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TMI Blog2018 (4) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... as "a residential house" and the assessee is entitled to the benefit accordingly. In that view of the matter, the Court held that the Tribunal as well as the appellate authority were justified in holding that there is no liability to pay Capital Gains tax as the case squarely falls under sec. 54 of the Income Tax Act, 1961. In the present case all the 6 flats were situate in the same premises and, therefore, the decision rendered in the case of Smt. K.G Rukminiamma (Supra) will apply. In the light of above judicial pronouncements on identical facts and circumstances of the case of the assessee we are of the view that the Assessee is entitled to deduction u/s.54F of the Act on all the 13 flats and there was no capital gain chargeable to tax in the hands of the assessee. - Decided in favour of assessee. - ITA No.209/Bang/2018 - - - Dated:- 25-4-2018 - Shri N.V Vasudevan And Shri Jason P Boaz, JJ. Appellant by : Shri B.S. Balachandran, Advocate. Respondent by : Smt. Padmameenakshi, JCIT. ORDER Shri N.V Vasudevan, This is an appeal by the assessee against the order dated 1/12/2017 of Commissioner of Income-tax (Appeals) - 7, Bengaluru relating to asst. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as his share of built up area under the JDA. The assessee claimed deduct ion u/s 54F of the Act in respect of all the 6 flats. The AO refused to allow the claim for deduction for on the ground that u/s.54F of the Act, deduction is allowed only on investment in acquiring a residential house and 6 flats got by the Assessee from the builder cannot be said to be one residential house. According to the AO, Investment in 6 residential flats is a clear violation of the conditions stipulated in section 54F and it was as good as investment in more than one residential house and the income from such house is chargeable under income from house property, The AO also held that the assessee s contention that all the 6 flats represent one residential property is not correct. In this regard the AO referred to the fact that an amendment was carried out to Sec.54F of the Act by the Finance (No.2) Act, 2014 w.e.f 1.4.2015 whereby the expression a residential house in Sec.54F of the Act was amended to read one residential house . The Assessee had contended that the aforesaid amendment made to section 54F is not applicable to the A.Y. under consideration and was prospective and applicable only fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date air which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions 01 this section, that is to say- 2. 9. A reading of the aforesaid provision makes it very clear that the property sold is referred to as original asset in the section. That original asset in described as buildings or lands appurtenant thereto and being a residential house. Therefore, it is not mere a residential house. ' The residential house may' include buildings or lands appurtenant thereto. The stress is on the use to which the property is put to. Only when that asset was used as a residential house, which may consist of buildings or lands appurtenant thereto, the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts are not in dispute. On a site measuring 30' x 110', the assessee had residential premises. Under a joint development agreement, she gave that property to a builder for putting iii. flats. Under the agreement eight flats are to be put up in that property and four flats representing 48% is the share of the assessee and the remaining 52% representing another four flats was the share of the builder. So the consideration for selling 52% of the site is four flats representing 48 /o. All the four flats are situate in a residential building. These four residential flats constitute a residential house for the purpose of Section 54. Pro-it on sale of property is used for residence. The four residential flats cannot be construed as four residential houses for the purpose of Section 54. It has to be construed only as a residential house and the assessee is entitled to the benefit accordingly. 13. In that view of the matter, the Tribunal as well as the appellate authority were justified in holding that there is no liability to pay capital gain tax as the case squarely falls under Section 54 of the income Tax Act. Hence, we do not see any substantial question of law arising fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. The Court held that the 4 flats constitute 'a residential house' for the purpose of sec 54. The 4 residential flats cannot be construed as 4 residential houses for the purpose of sec 54. It has to be construed as a residential house and the assessee is entitled to the benefit accordingly. In that view of the matter, the Court held that the Tribunal as well as the appellate authority were justified in holding that there is no liability to pay Capital Gains tax as the case squarely falls under sec. 54 of the Income Tax Act, 1961. 9. As far as the decision of the Hon ble Madras High Court in the case of V.R. Karpagam (supra) is concerned the facts were similar to the case of the assessee. The assessee in the case of V.R.Karpagam entered into an agreement with M for development of a piece of land owned by it. As per agreement, assessee was to receive 43.75% of built up area after development, which was translated into five flats. The Assessee claimed exemption u/s 54F on the value of five flats. The AO granted benefit of capital gains in respect of one flat and the CIT( A) affirmed findings of AO holding that claim of assessee u/s 54F for all five flats could not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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