TMI Blog2022 (12) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dismissed. Deduction u/s 54F - Assessee was eligible to acquire 7 flats against transfer of 50% undivided share in the land. The assessee has not received any consideration in cash rather the consideration is in the shape of flats only. Therefore, on the date of entering into JDA with the developer, it could be concluded that the assessee made deemed investment to acquire the flats. The mere delay on the part of the developer to hand over the possession of the flat would not vitiate the claim of the assessee since it would be beyond the control of the assessee to ensure timely acquisition of the flat. The provisions of Sec.54F are beneficial provisions and the same should be given effect to in full and could not be denied to the assessee on such technicalities. Therefore, we would hold that the assessee would be eligible for deduction u/s 54F. we direct Ld. AO to allow deduction u/s 54F on 7 flats acquired by the assessee under Joint Development Agreement. The corresponding ground raised by the assessee stand allowed. Unexplained cash credit - HELD THAT:- AR pleaded for another opportunity to the assessee to substantiate source of cash deposit. The Ld. AR submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght by the assessee at fag-end of the year and no time was left with Ld. AO to pass a speaking order. The Ld. Sr. DR also submitted that the 7 flats could not be considered as single unit and each unit is separate unit. 2.3 Having heard rival submissions and after due consideration of material facts, out adjudication would be as under. Assessment Proceedings 3.1 The assessee filed return of income on 23.04.2010 declaring income of Rs.3.46 Lacs, Based on assessment proceedings of AY 2012- 13, the case was reopened and notice u/s 148 was issued on 14.03.2016. It transpired that the assessee along with Mr. Sunil Wijeyanayake entered into Joint Development Agreement (JDA) with M/s Foundation One Infrastructure (P) Ltd. (FIPL) on 11.06.2008 for construction of residential apartments on property owned by them. The owners were to get 50% of super built-up area in exchange. The assessee received 7 flats for transfer of 50% undivided share in the land. The assessee computed Long Term Capital Gains u/s 50D and claimed exemption u/s 54 on 2 flats out of 7 flats. The Ld. AO disputed the valuation of the assessee and also opined that exemption u/s 54 would not be available since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found in the same from this angle. The adjudication in the impugned order, to that extent, does not require any interference on our part. The corresponding grounds urged by the assessee stand dismissed. 7. On the issue of deduction u/s 54F, it could be seen that the assessee was eligible to acquire 7 flats against transfer of 50% undivided share in the land. The assessee has not received any consideration in cash rather the consideration is in the shape of flats only. Therefore, on the date of entering into JDA with the developer, it could be concluded that the assessee made deemed investment to acquire the flats. The mere delay on the part of the developer to hand over the possession of the flat would not vitiate the claim of the assessee since it would be beyond the control of the assessee to ensure timely acquisition of the flat. The provisions of Sec.54F are beneficial provisions and the same should be given effect to in full and could not be denied to the assessee on such technicalities. Therefore, we would hold that the assessee would be eligible for deduction u/s 54F. 8. So far as the quantum of deduction is concerned, we find that the issue stood squarely covered in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a residential unit, namely, one unit. In that sense, the said provision is available to the assessee. 12. In the decision reported in (2012) 75 DTR 56 (Dr. (Smt.) P.K. Vasanthi Rangarajan, this Court, while dealing with the benefit of exemption under Section 54F, followed the abovesaid decision of this Court in T.C. (A) No. 656 of 2005 and granted the benefit to the assessee under Section 54F of the Income Tax Act on the investment made in the four flats. 13. Hence, the above-said decisions of this Court make it clear that the property should be assessed as one unit, even though different flats are available. Here also, as per the assessment order, all the flats have one door number, namely, Door No. 29F, Race Course, Coimbatore.' (vi) In G. Chinnadurai's case (supra) [Honourable Single Judge of Madras High Court] the relevant paragraphs are paragraphs 14 and 15 and they read as follows: Thus, by applying the legal principles enunciated in the case of Smt. V.R. Karpagam (supra), Dr. Smt. P.K. Vasanthi Rangarajan (supra), and G. Saroja (supra), it is to be pointed out that the expression 'a residential house' used in Section 54, should not be taken to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd being residential house, 54-F deals with capital gain arising out of transfer of any long term capital asset not being a residential house. Otherwise, in all other aspects of the matter the two provisions namely Section 54 and 54-F are in parimateria. Therefore, the interpretation of 'a residential house' occurring in Section 54 cannot be any different for the same phrase 'a residential house' occurring under Section 54-F of IT Act. In this regard what applies to Section 54 would apply in equal and full force to Section 54-F also. Therefore, the principles in K.G. Rukminiamma's case as well as Smt. V.R. Karpagam's case (supra) would apply to the facts of the instant case. (ix) As set out in the discussion supra, learned counsel for Revenue, relied heavily on Pawan Arya's case (supra) which was decided by a Division Bench of the Punjab and Haryana High Court. Pawan Arya's case (supra) arises under Section 54 of IT Act. We have already opined that Section 54 and 54-F of IT Act are in parimateria. Therefore, there is no difficulty on this count, but Pawan Arya's case is clearly distinguishable on facts. A perusal of the factual matrix in Pawan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pagam's case for two reasons and they are as follows: (a) Smt. V.R. Karpagam's case (supra) has been rendered by a coordinate Division Bench of this Court. (b) Smt. V.R. Karpagam's case (supra) has not been carried by Revenue to the Supreme Court and therefore is holding the field as on today. (xiv) We are informed that there is no intra court appeal in G.Chinnadurai's case also. In other words Revenue has accepted G.Chinnadurai's case is what we are given to understand. (xv) To make our discussion on case law as complete and as comprehensive as possible, we deem it relevant to also mention that the all too important phrase 'a residential house' occurring in Section 54-F was amended with effect from 01.04.2015. Such amendment was brought in by the Finance (No. 2) Act, 2014 and post amendment, 'a residential house' now reads as 'one residential house'. We have noticed that this amendment is only with effect from 01.04.2015 and the case on hand pertains to assessment year 2012-2013. Therefore, this amendment does not in any manner impact the instant case. However, we make it clear that we have noticed this amendment. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see from getting the benefit of Section 54-F as all the flats are in the same location/address and all flats are by products of one development agreement with the same builder. (vi) The logic behind our view is that the assessee, irrespective of whether it is one flat or many flats, gets proportionate undivided share in land only for the same piece of land. Therefore, assessee does not buy more than one property in that sense of the matter. Flats, apartments are completely based on co-ownership. (vii) Owing to all that have been stated supra, we conclude that the assessee is entitled to the benefit of Section 54- F of IT Act. Since facts are identical in the case before us, respectfully following the same, we direct Ld. AO to allow deduction u/s 54F on 7 flats acquired by the assessee under Joint Development Agreement. The corresponding ground raised by the assessee stand allowed. No other ground has been urged before us. 9. The appeal stands partly allowed in terms of our above order 10. Assessee s Appeal for AY 2012-13 10.1 In this year, the only ground urged is addition of unexplained cash credit for Rs.40.65 Lacs which was made in assessment order passed u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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