TMI Blog2021 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ding, it remains as one residential house as in the case of Shri Ramaiah Harish [ 2021 (9) TMI 1138 - ITAT BANGALORE ] Thus, we direct the AO to allow deduction u/s. 54F of the Act. The grounds raised by the assessee are allowed. - ITA No.192/Bang/2020 (Assessment year : 2016-17) - - - Dated:- 27-10-2021 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Appellant by : Shri C. Sandeep, CA Respondent by : Smt. Priyadarshini Besa Jt.CIT(DR)(ITAT), Bengaluru. ORDER Per Chandra Poojari, Accountant Member This appeal by the assessee is directed against the order dated 29.11.2019 of the CIT(Appeals)-7, Bengaluru for the assessment year 2016-17 on the following grounds of appeal:- 1) That the order of the learned Commissioner of Income-tax (Appeals) in so far it is prejudicial to the interest of the appellant is bad and erroneous in law and against the facts and circumstances of the case. 2) That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts disallowing the deduction of ₹ 1,63,03,233/- claimed u/s. 54F of the Act on the ground that the appellant has violated the provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4F has been amended w.e.f. AY 2015-16 restricting the benefit to one residential house only and thus, he disallowed the claim of deduction u/s 54F. The AO has placed reliance on the decision of Hon'ble Madras HC in the case of VR Karpagam 50 taxrnan.com 55. The assessee does not deny about two residential units consisting of ground floor and first floor and admits that the ground floor is self-occupied and the first floor has been let out on rent. However, the assessee submitted that the house in question is a single house with two entrances having Ground and First Floor with single Municipal Number and single PID number and therefore deduction u/s 54F should not be denied. 3. On appeal, the CIT(Appeals) confirmed the order of the AO on the reason that the assessee s building are two separate residential units having bed room, hall, kitchen and separate entrance. The assessee has also let out the first floor of the building and receiving rental income. Therefore, claim of assessee cannot be allowed in view of two separate independent residential units. Against this, the assessee is in appeal before us. 4. The ld. AR submitted that the AO disallowed the exemption u/s 54F o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. On identical facts, the Hon ble Bangalore Tribunal in Bhatkal Ramarao Prakash Vs ITO 175 ITD 144 has held that a residential house where ground floor is used for assessee s own residence and the first floor was let out has to be considered as one residential house for the purposes of S. 54F of the Act though having independent entries, deduction has to be allowed. The relevant portion of the decision is as under:- 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 particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property at N.R. Colony belonged to one owner, Smt. Janaki Iyengar and as per the Will of Smt. Janaki Iyengar, the Ground Floor of the premises which was numbered as Door No.37 was given to Smt. Janaki s sister, Dr. M. Vaidehi and the 1st Floor numbered as Door No.37/1 was given to Smt. Janaki s nephew, Shri P. Ramanuja Chari. Both these owners of Ground Floor and 1st Floor sold the property to the assessee. The Tribunal in para 20 of the order clearly observed that the entire property constitutes one residential house, but was bifurcated with two Door Nos. for Ground Floor and 1st Floor with common entrance in Ground Floor only to earmark the share of each beneficiary and that otherwise the property constitutes a single property, though it has two different Door Nos. The Tribunal has reached the conclusion that assessee has purchased only one property and not two properties. Though the Tribunal has made a reference to the decisions rendered by the Hon ble Delhi High Court in the case of Gita Duggal (2013) 30 Taxmann.com 230(Delhi) in which flats located in two different floors were regarded as one property. The Tribunal also referred to decisions of High Court of Karnataka referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal mentioned above would show that the Tribunal has interpreted section 54F on its own terms and held that multiple residential units in a single building has to be considered as one residential house. The Tribunal did not notice any ambiguity and hence, was not resolving any ambiguity. Hence, the learned CIT(A) clearly erred in law in relying on the decision of Hon ble Supreme Court in Dilip Kumar Co. (supra). The above decision is not applicable to the facts of the present case. 14. In view of the above submissions, the ld. AR submitted that the assessee is entitled to deduction u/s. 54F. 15. The ld. DR relied on the orders of lower authorities and submitted that the assessee s premises has been inspected by the Inspector of the department and he has given a report that the premises consists of two residential units each having doorways; Ground floor : 1 flat/residential unit BHK and 1st Floor : 1 flat/residential unit BHK. The assessee is residing in ground floor and 1st Floor is let out to the tenant and assessee is having more than one residential house. According to her, the assessee is not entitled to deduction u/s. 54F of the Act. 16. We have heard both the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this regard, the decisions cited by the ld. Counsel for the assessee before us supports the plea of the assessee viz., the decision of the Delhi High Court in the case of CIT Vs. Gita Duggal (2013 30 taxmann.com 230 (Delhi). In the aforesaid decision, the facts were that the assessee entered into a development agreement pursuant to which the developer demolished the property and constructed a new building comprising of three floors. In consideration of granting the development rights, the assessee received ₹ 4 crores and two floors of the new building. The AO held that in computing capital gains, the cost of construction of ₹ 3.43 crores incurred by the developer on the development of the property had to be added to the sum of ₹ 4 crores received by the assessee. The assessee claimed that as the said capital gains was invested in the said two floors, she was eligible for exemption u/s 54. The AO rejected the claim on the basis that the units on the said floors were independent selfcontained and not a residential house and granted exemption for only one unit. The CIT(A) and Tribunal upheld the assessee's claim by relying on B.AnandaBasappa 309 ITR 329 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e constructing a residential house. The physical structuring of the new residential house, whether it is lateral or vertical, cannot come in the way of considering the building as a residential house. The fact that the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction u/s 54/54F. It is neither expressly nor by necessary implication prohibited. 21. We are therefore of the view that the Assessee was entitled to claim deduction u/s.54F of the Act in respect of investment in the property bearing Door No.37 37/1, 1st Main Road, N.R.Colony, Bangalore. 5. We also notice that the revenue had filed a miscellaneous application against the above said order passed by the Tribunal in MP No. 08/Bang/2020 and the same was rejected by the order dated 09-09-2020 passed by the co-ordinate bench with the following observations:- 4. In this miscellaneous petition, the revenue has contended that since the Tribunal has placed reliance on the decision of the Hon'ble High Court of Karnataka rendered in the case of B. Ananda Bassappa (supra) and K G Rukminiamma (supra) and since by the Finance Act, 2014, sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Shri Chandrashekar Veerabhadraiah vs. ITO (ITA No.2293/Bang/2019 dated 07-12-2020 relating to AY 2015-16). Accordingly, we are unable to agree with the view taken by the tax authorities that each floor of the individual house/each portion in a floor is separate house property. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and hold that the house property received by the assessee is one residential house only within the meaning of sec.54F of the Act. Accordingly, we are of the view that the reasoning given by the AO to reject the claim for deduction u/s 54F is not justified. 7. With these observations, we restore this issue to the file of the AO for allowing the deduction u/s 54F of the Act in compliance with the above decision. 8. In the result, the appeal of the assessee is allowed. 17. In the present case also, the assessee owns one independent building which has two units one in ground floor and another in first floor and having two units cannot change the nature of the building, it remains as one residential house as in the case of Shri Ramaiah Harish (supra). Thus, we direct the AO to allow deduction u/s. 54F of the Act. The grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
