Income Tax Appellate Tribunal - Delhi
Gita Duggal , New Delhi vs Department Of Income Tax on 12 May, 2010
ITA NO. 3613/Del/2010
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C" NEW DELHI
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
I.T.A. No. 3613/Del/2010
A.Y. : 2007-08
Asstt. Commissioner of Income Tax, vs. Ms. Gita Duggal,
Circle-22(1), A-22, Westend,
New Delhi New Delhi
(PAN/GIR NO. : AAAPD1507F)
(Appellant ) (Respondent )
Asseessee by : Sh. Ravi Gupta, Advocate
Department by : Smt. Mona Mohanty, Sr. D.R.
ORDER
PER SHAMIM YAHYA: AM This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals) dated 12.5.2010 pertaining to assessment year 2007-08.
2. The first issue raised reads as under:-
"On the facts and on the circumstances of the case Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of ` 98,20,722/- u/s. 54F of the IT Act, 1961 which the Assessing Officer had allowed in respect of only one unit by treating the units as two separate residential properties."1
ITA NO. 3613/Del/2010
3. In this case the assessee was owner of the property at A-22, Westend Colony, New Delhi. It was having a basement, ground floor, first floor and the second floor. The assessee derived rental income from the property. During the year under consideration, the assessee entered into a collaboration agreement with a developer, M/s Thapar Homes Ltd. on 8.5.2006 to develop, construct and build a fresh building on the said plot of land. The Assessing Officer, was of the view that the provisions of section 54 were not applicable to the facts of the case. It was also his views that the entire new property would not be eligible for deduction under section 54F. It is mentioned in the order as follows:-
"In view of the above discussion, the assessee is found to be not eligible for exemption under section 54. Even, under section 54F, it would be eligible for deduction with respect to cost of construction incurred on the unit retained by the assessee plus any 1 unit of the remaining 2 units (The 2 units are treated as 2 separate residential properties). The assessee has retained the ground floor along with the basement. Therefore, the total cost of construction of ` 3,43,72,529/- is estimated to be incurred in the following ratio :
1:1:1:0:5 for Second floor : First floor : Ground floor : Basement Out of the above, the assessee is on the possession of ground floor and basement for self use. Hence, out of the remaining two floors, exemption would be granted on only 1 unit, as in accordance with the provisions of section 54F of Income Tax Act, 1961. Accordingly, the claim of the assessee to the tune of ` 98,20,722/- (Total cost incurred / 3.5 i.e. 3,43,72,529/3.5) is 2 ITA NO. 3613/Del/2010 added to the income of the assessee as chargeable under the long term capital gains.
4. Upon assessee's appeal, Ld. Commissioner of Income Tax (Appeals) considered the submissions and held as under:-
"In the case in hand, the Assessing Officer has only given the benefit of exemption under section 54/54F to the assessee for the basement and the ground floor. He has not given exemption to the assessee for the first floor and the second floor, as they had been given out on rent. Considering the decision of the Karnataka High Court in D. Ananda Bassappa (Supra) and the decision in Prem Prakash Bhutani (Supra), the Assessing Officer should have given the exemption under section 54 to the assessee for the balance floors. As such, it is held that the assessee is eligible for deduction under section 54 for the basement, ground floor, first floor and the second floor."
5. Against this order the Revenue is in appeal before us.
6. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that ld. counsel of the assessee submitted that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Karnataka High Court in the case of C.I.T. & Anr. v. Smt. K.G. Rukminiamma in ITA No. 783 of 2008 vide order dated 27.8.2010 wherein it was held as under:-
"The context in which the expression 'a residential house' is used in s. 54 makes it clear that it was not the intention of the 3 ITA NO. 3613/Del/2010 legislation to convey the meaning that it refers to a single residential house. If that was the intention, they would have used the word "one". As in the earlier part, the words used are buildings or lands which are plural in number and that is referred to as "a residential house", the original asset. An asset newly acquired after the sale of the original asset also can be buildings or lands appurtenant thereto, which also should be "a residential house". Therefore, the letter 'a' in the context it is used should not be construed as meaning "singular". But, being an indefinite article, the said expression should be read in consonance with the other words 'buildings' and 'lands' and, therefore, the singular 'a residential house' also permits use of plural by virtue of s. 13(2) of the General Clauses Act. - C.I.T. v. D. Ananda Bassappa (2009) 223 (kar) 186 : (2009) 20 DTR (Kar) 266 followed."
7. Upon careful consideration, we find that the contentions of the assessee that the issue is covered in favour of the assessee are correct.
7.1 Ld. Departmental Representative could not controvert the above and no contrary decision was cited before us.
8. Accordingly, we do not find any infirmity or illegality in the order of the Ld. Commissioner of Income Tax (Appeals) and hence, uphold the same.
9. The next issue raised is that on the facts and on the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of ` 2,78,926/- towards portfolio management fees.
4ITA NO. 3613/Del/2010
10. On this issue, ld. counsel of the assessee conceded that disallowance has been rightly made by the Assessing Officer. Hence, we allow this issue in favour of the Revenue.
11. In the result, the appeal filed by the Revenue is partly allowed.
Order pronounced in the open court on 07/6/2011 upon conclusion of hearing.
Sd/- Sd/-
[I.P. BANSAL]
BANSAL] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 07/6/2011
SRB
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches
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