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Deduction under Section 54 of ITA cannot be denied as long as there is a Residential unit

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Court :
Bombay High Court

Brief :
n this appeal, the order passed by the ITAT confirming that of the Commissioner of Income Tax was questioned. The assessee had bought 3 flats, one in his own name, another in the name of his wife and his own and the third in the name of his wife. The Assessee had claimed deduction under section 54 of the IncomeTax Act, 1961 on purchase of 2 flats, under two distinct agreements and from different sellers, in which he was either the sole owner or one of the joint owners. It was noted by both,the ITAT and the CIT, that the map of the general layout plan as well as internal layout plan in regard to flat no.s 103 and 104 indicate that there is only one common kitchen for both the flats. The flats were constructed in such a way that adjacent units or flats can be combined into one. the Appellate Court laid down that it is an admitted fact that the flats were converted into one unit and for the purpose of residence of the Assessee. It is in these circumstances, the CIT held that the acquisition of the flats may have been done independently but eventually they are a single unit and house for the purpose of residence. The Appellate Court upheld the reliance placed by the ITAT on the order passed by it in the case of Ms. Sushila M. Jhaveri. The language of the section was noted and it was reiterated that so long as there is a residential unit or house, then the benefit or deduction cannot be denied. In the instant case, the court held the flats to be a single unit. The Appeal did not raise any substantial question of law and was held liable to be dismissed. No order as to costs were made.

Citation :
Commissioner of Income Tax 21, Mumbai 400 051 v/s Devdas Naik

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX APPEAL NO.2483 OF 2011

Commissioner of Income Tax 21,

Mumbai 400 051 ...Appellant

v/s

Devdas Naik ...Respondent

Mr Abhay Ahuja for Appellant.

Mr Ajay R. Singh for Respondent.

CORAM : S.C. DHARMADHIKARI AND

B.P. COLABAWALLA JJ.

DATED : 10TH JUNE 2014.

P.C. 

1. The Appeal questions the order passed by the Income Tax Appellate Tribunal confirming that of the Commissioner of Income Tax (Appeals).

2. The concurrent finding of fact in relation to Assessment Year 2007-08 is questioned on the ground that the claim of deduction under section 54 of the Income Tax Act 1961 was not tenable.

3. It is urged that the factual position has been completely misread and misconstrued so as to allow the claim. Mr Ahuja, learned counsel appearing in support of this appeal submits that the law laid down by the Mumbai Bench of the Tribunal in the case of Income Tax Officer, Ward 19(3)4, Mumbai v/s Ms Sushila M. Jhaveri, reported in (2007) 107 ITD 327 (MUM)(SB) and confirmed by this Court in the case of Commissioner of Income Tax v/s Raman Kumar Suri in Income Tax Appeal No.6962 of 2010, decided on 27th November 2012, is applicable only when the house purchased is a single unit. According to Mr Ahuja, in the present case, two flats, one acquired in the Respondent Assessee's name and another jointly in the names of Respondent – Assessee and his wife but under two distinct agreements and from different sellers have been taken into consideration for the purpose of this deduction or the claim. That is contrary to the Legislative intent and also the plain language of section 54 of the Act. Therefore, according to Mr Ahuja, a substantial question of law arises for determination.

To read the full judgement find, the enclosed attachment

 

Ketaki Kumar
on 22 July 2014
Published in Income Tax
Views : 2862
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