ACIT, CHENNAI vs. D.JAYARAMAN, CHENNAI

आदेश / O R D E R

PER S.S.GODARA, JUDICIAL MEMBER

This Revenue’s appeal for assessment year 2009-10, is directed against order of the Commissioner of Income-tax (Appeals)- VI Chennai dated 11.2.2013, passed in Appeal No.225/11-12, allowing

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section 54F deduction of ` 1,42,90,574/-, in proceedings under section

143(3) of the Income-tax Act, 1961 (in short the ‘Act’).

business. He had filed his return on28.9.2009 disclosing total income

of ` 76,48,902/-. The same was ‘summarily’ processed.

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.

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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

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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.” 3. On perusal of the written arguments and the supporting documents filed, it can be noticed that the properties purchased from Balaji Premraj and Maheswaran & Uma Maheswaran is for business purpose though it contains buildings at dilapidated stage. In view of the above, it is held that the assessee was owning only one house as on the

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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.

Order pronounced on Wednesday, the 4th of February, 2015, at Chennai. Sd/- Sd/- (बी.आर. बा�करन) (एस. एस. गोदारा) (B.R. BASKARAN) (S. S. GODARA) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated: 4th February, 2015 RD

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�त/CIT 2. ��यथ�/Respondent 5. �वभागीय ��त�न�ध/DR 3. आयकर आयु�त (अपील)/CIT(A) 6. गाड� फाईल/GF