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TMI Blog2015 (10) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption u/s. 54 denied - Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in allowing exemption u/s. 54 in respect of two residential houses - AR of the assessee has stated that expression ‘a residential house’ does not mean one residential house - Held that:- The Tribunal has been consistently taking a view that ‘a residential house’ does not mean one residential house. The expression ‘a residential house’ used in the section 54 does not restrict the exemption for investment in one residential house. This issue has been decided by the Co-ordinate Bench of Tribunal in the case of Shri Narsing Gopal Patil Vs. Asst. Commissioner of Income (2013 (5) TMI 837 - ITAT PUNE). 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. Assessee is eligible to claim benefit of section 54 on both the flats in the same building.- Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Chandan Ventures on 10-08-2007. As per the Sale Deed the sale consideration of the building was fixed at ₹ 2.75 Crores. Subsequently, after more than 3 years a Deed of Rectification to Sale Deed was executed on 08-12-2010, wherein, the sale consideration to be received by the assessee in respect of the aforesaid building was reduced from ₹ 2.75 Crores to ₹ 1.50 Crores. The reason for reducing sale consideration as mentioned in Deed of Rectification was, shifting of liability from vendors to vendee for getting the property vacated from various tenants/occupants and other claimants. In this regard affidavits were also executed immediately after the Registration of Sale Deed. The affidavit dated 10-08-2007 was executed by the Co-owners of the property and affidavit dated 13-09-2007 was executed on behalf of M/s. Chandan Ventures. All the documents viz Development Agreement, Sale Deed, Rectification Deed and Affidavits are placed on record in the form of paper book. The Assessing Officer rejected the contentions of the assessee with respect to reduction of sale consideration from ₹ 2.75 Crores to ₹ 1.50 Crores. The Assessing Officer held that nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for vacating the premises. The ld. DR further submitted that the affidavits filed by the assessee stating that the sale consideration has been wrongly mentioned in the sale deed are self serving documents and an afterthought. The affidavits and the Deed of Rectification have been executed in an attempt to reduce the tax liability arising from sale of capital asset. The ld. DR further submitted that the assessee had claimed the benefit of exemption u/s. 54 of the Act. The exemption has been claimed in respect to two residential houses, whereas, under the provisions of section 54(1), the assessee can claim exemption in respect of one residential house only. Thus, the benefit of exemption u/s. 54(1) on second flat has been wrongly granted by Commissioner of Income Tax (Appeals). The ld. DR vehemently supported the assessment order and prayed for setting aside the impugned order. 6. Shri Sunil Ganoo appearing on behalf of the assessee submitted that initially the consideration for sale of property was fixed at ₹ 2.75 Crores. It is an undisputed fact that the property in question was occupied by tenants/occupants and there was litigation going on between the assessee and variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1544/PN/2012 for the assessment year 2008-09 decided on 31-05-2013. The ld. AR of the assessee prayed for dismissing the appeal of the Revenue and sustaining the findings of Commissioner of Income Tax (Appeals). 7. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. We have also considered the documents that have been placed on record by the assessee in the form of paper book, as well as, the decisions on which the ld. AR has placed reliance. To understand that factual matrix of the case, it is essential to first see the sequence of events. The same are as under: 03-04-2007 Registered Development Agreement in respect of property, Plot No. 548, Village Bhamburda (Shivajinagar), Pune between the assessee (and other co-owners) and M/s. Chandan Ventures. 10-08-2007 Registered Sale Deed executed for the above stated property between the parties aforementioned. 10-08-2007 Affidavit executed by assessee and other co-owners for rectification of sale deed. 13-09-2007 Affidavit executed on behalf of M/s. Chandan Ventures for rectification of sale deed. 08-12-2010 Registered Deed of Rectification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 Crores, as the assessee transferred the liability to get the premises vacated from the tenants/occupants who were in occupation of the property to the purchaser. As is evident from the records, that at the time of execution of development agreement, as well as sale deed, the fact that the part of property in question is occupied by tenants/occupants were in the knowledge of the developer/purchaser i.e. M/s. Chandan Ventures. The developer had taken the responsibility to deal with the tenants/occupants and the owners were relieved from the responsibility to settle with the tenants and occupants of the building. A specific clause to this effect was incorporated in the development agreement. The relevant extract of Clause 5(g) of the development agreement is reproduced as under: "5 (g) however, the entire cost and expenses, responsibilities and obligations, liabilities and duties of development of the said Property, the construction of the building/s thereon, and dealing or transacting with the tenants listed in ANNEXURE-II herein, so also all the matters relating and touching to any of these matters, shall entirely be borne by the Developer and the Owners shall not be liable or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased on August 9, 2007 i.e. a day prior to the execution of sale deed. We are unable to understand as to how the assessee would know that some error would be committed in the execution of sale deed which has to be rectified immediately thereafter. As has been observed earlier, the assessee and other co-owners had time of 4 months between the date of execution of development agreement and the sale deed to think over the manner in which premises has to be vacated from the tenants/occupants who are already litigating with the owners. We fail to understand, what motivated the assessee to execute affidavit abruptly after the execution of the sale deed, when they had 4 months time to take a concisions decision and formulate a plan to get the premises vacated. When confronted with this question the ld. AR had no reply. 12. The vendors realized the purported mistake immediately after the execution of Sale Deed on 10-08-2007 and executed an affidavit on same day to rectify it. Whereas, the purchaser realized the mistake after more than a month and thereafter execute affidavit on 13-09-2007 on similar lines for reducing the sale consideration in lieu of taking the responsibility to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains accrue only if there is a sale or any other transfer of the capital asset and if the assessee is able to prove that in fact no sale took place in that case no capital gain accrued which could be assessed to income tax. If the assessee, even in the face of the registered sale deed, is able to prove by cogent evidence and satisfy the Tribunal that no sale in fact took place, in that case, the Tribunal has to come to the conclusion that there was no capital gain. As is apparent from the observations made in the order of the Tribunal, the Tribunal was under the misapprehension that the registered sale deed was final and, therefore, refused to look into the other material produced by the assessee with a view to prove its case that the sale transaction was a sham transaction. It is, however, a different matter that the Tribunal may not feel convinced that the sale transaction was a sham transaction and refuse to rely on the material produced by the assessee for good reasons, but the said material had to be taken into consideration and could not be ignored." In the present case, we have considered all the documents which have been placed on record by the assessee. After examining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s open. We find that the ratio laid down by the Hon'ble Bombay High Court in the above said case has been followed in the present case. The subsequent events which have taken place after the execution of sale deed have been duly considered. Since, the subsequent documents executed do not inspire confidence in the absence of corroborative evidence, therefore, they would not make any impact of the covenants of original document. 13.4 The ld. AR has also placed reliance on the decision of Hon'ble Bombay High Court rendered in the case of CIT Vs. Shakuntala Kantilal (supra). In the said case the Hon'ble High Court has explained the terms 'full value of consideration' in the case of computing capital gains. The Hon'ble High held: "……………….the Legislature, while using the expression "full value of consideration", in our view, has contemplated both additions to as well as deductions from the apparent value. What it means is the real and effective consideration. That apart, so far as clause (i) of section 48 is concerned, we find that the expression used by the Legislature in its wisdom is wider than the expression " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial house' does not mean one residential house. In support of his submissions, the ld. AR of the assessee has placed reliance on the decision of the Co-ordinate Bench of Tribunal in the case of Shri Narsing Gopal Patil Vs. Asst. Commissioner of Income in ITA No. 1544/PN/2012 for the assessment year 2008-09 decided on 31-05-2013. We find that this issue has been dealt by the Hon'ble High Courts and various Benches of the Tribunal. The expression 'a residential house' used in the section 54 does not restrict the exemption for investment in one residential house. This issue has been decided by the Co-ordinate Bench of Tribunal in the case of Shri Narsing Gopal Patil Vs. Asst. Commissioner of Income (supra). The relevant extract of the order in said case is as under: "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 ..... 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