Income Tax Appellate Tribunal - Chennai
Vijayanirmala, Chennai vs Assessee on 10 March, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'B' CHENNAI
Before Shri Abraham P. George, Accountant Member and
Shri George Mathan, Judicial Member
.....
I.T.A. No. 485/Mds/2010
Assessment Year : 2003-04
Smt. Vijayanirmala, The Income-tax Officer,
Flat No. 3A, No.16, Media Ward-III,
Porur Somasundaram Street, Chennai.
T. Nagar, Chennai-600 017. Vs.
(PAN: AHAPG 1333P )
(Appellant) (Respondent)
Appellant by : Shri T. Banusekar
Respondent by : Shri P.B. Sekaran
ORDER
PER GEORGE MATHAN, JUDICIAL MEMBER :
This is an appeal filed by the assessee against the order of the learned Commissioner of Income-tax, Chennai-IV, Chennai u/s. 263 in C. No. 1321(4)/CIT-IV/09-10 dated 10th March, 2010 for the assessment year 2003-04. 2
I.T.A. No.485/Mds/2010
2. Shri T. Banusekar, CA represented on behalf of the assessee and Shri P.B. Sekaran, CIT-DR represented on behalf of the Revenue.
3. It was submitted by the learned authorised representative that the assessee had sold certain movable assets being shares and immovable properties being three residential properties and invested the net capital gain in a new residential house at Hyderabad and had claimed exemption u/s. 54 of the Income-tax Act, 1961. It was the submission that the assessment had been completed u/s. 143(3) wherein the claims have been accepted. It was the submission that a show cause notice u/s. 263 of the Act had been issued where the learned CIT had directed the assessee to show cause as to why the claim of deduction under sections 54 and 54F was liable to be withdrawn as the same had been allowed by the Assessing Officer without appreciating the facts and this has resulted in the assessment order being erroneous and prejudicial to the interests of the Revenue.
4. In reply, the assessee has submitted that the assessee had sold three flats in Chennai against which she had made the claim of deduction u/s. 54 in respect of the acquisition of the new residential house. It was the submission that the assessee had sold shares after the sale of the 3 flats which had also resulted in long term capital gains and the sale proceeds had also been invested in the acquisition of the residential house at Hyderabad which is under construction and claimed deduction u/s. 54F. It was the submission by the learned authorised 3 I.T.A. No.485/Mds/2010 representative that the submissions of the assessee had not been accepted and the learned CIT had set aside the assessment order holding that the assessee was entitled to deduction u/s. 54 in respect of the capital gains arising out of the transfer of only one residential house and the claim u/s. 54 in respect of the capital gains out of the transfer of the 3 residential houses was not in order. It was the further submission that the learned CIT was also of the view that in respect of the investment of the capital gains arising on the sale of shares, as the assessee was in possession of another residential house in Hyderabad, the assessee was not entitled to the claim of deduction u/s. 54F. The learned authorised representative drew our attention to the decision of the Karnataka High Court in the case of CIT v. D. Ananda Basappa reported in 309 ITR 329 wherein the term "a residential house" as found in section 54 has been interpreted to mean that the building should be of residential nature and the expression "a" should not be understood to indicate a singular number. It was the submission that section 54 nowhere specified that the assessee was entitled to the deduction u/s. 54 in respect of the sale of one residential house being a long term capital asset. It was the submission that sec. 54 permitted the assessee to invest the sale proceeds on the sale of long term capital assets being buildings or lands appurtenant thereto and being a residential house, in a residential house which the assessee has done. It was the further submission that the same term "a residential house" was also found in section 54F. It was 4 I.T.A. No.485/Mds/2010 the submission that in any case the issue being a debatable issue in view of the decision of the Hon'ble Karnataka High Court in the case of D. Ananda Basappa, the view taken by the Assessing Officer should not be held to be erroneous and prejudicial to the interests of the Revenue. It was the submission that the order passed u/s. 263 was liable to be set aside.
5. In reply, the learned DR vehemently supported the order of the learned CIT.
6. We have considered the rival submissions. A perusal of the provisions of sec. 54(1) shows that the words used are "the transfer of long term a capital (emphasis supplied by us) asset, being buildings or lands / appurtenant thereto, and being a residential house". Thus the reading of section 54 itself shows that it is not singular that has been contemplated in the said section and it is plural that is accepted by the said section. Thus the sale of 3 flats being long term capital assets, which are in the nature of residential houses and the investment of the proceeds therefrom in the new residential house is eligible for deduction u/s. 54 as claimed by the assessee and rightly allowed by the Assessing Officer. The provisions of section 54F also use the term "a residential house" which the Hon'ble Karnataka High Court while interpreting the term "a residential house" for the purpose of sec.54 has categorically held to indicate the residential nature of the asset and not a singular number. Thus the view taken by the Assessing Officer in allowing the claim of the assessee, it is noticed, is also supported by the decision of the 5 I.T.A. No.485/Mds/2010 Hon'ble Karnataka High Court in the case of D. Ananda Basappa, referred to supra. There is no other decision of any High Court against such a view. In the circumstances, it cannot be said that the acceptance of the claim of the assessee by the Assessing Officer has led to an error which is prejudicial to the interests of the Revenue. In any case, the view as expressed by the learned CIT in his order u/s. 263 is contrary to the decision of the Hon'ble Karnataka High Court in the case of D. Ananda Basappa, referred to supra, and consequently the order would be unsustainable in law. In the circumstances, we are of the view that the order passed by the learned CIT being unsustainable on the undisputed facts as mentioned in the order itself by applying the principles laid down by the decision of the Hon'ble Karnataka High Court in the case of D. Ananda Basappa, the same is quashed. In the circumstances, the appeal of the assessee is allowed.
7. The order was pronounced in the court on 6th August, 2010.
Sd/- Sd/-
(Abraham P. George) (George Mathan)
Accountant Member Judicial Member
Chennai,
Dated the 6th August, 2010.
H.
Copy to: Assessee/AO/CIT (A)/CIT/D.R./Guard file