9911796707
TMI Blog2017 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... me for the assessment year 2009-10 on 22.10.2010 declaring total income of Rs. 4,28,780/-. The return of income was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') on 8.3.2011. Subsequently, the case has been reopened u/s 147 of the Act, for the reasons recorded that the income chargeable to tax had been escaped assessment within the meaning of section 147 of the Act. The facts which are relevant for re-opening of assessment are that during the previous year relevant to assessment year 2009-10, the assessee Late Smt. R. Bhanusri along with 12 others entered into development agreement with M/s. Sri Sai Venkata Ramana Constructions for development of a piece of land admeasuring 1.68 acres at S.No.93, Gollapudi and agreed to share constructed flats in the ratio 17:23. The agreement with the builder for development and construction of flats is in the nature of transfer within the meaning of section 2(47) r.w.s. 53A of the Transfer of Property Act, 1882 and also fact that the assessee has not admitted resultant capital gain on transfer of land in pursuance of joint development agreement in the return of income filed on 22.2.2010, a notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property transferred has to be taken based on the cost of construction incurred by the developer for construction of flats, but not the guidance value of the property as per the SRO. The assessee has filed one more letter on 28.2.2013 and claimed exemption u/s 54F of the Act, on total flats received in pursuance of joint development agreement by claiming that the said flats are constructed for residential purpose. In support of his arguments relied upon the following case laws: 1) CIT Vs. Gita Duggal (ITA No.1237/2011) (Delhi High Court) 2) CIT Vs. Smt. K.G. Rukminiamma (2011) 239 CTR (Kar) 435 3) CIT Vs. Dr. P.K. Vasanthi Rangarajan (2012) 252 CTR (Mad) 336 4) CIT Vs. Syed Ali Adil (ITA No.2012) (A.P. High Court) The assessee referring to the above decisions submitted that in case of joint development agreements, if property is given for development, the assessee is eligible for deduction u/s 54F of the Act on all the flats received in pursuance to joint development agreement, even if the flats are located in different floors. 5. The A.O. after considering the explanations of the assessee and also referring to certain judicial precedents, held that as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee were commercial property, overlooking the fact that the flats were constructed for purely residential purpose and also the tenant has used the premises for accommodating the students for their residence. The assessee further submitted that the A.O. was erred in rejecting the claim of exemption u/s 54F of the Act, ignoring the decision of the Karnataka High Court, in the case of CIT Vs. K.G. Rukminiamma (supra), wherein it was held that several flats received by the site owner from the developer should be considered as a single residential unit and therefore, all of them were eligible for exemption u/s 54F of the Act. 7. The CIT(A) after considering the relevant submissions of the assessee, accepted the claim of the assessee with regard to the status and observed that the assessee's family was consisting of assessee and her two children and accordingly, the claim of HUF status is in order. The CIT(A) further observed that the A.O. was erred in determining the assessee's status as individual, ignoring the fact that the property in question was inherited from the assessee's ancestors and hence the assessee has rightly claimed the HUF status. In so far as computation of long term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Ld. CIT(A) erred in holding that the value of undivided share of land allotted to the assessee would not form part of consideration, since the entire land was handed over to the developer and the sale consideration was received in the form of flats along with undivided share of land. The Ld. CIT(A) ought not to have accepted the assessee's explanation for inclusion of minor share of land in the hands of the assessee, since the same is taxable in the hands of the assessee as per provisions of section 64(1) of the Act. The Ld. CIT(A) ought to have considered that the assessee is not eligible for deduction u/s 54F of the Act, as the consideration received was reinvested in the commercial property and not in the residential property. The D.R. further submitted that the Ld. CIT(A) erred in allowing exemption u/s 54F of the Act, as the assessee got his share of flats in different blocks and each block consist separate residential units having separate entrances and by no stretch of imagination, constitute a single residential unit. 10. On the other hand, the Ld. A.R. for the assessee strongly supported the order passed by the CIT(A). The A.R. further submitted that the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the issue and after analyzing the provisions of section 54F of the Act, observed that the expression 'a residential house' in section 54F of the Act has to be understood in a sense that building should be of residential nature and 'a' should not be understood to indicate a single number and where an assessee had purchased two residential flats, is entitled to exemption u/s 54F of the Act, in respect of capital gains on sale of its property on purchase of both flats. The High Court further observed that deduction u/s 54F of the Act, is allowable with respect to the residential house consisting of several independent units. A similar view has been expressed by the Hon'ble High Court of Madras, in the case of CIT Vs. Gumanmal Jain (supra), wherein the Hon'ble High Court observed that all the flats are a product of one development agreement of the same piece of land being said land, hence even if flats 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 54F of the Act. In yet another case, the Hon'ble High Court of Madras in the case of CIT Vs. V.R. Karpagam (2015) 373 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant facts, and also by following certain judicial precedents has rightly directed the A.O. to allow exemption claimed u/s 54F of the Act. We do not find any reasons to interfere with the order of the CIT(A). Hence, we uphold the CIT(A) order and reject the ground raised by the revenue. 15. The next ground raised by the revenue is with regard to computation of long term capital gain in pursuance of joint development agreement and adoption of consideration for transfer of property. Once the issue has been decided that the assessee is eligible for exemption u/s 54F of the Act, in respect of all the flats, the other issues, i.e. computation of capital gains and adoption of guidance value for the purpose of determination of capital gain becomes academic, as the assessee is eligible for exemption towards all the flats received in pursuance of a joint development agreement and hence computation of capital gain and adoption of guidance value for the purpose of determination consideration has no impact on the total income. 16. In so far as clubbing of income of the minor children in the hands of the assessee, we are of the view that even though section 64(1)(a) of the Act, applies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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