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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-8, Pune, dated 11.09.2019 for the A.Y.2014-15. The assessee has raised the following grounds of appeal: “1. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN LAW AND WITHOUT CONSIDERING FACTS AND SUBMISSION MADE, CLAIMED u/s 54F AMOUNTING TO RS.24,72,272/- IN RESPECT OF INVESTMENT IN SECOND RESIDENTIAL HOUSE. THE APPELLANT PRAYS THAT DEDUCTION u/s 54F BE ALLOWED IN RESPECT OF SECOND RESIDENTIAL HOUSE.”
2. Brief facts of the case are that assessee filed original return on 18/11/2014 declaring total income of Rs.2,41,550/-. The assessee then filed revised return on 27/03/2015 declaring total income of for A.Y.2014-15 Sonali Kiran Shivarkar L/h of Late Kiran Sopanrao Shivarkar [A] Rs.26,66,570/- . The assessee was engaged in the business of running petrol pump. For AY 2014-15, the assessee had shown income from Business and LTCG. The AO noticed that assessee had claimed exemption u/s 54F by investing the sale consideration in flat number 904 and 604 of Dreams Ragini. The AO in the assessment order has held as under : Quote “ The assessee owns his first house at flat number B-204 Ganga Savera Wanowari Pune 46, therefore, the assessee can take benefit of exemption u/s54F by investing in one residential unit. However, in the case of the assessee, the assessee has invested his sales proceeds in two residential units i.e flat no.904 on ninth floor and flat no.604 on sixth floor .thus the has invested his proceeds in second and third residential units ” Unquote.
2.1. The ld.CIT(A) held that the amendment to section 54F was clarificatory hence applicable for AY 2014-15 also, though it is mentioned that the amendment is w.e.f. AY 2015-16. Therefore, the Ld.CIT(A) upheld the decision of the Assessing Officer(AO).
Thus the only issue for consideration is whether the assessee was eligible to claim exemption u/s54F by investing in two Flats Numbers 604 and 904.
Relevant part of the Section 54F is reproduced here under : 54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before A.Y.2014-15 Sonali Kiran Shivarkar L/h of Late Kiran Sopanrao Shivarkar [A] or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date [constructed, a residential house] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where— (a) the assessee,— (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property” .] 5. In this case it is an admitted fact that the assessee had purchased Flat Number 604 and 904 in the same building. The AO held that these are different residential units. Thus, the question we have to decide is whether Flat Numbers 604 and 904 are different residential units or it is one residential unit for the purpose of Section 54F of the Act. The Ld.AR relied on various case laws to claim that these are one single residential unit. The Ld.DR relied on the order of the lower authorities.
The Hon’ble Madras High Court in the case of Gumanmal Jain 394 ITR 666 (Madras) held as under : Quote , “7.CONCLUSION:
A.Y.2014-15 Sonali Kiran Shivarkar L/h of Late Kiran Sopanrao Shivarkar [A]
(i) We therefore have no hesitation in holding that in the instant case the assessee having got 15 flats along with his two sons will not disentitle him from getting the benefit under Section 54-F of the IT Act only on the ground that all the 15 flats are not in the same Block, particularly in the light of the admitted factual position that all the 15 flats are located at the same address namely, 'Rain Forest' No. 57, New No. 36, Taylor's Road, Rem Street, Kilpauk, Chennai 600 010. (ii) As a sequitur, we are unable to persuade ourselves that the 15 flats, even if they are located in different blocks would not disentitle the assessee from getting the benefit of Section 54-F of IT Act. (iii) We have no hesitation in holding that the order of ITAT which has been called in question before us is correct, there is no infirmity in the said order, does not call for any interference and we are of the view that the said order deserves to be confirmed. (iv) We also noticed that in all the judgements, irrespective of whether it is under Section 54 or 54-F of IT Act, which we have discussed supra, the judgements have proceeded only on the basis that the flats [being more than one flat] are in the same location/address. Therefore, once it is in the same location/address, the question of whether it is in the same block or in different blocks does not arise for consideration. To our mind, as long as all the flats are in the same address/location even if they are located in separate blocks or towers it does not alter the position. In the instant case, after all, all the flats are a product of one development agreement of the same piece of land being said land. Therefore, we make it abundantly clear that even if flats/apartments are in different blocks and different towers as long as they are in same address/location it does not disentitle the assessee from getting the benefit of Section 54-F of IT Act. (v) Therefore, the sole and sheet anchor submission of counsel for Revenue that the 15 flats in the instant case are located in the different blocks does not impress us. We are unable to persuade ourselves that this will disentitle the assessee 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 A.Y.2014-15 Sonali Kiran Shivarkar L/h of Late Kiran Sopanrao Shivarkar [A] 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. ” Unquote. 6.1 In the case of Gumanmal Jain, it was an admitted facts that all the flats were on different floors, having separate kitchen. Separate entrance, but the Hon’ble High Court after discussing various decisions held that the assessee was eligible for exemption u/s 54F of the Act.
The Hon’ble Karnataka High Court in the case of Navin Jolly Vs. ITO 117 Taxmann.com 323 vide order dated 18th June, 2020 held as under : Quote, “11. Alternatively, we hold that assessee even otherwise is entitled to the benefit of exemption under section 54F(1) of the Act as the assessee owns two apartments of 500 square feet in same building and therefore, it has to be treated as one residential unit. The aforesaid fact cannot be permitted to act as impediment to allowance of exemption under section 54F(1) of the Act. Similar view was taken by Delhi High Court in case of Geeta Duggal wherein the issue whether a residential house which consists of several independent residential units would be entitled to exemption under section 54F(1) of the Act was dealt with and the same was answered in the affirmative. The appeal against the aforesaid decision was dismissed by the Supreme Court by an order reported in (2014) 52 taxmann.com 246 (SC). We agree with the view taken by Delhi High Court.” Unquote.
A.Y.2014-15 Sonali Kiran Shivarkar L/h of Late Kiran Sopanrao Shivarkar [A]
The Hon’ble Delhi High Court in the case of CIT Vs. Gita Duggal, 30 taxmann.com 230 held as under : Quote, “We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited. ” Unquote.
In the case before us, it is an admitted fact that the assessee had purchased flats number 604 and 904. These flats were in the same building but on different floors. Different Hon’ble High Courts have echoed that expression "a residential house' would encompass different residential units located on the different floors of the same building. Respectfully following the Hon’ble High Courts (supra) it is held that Flat Number 604 and 904 constitute one residential unit for the purpose of Section 54F for AY 2014-15 and hence assessee has fulfilled the conditions of eligibility for claiming exemption u/s.54F for the year. Therefore, it is held that the assessee is eligible for exemption u/s 54F. Accordingly, grounds of appeal raised by the assessee are allowed.
In the result, appeal of the Assessee is Allowed.