GOPAL NAIDU THIRUMALESH,CHITTOOR vs. INCOME TAX OFFICER, WARD -2, CHITTOOR.

At the outset, it is seen that there is a delay of 5 days in filing of the appeal by the assessee. The assessee has explained the reasons for the delay of 5 days. After discussing the issue with the learned DR, the delay of 5 days in filing of the appeal by the Page 1 of 6 assessee is hereby condoned and the appeal is admitted for adjudication.

The brief facts of the case are that the assessee is an individual and filed his return of income for the A.Y 2014-15 on 31/3/2015. The assessment has been reopened on the ground that the income chargeable to tax had been escaped the assessment on account of under assessment of the capital gain arising out of transfer of property in pursuant to JDA. Accordingly, notice u/s 148 of the I.T. Act, 1961 dated 30/01/2017 was issued and served on the assessee. In response, the assessee has filed return of income on 19/12/2017. The case was selected for scrutiny and during the course of assessement proceedings, the Assessing Officer noticed that the assessee, as a land owner, entered into JDA cum GPA on 24/10/2013 in favour of M/s. R.K. Developers, Chittoor for development of 3000 sft of land at survey No.275-3 & 210, Plot No.37 situated at Chittoor and the assessee did not admit any capital gains arising out of JDA. The Assessing Officer called upon the assessee to explain as to why additions should not be made in respect of capital gain. In response, the assessee submitted that the land owner has delivered the possession of the scheduled property to the developers for the limited purpose of development and thus, the same cannot be considered as transfer as defined u/s 2(47) of the I.T. Act, 1961. The appellant had also filed a revised statement of total income computing Long-Term Capital Gain and exemption claimed u/s 54F of the I.T. Act, 1961. The Assessing Officer after considering the relevant terms & conditions of JDA with M/s R.K. Developers, observed that the assessee has received 3 flats with a Page 2 of 6 built up area of 4073 sft besides car parking area of 300 sft in lieu of surrender of 65% of land. The Assessing Officer further noted that as per schedule D of JDA, the cost of construction of the flat was clearly specified at Rs.1400 per sft for construction of flat and Rs.492 per sft for car parking area. Therefore, taking into all relevant facts computed full value of consideration accrued as a result of transfer in consequent to JDA dated 24/10/2013 at Rs.58,49,800/-. The Assessing Officer had also computed the Long-Term Capital Gain of Rs.26,69,614/- in respect of property purchased on 30/07/2010 and also computed Short-Term Capital Gain of Rs.26,55,950 in respect of property purchased on 18/03/.2011, however, rejected the claim of the assessee towards exemption claimed u/s 54F of the I.T. Act, 1961.

On appeal, the learned CIT (A) upheld the additions made by the Assessing Officer.

Aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee referring to certain judicial precedents including the decision of the Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Syed Ali Adil (2013) 352 ITR 418 (A.P) submitted that the assessee is eligible for exemption u/s 54F of the Act, in respect of 3 flats received from the Builder for surrendering 65% undivided share in the land in pursuant to the JDA dated 24/10/2013. Therefore, he submitted that the exemption may be given to one flat in respect of Long-

The learned DR, on the other hand, supporting the orders of the learned CIT (A) submitted that the assessee has not made any claim towards exemption u/s 54F of the Act, either in the original return of income filed u/s 139 of the Act, or in the return filed in response to notice u/s 148 of the Act. Since the assessee has not satisfied the conditions prescribed u/s 54F of the Act, the Assessing Officer and the learned CIT (A) has rightly rejected the claim of exemption u/s 54F of the Act, and therefore, their order should be upheld.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the appellant has transferred immovable property in pursuant to JDA dated 24/10/2013 executed in favour of R.K. Developers and received 3 flats with super built up area of 4073 sft besides car parking area of 300 sft. The Assessing Officer has computed full value of consideration accrued as a result of transfer at Rs.58,49,800/- and also computed Long-Term Capital Gain of Rs.26,69,614/- and Short-Term Capital Gain of Rs.26,55,950/- and this fact is not disputed by the assessee. The only dispute is with regard to rejection of exemption claimed u/s 54F of the I.T. Act, 1961. The assessee claims that he is entitled for 54F exemption in respect of 3 flats received from the builder for surrendering 65% undivided share in land. The Assessing Officer denied the exemption u/s 54F of the Act, on the ground that the Page 4 of 6 assessee has not made any claim in respect of 54F exemption in the original return of income filed u/s 139 of the I.T. Act, 1961. In fact, the Assessing Officer is completely silent on the issue of exemption u/s 54F of the Act.

Be that as it may, but fact remains that, if an assessee transfers any property other than residential house property, then exemption is available u/s 54F of the Act, in respect of reinvestment of sale consideration received as a result of transfer of original asset, but said exemption u/s 54F of the Act, is available subject to fulfilment of conditions prescribed therein. In the present case, the appellant derived Long-Term Capital Gain of Rs.28,69,614/- and Short-Term Capital Gain of Rs.26,55,950/- for surrendering 65% undivided land. The appellant received 3 flats from the builder. There is no details as to whether all 3 flats are accrued or received by the appellant in respect of transfer of capital asset which is held for more than 36 months or it also pertains to a capital asset which was transferred within 3 years from the date of purchase. Further, there is no discussion as to fulfilment of various other conditions prescribed u/s 54F of the I.T. Act, 1961 including re-investment of sale consideration within the prescribed time limit. These facts needs to be verified. Further, there is no dispute with regard to the fact that the appellant is eligible for exemption in respect of one flat received from the builder in pursuant to JDA, provided all other conditions are satisfied. These facts are not forthcoming from the assessment order. Therefore, we are of the considered view that to verify the facts in its entirety on eligibility of the assessee for claiming exemption u/s 54F of the I.T. Act, 1961, the issue needs to be set

Page 5 of 6 aside to the file of the Assessing Officer. Thus, we set aside the order of the learned CIT (A) and restore the issue back to the file of the Assessing Officer and also direct the Assessing Officer to reconsider the issue of exemption claimed u/s 54F of the Act, in light of our findings and also in accordance with law after providing an opportunity of hearing to the assessee.

In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 14th October, 2024. Sd/- Sd/- (LALIET KUMAR) (MANJUNATHA, G.) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 14th October, 2024 Vinodan/sps Copy to: S.No Addresses 1 Shri Gopal Naidu Thirumalesh c/o Katrapati & Associates, 1-1- 298/2/B/3 Sowbhagya Avenue Apts, 1st Floor, Ashoknagar, Street No.1 Secunderabad 500020& 2 Income Tax Officer Ward 2 D.No. 10-251, Gandhi Road, Chittoor 3 Pr. CIT - Tirupati 4 DR, ITAT Hyderabad Benches 5 Guard File By Order