TaxTMI 
TaxTMI 
2018 (8) TMI 260
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....f immovable property bearing No.66, Katha No.42, House List No.38 measuring East to West : 30'-0" (Thirty Feet) and North to South : 50'-0" (Fifty Feet) and Property bearing No. 67 Katha No.10/3, measuring East to West : 30'-0" (Thirty Feet) and North to South : 50'-0" (Fifty Feet) situated at Ittamadu Village, Uttarahalli Hobli, Bangalore South Taluk, now coming under the purview of Bangalore Mahanagara Palike Ward No.55, in all measuring East to West : 60'-0" ( Sixty Feet) and North to South : 50'-0" ( Fifty Feet) and bounded on:- EAST BY : Road. WEST BY : Property bearing No.65, NORTH BY : Road, SOUTH BY : Property bearing Nos.61 and 62. BUILDING DESCRIPTION : Residential Building constructed on the Schedule property with plinth area of One Square having A.C.Sheet Roof, Mud wall, Mud flooring and Jungle Wood used for Doors and Windows without any civic amenities." 3. The assessee entered into a Joint Development Agreement (JDA) in respect of the aforesaid property dated 14.12.2005 with M/s. Vasthushree Developers, a partnership firm (the Developer). As per the JDA, the assessee was to receive 40% of the share of the land of the property and 4....
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....uction is allowed, but section 54F applies only where the capital asset that is transferred is not a residential house. Thus, section 54 applies to transfer of a residential house and section 54F applies to transfer of long term capital asset, not being a residential house. 6. In the present case, the stand of the CIT(Appeals) was that there was no residential house in the old property and therefore deduction u/s. 54 cannot be allowed. The plea of the assessee was that in any event, the assessee would be entitled to deduction u/s. 54F of the Act, which applies to long term capital asset, other than a residential house which may also include the land which is the subject matter of transfer. 7. The CIT(Appeals) examined the claim of assessee for deduction u/s. 54 of the Act. There was also a claim made by the assessee before the CIT(Appeals) that a transfer within the meaning of section 2(47) of the Act would take place only in the previous year in which the assessee received her share of built-up area of construction from the builder as per the terms of the JDA and not in the previous year in which the JDA was entered into between the assessee and the builder. This issue was, howe....
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.... constructing a residential house. Under proviso to section 54F of the Act, the assessee should not own more than one residential house, other than the new asset on the date of transfer of the original asset. According to the CIT(Appeals), the assessee owned another house and therefore deduction u/s. 54F of the Act cannot be given. The following were the conclusions of CIT(Appeals) in this regard:- "b) As regards claim of the appellant under Section 54F of the Act, in case the temporary structure was part of the appellant's 40% share of land and if it existed as on the date of the transfer, the appellant would not be eligible for deduction under Section 54F of the Act as the appellant herself has claimed the same to be a residential house. Further a perusal of the income tax return of the appellant for AY 2007-08 shows that the appellant was owner of a residential house at `BSK 3rd Stage', with a value of Rs. 4,83,100/-. In the statement of affairs as on 31.03.2011 (As enclosed with the return of income for AY 2011-12), the description of this property with value of Rs. 4,83,100/- is given as Houses(Flats) at BSK 3rd Stage. Thus the appellant would not satisfy the conditi....
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....long term capital gain because the clause in the JDA regarding adjustment and how the rate on which built-up area has to be adjusted is only in the event of change in the constructed are of flats allotted to the Assessee and when such change is very marginal. That cannot be applied as the cost of construction of the new asset. 14. The ld. DR relied on the order of the CIT(Appeals). 15. We have given a very careful consideration to the rival submissions. As far as the question whether section 54 of the Act would apply, it is clear from the Settlement Deed dated 24.07.2002 under which the assessee got the property that there was a residential house in the property which was subject matter of JDA. The CIT(Appeals), however, proceeded on the basis that the JDA does not make any reference to any building. We have perused the JDA and we find that the description as given in the schedule to JDA is as follows:- "SCHEDULE All the piece and parcel of property bearing Bangalore Mahanagara Palike Old No.66 & 67, New No.17 situated at Ittamadu Village, Uttarahalli Hobli, Bangalore South Taluk, Bangalore - 560 085, now coming under Bangalore Mahanagara Palike Ward No.55, in all measuring ....
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.... of the Hon'ble High Court of Karnataka in the case of CIT v. Late Khubchand M Makhija, ITA No.496/2007 dated 18.12.2013. 19. We have given careful consideration to the rival submissions. We find that the facts of the Assessee's case are similar to the case of Smt.K.G.Rukminiamma (supra) decided by the Hon'ble Karnataka High Court. In the case of K.G.Rukminiamma, the facts were, on a site measuring 30' x 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 8 flats are to be put up in that property and 4 flats representing 48% is the share of the assessee and the remaining 52% representing another 4 flats is the share of the builder. So the consideration for selling 52% of the site was 4 flats representing 48% of built up area and the 4 flats are situated in a residential building. The Court held that the 4 flats constitute 'a residential house' for the purpose of sec 54. The 4 residential flats cannot be construed as 4 residential houses for the purpose of sec 54. It has to be construed as "a residential house" and the assessee is entitled to the benefit according....
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....d M Makhija (Supra), the facts were that one residential house was sold and the Long Term Capital Gain on such sale was used to buy two independent residential houses. This aspect has been noticed by the Hon'ble Court in paragraph 15 & 16 of the judgment in the case of Khubchand M.Makhija (supra) wherein the distinguishing facts between the facts of K.G.Rukminiamma (supra) and the facts of the case in Khubchand M.Makhija (supra) were brought out by the Hon'ble Karnataka High Court. 22. In the light of the law as explained in the various judicial pronouncements referred to above, we are of the view that the CIT(Appeals) ought to have allowed deduction claimed by the assessee either u/s. 54 or 54F of the Act. Another aspect which needs to be considered is that the conclusion of CIT(Appeals) that since the assessee did not file return of income making claim for deduction u/s. 54 of 54F of the Act, the same cannot be allowed. On this aspect, we are of the view that the CIT(Appeals) as an appellate authority cannot deny the benefit of deduction which the assessee is entitled to in law. In this regard, the ld. counsel for the assessee has brought to our notice that the decision of the ....