DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 7(1), CHENNAI vs. VELLORE SUBRAMANIAN SARAVANAN, CHENNAI

आयकरअपीलीयअिधकरण, ‘सी’ ायपीठ,चेई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं
ी जगदीश, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकरअपीलसं./ITA No.1132/Chny/2023
&
CO No. 18/Chny/2024
िनधा रणवष /Assessment Year: 2015-16

The DCIT,
Non-Corporate Circle -7(1),
Chennai.

v.
Vellore Subramanian-
Saravanan,
S1, Dattatrya Apartments,
25, Giri Road, T.Nagar,
Chennai – 600 017. [PAN:AAWPS3926R]
(अपीलाथ"/Appellant)

(Respondent/Cross Objector)

Department by :
Ms. Anita, Addl. CIT
Assessee by :
Mr. D. Anand, Advocate
सुनवाईकीतारीख/Date of Hearing
:
08.01.2025
घोषणाकीतारीख /Date of Pronouncement
:
25.03.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

These are appeal preferred by the revenue and the cross objection filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC (hereinafter in short "the Ld.CIT(A)”), Delhi, dated 18.07.2023 for the Assessment Year (hereinafter in short "AY”)
2015-16. 2. The revenue’s grounds of appeal are as under:-

CIT(A) is contrary to law, facts and circums erred in not considering the fact that the building on 01.02.2013 and the sale of land more than one year from the date of i
01.02.2013. ) erred in not considering the fact that the residential building within the specified perio of sale as mandated for claiming deduction u ed in not considering the fact, against the re d CIT(A) in the case of C. AryamaSundar isposed the SLP on account of low tax effec r grounds that may be adduced at the time o r of the learned CIT(A) may be set aside an ored.
on preferred by the assessee are as rned Commissioner of Income Tax (Appeals)-N aw.
missed the claim of the appellant, that the val twenty people who had illegally occupied a port osting Rs.98,12,720/- as cost of improvement/
land.
pletion of assessment the appellant was not ocal Body administrator that the lands gifte upants. But before CIT (A) the appellant had hat the said occupants were occupying the said wing their residence in the gifted land.
a remand report recommending the claim of ents submitted in support of his claim. Th give a certificate that people are occupying the heir scheme of things to give such a certificate al photographs to prove the occupation by those e taken. But enough documents like Ration C ants showing the address of the land along w e issued by the State Government authorities w that the illegal occupants have taken poss by the appellant to them and they have started above submissions and also based on the sub f hearing, it is most humbly prayed that the Ho

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan stances of the assessee has took place on nvestment in e assessee has od of one year
/s 54F of the elied upon the amvsPCIT-3, ct and not on of heating, it is nd that of the under:-
NFAC is wrong, ue of the land tion of the land
/ cost incurred able to give a ed were taken submitted (i) d land and (ii) f the appellant he Local Body said land as it . Instead, they e people in the ard, Electricity with Patta and were submitted session of the living there.
bmission to be on'ble Tribunal may be pleased to all Capital Gains. (The valu
4. At the outset, it filed by the assessee af condonation application reveals that the assesse revenue only when he g and the assessee imm impugned order by sup one ground which was that the assessee has that within three mont filed the cross-objection that there was a delay o has been caused not assessee and the asse cause of the delay, we delay and we do so, an well as the cross objecti
5. The sole ground
Ld.CIT(A) allowing de
(hereinafter in short “th
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ow the claim of the appellant of Rs.97,07,7
ue of the land gifted was Rs.98,12,720/-) is noted that the cross-objection fter a delay of ‘179’ days. The ass which is placed on record. A perus ee came to know about the appeal p got the notice from the Tribunal dat mediately filed the cross-objectio pporting the order of the Ld.CIT(A) decided against him by the Ld.CIT( filed the cross-objection on 18.05. hs of notice from the Tribunal, the n. However, the Registry has broug of 179 days and considering the fact by any deliberate omission on th ssee filed an affidavit explaining t find there was excusable cause for nd proceed to hear the appeal of t ion preferred by the assessee.
of the revenue is against the duction u/s.54 of the Income T he Act”) in respect of cost of the la

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan
35/- from the (CO) has been sessee has filed sal of the same preferred by the ted 20.02.2024
on against the and has raised
(A). It is noted
2024, meaning e assessee has ht to our notice t that the delay he part of the the reasons for r condoning the the revenue as action of the Tax Act, 1961
and purchased on 01.02.2013 (i.e. mo term capital asset on 31
6. Brief facts are tha a cost of Rs.11,43,90,4
Act, an amount of Rs.
residential building cos
Rs.87,39,060/- on the purview of Section 5
construction of a resi land, and therefore, th for the above said amou the AO had denied the Rs.11,43,90,479/- as t
01.02.2013 which even capital asset on 31.03
residential building cost
7. Aggrieved by the appeal before the Ld.C relying on the decision the case of C. Arya taxmann.com 74/258 Ta
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re than 2 years & 1 month before t
1.03.2015).
at the assessee purchased a land on 477/- and has claimed exemption
13,43,90,479/- which included co ting Rs.1,89,22,000/- out of the c premise that the assessee's case
54F(1) as the assessee has ca idential building, which includes th e assessee was entitled to the ben unt. However, during the assessme benefit of sec.54F in respect of the the said land was acquired by th nt happened before one year of t
3.2015, but allowed the cost of c of Rs.1,89,22,000/-.
e decision of the AO, the assesse
CIT(A) who allowed the claim of th of the juri ictional Hon’ble Madras ma Sundaram v. CIT reported axman 10/407 ITR 1 [Mad-HC].

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan the sale of long n 01.02.2013 at u/s.54F of the nstruction of a capital gains of falls within the arried out the he purchase of nefit of sec.54F nt proceedings, cost of land of he assessee on the sale of the construction of e preferred an he assessee by s High Court in in [2018] 97

aforesaid action of the Ld.CIT(A), both the parties and perused the had claimed exemption u/s.54F of ,90,477/- in respect of constructio hich was partly allowed to the e the cost of construction of the resid to have disallowed the claim of c land was acquired by the assess asset which earned him capital gai wed the claim made by the assessee sessee is entitled for deduction u/s ade in purchase of land also.
e asset constructed by the asse was held that cost of the land wou w asset by relying on the decision the case of C. Aryamma Sundram efore us; and the only question
) in following the decision of the H e of C. Aryamma Sundram (supra)

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan the Revenue is records. The the Act for the on of residential extent of only dential building.
cost of land at see before one in. On appeal, e u/s.54 of the .54F of the Act
Meaning, while essee to claim uld be included of the Hon’ble
(supra) which is whether the Hon’ble Madras is erroneous or not? For that let us h
Hon’ble Madras High Co
4. The appellant assess
Nagar, New Delhi on 15
a total consideration of that arose to the appella on 14.5.2007, the superstructure thereon of Rs.15,96,46,446/-.
appellant assessee c
Rs.18,73,85,491/-. Thu capital gain as exempt f
5. The Assessing Off expenditure incurred af exemption under Sectio cost of construction
Rs.1,14,81,067/-. Exem
Section 54 of the said A 10. Following question
Hon’ble Madras High Co i.
When capital ga thereto and a r the date of suc eligible for set- land, if such lan property from w ii.
Whether, in com
54(1) of the Inc the cost of the c
11. And the Hon’ble holding as under:
18. The question is, wh residential house is exe
19. The conditions prec to income tax are:
(i)The assessee either one year
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have look at the facts of the case a ourt in the case of C. Aryamma Sund see sold a residential house property at No.137
5.1.2010 in favour of one Smt.Vanadana Mancha
Rs.12,50,00,000/- and the total long term cap ant assessee was Rs.10,47,95,925/-. In the me appellant assessee purchased the proper at No.138, JorBagh, New Delhi for a total consi
After demolishing the existing superstructu constructed a residential house at a us, the appellant assessee claimed entire lo from tax under Section 54 of the said Act.
ficer held that only that part of the cons fter the sale of the original asset would be eli on 54 of the said Act and based on records h incurred after the sale of the original as mption of Rs.1,14,81,067/- was allowed as reli
Act.
n of law are noted to have been a ourt on the aforesaid facts, as under ain arises from sale of building and/or land app esidential house is constructed within three ye ch sale, whether the cost of the new asset, off against capital gain, would include the cos nd had been purchased three years prior to sa which capital gain arose?
mputation of cost of new asset contemplated in come Tax Act, the cost of land can be segregat constructed house property ?
High Court has decided the ques hether any part of the capital gain from transfe mpt from the capital gain tax and if so to what e cedent for exemption of capital gain from being e should have purchased a residential house r before or two years after the date of transfe

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan as noted by the dram (supra):-
, Sundar anda, for pital gain eanwhile, rty with ideration ure, the cost of ng term struction gible for held that set was ef under dmitted by the :- urtenant ars from which is st of the le of the n Section ted from stion of law by er of the extent?
charged in India er of the residential hou constructed a n years from the resulted in the c
(ii)If the amou residential hous the amount of t charged under S
(iii)If the amoun the new residen
Section 45. 20. What has to be adju of the residential house said Act is specific and c just the cost of constr adjusted. The cost of th cost of the land, the c labour and any other c the residential house.
21. A reading of Sectio adjusted against the co such adjustment is that within one year before which resulted in the ca been constructed in In which resulted in the ca land from the cost of re
22. It is axiomatic that the same money receiv in the acquisition of ne
Legislature that the ver for transfer of a reside asset, Section 54(1) wo respect of property pur to the capital gain or exemption in case of p that might have been r resulted in the capital g
23. At the cost of repet being charged to incom another residential hou before or two years afte period of three years a not in dispute that the time stipulated in Sectio
54 that construction cou the asset resulting in ca the cost of the new hou and the cost of the new of the previous year. If ITA
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use which resulted in capital gain or alte new residential house in India within a period date of the transfer of the residential propert capital gain.
unt of capital gain is greater than the cost se so purchased or constructed, the difference the capital gain and the cost of the new asset
Section 45 as the income of the previous year.
nt of the capital gain is equal to or less than the ntial house, the capital gain shall not be charge usted and/or set off against the capital gain is, e that is purchased or constructed. Section 54(1
clear. It is the cost of the new residential house ruction of the new residential house, which he new residential house would necessarily inc cost of materials used in the construction, the cost relatable to the acquisition and/or constru n 54(1) makes it amply clear that capital gain st of new residential house. The condition prece t the new residential house should have been pu or two years after the transfer of the residentia apital gain or alternatively, a new residential ho dia, within three years from the date of the t apital gain. The said section does not exclude th sidential house.
Section 54(1) of the said Act does not contemp ved from the sale of a residential house should ew residential house. Had it been the intentio ry same money that had been received as consi ential house should be used for acquisition of ould not have allowed adjustment and/or exem rchased one year prior to the transfer, which g may be in the alternative have expressly m prior purchase, subject to purchase from any received for the transfer of the residential hous ain.
ition, it it reiterated that exemption of capital g me tax as income of the previous year is attract use has been purchased within a period of o er the date of transfer or has been constructed after the date of transfer of the residential hou new residential house has been constructed w on 54(1) of the said Act. It is not a requisite of uld not have commenced prior to the date of tra apital gain. If the amount of capital gain is grea use, the difference between the amount of cap w asset is to be charged under Section 45 as the f the amount of capital gain is equal to or less

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan rnatively of three ty which t of the between is to be e cost of ed under the cost
1) of the e and not is to be clude the e cost of uction of is to be edent for urchased al house, ouse has transfer, e cost of late that be used n of the ideration the new mption in gave rise made the advance se which ain from ed when one year within a use. It is ithin the f Section ansfer of ater than pital gain e income than the cost of the new residen house is constructed, th the said Act.
24. For the reasons di framed above are answ the respondent revenue the second question is a 12. From perusal of Court, we find that ther of C. Aryamma Sundra the Hon’ble Madras Hig and therefore the case present case and the Ld that there is no disp constructed within the t
AO has allowed the ded tune of Rs.1,89,22,000/
of three properties [on than the cost of new residential house is co u/s.45 of the Act and t and dismiss the grounds
13. Before parting, w
Revenue that, dismissa order of the Hon’ble
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ntial house, including the land on which the re he capital gain is not to be charged under Secti iscussed above, the appeal is allowed. The q wered in favour of the appellant assessee and e. The first question is answered in the affirma answered in the negative. No costs.
the aforesaid order of the Hon’bl re is similarity in the facts of present am (supra) and the question of law h Court is identical with that of the e law is squarely applicable to th d.CIT(A) rightly followed it; and fu pute that the new residential ho time stipulated u/s.54(1) of the Ac uction claimed for construction of th
/-; and since, the amount of capital e at Perambakkam & two at Coim residential house including the nstructed, the capital gain need n therefore, we confirm the action of s of appeal raised by the Revenue in we would like to address Ground al of SLP preferred by the Reven
Madras High Court in the case o

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan esidential on 45 of questions d against ative and e Madras High t case with that w raised before e present case, he facts of the urther, we note ouse has been t, because, the he house to the l gain from sale mbatore] is less land on which not be charged f the Ld.CIT(A) n this regard.
d No.4 of the ue against the of C. Aryamna

Sundaram (supra) for l
Hon’ble Madras High C
Court, and therefore Ld force in the said ground no quarrel that the H preferred by the Reven
Court in the case of C. A and therefore, we acce happen. However, the in the facts of the pre present assessee’s case the impugned action of place on record that th has overturned the afo
Court. Therefore, there so, it is dismissed.
14. The only issue against the action of th cost of improvement
Rs.97,07,735/- while co
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ow tax- effect, doesn’t mean that t
Court has been upheld by the Ho d CIT(A), erred in following it. We d of Revenue for the reason stated
Hon’ble Supreme Court has dism nue against the order of the Hon’b
Aryamna Sundaram (supra) only fo ept that the principle of doctrine of juri ictional Hon’ble Madras High esent case is squarely applicable t e, and therefore, no error can be att f the Ld.CIT(A), unless the departm he Hon’ble Supreme Court by subse resaid view rendered by the Hon’b e is no merit in the contention of th raised by the assessee in his Cro he Ld.CIT(A) disallowing the deduct of land at Perambakkam to omputing the LTCG on sale of that p

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan the view of the on’ble Supreme e don’t find any infra. There is missed the SLP le Madras High r low tax effect f merger didn’t
Court decision to the facts of tributed against ment is able to equent decision le Madras High he Revenue and oss-Objection is tion claimed on the tune of roperty.

ted by the AO are that the assesse on land at Perambakkam to omputing the capital gains from sale erefore, the AO asked the assessee he assessee brought to his notice t ed occupants/families on the main p h was creating hindrance in selling e unauthorized/adverse possession agreed to give them free of cost a land in lieu of them vacating from th hich, twenty (20) Gift Deeds were e d also undertaken not reclaim the la e assessee, total value of the land rsons/families were to the tune of as cost of improvement while calcu
G) on sale of land at Perambakkam cts, the assessee is noted to have f ift Deeds executed on 21.12.2017. claim on the specious plea that the ng evidence by adducing any certif rsons were staying in the main part wenty (20) illegal occupants had oc

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan ee has claimed the tune of e of property in for the proof of that there were part of the land g the property;
[from the main piece of land at he main-part of executed by the and occupied by d gifted by the Rs.98,12,720/- ulating the Long and in order to filed before the However, the assessee failed ficate from the t of the land at ccupied the said land at Perambakkam.
claim made by the asse
14.2 Aggrieved, the as who dismissed the same
14.3 Aggrieved, the ass
14.4 We have heard b issue, it is noted that t
31.03.2015 for a sa computing the capita improvement) to the tu the AO that there were possession [adverse pos said land. Therefore, property without clea negotiations, they conv of the land provided, th the same land, which such agreement, twenty families which was valu claim, assessee is note
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Meaning, the AO disbelieved the ssee in incurring such expenses.
ssessee preferred an appeal before e on the very same reasoning.
sessee is before us.
both the parties and perused the re he assessee had sold the land at Pe le consideration of Rs.9,26,58,5
al gains had claimed expendit une of Rs.97,07,735/- by bringing t
‘20’ illegal/unauthorized families wh ssession without any title] on the m it was not possible for the assess aring them from the land. Af veyed their willingness to clear from hey were allotted free of cost land a was accepted by the assessee ;an y (20) Gift Deeds were executed in ued at Rs.98,12,720/- and in orde ed to have produced the copy of No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan veracity of the e the Ld.CIT(A) ecords. On this erambakkam on 520/- and for ture
(cost of to the notice of hom all were in main part of the see to sell the fter protracted m the main part at the corner of nd by virtue of favour of ‘20’
er to prove the all Gift Deeds before the AO. But the the assessee didn’t file that there were illega
Perambakkam property
During the appellate pr for a Remand Report to the assessee and pu contents of which is rep
Sir
Sub: Submissio
AAWPS3926R - AY 2015

Ref: T. Letter in ------------------
With reference t
2. The CIT(A) vide he verify the claim on cost of land was given as to 2.1: Letter dated 01.11
(i) details/docum in the said land
(ii) Present aeria
3. In reply, assessee pr the 20 occupants. Also, were submitted and per the reallocated land call
4. Hence the claim of th
11. Aggrieved by th
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AO didn’t allow the claim only on t e evidence/certificate from local bo l ‘20’ families occupying the ma y and that they were relocated in roceedings, we note that the Ld.CIT o find out the truth/veracity of the rsuant to it, the AO has filed Re produced as under:
n of remand report - in the case of Sri Saravanan
5-16 · regarding.
n No. ITA No.116/CIT(A)-Z/2017-18 dated24.10
----------------------------------------------------- to the above following report is submitted.
r letter dated 24.10.2019 directed the asses t of improvement for Rs.97,07,735/- under the the dwellers who sai to be residing in the said la
.2019 was issued to the assessee seeking the ments to prove that the said occupants were oc l photographs showing their residence in the gifted roduced the relevant copies of gift deeds execu
, patta and encumbrance certificate for the said rused. Aerial photographs showing the occupant ed for were also submitted and verified.
he assessee may be considered on merits.
he aforesaid action of the Ld.CIT(A), the assesse

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan the ground that dy to establish in part of the the said land.
T(A) had called claim made by emand Report, n - ITA -
.2019
------- ssing officer to garb that part and sold.
cupying earlier d land.
ted in favourof d 20 occupants ts occupying in ee is before us.

Remand Report filed by the AO clea ced before the AO relevant copies o
‘20’ occupants and also Patta &
20’ occupants and the aerial photog ing in the reallocated land; and verified the same and didn’t rais meaning, accepted the veracity of to prove the veracity of his claim.
the AO, we are of the view that th to prove that the assessee had Rs.97,07,735/- and relocated them sold on 31.03.2015. And without e couldn’t have sold the property at 58,520/-. Therefore, expenses clai
07,735/- needs to be allowed and we peal filed by the Revenue is dismiss ssessee is allowed.
d on the 25th day of March, 2025, in MEMBER
(एबी टी.
(ABY T. VA
ाियकसद/JUDI

No.1132/Chny/2023
&
y/2024(AY 2015-16) ramanian Saravanan arly shows that of the Gift Deed
& Encumbrance graphs showing d the AO has se any adverse the documents
In the light of e assessee has gifted to ‘20’
m from the main t incurring such t Perambakkam med as cost of e order so.
sed and Cross-
Chennai.
/-
वक
)
ARKEY)
ICIAL MEMBER

चेई/Chennai,
िदनांक/Dated: 25th March, 2
TLN
आदेश की 1ितिलिप अ2ेिषत/Cop

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