Tax Case (Appeal) No. 301 of 2014. Case: Commissioner of Income Tax Vs V.R. Karpagam. High Court of Madras (India)

Case NumberTax Case (Appeal) No. 301 of 2014
CounselFor Appellant: T.R. Senthil Kumar, Standing Counsel
JudgesR. Sudhakar and G. M. Akbar Ali, JJ.
IssueGeneral Clauses Act 1897 - Section 13; Income Tax Act, 1961 - Sections 45, 54, 54F
Judgement DateAugust 18, 2014
CourtHigh Court of Madras (India)

Judgment:

R. Sudhakar, J.

  1. This Tax Case (Appeal) is filed by the Revenue as against the Income Tax Appellate Tribunal for the assessment year 2007-08 raising the following substantial questions of law:

  2. Whether on the facts and circumstances of the case, the Tribunal was justified in treating five independent flats in a multi-storey construction as a single residential unit under Section 54F, without considering the intention of the legislature to restrict the reinvestment to only one more residential unit under Section 54F?

  3. Whether on the facts and circumstances of the case, the Tribunal was right in interpreting the phrase "a residential house" in plural connotation for the purpose of reinvestment of capital gain for claiming exemption under Section 54F?"

  4. The brief facts are as follows:

    The respondent/assessee had entered into an agreement with one M/s.Mount Housing and Infrastructure Ltd., for development of a piece of land measuring 13,059 sq.ft. owned by her at Door No. 29F, Race Course, Coimbatore. As per the agreement, the assessee was to receive 43.75% of the built up area after the development. This 43.75% built up area was translated into five flats. The assessee, while filing her return of income, calculated the capital gains based on the sale consideration of Rs.1,09,75,620/-. As per the assessee, this was the value of the flats, which were to be received by her and was equivalent to 56.25% of the undivided share of land given by her to M/s.Mount Housing and Infrastructure Ltd. The assessee claimed exemption under Section 54F of the Income Tax Act on the value of the five flats. According to the assessee there were no capital gains whatsoever left for assessment.

  5. Before the Assessing Officer, two issues were raised, one on the value of the built-up area of the five flats and the other was whether the assessee would be entitled to the benefit of Section 54F of the Income Tax Act in respect of the five flats. The Assessing Officer granted the benefit of capital gains in respect of one flat and that too on the higher extent with regard to the floor space, viz., 2413.36 sq.ft.. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).

  6. The Commissioner of Income Tax (Appeals), by order dated 06.05.2010, after discussing the provisions of Sections 54 and 54F of the Income Tax Act, held that the claim of the assessee under Section 54F for all the five flats could not be admitted, but however, he took the view that the assessee would be entitled...

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