PARTHIBAN KALAVATHI,CHENNAI vs. ACIT NON CORPORATE CIRCLE 11, CHENNAI

per records assessee neither had any knowledge or capability about

the business or property development nor had any intention to do so

as the assessee gave a general power of attorney in favour of the

builder accordingly. All the activities were done by builder through

GPA dated 10.07.2013, whereby builder was authorized to do all such

things as is necessary to enable construction of flats and also to sell

the same. The GPA was restricted to the extent of builder’s right at

73.33% of the land and that portion allotted as builder’s share and the

ITA No.1131/Chny/2018 :- 10 -:

balance 26.67% was retained by the assessee. In our view, the entire

above transaction is purely sale of plot to the builder and in turn

received monetary consideration of Rs.2.85 Crore and balance 4 Flats

valued at Rs. 1,44,31,642/-. Hence, according to us, this is a

transaction of capital gains and assessee’s transaction is that of Long

Term Capital Gain. Hence, we direct the A.O to treat the transaction

as LTCG and assess the same accordingly.

is entitled to claim of deduction u/s. 54 or 54F of the Act as the case

may be, because the assessee has been allotted 4 residential Flats

against the sale of her ancestral land or in lieu of development of her

ancestral land. We noted that this issue has been considered by the

Hon’ble Madras High Court in the case of Tilokchand & Sons Vs. ITO

[2019] 413 ITR 189 (Madras), wherein a residential house as occurring

in s. 54(1) of the Act can include more than one or plural residential

house. The Hon’ble High court has considered even the amendment

which is effective from 01.04.2015 and applicable far and from

assessment year 2015-16 and the relevant assessment year before us

2014-15. Hence, the amendment will not apply in this case. The

Hon’ble Madras High Court has finally considered this issue in para 20

& 21 as under:

ITA No.1131/Chny/2018 :- 11 -:

“20. We have discussed about the two decisions from the Karnataka High Court, which, in our opinion, dealt with similar controversy as is raised before us herein. The only difference which we find is that the purchase of the residential houses in the present case is at different address in the same city of Madurai. In D. Ananda Basappa case stated (supra), two flats in question were admitedly adjacent to each other and which were joined to become one residential house. In the case of Khoobchand M.Makhija (supra), two door nos are given viz., 623 and 729, but the complete addresses and even the name of the city is not clear in the facts narrated in the said Judgment. But in our considered opinion, the difference of location of the newly purchased residential house(s) will not alter the position for interpretation of the word 'a residential house' to the effect that it may include more than one or plural residential houses, as held by Karnataka High Court, with which we respectfully agree. The location of the newly purchased houses by the same assessee viz., HUF out of sale consideration received on the sale of original capital Asset or a residential house in the given circumstances of availability of such residential houses as per the requirement of the HUF will not alter the position of interpretation. 21. In our understanding, if the word 'a' as employed under Section 54 prior to its amendment and substitution by the words 'one' with effect from 01.04.2015 could not include plural units of residential houses, there was no need to amend the said provisions by Finance Act No.2 of 2014 with effect from 01.04.2015 which the Legislature specifically made it clear to operate only prospectively from A.Y.2015-2016. Once we can hold that the word 'a' employed can include plural 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 securities. Therefore, in our opinion, Judgment rendered by the Karnataka High Court in D. Ananda Basappa (supra) & Khoobchand M.Makhija (supra) cited at bar by the learned counsel for the Assessee apply on all fours to the facts of the present case.”

ITA No.1131/Chny/2018 :- 12 -:

Order pronounced on 21st September, 2022.

Sd/- Sd/- (महावीर िसंह) कुमार अ�वाल अ�वाल अ�वाल) अ�वाल (मनोज मनोज मनोज कुमार मनोज कुमार कुमार (Mahavir Singh) (Manoj Kumar Aggarwal) उपा�� / Vice President लेखा सद�य सद�य सद�य /Accountant Member सद�य लेखा लेखा लेखा चे�ई/Chennai, �दनांक/Dated: 21st September, 2022. EDN/-

आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF