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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN
: अपीलाथ' क* ओर से/ Appellant by Mr.P.Rajasekharan, CA : Mr.Shaji P. Jacob, Addl. CIT ()यथ' क* ओर से /Respondent by : 08.02.2018 सुनवाई क* तार"ख/Date of Hearing घोषणा क* तार"ख / : 08.02.2018 Date of Pronouncement आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER: is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-4, Chennai, in 2007-08/CIT(A)-4 dated 30.08.2016 for the AY 2007-
2. Shri Shaji P. Jacob, Addl. CIT., represented on behalf of the Revenue and Shri P. Rajasekharan, CA., represented on behalf of the assessee. :- 2 -:
It was submitted by the Ld.AR that the assessee is one of the eight co-owners of the property representing 3.32 acres of land in respect of which, during the relevant Assessment Year, the assessee had entered into a Joint Venture Agreement with M/s.Shanmuga Constructions Services, to develop housing project. As per the Joint Venture Agreement, the co-owners were to receive 40% of the built up area inclusive of the common area in return for conveying 60% of the undivided share in the land. Consequent to the Joint Venture Agreement, 72 flats were allotted to the co-owners out of 176 flats to be constructed. The assessee herein was allotted 9 flats viz., flats D-3 in Wing-Brindavan, flats D-6, D-7, D-8, D-9 and D-10 in Wing-Gokulam and flats B-9, C-4 and C-5 in Wing- Vaibhav. Thus, the assessee was entitled to 10279 sq.ft. with plinth area of 8933.69 sq.ft. and common area of 1345.31 sq.ft. He was also entitled to 5979.09 sq.ft. of undivided share in the land. The assessee had claimed the benefit of deduction u/s.54F, which had been denied by the AO. On appeal, the Ld.CIT(A) confirmed the disallowance on the ground that all the 09 flats were having different electricity connections, the flats were rented out to 09 different persons and were located in three different Blocks of the Project. It was submitted by the Ld.AR that the issue was squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Shri A.P.Rajmohan & Shri A.P.Madanmohan in & respectively dated 07.04.2017, wherein, in respect of the Revenue’s appeal, the Co-ordinate Bench of this Tribunal had held as follows: :- 3 -:
4. This is second round of litigation before this Tribunal. In the first round of litigation, this Tribunal in & 1495/Mds/2013 dated 15.05.2015, found that in view of judgment of Madras High Court in V.R. Karpagam (supra),assessees are eligible for exemption even though multiple flats were allotted to them in lieu of cost of 60% of the land. This Tribunal has observed at para 12 on pages 12 and 13 as follows:-
12. Now coming to the issue of exemption under Section 54F of the Act, the assessees entrusted the construction of the building to the builder in lieu of 60% of the landed area transferred to the builder. Therefore, the assessees, from the date on which the transfer was made by entering into agreement for joint development, are in the process of constructing the residential house. Therefore, this Tribunal is of the considered opinion that the assessees are entitled for exemption under Section 54F of the Act. Now the objection of the Department is that the assessees got multiple flats, almost eight flats each, in lieu of the land transferred to the builder. The question arises for consideration is when the assessees received eight flats/residential units from the builder in lieu of cost of the land transferred to the builder, whether the assessees are entitled for exemption under Section 54F of the Act? We have gone through the judgment of Madras High Court in V.R. Karpagam (supra). In this case, the assessee obtained five independent flats in a multi-storied construction and claimed exemption as independent unit under Section 54F of the Act. The Madras High Court, after referring to the amendment made with effect from 1.4.2015, found that the assessee is eligible for exemption under Section 54F of the Act. In view of the judgment of the Madras High Court, this Tribunal is of the considered opinion that the assessees are eligible for exemption even though multiple flats were allotted to them in lieu of cost of 60% of the land allotted to the builder.
In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
It was a submission that the said Shri A.P.Rajmohan & Shri A.P.Madanmohan were co-owners of the same property. It was a further submission that the issue was squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of Shri Gumanmal Jain in TCA No.33 of 2017 dated 03.03.2017, wherein, the Hon’ble Jurisdictional High Court has held as follows:
7. CONCLUSION:
(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 :- 4 -: 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 54or 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 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.
5. It was a submission that the order of the Ld.CIT(A) & the AO, may be set-aside and the assessee granted, the benefit of deduction u/s.54F as claimed.
In reply, the Ld.DR vehemently supported the order of the AO & the Ld.CIT(A). It was a submission that the flats were in different blocks, :- 5 -: were having different electricity connections and were leased out to 09 different persons and were also located in three different blocks. It was a submission that the order of the Ld.CIT(A) was liable to be sustained.
We have considered the rival submissions.
8. A perusal of the decision of the Co-ordinate Bench of this Tribunal in the case of Shri A.P.Rajmohan & Shri A.P.Madanmohan referred to supra, who are the co-owners of the said property, in which, the assessee is also a co-owner and in respect of which, the Joint Venture Agreement has been entered into and the flats received, on which, the claim of deduction has been made u/s.54F, squarely covered the issue raised by the assessee in its appeal. Further, this view is also found to be squarely covered in line with the decision of the Hon’ble Jurisdictional High Court in the case of Shri Gumanmal Jain referred to supra, wherein, it has been categorically held that all the flats are by-products of one development agreement with the same builder and all the flats are in the same location and address and the flats got the undivided share in the land only from the same piece of land and therefore, entitled to the benefit of deduction u/s.54F. This being so, applying the principles laid down by the Hon’ble Jurisdictional High Court in the case of Shri Gumanmal Jain as also the decision of the Hon’ble Co-ordinate Bench of this Tribunal in the case of Shri A.P.Rajmohan & Shri A.P.Madanmohan are the co-owners of the same property, the findings of the Ld.CIT(A) stands set-aside and the AO is :- 6 -: directed to grant the assessee, the benefit of deduction u/s.54F as claimed.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the Open Court on February 08, 2018, at Chennai. (एस जयरामन) (जॉज" माथन) (S. JAYARAMAN) (GEORGE MATHAN) लेखा सद य/ACCOUNTANT MEMBER "या"यक सद य/JUDICIAL MEMBER