The Income Tax Appellate Tribunal (ITAT) Hyderabad adopted the principle of consistency and uniformity on co-owners who were subjected differently by the Revenue Department as the department denied applicability of section 54F.
The assessees Smt. Bachupally Laxmi and her son Shri Kaushik Routhu are owners of land to the extent of 363 sq. yards and 121 sq. yards respectively in Suryapet. They entered into a development agreement with a builder for the construction of a residential apartment with Smt.Devi Reddy Renuka and Smt. Nallapattu Saraswathi also holds 242 sq. yards of land each in the adjoining plots. The assessees did not file their returns of income for the relevant assessment years and when the Assessing Officer (AO) came to know about the development agreement, notices u/s 148 were issued to each of the assessees. They filed their returns of income declaring the Long-Term Capital Gain (LTCG) arising out of the development agreement and claimed the same as exempt under section 54F of the Act on account of the flats allotted to them by the builder. The Counsel for the Assessee Sri S, Rama Rao submitted that “for the purpose of computation of LTCG arising out of the development agreement cum GPA, the Assessing Officer has accepted that the assessee has acquired the flats as on 9.11.2009 and therefore, in the year 2012 when the assessee has sold the flat, the holding period has to be held as more than 3 years and the provisions of sub-section 3 of section 54F are not applicable. Similarly, the gain arising out of the sale of a flat also has to be held as LTCG and not STCG as held by the Assessing Officer. She further submitted that in the case of co-owners i.e. Smt. Devi Reddy Renuka and Smt. NallapattuSaraswati, the respective CIT (A)s have held the issue in favor of the assessees and the Revenue has not filed any appeals to the Tribunal.”
Judicial Member P. Madhavi Devi allowed the appeal by the assessee and held, “In the case of co-owners, the Revenue cannot take a different stand. If the Revenue has accepted the decision of the CIT (A)’s, in the cases of Renuka and Saraswati, I am of the opinion that the same decision has to be taken in the case of the assessees before this Tribunal also. Therefore, by adopting the principles of consistency and uniformity, I hold that the exemption u/s 54F cannot be withdrawn in the relevant A.Ys and the capital gain arising out of the sale of the flat has to be treated as LTCG as done in the case of co-owners. Thus, the appeals of both the assessees are allowed.”
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