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Before: Shri Duvvuru RL Reddy & Shri S. Jayaraman
आयकर अपीलीय अिधकरण, ‘‘सी” �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI �ी धु�ु� आर.एल रे�ी, �ाियक सद� एवं �ी एस जयरामन, लेखा सद� के सम� Before Shri Duvvuru RL Reddy, Judicial Member & Shri S. Jayaraman, Accountant Member आयकर अपील सं./I.T.A. No. 453/Chny/2018 िनधा�रण वष�/Assessment Year:2009-10 The Income Tax Officer, Smt. Mayuri Atul Shah, Non Corporate Ward 15(3), Vs. Flat No. 802, Building F, Waterfront Chennai 34. Condominium, Behind Nittro Gym, Kalyaninagar, Pune 411 006. [PAN:AACPA1988P] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri G. Johnson, Addl. CIT ��थ� की ओर से/Respondent by : Shri Vilesh Dalya, C.A. सुनवाई की तारीख/ Date of hearing : 20.04.2021 घोषणा की तारीख /Date of Pronouncement : 14.06.2021 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai, dated 29.11.2017 relevant to the assessment year 2009-10 in directing the Assessing Officer to allow the deduction under section 54 of the Income Tax Act, 1961 [“Act” in short].
Brief facts of the case are that the assessee is an individual and filed her return of income for the assessment year 2009-10 on 06.07.2011 declaring an income of ₹.2,90,72,790/-. The case was selected for scrutiny
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and the assessment under section 143(3)of the Act was completed on 29.11.2011 by making an addition of ₹.6,84,730/-. Since the assessee has offered the capital gain on sale of property less than the market value of the property contravening the provisions of section 50C of the Act and the assessee has claimed exemption under section 54 of the Act on the purchase of 2 flats, the assessment was reopened by issuing notice under section 148 of the Act.
2.1 With regard to the claim of exemption under section 54 of the Act, the Assessing Officer observed that the assessee has purchased 2 flats in flat No. 802A and flat No. 802B at Kalyani Nagar, Pune vide two separate documents. As there is separate door numbers for each flat and there are separate documents for each flat and they are two different units, the Assessing Officer restricted to one flat at ₹. 65,32,200/- and the taxable long term capital gain was arrived at ₹.3,80,13,202/-. Accordingly, excess claim of exemption under section 54 of the Act of ₹.9,11,300/- was brought to tax. On appeal, by following the decision in the case of CIT v. D. Ananda Basappa (2009) 180 Taxman 4/309 ITR 329 (Kar.) as well as the decision in the case of CIT v. V.R. Karpagam (2015) 373 ITR 127 (Mad), the ld. CIT(A) allowed both the grounds raised under section 54 of the Act and directed the Assessing Officer to allow the deduction claimed under section 54 of the Act for investment of long term capital gain in both the flats.
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Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the assessee had purchased two different flats viz. Flat No. 802A and Flat No. 802B vide two different documents in two different dates and offered the LTCG for the claim of deduction under section 54 of the Act. It was further submission that section 54 of the Act speaks of “new asset” and not “new assets” and therefore, the assessee is not entitled to claim the exemption under section 54 of the Act for more than one house and thus, the ld. DR pleaded for reversing the appellate order. On the other hand, the ld. Counsel for the assessee strongly supported the order of the ld. CIT(A) and prayed for sustaining the appellate order.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. Against the rejection of claim of exemption for the investment in two flats under section 54 of the Act, it was the submission before the ld. CIT(A) that the two flats are adjoining flats bearing Flat No. 802A and Flat No. 802B and there is only one kitchen and the assessee has used it as one residential unit. By relying on the decision in the case of CIT v. D. Ananda Basappa (supra), wherein, it was held that if there is a purchase of two flats, which were combined to make one residential unit, then the assessee is entitled for deduction for full amount of cost of two flats, the ld. CIT(A) allowed the ground of the assessee. Further, against the
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alternate plea of the assessee that even if the Department treat the residential unit as two different residential units, the assessee is entitled to claim exemption under section 54 of the Act in view of the decision in the case of CIT v. V.R. Karpagam (supra), in view of the above binding decision of the Hon’ble Jurisdictional High Court, the ld. CIT(A) accepted the alternate plea of the assessee.
We have perused both the case law relied on by the ld. CIT(A). With regard to the claim for exemption against acquisition of two houses under Section 54 of the Act, the same is not admissible in plain language of statute. However, in the judgment of Karnataka High Court in the case of CIT v. D. Ananda Basappa [2009] 309 ITR 329 (Kar), referred to in the impugned order, the exemption against purchase of two flats was allowed having regard to the finding that both the flats could be treated to be one house as both had been combined to make one residential unit. In the present case also, even though different flat numbers are given, both the flats in Flat No. 802A and Flat No. 802B are adjacent to each other and is a one residential property which has common passage/staircase, common kitchen and common entrance and common amenities as per the project of the builder. In view of the above factual position as well as case law relied on, the assessee is entitled to claim deduction under section 54 of the Act
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for the reinvestment of long term capital gain in acquisition of both the flats as one residential unit.
Against the alternate plea of the assessee that even if the Department treat the residential unit as two different residential units and the assessee is entitled to claim exemption under section 54 of the Act in view of the decision in the case of CIT v. V.R. Karpagam (supra), we find that even though in V.R. Karpagam's case, the claim was raised under Section 54F of the Act the said case law would certainly apply to a case under Section 54 of the Act also because a bare reading of Sections 54 and 54F of the Act would reveal that the two provisions are in pari materia with regard to those aspects of provisions of law which we are concerned with in the instant case. While section 54 of the Act deals with capital gains arising out of transfer of buildings or lands appurtenant thereto and being residential house, section 54F of the Act deals with capital gain arising out of transfer of any long term capital asset not being a residential house. Otherwise, in all other aspects of the matter, the two provisions namely sections 54 and 54F are in pari materia. Therefore, the interpretation of 'a residential house' occurring in section 54F cannot be any different for the same phrase 'a residential house' occurring under section 54 of Act. In this regard what applies to section 54F would apply in equal and full force to section 54 also. Therefore, the principles in V.R. Karpagam's case would certainly apply to
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the facts of the instant case. Thus, we are of the considered opinion that the ld. CIT(A) has rightly directed the Assessing Officer to allow deduction under section 54 of the Act for reinvestment of long term capital gain in acquisition of both the flats. Accordingly, the ground raised by the Revenue stands dismissed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced on the 14th June, 2021 in Chennai.
Sd/- Sd/- (S. JAYARAMAN) (DUVVURU RL REDDY) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 14.06.2021 Vm/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु� (अपील)/CIT(A), 4. आयकर आयु�/CIT, 5. िवभागीय �ितिनिध/DR & 6. गाड� फाईल/GF.