TaxTMI 
TaxTMI 
2020 (6) TMI 514
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.... (iii) Whether the authorities below are justified in law in holding that a property used for the commercial purpose, falls within the meaning of residential house as per the proviso (a) (i) to Section 54F(1) of the Act on the facts and circumstances of the case? 2. Facts leading to filing of this appeal briefly stated are that assessee is an individual and is Director of M/s Aburge India Property Services Pvt. Ltd., Bangalore. The assessee filed his return of income for Assessment year 2006-07 on 30.10.2006 declaring income of Rs. 53,06,473/-. The return filed by the assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued. The assessee stated that he had sold shares in the company viz., M/s Corporate Leisure Resorts and Hotels Pvt. Ltd., during financial year 2005-06 and derived long term capital gain of Rs. 1,55,47,315/-. The appellant further declared that he had constructed a residential property during the year situate at 808/7 and 808/8 Kaikondanahalli, Sarjapur, Bangalore. The appellant claimed exemption under Section 54F of the Act to the extent of Rs. 1,55,47,315/-. Before the assessing officer, the assessee agreed ....
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....iginal asset. It was further held that it is immaterial as to how the assessee utilized the residential units and whether these residential units are used for commercial purposes or residential purposes, so long as these units were recognized as residential units. Therefore, it was held that the assessee cannot claim the benefit of exemption under Section 54F of the Act. The appeal preferred by the assessee was therefore, dismissed. In the aforesaid factual background, this appeal has been filed. 6. Learned Senior Counsel for the assessee submitted that apartments No.204 and 605 viz., Oxford suites is a building comprising units offered for serviced apartments and each floor consists of eight apartments of 500 square feet floor area and the appellant had let out both the properties to be used as commercial / serviced apartments. Therefore, the aforesaid serviced apartments could not have been treated as residential units and in fact the same were commercial units and were being used by serviced apartments by the companies to accommodate their guests. It is also urged that clause (a) (i) of proviso to Section 54F(1) are not attracted and clause (b) of proviso to Section 54F(1) are ....
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....e taken into account for the purpose of taxation. It is however submitted that out of nine flats, seven flats have been sanctioned for commercial purposes and only two flats have been sanctioned as residential units which are being used for commercial purposes. It is also urged that requirement as prescribed in proviso to Section 54F(1) is of owning a residential house and not of its user. Our attention has also been invited to Section 32(1) of the Act and it has been stated that the legislature in Section 32(1) of the Act has used the expression 'owned' and 'used' simultaneously, whereas, the same has not been done in proviso to Section 54F(1) of the Act. It is argued that language of a taxing statute should ordinarily be understood in the sense in which it is harmonious with the object of statute to effectuate the legislative animation and taxing statute deserves to be strictly construed. In support of aforesaid proposition, reliance has been placed on decision of the supreme court in 'COMMISSIONER OF INCOME-TAX-III VS. CALCUTTA KNITWEARS', (2014) 43 TAXMANN.COM 446 (SC). 8. We have considered the submissions made on both the sides and have perused the re....
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....tiny of Section 54F(1) of the Act, it is evident that in order to attract Section 54F(1) of the Act, the conditions stipulated in clauses (a) and (b) of proviso to Section 54F(1) have to be complied with as the legislature has used the expression 'and' at the end of clause (a) of proviso to Section 54F(1) of the Act. It is pertinent to note that under Section 22 of the Act any income from any buildings irrespective of which the use which has to be treated under the head 'income from house property'. It is well settled legal proposition that a provision in a taxing statute providing incentive for promoting growth and development has to be construed liberally so as to advance the object of the Section and not to frustrate it. [SEE:'CIT VS. STRAWBOARD MFg. CO. LTD.', (1989) 177 ITR 431 (SC) AND 'BAJAJ TEMPO LTD. SUPRA]. A bench of this court in SAMBANDAM UDAY KUMAR SUPRA while interpreting Section 54F of the Act has held that provisions of Section 54F is a beneficial provision for promoting construction of residential houses and has to be construed liberally. Kerala, Delhi, Allahabad, Calcutta and Hyderabad High Courts have taken a view that usage of the pr....