SHRI MITESH BALWANTRAI KAMDAR, MUMBAI V. DCIT-27 (2), MUMBAI

CO 26/MUM/2023

AI Insights

The case revolves around the interpretation of Section 54 of the Income Tax Act, 1961, concerning the exemption from capital gains tax when investing in residential property. The assessee, Shri Mitesh Balwantrai Kamdar, purchased two adjacent flats and claimed the exemption for both, arguing that they were intended to be merged into one residential unit. The Assessing Officer disallowed the deduction, leading to an appeal before the CIT(A), which partially allowed the claim for one flat. Both the Revenue and the assessee appealed to the Tribunal. The Tribunal dismissed the assessee's cross objections, agreeing with the CIT(A)'s interpretation that Section 54 allows exemption for only one residential house.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301181 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 02-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 54; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER CO No.26/M/2023 (Arising out of ITA No.3120/M/2022) Assessment Year: 2017-18 Shri Mitesh Balwantrai Kamdar, 801, Kalindi Neelkanthvalley, Rajawadi, 7 th Road, Ghatkopar (E), Mumbai – 400 077 PAN: AADPK 0912E Vs. DCIT-27(2), Room No.419, 4 th Floor, Tower No.6, Vashi Railway Station Complex, Vashi, Navi Mumbai -400 703 (Appellant) (Respondent) Present for: Assessee by : None Revenue by : Smt. Mahita Nair, D.R. Date of Hearing : 13 . 06 . 2023 Date of Pronouncement : 28 . 06 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: The cross objector, DCIT-27(2), Mumbai (hereinafter referred to as ‘the Revenue’) by filing the present cross objections, sought to challenge the order dated 27.10.2022 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2017-18 on the grounds inter-alia that :- “1. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in restricting the CO No.26/M/2023 (Arising out of ITA No.3120/M/2022) Shri Mitesh Balwantrai Kamdar 2 exemption claimed under Section 54 only te one flat out of two adjacent flats acquired by the appellan without appreciating the fact that such two adjacent flat acquired with the intention of merging them together woul constitute 'one residential house'. The Respondent craves leave to add, alter, amend or withdraw all or an of the Grounds of Cross Objection herein and to submit such statements documents and papers as may be considered necessary either at c before the appeal hearing.” 2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : during the scrutiny proceedings the Assessing Officer (AO) called upon the assessee to file explanation to substantiate capital gain and subsequent deductions claimed under section 54 of the Income Tax Act, 1961 (for short ‘the Act’) by way of issuance of notice under section 142(1) of the Act. Third party information was also called. The assessee subsequently filed the reply/documents. It is noticed by the AO that the assessee has purchased land in Lonavala vide sale deed dated 20.09.2007 for a consideration of Rs.26,00,000/- with other expenses of Rs.78,000/- whereupon the assessee has claimed to have constructed a bungalow of 4800 sq. ft. Declining the contentions raised by the assessee the AO disallowed the deduction claimed by the assessee. 3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has partly allowed the same. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) both the Revenue as well as the assessee have come up before the Tribunal by way of filing appeal as well as cross objections respectively. CO No.26/M/2023 (Arising out of ITA No.3120/M/2022) Shri Mitesh Balwantrai Kamdar 3 4. Despite issuance and service of the notice to the assessee none appeared on behalf of him, so the Bench proceeded to decide the cross objections on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue. 5. We have heard the Ld. D.R. for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon. 6. At the very outset, it is brought to the notice of the Bench by the Ld. D.R. for the Revenue that appeal in this case bearing ITA No.3120/M/2022 for A.Y. 2017-18 has already been decided by the Bench in the presence of the authorized representative of the parties on 26.04.2023 and brought on record the order passed by the Tribunal vide which appeal filed by the Revenue has been dismissed on account of low tax affect. 7. In the backdrop of the aforesaid undisputed facts when we examine the impugned order passed by the Ld. CIT(A) he has provided relief to the assessee under section 54 of the Act qua one house purchased by him by providing deductions from the capital gains. It appears that the assessee is not interested in pursuing his cross objections because he has got the part relief from the Ld. CIT(A) and further appeal filed by the Revenue has been dismissed due to low tax affect hence did not prefer to argue his cross objections by putting in appearance before the Bench. 8. Operative part of the impugned order passed by the Ld. CIT(A) is extracted for ready perusal as under: CO No.26/M/2023 (Arising out of ITA No.3120/M/2022) Shri Mitesh Balwantrai Kamdar 4 “Decision : 4. Appellant has purchased 2 flats and then joined them as 1 flat. He claims that he is eligible for deduction from the capital gains u/s 54 of the Act. He has filed some case laws in support of his claim. The reference is made to section 54 of IT act which clearly says that "one house" is purchased. Question is can this legal fiction be continued to allow appellant to buy say 10 flats, to break the internal walls and have a whole floor of a building with so called single flat of 15000 sq.ft. That some assessee may do this is not in the doubt, but whether the same should be allowed u/s 54 of IT act, that seems to be the Key consideration in this case. 5. It would appear that reading the law in holistic manner it would be clear that, appellant is allowed section 54 benefit on only one house.” 9. Since the assessee/cross objector has not come up before the Tribunal to substantiate his ground and the order passed by the Ld. CIT(A) is factually valid one, hence does not call for any inference by the Tribunal. 10. Consequently cross objection filed by the assessee is dismissed. Order pronounced in the open court on 28.06.2023. Sd/- Sd/- (GAGAN GOYAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 28.06.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// CO No.26/M/2023 (Arising out of ITA No.3120/M/2022) Shri Mitesh Balwantrai Kamdar 5 By Order Dy/Asstt. Registrar, ITAT, Mumbai.