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Income Tax Officer, Ward -4 (1) , Visakhapatnam Versus Smt. Lavanya Dhara

Entitlement to exemption u/s 54F - contiguous units - first floor is divided into different residential units - exemption to be allowed to one unit or entire area - Held that:- The CIT(A) directed the AO to conduct an enquiry and allow the exemption in respect of one residential unit. In case, the assesse is using the entire first floor area for the purpose of her self-occupation then, AO is directed to allow the deduction in respect of entire first floor. In case on enquiry, it is found that th .....

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. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER FOR THE APELLANT : Shri M.N.MURTHY NAIK, DR FOR THE RESPONDENT : Shri ARUN KUMAR DAS, AR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the revenue is directed against the order of Ld. Commissioner of Income-Tax (Appeals), Visakhapatnam dated 26.09.2012 for the assessment year 2008-09. 2. The brief facts of the case are that the assessee is an individual, filed her return of income for the assessment year 20 .....

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letter dated 17-03-2010 had objected the reopening of assessment. The assesse stated that she has given only restrictive right to the builder to construct flats and hand over her share within 24 months from the date of agreement. It is stated that during the financial year relevant to assessment year the construction is yet to complete and the same would be completed in the year relevant to assessment year 2011-12, therefore, no transfer took place during the A.Y. 2008-09. The AO, vide letter da .....

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8-09. The AO, did not convinced with assesse replay, issued a show cause notice and asked her to file objections if any, for the proposed assessment arriving at a long term capital gain of ₹ 42,74,994/-. In response to show cause notice, the assesse filed a letter seeking time till 5-10-2010 to file her objections. The assesse however, did not file any objections. The AO left with no option, has completed the assessment u/s 144 r.w.s. 147 of the Income Tax Act, 1961 and determined a taxabl .....

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assesse made elaborate written arguments and also relied on various judicial precedents in support of her arguments. Regarding, exemption u/s 54F is concerned she had entered into a development agreement with M/s NKP builders for development of 726 Sq. yards of land. As per the said development agreement, in lieu of handing over 50% of land, she got 6250 Sft built up area. The builder has given entire first floor of 3144 sft and 50% of third and fourth floor comprising of 3106 sft. The assesse .....

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ITR (AT) 001, directed the AO to conduct an enquiry and allow the exemption in respect of one residential unit. In case, the assesse is using the entire first floor area for the purpose of her self-occupation then, AO is directed to allow the deduction in respect of entire first floor. In case, on enquiry it is found that the area in first floor is divided into different residential units then deduction may be allowed to the extent of cost of acquisition of one residential unit as per the choic .....

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than, the assesse loose the benefit of exemption in view of the Hon ble Supreme court decision in the case of Goetz (India) Ltd 284 ITR 323. The DR did not opposed the exemption allowed by the CIT(A) on the facts of the case, but he is only opposed the benefit of exemption allowed on the ground that the assesse did not made any claim before the Assessing Officer. On the other hand, the authorized representative strongly supported the CIT(A) order. 4. We have heard the rival contentions, perused .....

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erted the entire first floor into one single residential unit and self-occupied for residential purpose. Admittedly, she had not made any claim before the AO by filing revised return or even during the assessment proceedings. But, she had raised ground before the CIT(A) and made alternative claim that even if transfer did take place, thereby resulting into long term capital gains, the assessee has re-invested the entire LTCG therefore, eligible for exemption u/s 54F. The CIT(A) after relied upon .....

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allowed by the CIT(A) on the facts of the case, but he is only opposed the manner in which the exemption allowed though, the assessee did not made any claim before the Assessing Officer. During the course of hearing, the DR drew our attention to the Goetz (India) Ltd 284 ITR 323. We have examined the Hon ble Supreme Court decision mentioned (Supra) in the light of the facts of the present case. Their lordship in the above case in para 4 of the order has observed that the issue in this case is li .....

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e exist at the time of assessment. The CIT(A) rightly allowed the exemption u/s 54 to one single residential unit therefore, we are unable to agree with the issue raised by the revenue. 6. Coming to the merits of the case. The assesse claimed to have converted the entire first floor into one single residential unit and selfoccupied for residential purpose. The CIT(A) relied upon the special bench decision of ITAT in the case of Mrs. Sushila M Javeri 292 ITR (AT) 001 and allowed the exemption u/s .....

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quot; as well as "any" are ambiguous and, therefore, the meaning of these words has to be seen with reference to the context in which these words are used. Perusal of ss. 54, 54B, 54D, 54E, 54EA, 54EB and 54F clearly reveals that the legislature has used the words "a" and "any" with reference to investment of capital gain/sale consideration in certain asset or assets. The legislature was not oblivious regarding the meaning of these two words. The word "any" .....

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es the "specified asset". It includes various assets in which investment can be made by the assessees who are eligible for exemption under s. 54E. There is nothing to indicate that investment is restricted to any of the specified assets. Had the legislature intended to restrict investment in any one of the specified assets, it would have used the words "in any one of the specified assets" instead of "in any specified asset". This clearly shows that the word "an .....

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e piece of land. On the other hand, the legislature has used the word "a" in ss. 54 and 54F. Had the legislature intended for investment in more than one asset, it could have easily used the words "in any residential house" in ss. 54 and 54F instead of the words "a residential house". Superfluous words are not used by the legislature. Different words "a" and "any" have been deliberately used by the legislature to convey different meanings. Theref .....

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So long as the house purchased is one even after conversion, the exemption would be available. On the other hand, if the investment is made in two independent residential houses, even located in the same complex, then, exemption cannot be allowed for investment in both the houses. However, the choice would be with assessee to avail exemption in respect of any one house. Exemption under ss. 54 and 54F would be allowable in respect of one residential house only. If the assessee has purchased more .....

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