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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY
आदेश / O R D E R
Per A. Mohan Alankamony, AM:-
Both the Assessee and the Revenue has filed an appeal
against the order of the Ld. Commissioner of Income Tax
2 ITA Nos.860 & 1196/CHNY/2017
(Appeals)-3, Madurai dated 20.02.2017 in ITA No.0043/2016-17
for the assessment year 2013-14 passed U/s.250(6) r.w.s. 143(3) of the Act.
Assessee’s Appeal: The assessee has raised two grounds in his appeal however the crux of the issue is that the Ld.CIT(A) has erred in
restricting the claim of deduction U/s.54F of the Act from Rs.3,38,76,455/- to Rs.2,10,76,603/- by excluding the portion of the residential building which was used for business purpose.
Revenue’s Appeal: The Revenue has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in
granting exemption U/s.54F of the Act.
The brief facts of the case are that the assessee is an
individual earning income from business as partner in M/s. Saravana Cloth Store and also engaged in share trading business, filed his return of income for the assessment year 2013-
14 on 31.03.2015 electronically admitting total income of Rs.43,05,990/-. Initially the return was processed U/s.143(1) of
3 ITA Nos.860 & 1196/CHNY/2017
the Act and subsequently the case was selected for scrutiny under
CASS. Finally assessment order was passed U/s.143(3) of the Act on 31.03.2016 wherein the Ld.AO computed the Long Term Capital Gain of the assessee at Rs.2,29,14,340/- by granting
deduction U/s.54F of the Act to the extent of the value of the building used for residential purpose and by excluding the value of the building used for commercial purpose which works out to
Rs.82,75,000/-.
On appeal, the Ld.CIT(A) further analyzing the issue
observed that the assessee had utilized the third floor of the building extending to 3310 sq.ft., and 40% of the basement which works out to 1584 sq.ft., for residential purpose and the balance area was used for commercial purposes out of the total extent of
15,490 sq.ft. Thereafter the Ld.CIT(A) proportionately arrived at the value of the property constructed and used for residential purpose at Rs.2,10,77,603/- and arrived at the long term capital
gain of Rs.1,27,98,862/- as against Rs.27,38,089/- admitted by the assessee and Rs.2,29,14,340/- worked out by the Ld.AO. Thus the Ld.CIT(A) granted deduction of Rs. 2,10,77,603/- U/s.
54F of the Act to the assessee.
4 ITA Nos.860 & 1196/CHNY/2017
Before us the Ld.AR submitted that the assessee had
constructed the entire building for residential purpose and
therefore benefit U/s.54F of the Act has to be granted on the
entire value of the building constructed. He further relied in the
decision of various judicial authorities cited herein below:- (1) Mahavir Prasad Gupta V. JCIT in [2006] 5 SOT 353 (Delhi) – Delhi Tribunal (2) Amit Gupta V. DCIT in [2006] 6 SOT 403 (Delhi) (3) Shyamala Tandon V. Income Tax Officer in [2014] 43 taxmann.com 155 (Hyderabad – Trib.) (4) K. Pratibha V. ITO in [2014] 45 taxmann.com 282 (Hyderabad – Trib.) (5) N. Revathi V. ITO in [2014] 45 taxmann.com 30 (Hyderabad – Trib.)
He therefore pleaded that the addition made by the Ld.AO by
denying the benefit of deduction U/s. 54F of the Act may be
deleted. The Ld.DR on the other hand vehemently argued in
support of the order of the Ld.AO and prayed for sustaining the
same.
We have heard the rival submissions and carefully perused
the materials on record. On the plain reading of the provisions of
Section 54F of the Act, we do not find any bar on the assessee as
how he has to put to use the new residential property constructed
/ purchased by him for claiming the benefit of deduction U/s.54F
of the Act. Section 54F of the Act only stipulates that the assessee
should have constructed / purchased a residential house within
5 ITA Nos.860 & 1196/CHNY/2017
the stipulated time in order to claim the benefit of deduction. This proposition is fortified by the decision of various Judicial forum enumerated herein below. The Delhi Bench of the Tribunal in the case Mahavir Prasad Gupta Vs. JCIT reported in 101 TTJ 1078 has held that the use of the property is not a relevant criteria to consider the eligibility for claiming benefit U/s.54F of the Act. The only criterion is whether the assessee has constructed / purchased a residential house with in the stipulated period mentioned in the Act. Similarly in the case Amit Gupta Vs. DCIT reported in 6 SOT 403 on the identical situation, the Delhi Bench of the Tribunal has held as follows:- “The requirement of section 54F is that the property should be a residential house. The expression ‘residential house’ has not been defined in the Act. The popular meaning of the word is a place or building used for habitation of people. It is used in contradistinction to a place which is used for the purpose of business, office, shop, etc. It is not necessary that a person should reside in the house to call it a residential house. If it is capable of being used for the purpose of residence, then the requirement of Section 54F is satisfied. The fact that the assessee did not actually use the same for his residence would not disentitle him to the claim of exemption under section 54F.”
Similar view was expressed in the decision of the Hyderabad Bench of the Tribunal in the case Shyamlal Tandon Vs. ITO reported in 62 SOT 105.
6 ITA Nos.860 & 1196/CHNY/2017 10. Following the ratio laid down by the various Judicial Authorities cited herein above and the provisions of Section 54F of the Act, we hereby direct the Ld.AO to grant the benefit of deduction U/s. 54 of the Act to the assessee for the entire value of the building constructed without looking into as to how the Residential property was utilized by the assessee.
Since we have allowed the appeal of the assessee in favour of the assessee the ground raised in the Revenue’s appeal will not survive, and accordingly held against the Revenue.
In the result the assessee’s appeal is allowed and the Revenue’s appeal is dismissed.
Order pronounced on the 05th March, 2018 at Chennai.
Sd/- Sd/- (धु�वु� आर.एल रे�डी) (ए. मोहन अलंकामणी) ( Duvvuru RL Reddy ) ( A. Mohan Alankamony ) �या�यक सद�य /Judicial Member लेखा सद�य / Accountant Member
चे�नई/Chennai, �दनांक/Dated 05th March, 2018 RSR आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. �नधा�रती/Assessee 2. राज�व /Revenue 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF