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Shri Ram Ravikrishnan, C/o.R.Lakshmi Ratan & Co., Chartered Accountants, 48, Taylors Road, Kilpauk, CHENNAI-600 010 Vs Asst. Commissioner of Income Tax, Company Circle-V(3), CHENNAI
June, 20th 2014
              , `' ,  

  . . . ,       ,                                 

               . / 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
   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


       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


        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


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


     Order pronounced on Tuesday, the 17th June, 2014
at Chennai.

          Sd/-                              Sd/-
   (. .     . )                       (   )
(Dr. O.K. NARAYANAN)                (VIKAS AWASTHY)
   /VICE PRESIDENT                    /JUDICIAL MEMBER

/Dated: 17th June, 2014


                    /Copy to:
       1.  /Appellant                 2.    /Respondent
       3.    ()/CIT(A)                4.   /CIT
       5.          /DR                6.  /GF
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