, `' ,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, CHENNAI
. . . , ,
BEFORE Dr. O.K. NARAYANAN, VICE PRESIDENT &
SHRI VIKAS AWASTHY, JUDICIAL MEMBER
. / I.T.A. No. 1884/Mds/2012
/ Assessment Year : 2009-10
Shri Ram Ravikrishnan, Asst. Commissioner of
C/o.R.Lakshmi Ratan & Co., Vs Income Tax,
Chartered Accountants, Company Circle-V(3),
48, Taylors Road, CHENNAI
Kilpauk,
CHENNAI-600 010
[PAN: AACPR 3430 R]
( /Appellant) ( /Respondent)
/ Appellant by : Shri S.Sridhar, Advocate
/ Respondent by : Shri T.N.Betgeri, JCIT
/ Date of hearing : 28-04-2014
/ Date of Pronouncement : 17-06-2014
/ O R D E R
PER VIKAS AWASTHY, J.M:
The appeal has been filed by the assessee against the order
of the Commissioner of Income Tax(Appeals)-V, Chennai dated
11-09-2012 relevant to the Assessment Year (AY) 2009-10.
2 I.T.A. No. 1884/Mds/2012
2. The assessee filed his return of income for the AY under
consideration declaring income of `4,71,310/-. Thereafter, the
assessee filed revised return of income on 04-02-2011 declaring
income of `12,59,760/-. Notice u/s. 143(2) r.w.s. 129 of the
Income Tax Act, 1961 (herein after referred to as `the Act') was
issued to the assessee. During the course of scrutiny assessment,
the Assessing Officer observed that the assessee had admitted
the receipt of sale consideration of `3.00 Crores on account of sale
of land and building at Sholinganallur and `40.00 Lakhs on
account of sale of flat. Long Term Capital Gain on the aforesaid
properties was determined as `2,36,75,084/- and `15,19,367/-
respectively. The assessee claimed entire capital gain as exempt
u/s.54 of the Act. The Assessing Officer after verification came to
the conclusion that the property sold by the assessee at
Sholinganallur was an agricultural land and thus the assessee is
not entitled to claim exemption on the sale of said property u/s.54
of the Act.
Aggrieved against the assessment order, the assessee
preferred an appeal before the CIT(Appeals). The CIT(Appeals)
vide impugned order confirmed the findings of the Assessing
Officer. While dismissing the appeal of the assessee, the
3 I.T.A. No. 1884/Mds/2012
CIT(Appeals) observed that as per the documents, the built up
area on the land at Sholinganallur is only 600 sq. ft. The built up
area at the maximum be called as storage place in the agricultural
land.
Aggrieved by the order of CIT(Appeals), assessee has come
in second appeal before the Tribunal.
3. Shri S.Sridhar, appearing on behalf of the assessee
submitted that the land at Sholinganallur is located in a residential
area, Municipal numbers old No.189 and new No.138 have been
allotted to the property. The ld.Counsel for the assessee referred
to page No.18 of the Paper Book whereby the assessee has
nominated attorney in respect of the land-in-question. The details
of the property as mentioned in the attorney as well as the sale
deed dt.23-09-2009 executed by the Power of Attorney [POA] of
the assessee placed at page No.1 to 16 of the Paper Book clearly
shows that the land sold is a residential property on which building
is constructed. The ld.Counsel for the assessee further submitted
that the assessee has utilized the money received from sale of
property towards the construction of residential flat within the
4 I.T.A. No. 1884/Mds/2012
period of three years as envisaged in the provisions of section 54
of the Act. Thus, the assessee is entitled to claim exemption
u/s.54.
4. On the other hand, Shri T.N.Betgeri, appearing on behalf of
the Department vehemently supporting the order of CIT(Appeals)
submitted that the property sold is an agricultural land. The built
up area on the property is only 600 sq. ft., whereas total area of
the land is 12,000 sq. ft. The ld.DR vehemently opposed the
grounds raised in appeal and prayed for the dismissal of same.
5. We have heard the submissions made by the
representatives of both the sides. We have also perused the
orders of the authorities below and the documents referred to by
the ld.Clounsel from paper book during the course of submission.
The facts emanating from the documents on record are as under:
· The assessee purchased land measuring 27.55 cents
(12,000 sq. ft.,) on 30-12-2005 from M/s.Blue Lagoon
Motels and Properties Pvt. Ltd., situated at Field Nos.18A
and 19(part), Spring Garden Second Street, Old No.189,
5 I.T.A. No. 1884/Mds/2012
New No.138, Sholinganallur II Village, Tambaram Taluk,
Kancheepuram District;
· Subsequently, the assessee constructed residential
accommodation consisting of a bed-room, kitchen and a
toilet with the total covered area of 600 sq. ft. on the
aforesaid land.
· The assessee sold the property for `3.00 Crores to Ms.
Padmasani Rayaningar through his POA. The
consideration was received on the following dates:
29-07-2008 - `25.00 Lakhs
04-08-2008 - `25.00 Lakhs
07-09-2009 - `2.50 Crores
· The possession of the land and building was handed over
to the purchaser on 07-01-2009. Sale Deed was
executed on 23-09-2009.
The facts narrated above are not in dispute.
6 I.T.A. No. 1884/Mds/2012
The assessee, thereafter acquired a residential property within
three years from the date of transfer of the property at
Sholinganallur and claimed exemption u/s.54 of the Act. The
Revenue has disputed the nature of property at Sholinganallur.
As per the Revenue, the property sold is an agricultural land,
whereas, the assessee is claiming it to be a residential property.
6. For claiming benefit of exemption u/s.54, one of the pre-
conditions is that the Long Term Capital Asset to be transferred
should be a residential house. A close reading of the impugned
order shows that the reasons for not treating the property as
residential is, the built up area viz-a-viz total land and description
of land given in purchase deed. The authorities below are carried
away by proportion of covered area (600 sq. ft.,) to total area of
land (12000 sq. ft). In Section 54, the term used is residential
house, there is no minimum specification of covered area to
consider the property as residential building. The property is
situated within the municipal limits of Sholinganallur, door number
has been allotted to the property by Municipal Authorities. Once a
door number is allotted to the premises, this itself makes it clear
that it is not an agricultural property. In our considered view, the
7 I.T.A. No. 1884/Mds/2012
property (Long Term Capital Asset) transferred by the assessee is
a residential building with land appurtenant there to. Thereafter,
the assessee has acquired (constructed) a residential flat within
the period of three years by investing capital gain arising from the
sale of residential property. The assessee has satisfied all the
conditions laid down in section 54. Thus, the assessee is eligible
for claiming exemption u/s.54 of the Act. The impugned order is
set aside and the appeal of the assessee is allowed.
7. The assessee has filed paper book containing certain
documents. During the course of making submissions, the
ld.Counsel for the assessee has referred to sale deed
dt.23-09-2009 of the property situated at Sholinganallur at page
No.1 to 16 of paper book, GPA dt.07-01-2009 executed by the
assessee at page No.17 to 24 and Purchase Deed dt.30-12-2005
at page No.25 to 42 of paper book. Apart from the above
documents, the assessee has also filed a copy of affidavit
dt.18-10-2013, copy of Patta, certain letters and inspection report
of the SRO. Except for the copy of sale deed dt.23-09-2009, GPA
dt.07-01-2009 and copy of purchase deed dt.30-12-2005 no other
document is taken on record under Rule 18 of the Appellate
8 I.T.A. No. 1884/Mds/2012
Tribunal Rules, 1963. As the remaining documents were either
not part of record before the Assessing Officer or were in
vernacular or were not referred to during the course of
proceedings.
Order pronounced on Tuesday, the 17th June, 2014
at Chennai.
Sd/- Sd/-
(. . . ) ( )
(Dr. O.K. NARAYANAN) (VIKAS AWASTHY)
/VICE PRESIDENT /JUDICIAL MEMBER
/Chennai,
/Dated: 17th June, 2014
TNMM
/Copy to:
1. /Appellant 2. /Respondent
3. ()/CIT(A) 4. /CIT
5. /DR 6. /GF
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