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Income Tax Appellate Tribunal, ‘A’’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
Revenue in this appeal is aggrieved on the directions given by ld. Commissioner of Income Tax (Appeals)-4 to allow deduction under section 54F of the Income Tax Act, 1961 (in short ‘’the Act’’) to ITA No.3416/Mds/2016 :- 2 -: the assessee. As per the Revenue judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. V.R. Karpagam 373 ITR 127 relied on by the ld. Commissioner of Income Tax (Appeals) was distinguishable on facts.
Assessee alongwith his mother and brothers had during the relevant previous year sold 2400 sq.ft of land, bearing number 131 at Chinmaya Nagar, Chennai and a flat of 625 sqft bearing No.132 for a sum of �.1,47,00,000/-. Long term capital gains worked out by the assessee was as under:-
Total Sale consideration received for 4900 : �1,47,00,000 sq.ft Assessee’s share of sale consideration received for 3025 sq. ft (2400 + 625) 3025/4900 X 1,47,00,000 : �90,75,000 Less:- Cost of acquisition (i) 20,000 X 785/125 : �1,25,600 (ii) 1/4th share of �25,000 : : �1,31,850 �6,250
�70,74,400/- Long Term Capital Gain : �89,43,150/- (A)
Assessee claimed exemption under section 54F of the Act stating that he had constructed a building having built–up area of 6395 sq.ft
ITA No.3416/Mds/2016 :- 3 -: consisiting of five residential units. One unit was occupied by the assessee whereas the other four were let out. The ld. Assessing Officer denied the exemption citing the following reasons:-
(i) What was constructed by the assessee was five residential flats and exemption under section 54F could be given only to one residential unit. (ii) Though entire consideration was invested for the new building, unutilized amount was not kept in an account under the Capital Gain Account Scheme, before the due date for filing the return.
Aggrieved, assessee moved in appeal before the ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) held in favour of the assessee after giving a finding that assessee had constructed multiple flats in the same plot and judgment of Hon’ble Jurisdictional High Court in V.R. Karpagam case (supra) clearly applied. As to the observation of the ld. Assessing Officer, that assessee had failed to keep the unutilized amount under a capital gains account scheme, ld. Commissioner of Income Tax (Appeals) found that assessee personally supervised the construction work necessitating day-to-day payments and hence such a deposit was not required.
ITA No.3416/Mds/2016 :- 4 -:
Now before us, ld. Departmental Representative assailing the order of ld. Commissioner of Income Tax (Appeals) submitted that assessee failed to keep the unutilized amount in an account designed under ‘’Capital Gain Account Scheme’’. Further, according to him, exemption under section 54(F) of the Act could not be given when multiple flats were constructed.
Per contra, ld. Authorised Representative supported the 5.
order of ld. Commissioner of Income Tax (Appeals).
We have perused the orders and heard the rival contention.
It is not disputed that the construction done by the assessee on which claim under section 54F of the Act was made was in the same plot.
Whether claim under section 54F of the Act is available for purchase/construction of multiple units within the same plot/structure stands answered in favour of the assessee by the Hon’ble Jurisdictional High Court in the case of V.R.Karpagam case (supra).
As for failure of the assessee to keep the unutilized amounts in an account under capital gains accounts scheme, Assessing Officer has himself observed at para 1.1 of his order that entire net consideration received by the assessee was invested within the prescribed period for the new construction. Thus, we find that ld. Commissioner of Income
ITA No.3416/Mds/2016 :- 5 -:
Tax (Appeals) was justified in allowing the claim of the assessee. We do not find any reason to interfere with the order.
In the result, the appeal of the Revenue is dismissed. 7.
Order pronounced on Wednesday, the 6th day of September, 2017, at Chennai.