AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 394
X X X X Extracts X X X X
X X X X Extracts X X X X
....iny and notice under Sections 143(2) and 142(1) of the IT Act was issued and served on the assessee. (iv) As stated supra, the assessee is an individual and he is one Gumanmal Jain. Two sons of the assessee are Deepak Jain and Varun Jain. (v) Assessee and his two sons own certain contiguous extents of land. Assessee and his two sons aggregated the lands and post aggregation, total extent of land available was 24,840 square feet [hereinafter referred to as 'said land' for brevity]. (vi) The assessee along with his two sons entered into a Joint Development Agreement dated 15.07.2010 with a builder to develop the said land by constructing 16 flats therein with a total built up area of 56,945 square feet. Assessee and his two sons on one hand and the builder on the other hand agreed to share in an 70:30 ratio between them. (vii) The said land was developed. 16 Flats with separate kitchens and 37 car parks were put up. (viii) There is no dispute that the entire said land and the superstructure are in one location/door number and the same is 'Rain Forest', Old No.57, New No.26, Taylors Road, Rems Street, Kilpauk, Chennai 600 010. (ix) In lieu of the abov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g in Section 54-F of IT Act. (xiv) Aggrieved, the Income Tax Department [hereinafter referred to as 'Revenue' for the sake of brevity], preferred a statutory appeal before the ITAT being I.T.A.No.414/Mds/2016]. (xv) The above said statutory appeal of the Revenue, was dismissed by ITAT [confirming the order of CIT] by an order dated 11.05.2016, against which the instant further statutory appeal has been preferred by Revenue before us. ITAT also had relied on V.R.Karpagam's case [our Division Bench Judgement reported in [2015] 373 ITR 127]. 5. DISCUSSION: (i) As would be evident from the facts set out under the caption factual matrix supra, the entire matter turns on a very narrow and short compass. (ii) The narrow and short compass is, interpretation of the phrase 'a residential house' occurring in Section 54-F of the IT Act. (iii) Mr.Swaminathan, learned Standing counsel for Revenue would primarily contend that the 15 Flats [9 for the assessee and 3 flats each for his two sons] the details of which have been set out supra will not qualify as 'a residential house' occurring in Section 54-F of the IT Act, notwithstanding the ratio of our ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s all the four judgements deal with capital gains and turn an interpretation of the phrase 'a residential house' occurring in Sections 54 and 54-F of the IT Act, we do not deem it necessary to set out the facts in the above said citations in detail. (iiii) In K.G.Rukminiamma's case [Karnataka High Court Division Bench] the relevant paragraphs are paragraphs 8 to 13 and the same reads as follows: "8. For a proper appreciation of the aforesaid contention, it is necessary to have a careful look at Section 54 of the Income Tax Act, which reads as under: "54.Profit on sale of property used for residence: (1) Subject to the provisions of sub-Section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat is referred to as a residential house , the original asset. An asset newly acquired after the sale of the original asset also can be buildings or lands appurtenant thereto, which also should be a residential house. Therefore the letter a in the context it is used should not be construed as meaning singular. But, being an indefinite article, the said expression should be read in consonance with the other words buildings and lands and, therefore, the singular a residential house also permits use of plural by virtue of Section 13(2) of the General Clauses Act. This is the view which is taken by this Court in the aforesaid Anand Basappa's Case in I.T.A. No. 113/2004, disposed of on 20.9.2008. 11. We, therefore, do not see any merit in the submission of the Learned Counsel for the revenue. 12. In the instant case, the facts are not in dispute. On a site measuring 30' W 110', the assessee had a residential premises. Under a joint development agreement, she gave that property to a builder for putting up flats. Under the agreement eight flats are to be put up in that property and four flats representing 48% is the share of the assessee and the remaining 52....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45: (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where (a) the assessee, (i) owns more than one residential ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11. In similar circumstances, this Court, by order dated 04.01.2012 in T.C. (A) No. 656 of 2005 held as follows: "The above provision refers to a residential house meaning thereby that even if there are four different flats and if it is considered for the property assessed as one unit and one door number is given, it should be construed as a residential unit, namely, one unit. In that sense, the said provision is available to the assessee." 12. In the decision reported in (2012) 75 DTR 56 (Dr. (Smt.) P.K. Vasanthi Rangarajan, this Court, while dealing with the benefit of exemption under Section 54F, followed the above-said decision of this Court in T.C. (A) No. 656 of 2005 and granted the benefit to the assessee under Section 54F of the Income Tax Act on the investment made in the four flats. 13. Hence, the above-said decisions of this Court make it clear that the property should be assessed as one unit, even though different flats are available. Here also, as per the assessment order, all the flats have one door number, namely, Door No. 29F, Race Course, Coimbatore. (vi) In Chinnadurai's case [Honourable Single Judge of Madras High Court....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i materia with regard to those aspects of provisions of law which we are concerned with in the instant case. While Section 54 deals with capital gain arising out of transfer of buildings or lands appurtenant thereto and being residential house, 54-F deals with capital gain arising out of transfer of any long term capital asset not being a residential house. Otherwise, in all other aspects of the matter the two provisions namely Section 54 and 54-F are in pari materia. Therefore, the interpretation of 'a residential house' occurring in Section 54 cannot be any different for the same phrase 'a residential house' occurring under Section 54-F of IT Act. In this regard what applies to Section 54 would apply in equal and full force to Section 54-F also. Therefore, the principles in K.G.Rukminiamma's case as well as V.R.Karpagam's case would apply to the facts of the instant case. (ix) As set out in the discussion supra, learned counsel for Revenue, relied heavily on Pawan Arya's case which was decided by a Division Bench of the Punjab and Harayana High Court. Pawan Arya's case arises under Section 54 of IT Act. We have already opined that Section 54 and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. (xiii) Therefore, we find ourselves persuaded to follow V.R.Karpagam's case for two reasons and they are as follows: (a) V.R.Karpagam's case has been rendered by a coordinate Division Bench of this Court. (b) V.R.Karpagam's case has not been carried by Revenue to the Supreme Court and therefore is holding the field as on today. (xiv) We are informed that there is no intra court appeal in G.Chinnadurai's case also. In other words Revenue has accepted G.Chinnadurai's case is what we are given to understand. (xv) To make our discussion on case law as complete and as comprehensive as possible, we deem it relevant to also mention that the all too important phrase 'a residential house' occurring in Section 54-F was amended with effect from 01.04.2015. Such amendment was brought in by the Finance (No.2) Act, 2014 and post amendment, 'a residential house' now reads as 'one residential house'. We have noticed that this amendment is only with effect from 01.04.2015 and the case on hand pertains to assessment year 2012-2013. Therefore, this amendment does not in any manner impact the instant case. However, we make it cl....