2018 (11) TMI 1168 - AT - Income Tax

Appellate Tribunal in Bangalore grants exemption under section 54F for multiple residential units

Shri. B.J. Badrinath Versus The Income Tax Officer, Ward – 4 (3) (1), Bangalore

The Appellate Tribunal, Bangalore partly allowed the assessee's appeal for Assessment Year 2006-07, granting exemption under section 54F for all three ... Charging of interest u/s 234A and 234B - Held that:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This principle has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and therefore uphold the AO’s action in charging the said interest. The AO is, however, directed to re-compute the interest chargeable u/s 234A and 234B Claim of Exemption u/s 54F - 3 residential units received by the assessee in lieu of entering into a JDA with the same developer M/s. Chamundi Builders - Held that:- Respectfully following the decisions of the Hon’ble Karnataka High Court in the case of CIT Vs. Smt. K. G. Rukminiamma (2010 (8) TMI 482 - KARNATAKA HIGH COURT) and CIT Vs. V. R. Karpagam (2014 (8) TMI 899 - MADRAS HIGH COURT) and other judicial pronouncements referred to above, I am of the considered opinion that the assessee in the case on hand is eligible to be allowed for exemption u/s 54F of the Act in respect of multiple facts, i.e., the 3 flats in the same apartment building received by him upon entering into the JDA on 14.12.2005 with M/s. Chamundi Builders. The AO is accordingly directed. Consequently, ground No. 4 of the assessee’s appeal is allowed. Issues involved:1. Assessment of Long Term Capital Gains (LTCG) for Assessment Year 2006-07.2. Exemption under section 54F of the Income Tax Act for multiple residential units.3. Charging of interest under sections 234A and 234B of the Act.Assessment of Long Term Capital Gains (LTCG):The case involved the assessment of Long Term Capital Gains (LTCG) for Assessment Year 2006-07 based on a Joint Development Agreement (JDA) executed by the assessee with a builder. The Assessing Officer (AO) initiated proceedings under section 147 of the Income Tax Act, 1961, as he believed that capital gains had accrued to the assessee due to the JDA. The AO completed the assessment ex-parte, computing LTCG at Rs. 20,37,333. The CIT(A) upheld this computation but allowed exemption under section 54F of the Act to the extent of Rs. 13,60,280 for one residential unit, contrary to the assessee's claim for exemption for all three units received as per the JDA.Exemption under section 54F of the Income Tax Act:The assessee challenged the CIT(A)'s decision to grant exemption under section 54F only for one residential unit instead of all three units received under the JDA. The assessee argued that the Hon'ble Karnataka High Court's decision in CIT Vs. Smt. K. G. Rukminiamma supported the claim for exemption on multiple units in the same residential building. The Revenue contended that the legislative intent, as per the amendment in section 54F by the Finance Act, 2014, was to allow exemption for only one unit. However, the Tribunal, considering various judicial pronouncements, including decisions by the Hon'ble Karnataka and Madras High Courts, ruled in favor of the assessee. The Tribunal held that the assessee was eligible for exemption under section 54F for all three units received in the same apartment building, as per the terms of the JDA.Charging of interest under sections 234A and 234B of the Act:The assessee denied liability for interest under sections 234A and 234B of the Act. However, the Tribunal upheld the AO's action in charging the interest, citing the principle upheld by the Hon'ble Apex Court in the case of Anjum H. Ghaswala. The Tribunal directed the AO to re-compute the interest chargeable under these sections while giving effect to the order.In conclusion, the Appellate Tribunal, Bangalore partly allowed the assessee's appeal for Assessment Year 2006-07, granting exemption under section 54F for all three residential units received by the assessee and upholding the charging of interest under sections 234A and 234B of the Act. The Tribunal's decision was based on a thorough analysis of the legal provisions, judicial precedents, and the specific facts of the case.