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TMI Blog2021 (11) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement the developed area is agreed to be shared by the assessee and the developer as under: - Sharing of duplex houses - 47.53; and - Sharing of residential apartments - 365 : 63.5 On the date of executing the assessee has received only 2 flats and 1 duplex, therefore the AO construed that sec. 2(47) will apply. Accordingly the capital gain shall be computed as per sec.45 of the Income Tax Act, 1961. The AO after analysis of the documents computed capital gain of Rs. 6,16,52,201/- and disallowed the claim made by the assessee u/s 54 of the Act. Being aggrieved assessee went in appeal before the CIT(A) who granted partial relief to the assessee. 3. Aggrieved by the order of CIT(A), the Revenue is in appeal before us by raising the following grounds : "1. That the ld.CIT(A)'s action in allowing the appeal without hearing the AO is illegal, arbitrary and not in consonance with the principles of natural justice. 2. That on the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in allowing the appeal. 3. That on the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition made by the AO on account of wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 196 taxmann 87)(Karnataka). As brought out in the appellant's submissions earlier, the land owned by the appellant was 7254 Sq.Yds. This was given for development to My s. Prakruti Infra Structure and Developers for construction of 22 apartments and 8 duplex houses with total constructed area of 63417 sq. ft. Out of this the appellant's share was 47% for duplex houses and 36.5% for residential apartments. The Hon'ble High Court of Karnataka in the case of CIT Vs Anand Basappa [2009] 309 ITR 329 1180 Taxman 4(Kar.), held that Section 54 makes it apparent that the proceeds should be invested in a residential house. However, it being a beneficial provision, it should be construed liberally and the deduction cannot be restricted. In this context, the appellant during the course of appellate proceedings placed reliance on the following decisions and also made submissions:- (a) The Hon'ble High Court of Karnataka in the case of CIT vs Smt. K.G. Rukminamma [2011] (196 Taxman 87)(331 ITR 211)(Kar.) held that wherein a residential house were transferred and 4 flats in a single residential complex were purchased by the appellant, and it was held that all four residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Narasimha Sarma, learned Standing Counsel for the Income Tax Department at the stage of admission. 9. He contended that the deduction under section 54 of the Act is allowable only for one residential house and not for more than one residential house and that the Tribunal erred in holding that the deduction under section 54 of the Act is allowable for two independent residential flats in the same complex. He also placed reliance on the decision of the Special Bench of the Tribunal in ITO v. Ms. Sushila M. Jhaveri [2007] 107 ITD 327 (Mum.) 10. We see no force in the said contention. As held in D. Ananda Basappa's case (supra) by the Karnataka High Court, the expression "a residential house" in section 54 (1) of the Act has to be understood in a sense that the building should be of residential nature and "a" should not be understood to indicate a singular number and where an assessee had purchased two residential flats, he is entitled to exemption under section 54 in respect of capital gains on sale of its property on purchase of both the flats, more so, when the flats are situated side by side and the builder has effected modification of the flats to make it as one unit, desp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re similar to those in the case of Syed Ali Adil which had been decided by the jurisdictional High Court. Considering the various facts and circumstances of the instant case, it is held that the addition made in the assessment for A.Y.2016-17 is not warranted and hence deleted and the issues relate to A.Y.2014-15 as has been brought to note by the Assessing Officer on page 4 of the assessment order. Accordingly, the Assessing Officer is directed to take suitable remedial action for A.Y.2014-15. Ground nos. 2, 3, 4 and 5 are partly allowed. In the context of the judicial decisions of the AP High Court which have been respectfully followed, the canons of judicial discipline which have been adhered to. The Hon'ble Supreme Court in Jain Exports (P) Ltd., and Others vs. Union of India &. Others [3 SCC 579], Union of India & Others vs Kamlakshi Finance Corporation [55 ELT 433](SC) and the Hon'ble AP High Court in the case of State of Andhra Pradesh vs. CTO (169 ITR 564) are respectfully followed. The Hon'ble AP High Court in the case of State of Andhra Pradesh vs. CTO (169 ITR 564) while adjudicating a contempt of court case held: "It is clear from the judicial pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessing officer should not have tried to distinguish the same on untenable grounds. In this behalf, it will not be out of place to mention that in the hierarchical system of courts which exists in our country, it is necessary for each lower tiers including the High Court, to accept loyally the decisions of the higher tiers. It is inevitable in hierarchical system of courts that there are decisions of the Supreme Appellate Tribunals which do not attract the unanimous approval of all members of the judiciary. But the judicial system only works if someone is allotted to have the last word, and that last word once spoken is loyally accepted. The better wisdom of the court below must yield to the higher wisdom of the court above as held by the Supreme Court in the matter of CCE v. Dunlop India Ltd. AIR 1985 SC 330. " In the result the appeal is partly allowed." 4. After hearing both the sides and on perusal of material and orders of authorities below, we observe that the joint development agreement was executed on 6.11.2013 and from the assessment order the AO has himself accepted that the transfer took place as per sec.2(47) rws 53A of the Transfer of Property Act which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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