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Before: Shri V. Durga Rao & Shri Manoj Kumar Aggarwal
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai, dated 22.03.2019 relevant to the assessment year 2013-14. Vide order dated 21.10.2022, the ITAT passed its order after hearing both the sides. Subsequently, the Department filed Miscellaneous Petition by stating that ITAT, by order dated 21.10.2022 not adjudicated ground Nos. 2.1 & 2.2 and therefore, the order passed by the Tribunal was a mistake apparent on record and it has to be recalled to adjudicate the grounds. Accordingly, vide order in M.P. No. 187/Chny/2022 dated 17.05.2023, the Tribunal has recalled its order dated 21.10.2022 to adjudicate the issue. The grounds raised by the Revenue and which were not adjudicated by the Tribunal are reproduced as under: 2.1 The ld. CIT(A) erred in holding that Plot No. 6, Ganesh Nagar, Sholinganallur owned by the assessee was a vacant plot and not a residential property. 2.2 The ld. CIT(A) failed to consider the sale deed dated 4.7.2012 which clearly mentioned that the house property was a plot in the layout of Ganesh Nagar together with super structure and electrical connection and superstructure alone was valued at ₹.3,75,000/-. 2.3 The ld. CIT(A) ought to have appreciated that the building on the housing plot was capable of habitation. 2.4 The ld. CIT(A) erred in facts and law in holding that the assessee owned only one residential house.
The issue before us for consideration is to decide whether the assessee was having one property or two properties at the time of transfer of capital assets.
Facts, are in brief, that the assessee sold his ancestral land at Muttukkadu village, Tiruporur TK on 22.02.2013 for ₹.6,45,10,000/-. On 07.022013, the assessee purchased a residential house at Padur village, Tiruporur TK for ₹.3,21,37,462/-. On 09.07.2012, the assessee also bought a vacant land at No. 6, Ganesh Nagar, Sholinganallur for ₹.24 lakhs. That part, the assessee was also having a commercial property let out for hospital. When the assessee sold property on 22.02.2013, according to the Department, the assessee was having two house properties i.e., one purchased on 09.07.2012 being vacant land at Ganesh Nagar, Sholinganallur and the other residential property purchased at Padur village, Tiruporur. Therefore, the Assessing Officer was of the view that the assessee was not entitled for benefit under section 54F of the Income Tax Act, 1961 [“Act” in short]. The Assessing Officer has also noted that the vacant land at Ganesh Nagar, Sholinganallur was actually not a vacant land and there is electric connection and also the assessee was receiving rental income and therefore, the Assessing Officer was of the view that it is also a house property.
The case of the assessee before the Assessing Officer as well as the ld. CIT(A) that there was no house at all in the property situated at Ganesh Nagar, Sholinganallur, whatever old building existing in dilapidated condition and submitted that since electricity meter exists, it cannot be said that it is a residential property. After considering the explanations of the assessee, the ld. CIT(A) has held that the assessee was having only one residential property at Padur village, Tiruporur TK and entitled for the benefit under section 54F of the Act.
The ld. DR supported the order passed by the Assessing Officer. On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A).
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The ld. CIT(A) gave a categorical findings that the property at Ganesh Nagar, Sholinganallur is only vacant property and it cannot be said as house property and therefore, the assessee is entitled to claim deduction under section 54F of the Act. Thus, the grounds of appeal in ground Nos. 2.1 to 2.4 are dismissed.
7. So far as assessee’s entitlement for benefit under section 54F of the Act for more than one property, the observations of the ITAT in its order dated 21.10.2022 are reproduced as under for the sake of convenience: 6. We have heard both the sides, perused the material available on record and gone through the facts and circumstances of the case. Before us, the Ld. counsel for the assessee first of all stated that Plot No.6 at Ganesh Nagar is a vacant plot and not a house. He stated that the entire revenue records proved it that this is a plot, but he stated that the amendment brought in by the Finance (No.2) Act, 2014 in s. 54(1) of the Act by which words “a residential house” were replaced by “one residential house” was applicable from A.Y 2014-15 and assessee can claim reinvestment exemption from multiple units. The Ld. counsel for the assessee stated that this issue is decided by Hon’ble Madras High Court in the case of CIT vs. Gunmanmal Jain [2017] 80 taxmann.com 21 (Mds.), wherein it was held that amendment was made to s. 54F of the Act with regard to word “a” by Finance (No.2) Act, 2014 with effect only from 01.04.2015 withdrawing deduction for more than one flat (residential house). Prior to said amendment, a residential house would multiple flats/residential units.
In view of the above, we are of the view that the amendment in the provisions of s. 54(1) replacing the word “a residential house” by “one residential house” was brought in Finance (No.2) Act, 2014 w.e.f 01.04.2014 and will apply for A.Y 2015-16. The relevant assessment year before us is 2013-14 and hence, the assessee is eligible for claim of deduction u/s. 54F of the Act, though there may be multiple units. Accordingly, the appeal of the Revenue is dismissed.
In view of the above concrete findings of the Tribunal in its order dated 21.10.2022, we hold that the assessee is eligible for claiming deduction under section 54F of the Act. Thus, on both counts, the appeal filed by the Revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced on the 13th September, 2023 at Chennai.