TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 776
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....acts and further erred in holding that what the assessee has done is construction of second and third floors which is a separate residential unit while as the Khata certificate as per BBMP records demonstrate that second and third floors are part of the same residential unit and thereby erred in denying deduction u/s. 54F. 4. The learned CIT (A) ought to have appreciated the legal position that if two decisions are available on that is favourable to the assessee is to be followed and thereby erred in following the decision against the assessee though there is a decision in favour of the assessee. 5. The learned CIT (Appeals) erred in relying upon the decision of Hon'ble Chennai - ITAT in the case of ACIT vs T.N Gopal which cites that construction of additional floor would not make the assessee eligible for deduction u/s 54F without appreciating the fact that the assessee in the said scenario had only constructed additional floor on his existing house property. However, the exemption Under Section 54F is available only for purchase or construction of a new property, the assessee MrAshwath Ramakrishna constructed the additional floors on newly purchased residential units. ....
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....A) as per Para 4.5 of his order. He pointed out that this is the main objection of CIT(A) that the additional 2nd and 3rd floors constitute separate residences. He pointed out that this is also noted by CIT(A) in same Para that although the entire house is under one survey number but the assessee has not brought anything on record to show that these additional floors were part of the same house that was originally purchased. The third objection is this that construction of 2nd and 3rd floor is seen to have commenced only in March 2017, a full year after the new residential house comprising ground and first floors was purchased. This objection of the CIT(A) is this that if the two additional floors were indeed part of the same residential unit, the construction work should have been carried on at the same time as the civil works / renovation of the ground and first floors was undertaken. Regarding these objections of ld. CIT(A), he submitted that as per the judgment of Hon'ble Calcutta High Court rendered in the case of B.B. Sarkar Vs. CIT as reported in 132 ITR 150 (Cal), it was held that if an assessee is entitled to relief on fulfilment of either of the two conditions, that is to....
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....F on the ground that the assessee has only constructed additional floor on his existing house property but the exemption u/s. 54F is available only for purchase or construction of a new property and in cases, where the assessee does not own a house other than the new property. He submitted that in the present case, the additional floor was constructed in the new property purchased by the assessee and not on existing property and therefore, this Tribunal order is not applicable in the present case. As against this, ld. DR of revenue supported the orders of authorities below. 5. I have considered the rival submissions. First of all, I reproduce para no. 4.5 from the order of CIT(A) because in this para, the objections of CIT(A) are contained. This para reads as under. "4.5 The Other claim of the appellant that the construction of the second and third floors also should be counted towards the cost of construction of the new asset is not admissible. The claim of the appellant is not admissible since he had purchased the new asset which consisted of the ground and first floor. The provisions of the Act are clear in this regard. Either the new asset is purchased or constructed withi....
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....altered and modified as contemplated by the different sub-sections of Section 155. Now, adverting back to the provisions of Section 54 of the Act, in our opinion, the language contemplates that in order to be entitled to the relief, the assessee must fulfil either of these conditions either the assessee or his parents must be using or residing in a house and it must have been used as a residential house within two years prior to the date of the transfer. This is a mandatory provision in order to attract the provisions of Section 54. If a house was so used, then on a transfer of that house, (1) one year prior to the transfer or one year after the transfer, (2) either purchased a house or within a period of two years after the date constructed a house property for the purpose of his own residence, then in respect of the value of the new asset, that is to say, the house property purchased or constructed he would be entitled to claim relief as contemplated in clauses (i) and (ii) of the section. In the facts and circumstances of the case, Clause (ii) would be attracted if the assessee's contention is accepted. Now, if an assessee is entitled to relief on fulfilment of either of the....
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....ses, to carry out the intention of the Legislature it may be necessary to read "and" in place of "or" and vice versa. The scheme and purpose of Section 54, in our opinion, if read in the entirety of the section, would be defeated if the construction sought for by the revenue is accepted. But it is only on the fulfilment of this that Section 155(8) would be attracted." 7. When I go through the objections of CIT(A) contained in Para 4.5 of his order as reproduced above, I find that it is observed by CIT(A) in this para that as per the provisions of section 54F, either the new asset is purchased or constructed within the time limit specified. Hence it is seen that as per this observation of CIT(A) in this para, as per him, cost of purchase and cost of construction of additional floors both cannot be considered for the purpose of allowing deduction u/s. 54F of IT Act. This objection of CIT(A) is not valid in the light of this judgment of Hon'ble Calcutta High Court. Regarding the delay in starting of the construction of 2nd and 3rd floors, it is seen that such delay is explained by giving proper reasons by saying that the assessee was having health problem of himself and apart from t....