TMI Blog2017 (5) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the entire plot of land could be treated as land appurtenant to the buildings sold by the assessee. The dictionary meaning given to us by the Deptl. Rep. does not really bear out the contention of the Department. Assessee shall be granted with deduction u/s.54F of the Act as the investment in entire property to be considered as a single residential unit, since the consideration received from sale of capital asset was so invested. - Decided against revenue. - ITA No. 638/Mds/2016 - - - Dated:- 1-5-2017 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER, AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri Shiva Srinivas, JCIT For The Respondent : Shri B. Ramakrishnan, FCA ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the Revenue is directed against the order of the Commissioner of Income-tax(Appeals) dated 22.12.2015. 2. The only grievance of the Department in this appeal is with regard to granting of deduction u/s.54F of the Act in respect of 5 properties, which were purchased by the assessee by DRT auction wherein clubbed the same as one property. 3. The brief facts of the case are that during the assessment year, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he auction notice by the DRT-3, Chennai clearly shows that it is a single composite unit and with a condition that the property cannot be split. Further, the previous owner held the property as a single residential unit consisting of the entire property offered for sale by DRT, which is also supported by the assessment made for property tax by local authorities. Further, the aforesaid residential house is being assessed to property tax by the corporation of Chennai for the past seven years as a single residential house and the electricity is also for the said single residential house. e. There is no evidence on record that the assessee made two separate investments in residential house and in land separately. f. The assessee had furnished before the AO all the required documents to support its contention that the entire purchase is a single residential house comprising house, servant room, pooja/prayer hall, motor room, well, garden, etc. covering the entire land area. Hence, there is no vacant land and further, the house was sold with proper compound wall that covers all 4 sides as one single unit. 3.2 In support of his contention, the assessee relied on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and not disputed that the assessee had purchased property from the DRT vide DRC 211/2012 for a consideration of ₹ 10.10 crores by public auction. Further, as per the documents it was seen that the assessee had purchased 43600 sq.ft. of land described in Schedule A and B together with building thereupon. 4.1 Before the CIT(Appeals), the assessee placed on record the plan of property purchased and after perusal of the same, he observed that the property, which is rectangular bound by compound walls on four sides houses the impugned building being house property in the South Western corner of the property with a shed on the South Eastern part of the property, car parking and again a shed on the South Western and North Western part of the property. The opening of the gate giving access to the property is on the North Eastern Corner of the property while a well as also a motor room situated in the corner of North Eastern part of the property. The CIT(Appeals), further observed that the property consisted of a residential house along with land appurtenant thereto housing car parking, sheds, well, motor room etc. in it as a single composite unit. Further there is a road / fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it. This is not so in the case of the assessee, who has graphically by way of presenting the plan as also placing reliance on several supporting documents pleaded its case that the impugned property was a composite one from which vacant land could not be artificially bifurcated or segregated. According to the CIT(Appeals), the submissions of the assessee are underscored. 4.5 After perusal of documents submitted and case laws taken up by the assessee, the CIT(Appeals) observed that the certificate of sale of immovable property dated 27.11.2013 in DRC No. 211/2012 evidences that Mr. K.N.Raja, in this case, the assessee, who has paid a sum of ₹ 10.10 crores and being declared the purchaser at sale by auction held on 17.10.2013 in respect of immovable property which holds out the impugned property as a composite unit as is evident from the citation as follows: All that piece and parcel of land admeasuring 43,600 sq.ft. (Schedule A B) together with building thereupon situated at Uthandi Village, within the sub Registration Distric t of Neelankari and Registration District of Chennai South, details of which are as under : The certificate of sale recognizes Schedule A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso observed that in Addl. CIT, Range-1 v. Narandra Mohan Uniyal, 34 SOT 152, Delhi Bench of the Tribunal affirmed the cost of vacant land appurtenant to land forming part of a residential unit to be considered for claim of exemption u/s.54F even if no construction has been done on the appurtenant land. Finally, the CIT(Appeals) relied on the decision of the Tribunal in the case of ACIT v. Anandhi Karthikeyan, wherein, the Tribunal, in ITA No.1242/Mds/2009 dated 6.11.2009 observed that the land cost would be part and parcel to the residential house for the purpose of deduction u/s.54F of the Act and on those facts even if the residential house constructed in a lesser area than the approved plan the deduction cannot be denied u/s.54F of the Act. In that case, while the total area shown in the sketch was 12000 sq.ft., in the final plan, the covered area was shown as 2680 sq.ft. with three car parking space and drive way small pool and pump house. The CIT(Appeals) observed that the AO had inferred that the so called construction of residential house was with the design towards a make believe activity to get eligibility u/s.54F of the Act. Besides, the assessee placed on record chitta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sections 54 and 54F is not tenable at all. In the instant case, there is no dispute to the fact that investment of capital gains was made within the statutory period and moreover within the same financial year. Residential house was constructed on the part of plot of land, the exemption claimed in respect of investment made in land cannot be declined when all the other conditions as stipulated under section 54F are being satisfied. While dealing with the objection of the Assessing Officer, the CIT(A) has categorically given a finding that residential building was located in the said land so purchased was of a plot having area of 43,600 sq.ft. consisting of 2 Schedule of property A B. In B Schedule of property, no residential building and there is only land. Both these plots were having 1000 sq.mtrs. of land. Both the plots formed part of one residential unit and are contiguous and adjoining to each other. The comments of the Assessing Officer to the effect that exemption under section 54F is eligible only for construction of house is not tenable insofar as even cost of land forming part of the residential unit on which no construction is done is also eligible for exemption u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said amendment, it is clear that a residential house would include multiple flats/residential units as in the present case where the assessee has got five residential flats. We may also mention here that all the authorities below have clearly understood that the agreement signed by the assessee with M/s. Mount Housing Infrastructure Ltd., is that the assessee will receive 43.75 per cent. of the built-up area after development, which is construed as one block, which may be one or more flats. In that view of the matter what was before the Assessing Officer is only equivalent of 56.25 per cent. of the land transferred, equivalent to 43.75 per cent. of the built-up area received by the assessee. This built-up area got translated into five flats. Hence, we are of the opinion that the transaction in this case was not with regard to the number of flats but with regard to the percentage of the built- up area vis-a-vis the undivided share of land. 11. In similar circumstances, this court, by order dated January 4, 2012, in T. C. (A.) No. 656 of 2005 held as follows : The above provision refers to a residential house meaning thereby that even if there are four different flats and if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee if the major portion of the building was used for residential purposes by him or by his parent. In the present case the Commr. (A) has brought on record, and his findings have not been successfully impugned before us, that while the total area or the plot sold was 2146 sq. yards, the let out structure built in 1960 occupied only 108 sq. yards. Thus, the property sold was substantially self occupied by the assessee and the provisions of s. 54 were rightly relied upon by the assessee before the lower authorities. 7. As for the contention of the Deptl. Rep. about the meaning of appurtenant thereto we agree with Shri V.H. Patil that the land appurtenant to the building would not only be the land married to the super-structure but would include the land adjacent to and surrounding the super-structures as may be found necessary for the beneficial and proper enjoyment of the buildings. In our opinion, lands appurtenant to the buildings within the meaning of s. 54 would be those enjoyed with and occupied with the buildings in question. Considering the location and the various structures on the plot of land and having seen the site plan we are convinced that the entire plot of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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