ITO, CHENNAI vs. GOPIKRISHNAN MOHAN, CHENNAI

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ITA 3416/CHNY/2016Status: DisposedITAT Chennai06 September 2017AY 2012-135 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the claim under Section 54F is available for constructing multiple units on the same plot, as per the jurisdictional High Court's decision. It also found that depositing unutilized funds was not necessary as the entire consideration was invested in the new construction.

What were the facts?

The assessee sold land and a flat, and claimed exemption under Section 54F for constructing a building with multiple residential units. The Assessing Officer denied the exemption, citing the construction of multiple units and failure to deposit unutilized funds in the Capital Gains Account Scheme.

What were the issues?

Whether exemption under Section 54F is available for constructing multiple residential units on the same plot, and whether depositing unutilized sale consideration in the Capital Gains Account Scheme is mandatory when the entire amount is invested.

Which sections of the Income-tax Act were involved?

Section 54F

AI-generated summary — verify with the full judgment below

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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

1.

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.

2.

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.

3.

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 -:

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).

6.

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.

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