ACIT, CHENNAI vs. D.JAYARAMAN, CHENNAI

आदेश / O R D E R

PER S.S.GODARA, JUDICIAL MEMBER

I.T.A.No. 1398/13 :- 2 -: section 54F deduction of ` 1,42,90,574/-, in proceedings under section 143(3) of the Income-tax Act, 1961 (in short the ‘Act’).

The Assessing Officer took up ‘scrutiny’. He received AIR 3. information for examining the assessee’s deduction claim u/s 54F.

The assessee had sold two residential plots namely No.9., Janaki Nagar, A.R. Street, Valasaravakkam, Chennai-87 and Plot No.204,213, Lakshmi Nagar, Valasaravakkam Chennai-87 on 20.2.2009 and 23.8.2008 for ` 1.16 crores and 71 lakhs, resulting in long term capital gains of ` 91.75 lakhs and ` 51,15,574/- respectively; totalling to ` 1,42,90,574/-. The Assessing Officer found the assessee to be owning five residential properties (i) Flat No.2, Viji Apartments, No.34, Pinjala Subramanian Street, T. Nagar, Chennai-17, (ii) No.10 Ragaviah Road, T. Nagar, Chennai-17, (iii) No.14/A5 Wason Street, T. Nagar, Chennai, (iv) Balaji Premraj – House Property Land 2400 sq ft Building -1290 sq ft. and (v) DRP Maheswaran & Uma Maheswaran – Land 2400 sq ft Building 2900 sq ft. as on 23.8.2008. He had transferred this first property to his wife Smt. Usha Jayaraman on 18.12.2008.

I.T.A.No. 1398/13 :- 3 -:

The second residential house stated hereinabove had been let out on 23.8.2008. The assessee pleaded to have been using third property hereinabove as an office. The Assessing Officer quoted his construction agreement for treating the same as a residential property.

A notice was also taken of the fact that though it was claimed as office premises, no depreciation relief had been raised. The assessee further submitted that the remaining two properties were having dilapidated buildings and their nature was ‘land’ only. The Assessing Officer referred to their purchase agreements categorizing these two properties as ‘land and building’. All these facts led him to conclude that the assessee owned more than one residential property at the time of transferring the original asset on 23.8.2008.

It is also noticed that the Assessing Officer further considered section 54F deduction claimed qua the sale deed executed n 20.2.2009 (supra). He concluded that the assessee had four residential properties (supra) on the said date. It was held that the assessee in any case had been owning more than one residential house at the time of executing both sale deeds. This made him to disallow section 54F deduction claimed in the ‘regular’ assessment framed on 29.12.2011.

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The assessee preferred an appeal. The CIT(A) has accepted 4. his contentions as under:

“2. Aggrieved with this disallowance, the assessee has come up in appeal represented by Shri B. Radhakrishnan, FCA. The written arguments filed by the AR are extracted here:

"The appellant, an individual is engaged in the Construction Business. The Appellant had filed his return of income on 28/09/2009 for the AY 2009-10 admitting total income of Rs.76,48,902/-. The facts of the case are as under :- The return was processed u/s 143(1) and a refund of Rs. 7,770/- has been granted vide that intimation. The return was selected for scrutiny u/s 143(2) based on AIR information and notice u/s 142(1) was issued. The Assessment was completed by the AO on 29-12-2011 disallowing the exemption claim made by the Appellant u/s 54F against capital gain on sale of two long term capital assets amounting to Rs.1,42,90,574/- (91,75,000 + 51,15,574) on the ground that the assessee is the owner of more than one residential property at the time of sale of the capital assets at the following places: i. Flt No. 2, Viji Apartments, Pinjala Subramaniam Street, T. Nagar, Chennai - 17 No. 10, Ragaviah Road, T. Nagar, Chennai - 17 ii. iii. No. 14/A5, Wason Street, T. Nagar, Chennai - 17 iv. Balaji Premraj - House Property v. D. Maheswaran & Uma Meheswaran Aggrieved by the disallowance of exemption claim made u/s 54F the Appellant has preferred this appeal. The appellant sold one piece of land at Lakshmi Nagar, Valasaravakkam on 23-8-2008 for a consideration of Rs. 70,00,000/- and admitted a capital gain of Rs.51,15,574/- on this sale. Thereafter the appellant also sold another piece of land at Janaki nagar, Valasarawakkam on I.T.A.No. 1398/13 :- 5 -:

20/02/2009 for a consideration of Rs. 1,16,00,000/- and admitted a capital gain of Rs.91,75,000/- on this sale. The appellant claimed deduction uls.54F on the total capital gains of Rs.1,42,90,574/- by acquiring residential house property. But the Learned Assessing Officer disallowed the claim on the basis that the appellant is the owner of more than one residential property at the time of sale of both assets without considering the submissions made by the appellant on the ownership of other assets. The appellant has offered the following explanations in support of his exemption u/s.54F. i. House Property at Pinjala Subramanian St., T-nagar has, been settled by the assessee in favour of Mrs. Usha Jayaraman, wife of the assessee on 18/12/2008 ii. Property at No.l0, Reqevish Road, T-Nagar is a let out property and the income from same has been offered for tax under the head 'Income from House Property'. iii. Property at No. 14/A5; Wason Street, T-Nagar has been used as office by the assessee and the same has been accepted by the Assessing Officer in the previous Assessment Years. iv, The properties purchased from Balaji Premraj and Maheswaran & Uma Maheswaran is for business purpose and it contains buildings at dilapidated stage and also the possession of same not handed over to the assessee during the assessment year in which exemption u/s 54F has been claimed. Based on the above it is most humbly submitted that the action of the Assessing Officer in disallowing the claim of exemption u/s 54F is erroneous and unjustified and it is most humbly prayed that this respectful authority may be pleased to direct the Assessing Officer to delete the disallowance made.”

date of acquiring second residential house and accordingly, he is eligible for deduction u/s 54F from the capital gains.

This leaves the Revenue aggrieved.

We have heard both parties and gone through the relevant 5. findings. Facts of the case already stand narrated in the preceding paragraphs. The Assessing Officer has rejected section 54F deduction by specifically pointing out that on 23.8.2008 as well as 20.2.2009, the assessee owned more than one residential house. These findings have nowhere been dealt with elaborately in the lower appellate order.

We find that assessee’s written submissions have been accepted without discussing the facts or giving reasons in support of the impugned conclusion. Section 250(6) of the Act envisages that the CIT(A)’s order has to state points for determination, decision thereupon and reasons in support. No such compliance is forthcoming from the order under challenge. The assessee also fails to controvert this factual position. In these circumstances, we deem it appropriate that the CIT(A) shall again hear the case on merits and pass a fresh order as per law. The Revenue’s grounds are restored back to the lower appellate authority.

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The Revenue’s appeal is allowed for statistical purposes. 6.