ALOK KUMAR CHAMRIA (HUF),KOLKATA V. I.T.O., WARD - 32(3), KOLKATA, KOLKATA

ITA 1487/KOL/2024

AI Insights

The case involves Alok Kumar Chamria (HUF), who appealed against the order of the National Faceless Appeal Centre (CIT(A)), which had upheld the additions made by the Assessing Officer under sections 50C and 54F of the Income Tax Act. The Assessing Officer had treated the difference between the declared sale consideration and the stamp duty value of the property sold as a long-term capital gain, and denied the deduction under section 54F for the investment in two flats, citing non-compliance with the conditions of owning multiple residential units and the timing of the purchase. The Tribunal found the difference in valuation to be negligible and allowed the deduction under section 54F, treating the two flats as a single unit.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36034 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-12-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 08-07-2024
• Other Referred Cases: CIT vs. Devdas Naik [2014] 48 taxmann.com 30(Bom), Shaista Irphan Mogul vs. ACIT ITA No.4916/Mum/2019 dated 01.07.2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital Gains
• Section: 142(1); 143(2); 250; 143(1); 48; 54F; 50C

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Rajesh Kumar, Accountant Member I.T.A. No.1487/Kol/2024 Assessment Year: 2017-18 Alok Kumar Chamria (HUF)…………........………………....Appellant 25E Chamria House, Shakespeare Sarani, 3rd Floor, W.B. – 700017. [PAN: AAFHA4854F] vs. ITO, Ward-32(3), Kolkata.….……….…............................…..…..... Respondent Appearances by: Mrs. Saswati Mitra (Dutta), Advocate, appeared on behalf of the assessee. Shri Pradip Kr. Biswas, Addl. CIT, appeared on behalf of the Revenue. Date of concluding the hearing : November 19, 2024 Date of pronouncing the order : November 29, 2024 आदेश / ORDER Per Sonjoy Sarma, Judicial Member: The present appeal has been preferred by the assessee against the order dated 29.04.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The brief facts of the case are that the assessee filed its return of income on 03.08.2017 by declaring a total income of Rs.12,14,280/-. The return was processed u/s 143(1) of the Act and refund of Rs.26,980/- was issued. Subsequently, the case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued requiring the assessee to furnish specific details. The assessee submitted responses and uploaded documents periodically. During the scrutiny proceedings, the Assessing Officer observed that the assessee had declared long-term capital gain (‘LTCG’) from the sale of immovable property. The Assessing Officer noted that sale consideration for seven flats as per sale deed was lower than the stamp duty value. He invoked I.T.A. No.1487/Kol/2024 Assessment Year: 2017-18 Alok Kumar Chamria (HUF) 2 section 50C of the Act which mandates that stamp duty value or actual value of sale consideration, which is higher, be considered for computing LTCG. The Assessing Officer found that the stamp duty value exceeded the actual sale consideration, therefore, he proposed an addition of Rs.10,21,262/- to the total income of the assessee representing the difference between the sale price declared and stamp duty value. The Assessing Officer noticed that the assessee claimed deduction of Rs.2,68,92,241/- u/s 54F of the Act in respect of investment made in two flats i.e. Flat No.B-12, and Flat No.11, at Kalpataru Avana, Maharashtra. The Assessing Officer denied the deduction on the ground that the assessee owned three residential units at a time i.e. one flat at Kolkata and the aforementioned two flats in Maharashtra, which is a violation of the condition laid down u/s 54F of the Act and the purchase of new flat was not completed within the stipulated period of two years from the date of transfer of the original asset. Moreover, the assessee had not produced any evidence of deposit in the bank under Capital Gains Account Scheme (CGAS) as required u/s 54F(4) of the Act. Considering the above facts, the Assessing Officer added Rs.2,79,13,503/- to the total income of the assessee. 3. Dissatisfied with the order, the assessee went in appeal before the ld. CIT(A) stating that two flats were purchased with the intention of being used as a single residential unit and architectural interior design plans and considered as a common unit and were designed to function as one unit. The assessee also stated before the ld. CIT(A) that delay in completion of the construction was due to default of builders and not for the fault of the assessee. However, the ld. CIT(A) dismissed the appeal emphasising that flats were acquired through two separate agreements and no conclusive evidence was provided to prove that these were indeed a single unit. Moreover, the assessee failed to comply with the I.T.A. No.1487/Kol/2024 Assessment Year: 2017-18 Alok Kumar Chamria (HUF) 3 statutory condition and had not responded adequately to the notices issued by the ld. CIT(A) 4. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before this Tribunal. Before the Bench, the assessee reiterated that the flats were designed to function as one unit supported by architectural certificate, however, the instant certificate was not produced at the time of the proceedings before the ld. CIT(A). The contention of the assessee was that substantial compliance was made to section 54F through investment and partial deposit in CGAS asserting that substantive conditions were met by showing bank account details. Therefore, the addition made by the lower authorities are uncalled for. Another contention of the ld. AR is that the difference of Rs.10,21,262/- represented only 2.7% of the total sale consideration of Rs.37749550/- for the property sold and the assessee argued that the percentage is negligible and should not be triggered section 50C of the Act. The assessee contended that the minor variation should not attract the provisions of section 50C of the Act as Hon’ble Courts previously held that negligible difference between the actual sale consideration and the stamp duty value should not be trigger addition u/s 50C of the Act. Therefore, Ground Nos.4 of the appeal should be allowed. The ld. AR in order to substantiate its claim u/s 54F relied on the decision of the Hon’ble Mumbai High Court in the case of CIT vs. Devdas Naik reported in [2014] 48 taxmann.com 30(Bom), wherein, on similar facts lead to allow the deduction u/s 54F for two flats treated as a single unit. 5. On the other hand, the ld. DR supported the decisions of the authorities below and stated that there was no error occurred while passing the orders of the authorities below. 6. We, after hearing the rival submissions and perusing the materials available on record, find that the addition u/s 50C was for the I.T.A. No.1487/Kol/2024 Assessment Year: 2017-18 Alok Kumar Chamria (HUF) 4 difference between sale consideration and stamp duty value and was marginally very low i.e. Rs.10,21,262/-, which is only 2.7% of the sale consideration. We, after relying on the judicial precedents, hold that the addition of Rs.10,21,262/- was unwarranted. Since this argument aligns with the judicial principles emphasising that minor deviation does not necessarily reflect an attempt to evade taxes, particularly when the variation is below a threshold limit of 5%.. We in this respect rely on the decision of the Coordinate Mumbai Bench of the Tribunal in the case of ‘Shaista Irphan Mogul vs. ACIT’ in ITA No.4916/Mum/2019 dated 01.07.2021. Accordingly, the addition of Rs.10,21,262/- made u/s 50C is deleted and Ground No.4 of the assessee is allowed. 6.1 On the other hand, the issue relating to allowability of deduction u/s 54F is concerned, the assessee claimed that two flats were constituted a single unit based on architectural plans and interior design. In this regard, architectural certificate was also furnished before the Bench. It is also acknowledged that the assessee has made substantive investment within the prescribed period by depositing in CGAS account, hence, we deem it necessary to allow the instant issue in favour of the assessee considering the judgment of CIT vs. Devdas Naik (supra) and accordingly, we direct the Assessing Officer to delete the impugned addition. 7. In terms of the above, the appeal of the assessee is allowed. Kolkata, the 29th November , 2024. Sd/- Sd/- [Rajesh Kumar] [Sonjoy Sarma] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 29.11.2024. RS I.T.A. No.1487/Kol/2024 Assessment Year: 2017-18 Alok Kumar Chamria (HUF) 5 Copy of the order forwarded to: 1. Alok Kumar Chamria (HUF) 2. ITO, Ward-32(3), Kolkata 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches "