A.M.SUBRAMANIAN,MADURAI vs. DCIT, MADURAI

Both the Assessee and the Revenue has filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Madurai dated 20.02.2017 in 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 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/-.

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.)

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 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.”

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.