TMI Blog2021 (9) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... the plural number of residential houses also. - Decided in favour of assessee. Computation of capital gain - cost of acquisition being the fair market value as on 01.04.1981 - HELD THAT:- Admittedly, the date of sale was on 19.03.2008 for a consideration of ₹.25,00,00,000/-. Without any valid document, the assessee has estimated the cost of acquisition of the property at ₹.25,00,000/- per ground, which appears to be on the higher side, but, at the same time, the value adopted by the Assessing Officer is only ₹.30,000/- per ground and that is also not correct value since the property is located at T. Nagar, Chennai. The decision in the case of CIT v. J. Chelladurai [ 2011 (12) TMI 41 - MADRAS HIGH COURT] relied on by the ld. Counsel for the assessee has no application since the property in that case was located in mofussil area, whereas, in the present case, the property is at prime locality of Chennai city. Thus, to meet the ends natural justice and considering the facts and circumstances of the case, we fix the value of the property at ₹.45,000/- per ground as on 01.04.1981 i.e., 45,000 x 4.5 = 2,02,500x5/9 comes to ₹.1,12,500/- and direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,21,760/- from house property and other sources. The return of income was processed under section 143(1) of the Act. As per the information available with the Department regarding sale of immovable property at T. Nagar by one Shri B. Sundararajan and Smt. B. Vatsala (mother of Shri Sundararajan) of ₹.45 crores. The total consideration of ₹.45 crores was divided between the two as ₹.25 crores for Shri B. Sundararajan and ₹.20 crores for Smt. B. Vathsala, assessee. Accordingly, the case reopened under section 147 of the act and notice under section 148 of the Act was issued. Upon the request, the assessee was intimated the reasons for reopening of assessment. After considering the submissions of the assessee and disposing the objections, the Assessing Officer completed the assessment under section 143(3) r. w s. 147 of the Act by assessing the total income at ₹. 6,59,56,280/- after making the disallowance under section 54F of the Act of ₹. 6,39,34,520/-. On appeal, by following the decision in the case of CIT vs. Smt. V.R. Karpagam [2015] 373 ITR 127 (Mad.) and CIT vs. Gumanmal Jain [2017] 394 ITR 666 (Mad.), the Ld. CIT(A) directed the AO to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and disallowed her claim for the second property which was invested for ₹.6.52 crores. In nutshell, the Assessing Officer held that the assessee is entitled to reinvest in only one residential property. 4.1 The AR of the assessee has submitted before the ld. CIT(A) that the assessee reinvested in the assessment year 2008-09 in which there was no restriction that an assessee should reinvest in only one residential property. It was also pointed out that the amendment restricting the reinvestment to one residential property was introduced prospectively w.e.f. the assessment year 2015-16.The AR of the assessee has relied on two decisions in the case of V.R. Karpagam and Gumanmal Jain (supra). By reproducing the head-notes of both the above decisions, the ld. CIT(A) held that both the case law squarely applies to the assessee s case in her favour and directed the Assessing Officer to allow the claim of deduction under section 54F of the Act for reinvestment in both the residential properties. 4.2 The contention of the Department is that the reinvestment in multiple properties located in different addresses is not eligible for claiming deduction under section 54F of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. [Prior to amendment by Finance (No. 2) Act, 2014 w.e.f. 01.04.2015 amendment, the aforesaid words in brackets read like this. Constructed, a residential house] 16. We are conscious of the fact that the questions posed for our consideration have to be answered in the context of an Assessee which is a HUF, which has a special character. It is only by deeming fiction of law that a HUF, is treated as a separate assessable entity by including the same in the definition of the word 'person' under Section 2 (31) of the Act. The definition of the word Assessee under Section 2(7) of the Act means a 'person' by whom any tax or sum of money is payable under the Act. Thus, the HUF is also a 'person' and a separate assessable entity under the Income Tax Act, 1961. 17. The purpose of Section 54 appears to allow a deduction to an Assessee, being an individual or HUF, to the extent of investment made in residential house as against the Capital Gains accruing on the sale of original residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at where capital gains arises from transfer of a long-term capital asset, not being a residential house, and the assessee within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transfer constructs, a residential house, then, the portion of capital gains in the ratio of cost of new asset to the net consideration received on transfer is not chargeable to tax. 20.3.Certain courts had interpreted that the exemption is also available if investment is made in more than one residential house. The benefit was intended for investment in one residential house within India. Accordingly, sub-section (1) of Section 54 of the Income-tax Act has been amended to provide that the rollover relief under the said section is available if the investment is made in one residential house situated in India. 20.4. Similarly, sub-section (1) of Section 54F of the Incometax Act has been amended to provide that the exemption is available if the investment is made in one residential house situated in India. 20.5. Applicability:-These amendments take effect from 1st April, 2015 and will accordingly apply in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l residential houses also in Section 54 prior to its amendment such interpretations will not change merely because the purchase of new assets in the form of residential houses is at different addresses which would depend upon the facts and circumstances of each case. So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction under Section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. If that be so, the Assessee-HUF in the present case, in our opinion, complied with the conditions of Section 54 of the Act in its true letter and spirit and, therefore was entitled to the deduction under Section 54 of the Act for the entire investment in the properties and securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Per contra, the ld. DR has submitted the property is located within the city limits and therefore, the case law relied upon by the ld. Counsel has no application. 6.2 We have considered the rival submissions and gone through the orders of authorities below including case law relied upon. The assessee has sold the property of 4.5 grounds of land and building at Usman Road, T. Nagar. The assessee has estimated the cost at ₹.25,00,000/- and 5/9th of the assessee s share comes to ₹.77,14,400/- by applying index ratio viz., 551/100. Since the Assessing Officer was of the opinion that the estimation of cost of acquisition appears on the higher side, after verification of SRO s letter, the Assessing Officer estimated the cost at ₹.30,000/- per ground as on 01.04.1981 and the difference was brought to tax. On appeal, the ld. CIT(A) confirmed the assessment order. Admittedly, the date of sale was on 19.03.2008 for a consideration of ₹.25,00,00,000/-. Without any valid document, the assessee has estimated the cost of acquisition of the property at ₹.25,00,000/- per ground, which appears to be on the higher side, but, at the same time, the value adopted by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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