Income Tax Appellate Tribunal - Pune
Narsing Gopal Patil, Pune vs Department Of Income Tax on 3 May, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES "A", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND SHRI G.S. PANNU, ACCOUNTANT MEMBER
ITA No.1544/PN/2012
(Assessment Year: 2008-09)
Shri Narsing Gopal Patil
Ganeshnagar, Thergaon,
Chinchwad, Pune - 411 033
PAN : AAYPP5422H .... Appellant
Vs.
Asst. Commissioner of Income Tax
Circle - 9, Pune. .... Respondent
ITA No.1815/PN/2012
(Assessment Year: 2008-09)
Asst. Commissioner of Income Tax
Circle - 9, Pune .... Appellant
Vs.
Shri Narsing Gopal Patil
Sunhera Palace, Ganeshnagar,
Thergaon, Chinchwad,
Pune - 411 033
PAN : AAYPP5422H .... Respondent
ITA No.1545/PN/2012
(Assessment Year: 2008-09)
Mrs. Rajshree Irappa Patil
Sunehera Palace, Ganeshnagar,
Thergaon, Chinchwad,
Pune - 411 033
PAN : APMPP8822L .... Appellant
Vs.
Asst. Commissioner of Income Tax
Circle - 9, Pune. .... Respondent
ITA No.1814/PN/2012
(Assessment Year: 2008-09)
Asst. Commissioner of Income Tax
Circle - 9, Pune .... Appellant
Vs.
Smt. Rajshree Irappa Patil
Sunehera Palace, Ganeshnagar,
Thergaon, Chinchwad,
Pune - 411 033
PAN : APMPP8822L .... Respondent
2 ITA Nos.1544 to 1546/PN/2012
ITA Nos.1813 to 1815/PN/2012
ITA No.1546/PN/2012
(Assessment Year: 2008-09)
Mrs. Hemalata Suresh Patil
Sunehera Palace, Ganeshnagar,
Thergaon, Chinchwad,
Pune - 411 033
PAN : APMPP8714R .... Appellant
Vs.
Asst. Commissioner of Income Tax
Circle - 9, Pune. .... Respondent
ITA No.1813/PN/2012
(Assessment Year: 2008-09)
Asst. Commissioner of Income Tax
Circle - 9, Pune .... Appellant
Vs.
Smt. Hemalata Suresh Patil
Sunehera Palace, Ganeshnagar,
Thergaon, Chinchwad,
Pune - 411 033
PAN : APMPP8714R .... Respondent
Appellant by : Mr. Sunil Ganoo
Respondent by : Ms. Ann Kapthuama
Date of hearing : 03-05-2013
Date of pronouncement : 31-05-2013
ORDER
PER G. S. PANNU, AM
The captioned six appeals comprise of three appeals filed by the assessee and equivalent cross-appeals by the Revenue for the assessment year 2008-09. The appeals relate to three different assessees belonging to the same family and involve a common issue, therefore they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
2. The captioned three assessees are co-owners of a property, which has been sold during the previous year relevant to the assessment year under 3 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 consideration, and taxation of the resultant capital gain is the subject matter of the dispute in the captioned appeals.
3. The facts and circumstances in the case of all the three assessees are common therefore the cross-appeals in the case of Shri Narsing Gopal Patil i.e. ITA No. 1544/PN/2012 filed by the assessee and ITA No. 1815/PN/2012 filed by the Revenue are taken up as lead case.
4. The relevant background to appreciate the controversy raised by the assessee in its appeal vide ITA No. 1544/PN/2012 and by the Revenue in its cross-appeal vide ITA No. 1815/PN/2012 is as follows. The assesses is an individual who filed his return of income for the assessment year 2008-09 declaring total income of Rs.12,44,720/-, which was subject to scrutiny assessment whereby the total income was assessed at Rs.3,55,35,574/-. During the year under consideration, assessee sold his land situated at Survey No. 100, Tathawade, admeasuring 5 Hectares for a consideration of Rs.5,31,40,000/- to M/s Broadway Integrated Park Pvt. Ltd. vide sale deed dated 23.05.2007. The assessee declared long term capital gain of Rs.3,48,70,434/- and the Assessing Officer computed the same at Rs.3,49,34,327/- after making an addition of Rs.63,893/- on account of variation in the computation of cost of acquisition, and the said addition has since been deleted by the CIT(A) and on this aspect no further dispute has been raised by the Revenue.
5. The dispute before us is with regard to the claim of the assessee for exemptions under Section 54B and Section 54F of the Income Tax Act, 1961 (in short "the Act") amounting to Rs.1,59,09,583/- and Rs.1,83,17,378/- respectively. The assessee had claimed the aforesaid exemptions with respect to the long term capital gain and Assessing Officer denied both the claims. The assessee carried the matter in appeal before the CIT(A) who allowed the claim of the assessee for exemption under Section 54B of the Act amounting 4 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 to Rs. 1,59,09,583/- whereas the other claim of the assessee for exemption under Section 54F of the Act was denied by the CIT(A) amounting to Rs.1,83,17,378/-. The assessee is in appeal before us with regard to the action of the CIT(A) in denying the exemption under Section 54F of the Act whereas the Revenue is in appeal disputing the action of the CIT(A) allowing exemption under Section 54B of the Act.
6. In this background, the cross-appeals have been heard. With regard to the appeal of the Revenue, the learned Departmental Representative has contended that the CIT(A) has unjustly allowed the exemption under Section 54B of the Act by merely relying on the entries in the 7/12 extract whereas the assessee had otherwise failed to substantiate that the land in question was actually used for agricultural activities in the two years prior to the date of transfer. According to the learned Departmental Representative, it was a pre- condition for allowing exemption under Section 54B of the Act that the land sold by the assessee is used for agricultural activities in the two years prior to the date of transfer and in the present case the Assessing Officer established that the assessee could not demonstrate that the land was used for agricultural activities, and in this regard reference has been made to the discussion in the assessment order.
7. On the other hand, the learned representative for the assessee while defending the action of the CIT(A) in allowing exemption under Section 54B of the Act pointed out that the entries in the 7/12 extracts clearly established that the impugned land was not only agricultural land but in the period of two years before the date of transfer, agricultural activities were being carried out. It has also been pointed out by the learned counsel that the copies of the 7/12 extract are annexed in the Paper Book filed at pages 50 to 53 and it is also asserted that in the returns of income filed for the earlier years, the assessee was declaring agricultural income. It has been submitted that the CIT(A) correctly analyzed the position by observing that there was a presumption of 5 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 correctness of the entries made in the Land Revenue records in terms of Section 157 of the Maharashtra Land Revenue Code, 1966 and that there was no material with the Assessing Officer to rebut such presumption and as a result the CIT(A) was justified in holding that the test of the land being used for agricultural activities for two years prior to the date of transfer, stands fulfilled.
8. We have carefully considered the rival submissions. Section 54B prescribes that where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes, and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, the said capital gain shall not be charged to income tax and shall be exempt from tax. In terms of Section 54B of the Act, assessee claimed exemption in relation to the long term capital gain earned on the sale of agricultural land situated at village Tathavade, Taluka Mulshi, District- Pune. The Assessing Officer while scrutinizing assessee's claim for exemption under Section 54B of the Act required the assessee to furnish proof that agricultural activity was being carried out by him on the said land for two years prior to the date of transfer. The assessee made two-fold submissions. Firstly, as per the assessee the said land was agricultural land and was situated in no development zone and he also filed the copy of the Land Revenue records, namely, 7/12 extract of the land pertaining to the financial years 2001-02 to 2008-09 to substantiate that crops were grown on such land. Secondly, assessee submitted that he has been declaring agricultural income in his income-tax returns filed for the assessment years 2002-03 to 2007-08. In this manner, the assessee sought to justify that the land in question was being used for agricultural purposes during the period of two years immediately preceding the date of transfer. The Assessing Officer was not satisfied with the explanation furnished by the assessee. According to him the assessee did not discharge his onus of proving beyond reasonable doubt that assessee was 6 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 actually carrying out agriculture on the said land for two years prior to the date of transfer. Accordingly, the claim of exemption under Section 54B of the Act amounting to Rs.1,59,09,583/- was disallowed. The CIT(A) has since allowed the claim of the assessee as per the following discussion in para 11 of his order :-
"I have carefully considered the facts of the case as well as reply of the Appellant. In this case it is seen that the land in question has been shown as agricultural in revenue records. Copies of 7/12 extract also evidences that agricultural operations was carried out in the said land. The presumption is that the entries in revenue records are to be accepted as true unless proved contrary. The A.O. has relied on the language of section 54B to test the admissibility of exemption u/s 54B. The presumption is that entries in Revenue records are rebuttable but the A.O. has not done this. The Appellant too has not demonstrated that agricultural activities were carried out in the said land for two years prior to date of sale. In this situation, the question is whether entries in 7.12 extracts are sufficient to meet the requirements of section 54B of Income-tax Act. In my opinion entries in 7/12 extracts which remains uncontroverted by the A.O. are sufficient enough to meet the requirements of section 54B of I.T. Act. Accordingly, the A.O. is directed to delete the addition of Rs.1,59,09,583/- and allow the claim u/s 54B of I.T. Act. The ground is thus allowed."
9. Ostensibly, as per the CIT(A) the entries in 7/12 extract, which show growing of crops during the relevant period, have not been controverted by the Assessing Officer and therefore there was no justification to deny assessee's claim for exemption under Section 54B of the Act. The aforesaid position articulated by the CIT(A) in the impugned order is the subject-matter of consideration before us. Admittedly, one of the pre-conditions for availing of exemption under Section 54B requires that the land which is the subject matter of transfer ought to have been used by the assessee or a parent of his "for agricultural purposes" during the period of two years from the date of transfer. In the present case, the assessee putforth the 7/12 extract as per the Land Revenue records for the financial years 2001-02 to 2008-09 to establish that the land was being cultivated and was also classified as an agricultural land. Copies of 7/12 extract have also been placed before us by the assessee at pages 50 to 53 of the Paper Book. A perusal of the same does give a 7 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 reflection that the crops were being grown on such land namely, Rabbi, Jawar, Rice etc. As correctly noted by the CIT(A) there is a presumption of correctness of entries in the Land Revenue records in terms of Section 157 of the Maharashtra Land Revenue Code, 1966, the relevant extract of which has been noted by the Assessing Officer also in his assessment order, though such presumption is not absolute but is a rebuttable presumption. The aforesaid presumption coupled with the fact that the assessee had declared agricultural income in its return of income for assessment years 2005-06 to 2007-08 do lend weight to the assertion of the assessee that the land was being used for agricultural purposes in the two years immediately preceding the date of transfer. In this background we notice that the CIT(A) correctly came to the conclusion that the Assessing Officer has not satisfactorily rebutted the presumption attached to the entries in the 7/12 extract i.e. the Land Revenue records. As per the Assessing Officer the declaration of agricultural income for assessment years 2005-06 to 2007-08 by the assessee were not scrutinized by the Department and therefore, the genuineness of the claim of agricultural income for those years was not proved and therefore he was not satisfied with the explanation. In our considered opinion, assessee had duly discharged the initial onus cast on him to establish his case that the said land was being used for agricultural purposes based on the entries in the 7/12 extract and the declaration of agricultural income in the returns filed for assessment years 2005-06 to 2007-08. Thereafter, the burden was on the Assessing Officer to rebut the stand of the assessee, which was backed by the presumption attached to the Land Revenue records as per Section 157 of the Maharashtra Land Revenue Code, 1966 and also the factum of declaration of agricultural income by the assessee in the respective assessment years. The Assessing Officer has merely disbelieved the explanation furnished by the assessee without any credible material to negate the same. Having regard to the material and evidence on record and the legal position, in our view, the CIT(A) was justified in holding that the assessee discharged the burden cast on him to establish that the land was being used for agricultural purposes in 8 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 the two years immediately preceding the date of transfer. We hereby affirm the same and accordingly the Revenue has to fail on this aspect.
10. In the result, appeal of the Revenue in ITA No. 1815/PN/2012 in the case of Shri Narsing Gopal Patil is dismissed.
11. Now we may take up assessee's claim for exemption under Section 54F of the Act, which has since been denied by the Assessing Officer as well as by the CIT(A). In this regard, brief facts, are that in the return of income, assessee claimed exemption under Section 54F of the Act amounting to Rs.1,83,17,378/- on the ground of having invested the requisite sale consideration for construction of his residential house at Thergaon. The Assessing Officer has denied the claim of the assessee on two grounds and in the alternative, as per the Assessing Officer even if assessee is to be held eligible for the exemption under Section 54F, the same was liable to be allowed only to the extent of Rs.10,80,123/- and not as claimed by the assessee.
12. Firstly, as per the Assessing Officer, the assessee does not fulfill a basic pre-requisite for claiming exemption under Section 54F of the Act, which is to the effect that the construction of the new residential house is to be completed within 3 years from the date of transfer of old asset. As per the Assessing Officer construction of the new residential house was to be completed by 23.05.2010 whereas in the present case when the assessee was asked to furnish the necessary completion certificate from the municipal authorities, the assessee failed to furnish the same and merely a copy of application made to the municipal authorities for obtaining completion certificate was furnished. As per the Assessing Officer claim could not be allowed for the aforesaid reason.
9 ITA Nos.1544 to 1546/PN/2012
ITA Nos.1813 to 1815/PN/2012
13. In so far as the aforesaid objection of the Assessing Officer is concerned, the CIT(A) has discussed it in para 17 of his order, which is as under : -
"I have carefully considered the facts the case as well as reply of the assessee. As regards the first ground in which exemption u/s 54 of I.T. Act has been denied by the A.O., it is seen that there is no such condition in the section that the residential house is to be completed within 3 years of the date of transfer of original asset. What is required is investment of the sale consideration within 3 years from the date of transfer in order to qualify for exemption u/s 54 of I.T. Act. There may be many situations due to which the residential house cannot be completed. For that matter if the appellant intends to construct high value residential house which is likely to cost more than the sale consideration of the old asset, the new house cannot be completed for want of additional fund etc. Therefore, completion of residential house cannot be said to be criteria for claiming exemption u/s 54F of I.T. Act. In my opinion the conditions of section 54F can be said to be met if the sale consideration for claiming exemption u/s 54F of I.T. Act has been invested in the residential house within 3 years from the date of transfer of the old asset. Therefore, A.O. was not justified in holding that exemption u/s54F cannot be allowed if construction of residential house was not completed within 3 years of date of transfer of old asset. Therefore denial of exemption u/s 54F on this account cannot be upheld. However, claim of the appellant is seriously hit by alternative finding of the AO which is discussed in subsequent paras."
As per the CIT(A), the objection taken by the Assessing Officer on the completion of construction was not justified. The aforesaid aspect emerging from the order of the CIT(A) is not challenged by the Revenue in its appeal before us, and therefore we do not elaborate any further on the same as we are presently dealing with only the appeal of the assessee against the ultimate denial of exemption under Section 54F of the Act.
14. The other objection of the Assessing Officer, and which has been upheld by the CIT(A) to sustain the disallowance of exemption under Section 54F of the Act is to the following effect. As per the Assessing Officer, assessee had invested the sale consideration in a "commercial-cum-housing complex" and not in residential house as mandated by Section 54F of the Act. The Assessing Officer noticed that assessee had entered into a contract with 10 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 one Shri S.D. Dagrekar, for construction of a "commercial-cum-housing complex", which comprised of construction of two buildings - one, having 18- one BHK flats and other having 18 - two BHK flats along with 9 shops. As per the Assessing Officer since the investment was for a "commercial-cum- housing complex" and not in a residential house as required by Section 54F of the Act, the exemption was not allowable.
15. In appeal before the CIT(A), on this aspect assessee submitted that the entire building was owned by the assessee and his two daughters and that the buildings were not submitted either to the provisions of Maharashtra Apartment Ownership Act, 1970 or the Maharashtra Co-operative Societies Act and therefore each dwelling unit in the building could not be termed as a separate residential immovable property. It was also contended that the building was not structurally divided and therefore each independent unit could not be termed as separate residential immovable property. The CIT(A) has examined the pleas set-up by the assessee but was not satisfied. The CIT(A) upheld the stand of the Assessing Officer that in the present case assessee had constructed two buildings which comprised of "commercial-cum-housing complex", and the same did not qualify for exemption under Section 54F of the Act because what is required as per the Section 54F of the Act was to construct "a residential house". Secondly, the claim of the assessee that each dwelling unit in the building could not be termed as a separate residential property was also not accepted by the CIT(A). According to the CIT(A) the requirement of Section 54F was to construct or purchase "a residential house". As per the CIT(A) the used of the phrase "a" before the expression "residential house" clearly signified the legislative intent that the exemption is to be allowed in respect of the construction of a single residential house and not multiple dwelling units. For the aforesaid reasons, CIT(A) upheld the denial of assessee's claim for exemption under Section 54F of the Act. 11 ITA Nos.1544 to 1546/PN/2012
ITA Nos.1813 to 1815/PN/2012
16. Before us, the learned counsel for the assessee has vehemently pointed out that the claim of exemption under Section 54F of the Act based on the investment in construction of the new building was limited to the investment made in the construction of residential portion of the new building. Further with regard to the plea of the Revenue that the building constructed by the assessee consisted of several residential units, it was pointed out that the same would not act as a bar for allowance of exemption under Section 54F of the Act and reliance was placed on the judgement of the Hon'ble Delhi High Court in the case of CIT vs. Gita Duggal (2013) 257 CTR 208 (Delhi) in this regard. Reliance has also been placed on the judgement of the Hon'ble Karnataka High Court in the case of CIT vs. D. Ananda Basappa (2009) 309 ITR 329 (Kar.), which has further been approved by the Hon'ble Supreme Court vide its order dated 10.08.2009 whereby SLP (CC) 1046/2009 preferred by the Revenue was dismissed.
17. On the other hand, the learned Departmental Representative has defended the case of the Revenue by relying on the reasoning advanced by the Assessing Officer and the CIT(A) to deny the assessee's claim for exemption under Section 54F of the Act, which we have already noted in para 14 above, and is not being repeated for the sake of brevity.
18. We have carefully considered the rival submissions. Section 54F of the Act prescribes exemption of capital gain arising from the transfer of any long term capital asset, not being a residential house; the exemption is provided in case, within a period of one year before or two years after the date of which the transfer took place assessee purchases or within a period of three years after that date constructs a residential house, and if the cost of the new asset is not less than the net consideration in respect of the original asset the whole of such capital gain is exempted and if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain, the same proportion as the cost 12 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 of the new asset bears to the net consideration, shall be exempted from tax. The case made out by the assessee is that he has undertaken construction of "commercial-cum-housing complex" on his land at Thergaon which involved construction of two buildings. One building comprised of 18 - one BHK flats and other 18 - two BKH flats along with 9 shops with shutters. The objection taken by the Revenue is to the effect that the building constructed by the assessee, apart from containing a commercial area, was comprising of more than one separate and independent residential units and therefore it cannot be considered as one unit to enable the assessee to claim exemption under Section 54F of the Act. The said objection of the Revenue is based on the understanding of Section 54F of the Act that it requires construction of "a residential house". In other words, as per the Revenue presence of the phrase "a residential house" means one residential house and not a residential property with multiple residential units.
19. A similar objection has been dealt with by the Hon'ble Delhi High court in the case of CIT vs. Gita Duggal (supra) in the context of Sections 54/54F of the Act, and the following discussion in the order of the Hon'ble Delhi High is worthy of notice :-
"What in effect the assessing officer had done was to reject the assessee's claim for deduction under Section 54/54F of the Act in respect of the house/units in the first and second floors holding that they were separate and independent residential units having separate entrances and cannot be considered as one unit to enable the assessee to claim the deduction. This was disapproved by the CIT(Appeals) on the basis of the judgement of the Karnataka High Court (supra) and his decision was approved by the Tribunal. The Tribunal expressed the view that the words "a residential house"
appearing in Section 54/54F of the Act cannot be construed to mean a single residential house since under Section 13(2) of the General Clauses Act, a single includes plural.
It is the correctness of the above that is questioned by the revenue and it is contended that the interpretation placed by the Tribunal gives rise to a substantial question of law. The assessee strongly relies upon the judgement of the Karnataka High Court (supra) which, it is stated, has become final, the special leave petition filed by the revenue against the said decision having 13 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 been dismissed by the Supreme Court as reported in the annual digest of Taxman publication. The judgement of the Karnataka High Court supports the contention of the assessee. An identical contention raised by the revenue before that Courts was rejected in the following terms :
"A plain reading of the provision of section 54(1) of the Income-tax Act discloses that when an individual-assessee or Hindu undivided family- assessee sells a residential building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek exemption of the capital gains tax. Section 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural.
The contention of the Revenue is that the phrase "a" residential house would mean one residential house and it does not appear to the correct understanding. The expression "a" residential house should be understood in a sense that building should be of residential in nature and "a" should not be understood to indicate a singular number. The combined reading of sections 54(1) and 54F of the Income-tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to section 54 of the Income-tax Act, lays down that if the assessee has already one residential building, he is not entitled to exemption of capital gains tax, when he invests the capital gain in purchase of additional residential building.
This judgement was followed by the same High Court in the decision in CIT v. Smt. K. G. Rukminiamma [2010] 196 Taxman/[2010] 8 taxmann.com 121 (Kar.).
There could also be another angle. Section 54/54F uses the expression "a residential house". The expression used is not "a residential unit". This is a new concept introduced by the assessing officer into the section. Section 54/54F requires the assessee to acquire a "residential house"
and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the Section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the section which requires that the residential house should be built in a particular manner, it seems to us that the income tax authorities cannot insist upon that requirement. A person may construct a house according to his plans and requirements. Most of the houses are constructed according to needs and requirements and even compulsions. For instance, a person may construct a residential house in such a manner that he 14 ITA Nos.1544 to 1546/PN/2012 ITA Nos.1813 to 1815/PN/2012 may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly post-requirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consist of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited."
[underlined for emphasis by us]
20. From the aforesaid discussion, it is to be understood that the presence of the expression "a residential house" under Section 54F of the Act is not to be understood to mean that the assessee is to acquire a single residential unit. Section 54F requires the assessee is to acquire "a residential house" and so long as the assessee acquires a building, which may be constructed in a manner so as to consist of several units which can, if the need arises be used as independent units as residences the requirement of Section 54F should be taken to have been satisfied. In our considered opinion, the aforesaid decision of the Hon'ble Delhi High Court supports the proposition canvassed by the assessee and negates the objection raised by the Revenue. On this point, it would also be worthwhile to notice that the Hon'ble Delhi High Court has referred with approval to an earlier judgement of the Hon'ble Karnataka High Court in the case of CIT vs. D. Ananda Basappa (supra) wherein the similar proposition was dealt with. The judgement of the Hon'ble Karnataka High Court has the implied approval of the Hon'ble Supreme Court, when the SLP filed by the Revenue was dismissed on 10.08.2009 (supra). 15 ITA Nos.1544 to 1546/PN/2012
ITA Nos.1813 to 1815/PN/2012
21. In this view of the matter, we do not find any justification on the part of the Revenue to deny exemption under Section 54F of the Act merely on the ground that the residential building constructed by the assessee consisted of several independent residential units.
22. The other point made by the Revenue is that the construction undertaken by the assessee involved construction of commercial area also by way of shops and the same does not fall within the purview of Section 54F of the Act. On this aspect, the learned counsel for the assessee stated at the time of hearing that the assessee had claimed exemption only with regard to the investment made towards construction of the residential area and not in relation to the shops, etc.. In this connection, the learned counsel has referred to pages 10 to 15 of the supplementary Paper Book dated 03.05.2013 filed before us, which shows the calculation of cost of construction of the residential portion of the new building, and it also asserted that such details were placed before the Assessing Officer. The learned Departmental Representative has not negated the aforesaid plea and there is no adverse discussion emerging from the order of the lower authorities on this aspect. Therefore, so long as the assessee's claim of exemption is limited to the investment in the construction of the residential portion of the building, the same is held to be allowable. Thus, on this aspect, assessee succeeds, and his claim for exemption under Section 54F of the Act is upheld.
23. In the result, the cross-appeal of the assessee in ITA No. 1544/PN/2012 in the case of Shri Narsing Gopal Patil is allowed.
24. Since it was a common point between the parties that the other appeals are in the case of co-owners and involve identical issues covered in the cross-appeals in the case of Shri Narsing Gopal Patil, our decision in the cross-appeals of Shri Narsing Gopal Patil (supra) would apply mutatis-mutandis in the other set of appeals also.
16 ITA Nos.1544 to 1546/PN/2012
ITA Nos.1813 to 1815/PN/2012
25. Resultantly, whereas the captioned appeals of the Revenue are dismissed those of assessees are allowed.
Order pronounced in the open Court on 31 st May, 2013.
Sd/- Sd/-
(SHAILENDRA KUMAR YADAV) (G. S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated: 31 st May, 2013
Sujeet
Copy of the order is forwarded to: -
1) The Assessee;
2) The Department;
3) The CIT(A)-V, Pune;
4) The CIT-V, Pune;
5) The DR, "A" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True copy//
Private Secretary
I.T.A.T., Pune