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TMI Blog2019 (7) TMI 1610X X X X Extracts X X X X X X X X Extracts X X X X ..... this is the only submission of ld. AR of assessee in para 13 of written submissions as reproduced above that since as per the claim of the assessee, deduction is allowable in respect of the property purchased on 28.04.2014 and the assessee has not purchased any other property after this date, this proviso is not applicable. In this regard, we find no merit in this contention of ld. AR of assessee because as per the proviso (a)(ii) of section 54F (1) as reproduced above, this is not the requirement that no other property other than the new property should be purchased after the purchase of new asset. In fact, the requirement of the proviso is this that if the assessee purchases any residential house other than the new asset within the period of one year after the date of transfer of original asset, deduction is not allowable u/s. 54F (1). Hence whether the deduction u/s. 54F (1) is allowable in respect of second property or first property, it is not material because in both the situations, the proviso will be operating and as a result, the assessee will not be eligible for deduction u/s. 54F (1). - Decided against assessee. - ITA No. 3255/Bang/2018 - - - Dated:- 25-7-2019 - SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 7/4, Arekere Ward No. 193, in Arekere Village, Begurli, Bangalore South Taluk, Bangalore for a consideration of ₹ 55.74,770/-, inclusive of Stamp Duty, on 28-04-2014. The Appellant has claimed deduction u/s. 54F in respect of the re-investment made in the aforesaid 2 properties. The AO has allowed deduction in respect of investment made in the property purchased on 25-04-2014 amounting to ₹ 28,85,940/- and disallowed the deduction in respect of the second property purchased on 28-04-2014. 4. Being aggrieved with the assessment order, the assessee carried the matter in appeal before CIT(A) and this contention was raised before CIT(A) that deduction u/s. 54F should be allowed in respect of both properties purchased by the assessee. As per the impugned order, ld. CIT(A) has considered the amendments in section 54F w.e.f. 01.04.2015 as per which in place of the words constructed, a residential house , the following words were inserted i.e. constructed, one residential house in India . In view of this amendment in section 54F by the Finance (No. 2) Act, 2014 w.e.f. 01.04.2015, it was held by CIT(A) that assessee s claim for deduction u/s. 54F in respect of both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.5 of the impugned order of CIT(A) because the decision of CIT(A) is contained in these paras along with the reasoning. 6.1 It is pertinent to note that section 54F has been amended by Finance Act 2014 wef 01-04-2015 which was necessitated since the Courts have interpreted provisions to hold that exemption is available even if investment is made in more than one house. To overcome these judicial decisions on allowing exemption for investment in multiple houses and also to resolve controversy as regards whether the investment should be in a house in India, the Finance (No. 2) Act, 2014 has amended section 54(1) so as to provide that the exemption is available, if the investment is made in purchase or construction alone residential house situated in India. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years. 6.2 In case of the appellant the AY being 2015-16, the amended provision will apply and therefore the claim of the assessee for exemption u/s 54F for investment in two residential houses is not tenable. Further, the proviso to the section stipulates that nothing contained in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-2014 of the Hon'ble High Court of Karnataka in the case of B. Srinivas v/s. ITO Ward- 3(3) Bangalore in ITA No. 1134/2008, the same was marked as Annexure - D of the Written Submissions dtd: 24-07-2018. (The relevant paras for reference are 8 and 9) ii. The Order dtd: 25-10-2017 of the Hon'ble ITAT Bangalore in the case of Arun Kumar Nathan v/s. ACIT, Circle - 2(3)(1), Bangalore in ITA No. 1041/Bang/2017, the same was marked as Annexure - E of the Written Submissions dtd: 24-07-2018. (The relevant para for reference is 8) 3. The Appellant submits that as per the decision of the Hon'ble High Court of Karnataka (supra), the Assessee is entitled for the deduction u/s. 54F, even if two properties are purchased in the same locality. 4. Without prejudice to the above the Appellant submits that as per the decision of the Hon'ble Jurisdictional ITAT, if the Assessee purchases two properties in the same year, the option is available to the Assessee to claim the benefit of section 54F in respect of the residential house so opted. In this regard the Appellant submits that the Appellant has purchase3d one property on 25-04-2014 followed a Second property purchased o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on satisfaction of the condition mentioned therein, the case of the assessee for exemption will be lost at the very outset. Decisions relied upon by assessee are not applicable as the same are decided on the basis of the provisions of section 54F before it was amended wef AY 2015-16 and also they are not on the application of proviso (a) (ii) to section 54F (1). Reliance is placed on the decision of the Pune ITAT in the case of Rusi N. Billimoria 27 SOT 40. 6.5 In view of above, it is held that the appellant is not entitled to exemption u/s 54F of the Act and consequently the AO is directed to withdraw the exemption of ₹ 28,85,940/- allowed by him in the assessment order. 7. We also reproduce the written submissions filed by the ld. AR of assessee as available on pages 1 to 7 of the paper book. The same are as under. 1. The Appellant begs to submit the following written submissions in support of the Appeal filed against the Assessment Order dtd: 28-12- 2017 passed u/s. 143(3) of the Act. 2. The Appellant had owned a vacant site bearing No.17, situated in Sy. Nos. 99/1, 100/1, 106, 107, 108, 109, 110, 118, 120, 121/2, of a Layout formed by the Reserve Bank of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stamp duty, registration fee and other incidental expenses. 7. The Ld. AO was of the view that the decision of the Hon'ble High Court of Karnataka in the case of B.Srinivas v/s. ITO Ward-3(3) Bangalore (supra) is not applicable, since the judgment was delivered prior to 01-04-2015 and Section 54F was amended w.e.f 01-04-2015 and therefore the deduction was allowable only in respect of investment made in One House amounting to ₹ 28,85,940/- (exclusive of Stamp Duty and Registration Fee) and the same was allowed in respect of a Residential House purchased on 25-04-2014 ignoring the Second Residential House purchased on 28-04-2014. In this regard the Appellant submits that the Original Asset was sold prior to 01-04-2015 and the reinvestment was also made in purchase of two Houses prior to the date of amendment of section 54F being 01-04-2015. Therefore the Ld. AO was not justified to disallow the deduction stating that the amendment was made w.e.f 01-04-2015 on the basis of which the Appellant was not entitled for deduction in respect of Investment made in two houses without appreciating the fact that the reinvestment was made in purchase of two houses prior to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso (a)(ii) of section 54F (1) and accordingly the Appellant was not entitled for deduction in respect of the Reinvestment made in two house properties. In view of the said finding the AO was directed to withdraw the exemption of ₹ 28,85,940/- allowed in the Assessment Order relating to the investment made in purchase of First house on 25-04-2014 without appreciating the Appellant's Submissions dtd: 24-07-2018 placed at Page No. 75 to 79 of Paper Book and also the Additional Submissions dtd: 14-09-2018 placed at Page No. 80 to 82 of Paper Book. 12. The Appellant in this regard submits that the Ld. CIT(A) was not. justified to disallow the deduction of ₹ 55,74,770/- invested in purchase of Second House and also not justified to direct the AO to withdraw the exemption allowed of ₹ 28,85,940/- relating to the investment made in purchase of First House on 25-04-2014. 13. The Appellant submits that the Ld. CIT(A) was not justified to hold that the Appellant was not entitled for the deduction in view of proviso (a)(ii) of section 54F(1) of the Act since the Assessee is entitled to claim the deduction in respect of any one of the properties purchased and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee or not because if it is found by us that the assessee is eligible for deduction u/s. 54F in respect of both house properties then the proviso (a)(ii) to section 54(1) will not be applicable in the present case because in that situation, both the properties purchased by the assessee will be considered as a new asset and since apart from these two house properties, no other house property is purchased by assessee within one year from the date of sale of the asset, this proviso cannot be made applicable. In this regard, we find that the provisions of section 54F (1) has been amended by Finance (No. 2) Act, 2014 w.e.f. 01.04.2015. In the pre amended provisions, the following words were part of sub section (1) of section 54F constructed, a residential house . But as per the amended provisions, these words are replaced by the following words constructed, one residential house in India . In view of this specific provision of section 54F, after the amendment w.e.f. 01.04.2015 i.e. Assessment Year 2015-16, deduction is allowable u/s. 54F(1) only in respect of one residential house purchased or constructed by the assessee and hence, on this aspect, we find no infirmity in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property . 11. In respect of the applicability of this proviso, this is the only submission of ld. AR of assessee in para 13 of written submissions as reproduced above that since as per the claim of the assessee, deduction is allowable in respect of the property purchased on 28.04.2014 and the assessee has not purchased any other property after this date, this proviso is not applicable. In this regard, we find no merit in this contention of ld. AR of assessee because as per the proviso (a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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