TaxTMI 
TaxTMI 
2025 (9) TMI 1854
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....t, cannot invoked only based on a change of opinion. 2. The Principal Commissioner of Income-tax has erred in passing Order u/s.263 of the Income-tax Act, 1961 dated 27.03.2025, without appreciating the fact that the order passed by the A.O. is neither erroneous nor prejudicial to the interest of revenue. 3. The Principal Commissioner of Income-tax has erred in passing Order u/s.263 of the Income-tax Act, 1961 dated 27.03.2025, and issuing directions that exemption u/s.54F was not admissible without considering that A.O. had considered the investment was in multiple flats that were interconnected with a single access point, common living space and internal stairways qualifying it as a single residential unit, and after application of mind held that the provisions of Section 54F was available to the Assessee and hence the directions of Principal Commissioner of Income-tax were on account of change of opinion. 4. The Appellant prays that, the Order u/s.263 of the Income-tax Act dated 27.03.2025 passed by Principal Commissioner of Income-tax be annulled, squashed and set aside. 5. The aforesaid Grounds of Appeal are independent, alternative and with....
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....sessee and investment made thereafter for claiming deduction u/s. 54F. Ld. Assessing Officer observes that from the perusal of the agreement dated 23.12.2020, assessee had purchased six flats bearing numbers 1402,1403,1502,1503,1602 and 1603 for a consideration of Rs. 20,00,64,750/- in a residential project named as "APAS VALMARK" in Bengaluru. Details of the flats purchased by the assessee for making claim of deduction u/s. 54 F is tabulated below. SCHEDULE C' APARTMENT (DESCRIPTION OF APARTMENTS AGREED TO BE SOLD) SI. No. Apartment Number BHK Floor Super Built Up Area in square foot Covered Car Parking 1 1402 З ВНК 14 3170 2 2 1502 3 ВНК 15 3170 2 3 1502 3 ВНК 16 3170 2 4 1403 4 BHK 14 3560 2 5 1503 4 BHK 15 3560 2 6 1603 4 8HK 16 3560 2 Total 20190 12 All the above mentioned apartments are located in the Building named "APAS VALMARK" constructed on the Schedule 'A' property forming part of the triplex units bearing Nos. 1402, ....
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.... were placed on record. Assessee explained that in this triplex flat which comprises of six flats, two on each floor had only one kitchen, one living room and that all the flats are interconnected by common wall and internal staircase. This triplex flat is used as "one residential house" and therefore, assessee has rightfully claimed the deduction u/s. 54F. 3.6. Assessee made another submission before the ld. Assessing Officer, dated 20.12.2022 explaining the nature and source of investments and the details of long-term capital gain earned by him as well as on the proposal of the ld. Assessing Officer for denying the deduction claimed u/s. 54F, reiterating his factual position. Through this submission, assessee placed reliance on several judicial precedents including that of Hon'ble High Court of Madras. Ld. Assessing Officer elaborately dealt with the submissions made by the assessee in the course of assessment proceedings, relevant extracts of which are reproduced in the assessment order. 3.7. Having considered the exhaustive submissions along with judicial precedents relied upon by the assessee, ld. Assessing Officer concluded of considering the proposed variations at ....
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....it is prejudicial to the interest of Revenue. Ld. PCIT thus concluded in para 14 and 15 of the impugned order that the Assessing Officer failed to conduct proper enquiries, investigation and examination and the deduction claimed u/s. 54F is to be disallowed, as assessee has not complied with conditions laid down in the said section, in respect of house property bought by the assessee in "APPAS VALMARK", Bengaluru by converting multiple flats into one residential house. He thus, set aside the assessment order with the direction to pass a fresh assessment considering the issues raised in the revisionary order, by giving reasonable opportunity of being heard to the assessee. 5. We have heard both the parties and perused the material on record and given our thoughtful consideration to the orders of the authorities below. We have also perused the paper book containing factual documents in 72 pages and also the paper book containing judicial precedents. At the outset, we note that ld. Assessing Officer had made detailed enquiry and verification in respect of the reason for which the case was taken up for scrutiny assessment namely, "for verification of deduction claimed by the assesse....
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....Schedule B hereto and for the sake of brevity is hereinafter collectively called and referred to as the SCHEDULE 'B' PROPERTY and a 3 and 4 BHK Apartment forming part of the triplex units bearing Nos. 1402, 1502, 1602, 1403, 1503 and 1603 respectively on the Schedule A property on the Fourteenth, Fifteenth and Sixteenth Floors, individually measuring 3170 sq.ft., 3170 sq.ft., 3170 sq.ft., 3550 sq.ft .. 3560 sq.ft. and 3560 sq ft. of Super Built up area, along with 2 (two) covered car parking space reserved for each apartment referred to above which is more fully and particularly described in the Schedule 'C' hereto and for the sake of brevity is hereinafter collectively called and referred to as the SCHEDULE 'C' APARTMENT in accordance with the sanctioned plan and on the terms, conditions and specifications as mentioned in the SCHEDULE D' hereunder." (emphasis supplied by us by bold and underline) 6.2. From the above Para, it is noted that the scheduled property is a "triplex unit" comprising of the six flats. We also take note of the Schedule C containing description of the apartments agreed to be sold by the developer vide this registered agreeme....
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....ment and second floor of the property. According to him, the basement and second floor were required to be considered as two separate residential houses, and therefore, the provisions of section 54F were not complied with. Revenue was in appeal before the Hon'ble High Court on the relief granted by the Tribunal in allowing the claim of deduction u/s. 54F by treating the different units at different floors as one single residential house. 7.1. Hon'ble Court referred and relied on the decision of Hon'ble High Court of Karnataka in the case of CIT vs. D. Ananda Basappa [2009] 309 ITR 329 (Kar), whereby it held that the expression 'a residential house' should be understood in a sense that 'a' should not be understood to indicate a singular number. Hon'ble Court noted that the two apartments had been joined to make one unit by opening a door between the two apartments and therefore, the same could be construed as one unit. Hon'ble Delhi High Court referred to the decision of its own Coordinate Bench in the case of CIT vs. Geeta Duggal [2013] 357 ITR 153 (Del), wherein the issue relating to 'a residential house' vis-à-vis 'a resid....
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....#39;ble High Court of Madras and of its own Coordinate Bench in another case, found no infirmity with the decisions of the Tribunal in holding that the assessee could not be denied the deduction u/s.54F on the ground that she held more than one residential unit. While concluding, Hon'ble Court also took note of the fact that configuration of ownership of the property as recorded in South Delhi Municipal records does not lead to the conclusion that there is any failure on the part of the assessee in disclosing the material facts relevant for claiming the deduction sought by the assessee. 7.4. Relevant paragraphs of this decision from para 20 to para 28 are extracted below for ready reference :- "20. In CIT v. D. Ananda Basappa [2009] 180 Taxman 4/309 ITR 329 (Karnataka), the Karnataka High Court considered the admissibility of exemption under Section 54 of the Act in a case where the Assessee had sold a residential house and purchased two adjacent apartments. The Court held that "the expression 'a' residential house should be understood in a sense that building should be of residential in nature and 'a' should not be understood to indicate a singular ....
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....upon that requirement. A person may construct a house according to his plans and requirements. Most of the houses are constructed according to the needs and requirements and even compulsions. For instance, a person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly postretirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new reside....
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....acts in her return. The Assessee had fairly disclosed about the sale of the original asset, in respect of which capital gains had arisen as well as about the house property purchased from the said sale proceeds. 28. The configuration of ownership of the property, as recorded in the South Delhi Municipal Corporation records for D-6/5, does not lead to the conclusion that there was any failure on the part of the Assessee in disclosing the material facts relevant for claiming the deduction sought by the Assessee. 29. In view of the above, we find that no substantial question of law arises for consideration of this court. Accordingly, the appeal as well as the pending application is, accordingly, dismissed." 8. It is important to take note of the fact that assessee has relied upon these judicial precedents of various Hon'ble High Courts which were placed before the ld. Assessing Officer in the submissions made in the assessment proceedings. Ld. Assessing Officer had taken cognizance of all the submissions including the factual position corroborated by documentary evidences based on which he found the submissions satisfactory and dropped the variation proposed i....