TMI Blog2019 (2) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, as we have already seen, the Assessee had paid the entire consideration for the site originally allotted as early as in the year 2001. The Assessee had performed its part of the contract with the society. Therefore the claim of the Assessee that it held the property from 22.3.2001 has to be accepted, keeping in mind the policy and object of the provisions giving exemption from levy of tax on capital gain. We are of the view that the capital gain in question in the present case has to be treated as LTCG as claimed by the Assessee Computation of capital gain and deduction u/s. 54F in respect of another property sold by the assessee during the relevant previous year - Held that:- A person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly post-retirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Suresh, CA For The Respondent : Shri Vikas Suryawamshi, Addl.CIT(DR)(ITAT), Bengaluru ORDER Per N V Vasudevan, Vice President This appeal by the assessee is against the order dated 24.08.2018 of the CIT(Appeals)-V, Bengaluru, relating to assessment year 2015-16. 2. There are basically 3 issues that arise for consideration in this appeal. The first issue is with regard to the computation of capital gain on sale of a property viz., Site No.513 (PII), R.R. Nagar, Bangalore by the assessee [hereinafter referred to as the RR property]. It is not in dispute that the assessee acquired the RR property from Ideal Homes Co-op. Building Society Ltd., Bangalore, under a lease-cum-sale agreement dated 22.3.2001. As per the terms of lease-cum-sale agreement, the assessee paid a sum of ₹ 60,000 towards the value of site on the date of agreement for lease-cum-sale. As per the further terms of this agreement, the assessee has to construct the building on the site within two years from the date of agreement. The assessee should not alienate the site for a period of 10 years. The assessee took possession of the property and constructed a building. As per the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solutely by the society to the Assessee by a registered sale deed dated 31.08.2014 can be said to be a LTCG. 9. Sec.2(29B) of the Act defines Long term capital gain as follows:- long-term capital gain means capital gain arising from the transfer of a long-term capital asset; Sec.2(29A) of the Act defines Long term Capital asset as follows:- long-term capital asset means a capital asset which is not a short-term capital asset ; Sec.2(42A) of the Act defines Short Term Capital asset as follows:- ( 42A) short-term capital asset means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer : .. Sec.2(42B) of the Act defines Short term capital gain as follows:- ( 42B) short-term capital gain means capital gain arising from the transfer of a short-term capital asset; 10. We have to look at the definition of the term Short term capital gain because what is not short term capital gain is Long term capital gain and that is the way Long term capital gain has been defined in the Act. Short term capital gain means capital gain arising from the transfer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Karnataka High Court. Similar decisions were rendered by the Hon ble Allahabad High Court in the case of Smt.Rama Rani Kalia 358 ITR 499 (All) Amar Nath Agarwal 371 ITR 183 (All) . 13. We also find support for the aforesaid conclusions from another decision of the Hon ble Karnataka High Court in the case of CIT vs A Suresh Rao 223 Taxmann 228 (Kar) wherein similar issue was considered and wherein the significance of the expression held used by the legislature has been analysed and explained at length. Hon ble High Court analysed various provisions of the Act pertaining to computation of capital gain under various situations and also circulars issued by the CBDT on this issue. Relevant portion of the observation wherein the issue before us has been properly analysed is reproduced hereunder:- The definition as contained in Section 2 (42A) of the Act, though uses the words, a capital asset held an assessee for not more than thirty-six months immediately preceding the date of its transfer , for the purpose of holding an asset, it is not necessary that, he should be the owner of the asset, with a registered deed of conveyance conferring title on him . In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins tax the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to be paid in installments does not affect the legal position. Therefore, in construing such taxation provisions, what should be the approach of the courts and the interpretation to be placed is clearly set out by the Apex Court in the case of Smt. Saroj Aggarwal vs CIT 156 ITR 497 wherein it is held as under:- Facts should be viewed in natural perspective, having regard to the compulsion of the circumstances of a case. Where it is possible to draw two inferences from the facts and where there is no evidence of any dishonest or improper motive on the part of the assessee, it would be just and equitable to draw such inference in such a manner that would lead to equity and justice. Too hypertechnical or legalistic approach should be avoided in looking at a provision which must be equitably interpreted and justly administered Courts should, whenever possible unless prevented by the express language by any section or compelling circumstances of any particular case, make a benevolent and justice oriented inference. Facts must be viewed in the social milieu of a count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable proper ty being resident ial house (First f loor) bearing Bruhat Bangalore Mahanagara Pal ike Khatha # 37/1, PID # 51-14-37/1 , si tuated at 1st Main Road, N R Colony, Bangalore, the residential house having total built up area of 1180 sft. , buil t above property # 37, PID # 51- 14-37, bui lt wi th RCC roof , red-oxide f loor ing, teak wood doors and windows, the ITEM # 1 2 of SCHEDULE PROPERTY, built on site measuring East to West 60 ft. , and North to South 40 ft. , measuring in all 2400 sft., and bounded on: EAST BY : 1ST MAIN ROAD WEST BY : PRIVATE PROPERTY NORTH BY : 3RD CROSS ROAD SOUTH BY : PRIVATE PROPERTY IN WITNESS WHEREOF THE VENDORS AND THE PURCHASERS HAVE AFFIXED THEIR SIGNATURES TO THIS DEED OF ABSOLUTE SALE ON THE DATE MENTIONED ABOVE AT BANGALORE. 16. Another aspect which is to be noted is that the assessee purchased property in the name of himself, his wife Smt. Geeta Prakash and his son - Shri Amit Prakash. 17. The AO was of the view that to claim deduction u/s. 54F of the Act, the assessee should not own more than one house, other than the new asset. Since as per the description of the property pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 200/-. Hence, allowable deduction u/s. 54F of the Income Tax Act, 1961 is computed as under; Allowable Deduction u/s. 54F = Long Term capital Gains x Amount invested to purchase of construct residential house Net Consideration 1,33,89,451 x 76,75,200 ₹ 73,40,480/- 1,40,00,000 7.2 In view of the above discussion, taxable long term capital gains in assessee case are computed at ₹ 60,48,571/- (Rs. 1,33,89,451 - ₹ 73,40,480) and brought to tax during A.Y. 2015-16. Disallowance : ₹ 60,48,571/- 18. On appeal by the assessee, the CIT(Appeals) confirmed the order of AO. Aggrieved by the order of CIT(A), the assessee has raised ground Nos.5 to 7 before this Tribunal. 19. We have heard the rival submissions. We have already seen that the Assessee claimed that it had invested LTCG in purchase of another residential house property and claimed deduction u/s.54F of the Act. One of the conditions for allowing deduction u/s.54F as laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rakash Smt. Geetha Prakash Sri.Padmanabh a Ramanuja Chari Union Bank of India, Vartak Nagar, Thane (west), A/c. # 62330201001313 1,20,00,00/- 3c 27/06/2014 The National Co-op Bank Ltd., Gandhi Bazar, Bangalore -SB A/c.# 43689 of Sri. 'Amith Prakash Sri.Padmanabh a Ramanuja Chari Union Bank of India, Vartak Nagar, Thane (west), A/c. # 62330201001313 22,56,000/- 3d Income tax deducted at Source Paid by Challan Serial # 00021 dt.28/06/2014 1,44,000/- TOTAL 3,60,00,000/- 20. As far as the case of the AO that assessee has purchased two properties under Sale Deed dated 28.06.2014 is concerned, we have perused the schedule of the property that was purchased. Actually this was a single piece of property viz., Site No.1 owned by Smt. Janaki Iyengar, Smt. Janaki Iyengar constructed a residential house in ground floor in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that as held in B.Ananda Bassappa (SLP dismissed) K G Rukminiamma , the Revenue s contention that the phrase a residential house would mean one residential house is not correct. The expression a residential house should be understood in a sense that building should be of residential in nature and a should not be understood to indicate a singular number. Also, section 54/54F uses the expression a residential house and not a residential unit . Section 54/54F requires the assessee to acquire a residential house and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the Section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the section which requires that the residential house should be built in a particular manner, it seems to us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be allowed to the Assessee, such deduction should be restricted to 1/3rd of the cost of the new asset. The stand of the Assessee on the other hand is that Sec.54F mandates that the new asset should be purchased by the Assessee and it does not stipulate that the house should be purchased in the name of the Assessee only. 24. The view of the revenue finds support in the decision of the Hon ble Bombay High Court in the case of Prakash Vs. ITO 312 ITR 40 (Bom) wherein it was held that to claim deduction u/s.54F of the Act, it is necessary and obligatory to have investment made in residential house in the name of the Assessee only and not in the name of any other person. The view of the Assessee finds support in the decision of Hon ble Karnataka High Court in the case of DIT (Intl.) Vs. Mrs. Jennifer Bhide (2011) 15 taxmann.com 82 (Karn.) wherein it was held that there is no requirement that investment u/s.54EC should be in the name of Assessee only. In that case new asset was purchased in the name of the Assessee and her husband. The AO allowed deduction u/s.54EC only to the extent of 50% on the reasoning that deduction will be allowed only to the extent of investment made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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