The two member bench of Bangalore Income Tax Appellate Tribunal ( ITAT ) allowed the deduction claimed under Section 54F of the Income Tax Act, 1961 with respect to all apartment units received pursuant to Joint Development Agreement ( JDA).
The Assessee, Narayanappa Ramanna along with his four brothers, had entered into a Joint Development Agreement (JDA) with M/s. Nagarjuna Construction Co. Ltd., (NCC). By virtue of the JDA with NCC, the assessee received 15 constructed apartment units.
During the assessment proceedings the AO disallowed the claim of deduction under section 54F of the Act in respect of 14 apartment units and allowed the benefit of investment only on one apartment unit by interpreting as “a residential house” as per the provisions of section 54F of the Act as existing during the relevant Assessment Year viz., Assessment Year 2008-09, to mean only one residential unit
Aggrieved by the denial of deduction under section 54F of the Act, assessee preferred appeal before the First Appellate Authority. The CIT(A), by relying on various judgments, allowed the appeal of the assessee.
Accordingly the revenue filed an appeal before the tribunal.
During the adjudication Aman Garg, the counsel for assessee submitted that the prior to the amendment to section 54/54F of the Income Tax Act w.e.f. 01.04.2015, the issue stands covered in favor of the assessee in the following judgment of Madras High Court – Commissioner Of Income Tax Versus Smt. Vr. Karpagam .
Vivek Vardan, Counsel for Revenue supported the order of lower authorities
It was observed that the AO had denied the exemption under section 54F of the Income Tax Act in respect of 14 apartment units for the reason that pursuant to the JDA, assessee had received multiple residential units and not a single residential unit.
Further observed in the decision of Madras High Court in the case of CIT Vs. Smt. V. R. Karpagam reported in had categorically held that the principles mentioned in section 54 of the Act is to be applied pari passu to section 54F of the Income Tax Act.
After reviewing the facts the ITAT bench of C. N. Prasad (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) held that assessee is entitled to the benefit of section 54F of the Income Tax Act in respect of all the units received by the assessee pursuant to the JDA, since the relevant Assessment year is prior to the amendment to section 54F of the Income Tax Act (i.e., 01.04.2015).
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