduce the tax liability arising from sale of capital asset. The ld. DR further submitted that the assessee had claimed the benefit of exemption u/s. 54 of the Act. The exemption has been claimed in respect to two residential houses, whereas, under the provisions of section 54(1), the assessee can claim exemption in respect of one residential house only. Thus, the benefit of exemption u/s. 54(1) on second flat has been wrongly granted by Commissioner of Income Tax (Appeals). The ld. DR vehemently supported the assessment order and prayed for setting aside the impugned order. 6. Shri Sunil Ganoo appearing on behalf of the assessee submitted that initially the consideration for sale of property was fixed at ₹ 2.75 Crores. It is an undisputed fact that the property in question was occupied by tenants/occupants and there was litigation going on between the assessee and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. ACIT in ITA No. 1544/PN/2012 for the assessment year 2008-09 decided on 31-05-2013. The ld. AR of the assessee prayed for dismissing the appeal of the Revenue and sustaining the findings of Commissioner of Income Tax (Appeals). 7. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. We have also considered the documents that have been placed on record by the assessee in the form of paper book, as well as, the decisions on which the ld. AR has placed reliance. To understand that factual matrix of the case, it is essential to first see the sequence of events. The same are as under: 03-04-2007 Registered Development Agreement in respect of property, Plot No. 548, Village Bhamburda (Shivajinagar), Pune between the assessee (and other co-owners) and M/s. Chandan Ventures. 10-08-2007 Registered Sale Deed executed for the above stated property between the parties aforementioned. 10-08-2007 Affidavit executed by assessee and other co-owners for rectification of sale deed. 13- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,25,00,000/- Payable by the Purchaser to and in favour of the Vendors, on or before 19.08.2007. 25,00,000/- Payable by the Purchaser to and in favour of the Vendors, within 3 months. 2,75,00,000/- Total (Two crore Seventy Five lakh only) 9. Subsequently, a registered Deed of Rectification of Sale Deed was executed on 08-12-2010 whereby the sale consideration was reduced to ₹ 1.50 Crores, as the assessee transferred the liability to get the premises vacated from the tenants/occupants who were in occupation of the property to the purchaser. As is evident from the records, that at the time of execution of development agreement, as well as sale deed, the fact that the part of property in question is occupied by tenants/occupants were in the knowledge of the developer/purchaser i.e. M/s. Chandan Ventures. The developer had taken the responsibility to deal with the tenants/occupants and the owners were relieved from the responsibility to settle with the tenants and occupants of the building. A specific clause to this effect was incorporated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and made allowances of ₹ 1.25 Crores for payment to the tenants/occupants and occupants of the building. The purchaser also executed affidavit on similar lines on 13-09-2007. The affidavit executed by the assessee and other co-owners is at pages 95 to 98 of the paper book and the affidavit executed on behalf of the purchaser i.e. M/s. Chandan Ventures is at pages 91 to 94 of the paper book. While examining the said documents it is observed that the stamp paper used for making affidavit by the assessee and other co-owners was purchased on August 9, 2007 i.e. a day prior to the execution of sale deed. We are unable to understand as to how the assessee would know that some error would be committed in the execution of sale deed which has to be rectified immediately thereafter. As has been observed earlier, the assessee and other co-owners had time of 4 months between the date of execution of development agreement and the sale deed to think over the manner in which premises has to be vacated from the tenants/occupants who are already litigating with the owners. We fail to understand, what motivated the assessee to execute affidavit abruptly after the execution of the sale deed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, the Tribunal held that the registered sale deed was a sacrosanct document and refused to look into other material produced by the assessee to substantiate its claim that the sale transaction was a sham one. The matter travelled to the Hon'ble High Court, the Hon'ble High Court reversed the findings of the Tribunal by observing as under: It is no doubt true that the evidentiary value has to be attached to a registered document but the said document cannot be a final word in the matter. It has to be remembered that capital gains accrue only if there is a sale or any other transfer of the capital asset and if the assessee is able to prove that in fact no sale took place in that case no capital gain accrued which could be assessed to income tax. If the assessee, even in the face of the registered sale deed, is able to prove by cogent evidence and satisfy the Tribunal that no sale in fact took place, in that case, the Tribunal has to come to the conclusion that there was no capital gain. As is apparent from the observations made in the order of the Tribunal, the Tribunal was under the misapprehension that the registered sale deed was final and, therefore, refused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court further held that in view of the impact of the subsequent events on the operative part of the order under challenge, which had completely changed the colour of the original findings, in the peculiar facts and circumstances of this case, the order of the Commissioner was to be set aside, and it would be necessary for the Commissioner to reconsider the application filed and the submissions made by the assessee on the merits in the light of the subsequent events following the principles of natural justice and keeping all rival contentions open. We find that the ratio laid down by the Hon'ble Bombay High Court in the above said case has been followed in the present case. The subsequent events which have taken place after the execution of sale deed have been duly considered. Since, the subsequent documents executed do not inspire confidence in the absence of corroborative evidence, therefore, they would not make any impact of the covenants of original document. 13.4 The ld. AR has also placed reliance on the decision of Hon'ble Bombay High Court rendered in the case of CIT Vs. Shakuntala Kantilal (supra). In the said case the Hon'ble High Court has expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (Appeals) in allowing exemption u/s. 54 in respect of two residential houses. The ld. DR has submitted that the expression used in section 54 is a residential house that means one house. The assessee cannot claim exemption u/s. 54 on more than one house. On the other hand the ld. AR of the assessee has stated that expression a residential house does not mean one residential house. The Tribunal has been consistently taking a view that a residential house does not mean one residential house. In support of his submissions, the ld. AR of the assessee has placed reliance on the decision of the Co-ordinate Bench of Tribunal in the case of Shri Narsing Gopal Patil Vs. Asst. Commissioner of Income in ITA No. 1544/PN/2012 for the assessment year 2008-09 decided on 31-05-2013. We find that this issue has been dealt by the Hon'ble High Courts and various Benches of the Tribunal. The expression a residential house used in the section 54 does not restrict the exemption for investment in one residential house. This issue has been decided by the Co-ordinate Bench of Tribunal in the case of Shri Narsing Gopal Patil Vs. Asst. Commissioner of Income (supra). The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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