TMI Blog2016 (3) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... at the properties lose its basic nature and characteristics. From the facts, it is undoubtedly clear that as on the date of transfer of original asset, the assessee has owned two residential flats. Therefore, we are of the opinion that the assessee is not eligible for exemption u/s 54F of the Act for the flats received in lieu of joint development agreement. The CIT(A) has rightly confirmed the order of the assessing officer denial of claim - Decided against assessee. - I.T.A.No.134/Vizag/2015 - - - Dated:- 19-2-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant by : Shri I. Sarish Kumar, DR For The Respondent : Shri G.V.N. Hari, AR ORDER PER G. MANJUNATHA, Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain why the capital gain should not be levied on three flats received consequent to joint development agreement. In response to the show cause notice, the assessee filed a revised statement of total income to arrive at a capital gain of ₹ 30,65,236/- and claimed exemption u/s 54F of the Act on the total capital gain for reinvesting the sale consideration in 3 flats. The A.O., however, after considering the explanations furnished by the assessee denied the benefit of exemption u/s 54F of the Act. While doing so, the A.O. held that as per the information available on record, the assessee owns 2 residential flats S1 F1 in Soubhagya Nilayam which was purchased by him in the year 2006-07 and later completed the construction after o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complex. In view of the judgement of the Hon ble Andhra Pradesh High Court in the case of CIT Vs. Syed Ali Adil 352 ITR 418, he is eligible for exemption for all the three flats as a single residential unit. The CIT(A), however after considering the explanations of the assessee held that the information available in the file clearly show that the building plan has been approved for construction of residential building. The bank has granted loan to the assessee towards home loan for purchase or construction of residential house. The assessee and his family members have constructed 8 residential flats. All these facts are not in dispute. Therefore, there is element of doubt that the assessee acquired and owned two commercial flats in Soubhagy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption under sec. 54F for acquiring 3 flats in lieu of development agreement. The A.O. disallowed the claim of exemption u/s 54F of the Act, on the ground that the assessee owned two residential houses as on the date of transfer of original asset. The contention of the assessee was that the two flats are commercial and let out to commercial purposes. Therefore, he is eligible for claiming exemption u/s 54F of the Act on the new flats acquired in lieu of joint development agreement. The assessee filed a paper book containing rental agreement copies of flats, electricity bill and municipal tax assessment records. Though, the records clearly shows that the flats are let out for commercial purposes and also electricity consumption was charged o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that the assessee owned two residential flats and these flats are let out for commercial purposes. But, in our view, just because property was put to use for commercial purpose, the basic character of nature and property would not change. Therefore, we are of the opinion that the assessee owned two residential houses, other than new house as on the date of transfer of asset and hence, not eligible for exemption u/s 54F of the Act. 7. Coming to the case laws relied upon by the assessee. The assessee relied upon ITAT, Chennai Bench decision in the case of ITO Vs. M. Venkatesan (supra). We have considered the case law relied upon by the assessee in the light of the facts of the present case and find that the decision is not applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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