SMT. RANJANA AJAY CHIKHALE,,NAVI MUMBAI vs. INCOME-TAX OFFICER, WARD - 1,, PANVEL

PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (A) – 2, Pune, dated 01.03.2019 for A.Y. 2014-15.

Assessee is an individual who filed his return of income for A.Y. 2014-15 declaring total income at Rs.Nil. The return was inititally processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act

vide order dated 30.11.2016 and the total income was determined at

Rs.39,16,385/-. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A) who vide order dt.01.03.2019 (in appeal

No.522/2017-18) dismissed the appeal of assessee. Aggrieved by the

order of Ld.CIT(A), assessee is now in appeal and has raised the

following grounds :

“1. The Learned CIT appeals erred in sustaining the additions made by the Assessing Officer merely on the basis that the assessee has not joined the two residential flats to make one residential house property without appreciating the judicial precedents. 2. The learned Assessing Officer erred in relying on the decision in case of Sushila M. Jhaveri, wherein the facts are completely different from the present case. 3. The learned CIT Appeals erred in not appreciating the fact that the amendment made in section 54F of the Income Tax Act, 1961 is applicable prospectively and not retrospectively.”

3.1. During the course of assessment proceedings assessee had sold a

plot of land at Nagpur for a sale consideration Rs.85,00,000/- on

23.01.2012 and re-invested the amount for purchasing of two

residential houses i.e., Flat No.505 and 506, Building No.14, Mohan

Palms, Badlapur, Mumbai and had claimed deduction u/s 54F of the

Act for both the residential flats. On perusal of the records, AO found

that both the flats are adjacent flats which are not covered into one

house and accordingly, he had restricted the claim of deduction u/s 54

of the Act of assessee on one house only by holding that as per the

provision of section 54F of the Act, deduction will be given for

investment in one of the residential units only. When the matter was

carried before Ld.CIT(A), he confirmed the action of AO holding that

assessee is not entitled for deduction u/s 54F on two flats.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.

and Ld.CIT(A) and further submitted that assessee had purchased two

adjoining residential units for residential purposes. It was further

submitted that the amendment in Section 54F made by the Finance

(No.2) Act, 2014 was w.e.f. from 01.04.2015 i.e., from A.Y. 2015-16

onwards which made the restriction on purchase or construction to one

residential house in India meaning thereby that prior to the amendment

even on purchase of more than one residential house assessee was

eligible to claim deduction. Ld.A.R. relied on the decision of Hon’ble

Delhi High Court in the case of CIT Vs. Gita Duggal wherein it was held

that Section 54F the I.T.Act does not require the residential property to

be built in a particular manner. Ld.A.R. further submitted that the

issue is covered by the decision of Hon’ble Madras High Court in the

case of CIT Vs. Gumanmal Jain reported in (2017) 394 ITR 666. From

the copy of the decision of Hon’ble Madras High Court, he pointed that

the Madras High Court in the case of Gumanmal Jain (supra) has

considered the amendment made to Sec.54F of the Act by the Finance

Act No.2 of 2014 and after considering the amendment, it has held that

prior to the amendment, residential house would include multiple flats /

residential house and has held that as long as flats are in the same

address/location even though they are located in different blocks /

buildings, it was not disentitle the assessee from getting the benefit of

deduction u/s 54F of the Act. He therefore relying on the aforesaid

decisions submitted that assessee be allowed the claim u/s 54F of the

Act. Ld. D.R. on the other hand, supported the order of lower

authorities.

record. It is an undisputed fact that assessee had sold a plot for a

consideration of Rs.85,00,000/- and had re-invested the same in

purchasing two residential units, being adjoining residential units. It is

an undisputed fact that the aforesaid two flats purchased by the

assessee are in the same building. It is Revenue’s contention that u/s

54F, assessee is eligible for deduction only on one unit and not on two

residential units. I find that Hon’ble Madras High Court after

considering the amendment made to Sec.54F of the Act by the Finance

(No.2) Act, of 2014 has held that even if the flats/apartments were in

different blocks/buildings and so long as they are at the same

location/address, assessee was eligible for deduction u/s 54F of the

Act prior to 01.04.2015. It had further held that prior to the

amendment made by the Finance Act (No.2) Act, 2014 w.e.f. 01.04.2015

(from A.Y. 2015-16 onwards), the residential house would include

multiple flats / residential units. Before me, Revenue has not pointed

out any contrary binding decision in its support. I therefore considering

the fact that the impugned year being A.Y. 2014-15 wherein the

amendment made by Finance (No.2) of Act, 2014 would not apply and

relying on the aforesaid decision of the Hon’ble Madras High Court in

the case of Gumanmal Jain (supra), am of the view that assessee is

eligible for deduction u/s 54F of the Act on both the flats. I thus hold

so. Thus, the grounds of assessee are allowed.

Order pronounced on 16th day of October, 2019.

Sd/-- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER पुणे Pune; �दनांक Dated : 16th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.