TMI Blog2017 (3) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... mind, as long as all the flats are in the same address/location even if they are located in separate blocks or towers it does not alter the position. In the instant case, after all, all the flats are a product of one development agreement of the same piece of land being said land. Therefore, we make it abundantly clear that even if flats/apartments are in different blocks and different towers as long as they are in same address/location it does not disentitle the assessee from getting the benefit of Section 54-F of IT Act. Therefore, the sole and sheet anchor submission of counsel for Revenue that the 15 flats in the instant case are located in the different blocks does not impress us. We are unable to persuade ourselves that this will disentitle the assessee from getting the benefit of Section 54-F as all the flats are in the same location/address and all flats are by products of one development agreement with the same builder. The logic behind our view is that the assessee, irrespective of whether it is one flat or many flats, gets proportionate undivided share in land only for the same piece of land. Therefore, assessee does not buy more than one property in that sense of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove said 70:30 ratio set out in the builders agreement, assessee got 9 flats and his two sons got 3 flats each. The details are as follows: The assessee received the following flats : GUMANMAL JAIN S.No. Block No. Floor Area Square Feet 1 A FIRST (I) 4015 2 B FIRST (I) 3365 3 A SECOND(II) 3960 4 B SECOND(II) 3360 5 C SECOND(II) 3355 6 B THIRD (III) 1122 7 C THIRD(III) 3360 8 B FOURTH (IV) 1120 9 C FOURTH (IV) 3355 TOTAL 9 FLTS 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke of brevity], preferred a statutory appeal before the ITAT being I.T.A.No.414/Mds/2016]. (xv) The above said statutory appeal of the Revenue, was dismissed by ITAT [confirming the order of CIT] by an order dated 11.05.2016, against which the instant further statutory appeal has been preferred by Revenue before us. ITAT also had relied on V.R.Karpagam's case [our Division Bench Judgement reported in [2015] 373 ITR 127]. 5. DISCUSSION: (i) As would be evident from the facts set out under the caption factual matrix supra, the entire matter turns on a very narrow and short compass. (ii) The narrow and short compass is, interpretation of the phrase 'a residential house' occurring in Section 54-F of the IT Act. (iii) Mr.Swaminathan, learned Standing counsel for Revenue would primarily contend that the 15 Flats [9 for the assessee and 3 flats each for his two sons] the details of which have been set out supra will not qualify as 'a residential house' occurring in Section 54-F of the IT Act, notwithstanding the ratio of our Division Bench in V.R.Karpagam's case as according to him, the flats are in different blocks and not in the same block. (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Sections 54 and 54-F of the IT Act, we do not deem it necessary to set out the facts in the above said citations in detail. (iiii) In K.G.Rukminiamma's case [Karnataka High Court Division Bench] the relevant paragraphs are paragraphs 8 to 13 and the same reads as follows: 8. For a proper appreciation of the aforesaid contention, it is necessary to have a careful look at Section 54 of the Income Tax Act, which reads as under: 54.Profit on sale of property used for residence: (1) Subject to the provisions of sub-Section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income-tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt thereto, which also should be a residential house. Therefore the letter a in the context it is used should not be construed as meaning singular. But, being an indefinite article, the said expression should be read in consonance with the other words buildings and lands and, therefore, the singular a residential house also permits use of plural by virtue of Section 13(2) of the General Clauses Act. This is the view which is taken by this Court in the aforesaid Anand Basappa's Case in I.T.A. No. 113/2004, disposed of on 20.9.2008. 11. We, therefore, do not see any merit in the submission of the Learned Counsel for the revenue. 12. In the instant case, the facts are not in dispute. On a site measuring 30' W 110', the assessee had a residential premises. Under a joint development agreement, she gave that property to a builder for putting up flats. Under the agreement eight flats are to be put up in that property and four flats representing 48% is the share of the assessee and the remaining 52% representing another four flats is the share of the builder. So, the consideration for selling 52% of the site is four flats representing 48%. All the four flats are situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has, within a period of one year before two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45: (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where (a) the assessee, (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if it is considered for the property assessed as one unit and one door number is given, it should be construed as a residential unit, namely, one unit. In that sense, the said provision is available to the assessee. 12. In the decision reported in (2012) 75 DTR 56 (Dr. (Smt.) P.K. Vasanthi Rangarajan, this Court, while dealing with the benefit of exemption under Section 54F, followed the above-said decision of this Court in T.C. (A) No. 656 of 2005 and granted the benefit to the assessee under Section 54F of the Income Tax Act on the investment made in the four flats. 13. Hence, the above-said decisions of this Court make it clear that the property should be assessed as one unit, even though different flats are available. Here also, as per the assessment order, all the flats have one door number, namely, Door No. 29F, Race Course, Coimbatore. (vi) In Chinnadurai's case [Honourable Single Judge of Madras High Court] the relevant paragraphs are paragraphs 14 and 15 and they read as follows: Thus, by applying the legal principles enunciated in the case of Smt.V.R.Karpagam (supra), Dr.Smt.P.K.Vasanthi Rangarajan (supra), and G.Saroja(supra), it is to be poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith capital gain arising out of transfer of any long term capital asset not being a residential house. Otherwise, in all other aspects of the matter the two provisions namely Section 54 and 54-F are in pari materia. Therefore, the interpretation of 'a residential house' occurring in Section 54 cannot be any different for the same phrase 'a residential house' occurring under Section 54-F of IT Act. In this regard what applies to Section 54 would apply in equal and full force to Section 54-F also. Therefore, the principles in K.G.Rukminiamma's case as well as V.R.Karpagam's case would apply to the facts of the instant case. (ix) As set out in the discussion supra, learned counsel for Revenue, relied heavily on Pawan Arya's case which was decided by a Division Bench of the Punjab and Harayana High Court. Pawan Arya's case arises under Section 54 of IT Act. We have already opined that Section 54 and 54-F of IT Act are in pari materia. Therefore, there is no difficulty on this count, but Pawan Arya's case is clearly distinguishable on facts. A perusal of the factual matrix in Pawan Arya's case would show that the assessee who had capital gain i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been carried by Revenue to the Supreme Court and therefore is holding the field as on today. (xiv) We are informed that there is no intra court appeal in G.Chinnadurai's case also. In other words Revenue has accepted G.Chinnadurai's case is what we are given to understand. (xv) To make our discussion on case law as complete and as comprehensive as possible, we deem it relevant to also mention that the all too important phrase 'a residential house' occurring in Section 54-F was amended with effect from 01.04.2015. Such amendment was brought in by the Finance (No.2) Act, 2014 and post amendment, 'a residential house' now reads as 'one residential house'. We have noticed that this amendment is only with effect from 01.04.2015 and the case on hand pertains to assessment year 2012-2013. Therefore, this amendment does not in any manner impact the instant case. However, we make it clear that we have noticed this amendment. It is also to be borne in mind that the other coordinate Division Bench of this Court has also noticed this amendment in V.R.Karpagam's case and thereafter laid down the principles/ratio. 7. CONCLUSION: (i) We therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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