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TMI Blog2022 (6) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the convenience, the built-up area was divided into 3 units and that cannot be basis that the assessee got 3 residential houses. In order to decide this issue, it would be necessary to examine the plan and the manner in which the construction of the 3 units has been done and how the property has been assessed and enjoyed by the assessees. We therefore deem it fit and proper to remand this issue to the AO for fresh consideration after affording opportunity of being heard to the assessee. Thus, both the appeals of the assessees are treated as partly allowed for statistical purposes. - Appeal Nos. ITA No.449/Bang/2021, ITA No.633/Bang/2021, SP No.111/Bang/2021 (in ITA No.449/Bang/2021) - - - Dated:- 24-6-2022 - Shri N. V. Vasudevan, Vice President And Ms. S.Padmavathi, Accountant Member For the Assessee : Shri. V. Srinivasan, Advocate For the Revenue : Smt. Priyadarshini Baseganni, Addl. CIT(DR)(ITAT), Bengaluru. ORDER PER N. V. VASUDEVAN, VICE PRESIDENT : ITA No.449/Bang/2021 is an appeal by the assessee against the order dated 26.07.2021 of the NFAC, Delhi, relating the Assessment Year 2015- 16. ITA No.633/Bang/2021 is also an appeal by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding. It is further agreed that the 2000 square feet of terrace area being allotted to the Second Party shall always form part of and be a portion the DEVELOPER'S CONSTRUCTED AREA or proportionate portion thereof or as the case the Second Party deems it fit, but however under no circumstances shall the Second Party or its successors-in-interest/ title be entitle to deal with, use or otherwise dispose off this 2000 square feet of terrace area independently i.e., Without being or forming part of the correspcoding super built-up area forming part of DEVELOPER'S CONSTRUCTED AREA or portion thereof as the case may be. It is hereby clarified that the balance terrace area available will be part of common area available for the benefit of all other unit/apartment owners in the Residential Building. 4. In the return of income filed for Assessment Year 2015-16, Shri. Nagaraj Desirazu computed capital gain on account of JDA as follows: INCOME FROM CAPITAL GAINS : Rs Rs. Part Sale consideration received on Development of Plot situated at Bangalore 19285000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in the assessment proceedings that as per the terms of the JDA, the assessee was entitled to built up area which consisted of more than one residential house and he invoked the provisions of the first proviso to section 54F(1) of the Act, which reads thus: Provided that nothing contained in this subsection shall apply where the assesse owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset. According to the AO, as per the JDA, the assessee was entitled to more than 2 residential houses i.e., flats and therefore the deduction under section 54F of the Act cannot be allowed to the assessee. 7. In reply to the proposal of the AO as above, the assessee submitted that he was entitled to as share of Land Owners one residential house consisting of 3 units. It was the plea of the assessee that though there were three units they have to be regarded as one residential house only. The sum and substance of the stand taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstituted by 'one residential house'. The assessee has claimed one residential house as a result of joint development agreement as new asset under section 54F. It also irrefutable fact that by virtue of Joint Development agreement, assessee is in possession of other residential house the income from which is chargeable under the head Income from House Property within period of 3 years from date of transfer, other than new asset. It could not be stand of assessee that on one hand benefit of new asset investment can be availed for one of the residential house arising out of Joint Development agreement and on the other hand conveniently ignoring the other residential houses resulting to assessee as a result of joint development agreement so as to be complaint with conditions stipulated in section 54F. Thus assessee is in violation of proviso to sub-section (1) of section S4F and also condition stipulated in sub-section (2) of section 54 as proposed in show-cause notice. In light of the above discussions the assessment is proceeded with by denying the benefit exemption under section 54F of Income tax act. Also, penalty proceedings u/s 271(1)(c) of Income Tax Act, 1961 is bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed was deduction while computing capital gain was deduction u/s.54F of the Act and this is the reason why the same expression has been used in the notice issued while taking up the case for limited scrutiny. The notice issued while taking up a case for scrutiny cannot be read as a piece of legislation and it cannot be expected to use the exact expression as found in section 54F of the Act when the case is taken up for limited scrutiny. The intent and purpose of limited scrutiny was only to examine the deduction claimed by the assessee under section 54F of the Act as per the computation of the total income. This would be evident from a look at all the circumstances of the case. The Assessee cannot be heard to say that in the case of the assessee which was taken up for limited scrutiny, the AO can examine only allowing deduction under section 48 of the Act because of the use of the words deduction claimed in computing capital gain used in the limited scrutiny. In our view the stand of the Assessee if permitted will be too technical and defeat the very purpose of the assessee s case being taken up for limited scrutiny. We therefore reject the plea of the assessee in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said additional ground, the plea of the assessee is that whatever area it got from the developer under the JDA has to be regarded as one residential unit and exemption under section 54 of the Act should be allowed to the assessee. In this regard, learned Counsel for the assessee drew our attention to the terms of the JDA clause 4 which we have extracted in the earlier part of this order. According to him, Mr. Naragaju Desirazu was entitled to 50% of super built up area in the ground floor and entire super built up area in the first floor and Shri. Desirazu Sundara Siva Rao was likewise entitled to 50% of the super built up area in the ground floor and entire super built up area in the second floor. According to the terms of the agreement, the assessee bargained for only a built-up area and it has to be regarded as one residential area for the purpose of claiming deduction under section 54F of the Act. In this regard, we find that neither before the AO nor before the CIT(A) such a plea was taken. In fact, the plea before the AO was that the assessee should be allowed the benefit of deduction of exemption atleast in respect of one residential unit and it has been submitted that for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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