Assessee's Appeal Granted: Deduction under Section 54F for Flats Received in JDA

The Tribunal allowed the assessee's appeal, granting deduction under section 54F for all ten flats received under the Joint Development Agreement (JDA). Consequently, there was no taxable Long Term Capital Gains remaining, and the issue regarding the year of taxability of LTCG did not need to be decided. The appeal was partly allowed, with the judgment pronounced on 19th November 2020.

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Issues Involved:
1. Whether there was a "transfer" of property under section 2(47)(v) of the Income Tax Act, 1961.
2. Whether the assessee is entitled to deduction under section 54F of the Act for all flats received under the Joint Development Agreement (JDA).

Issue-wise Detailed Analysis:

1. Transfer of Property under Section 2(47)(v):
The core issue was whether the execution of the Joint Development Agreement (JDA) dated 21.01.2010 constituted a "transfer" of property under section 2(47)(v) of the Income Tax Act, 1961. The assessee argued that a transfer would only occur upon the delivery of the constructed area by the developer, which had not taken place during the relevant assessment year (2010-11). Consequently, the assessee claimed that no capital gain was exigible to tax for that year.

The Assessing Officer (AO) disagreed, asserting that possession had been delivered to the developer upon signing the JDA, thus constituting a transfer. The AO referenced the Karnataka High Court's decision in CIT Vs. T. K. Dayalu, which held that the date of transfer is the date on which possession is handed over to the developer under a JDA. The AO computed the Long Term Capital Gains (LTCG) as follows:
- Market value of the super built-up area: Rs. 2,59,45,113/-
- Less: Indexed cost of land surrendered: Rs. 81,65,266/-
- Long Term Capital Gains: Rs. 1,77,79,850/-

The CIT(A) upheld the AO's view, leading to the assessee's appeal to the Tribunal. The Tribunal found no delay in the appeal filing, rejecting the Registry's objection regarding a 128-day delay.

2. Deduction under Section 54F:
The second issue was whether the assessee could claim deduction under section 54F of the Act for all the flats received under the JDA. Initially, the assessee claimed deduction for only one of the ten flats. However, during the appeal, the assessee sought to extend the deduction to all ten flats.

The Tribunal considered the additional ground of appeal, which was a legal issue that could be decided based on existing facts. The Tribunal referenced several judicial pronouncements, including the Karnataka High Court's decision in CIT Vs. K. G. Rukminiamma, which held that multiple residential units received under a JDA could be considered as "a residential house" for the purpose of section 54F. This interpretation was supported by the General Clauses Act, which allows singular terms to include the plural.

Similarly, the Madras High Court in CIT Vs. Smt. V.R Karpagam and CIT Vs. Gumanmal Jain held that prior to the amendment effective from 01.04.2015, the term "a residential house" under section 54F could include multiple flats. The Tribunal concluded that the assessee was entitled to deduction under section 54F for all ten flats received under the JDA. Consequently, if the deduction was allowed, there would be no taxable LTCG remaining.

Conclusion:
The Tribunal allowed the assessee's appeal, granting deduction under section 54F for all ten flats received under the JDA. As a result, there was no necessity to decide the issue regarding the year of taxability of LTCG. The appeal was partly allowed, and the judgment was pronounced on 19th November 2020.

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