SHRI RAJENDRA MADHUKAR MAHAJAN, Nagpur V. THE ITO, WARD- 1(3), Nagpur

ITA 115/NAG/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0384 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 19-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VITTHAL BHOSALE
• Keywords: Set aside
• Section: 54F; 195

Judgement Text

आयकर अपीऱीय अधिकरण न्यायपीठ नागप ू र म ें । IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR (At e-Court, Pune) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपीऱ सं. / ITA No.115/NAG/2017 ननिाारण वषा / Assessment Year : 2013-14 Shri Rajendra Madhukar Mahajan, G-3, Adavait Apartment, 33 Khare Town, Dharampeth, Nagpur - 440010 PAN : AAUPM9070G .......अऩीऱाथी / Appellant बनाम / V/s. The Income Tax Officer, Ward – 1(3), Nagpur ......प्रत्यथी / Respondent Assessee by : Shri Rajesh Loya Revenue by : Shri Vitthal Bhosale स ु नवाई की तारीख / Date of Hearing : 12-11-2021 घोषणा की तारीख / Date of Pronouncement : 10-01-2022 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 28-12-2016 passed by the Commissioner of Income Tax (Appeals)-1, Nagpur [‘CIT(A)’] for assessment year 2013-14. 2. The assessee raised two grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) is justified in confirming the addition made by the AO on account of denying exemption u/s. 54F of the Act. 2 ITA No. 115/NAG/2017, A.Y. 2013-14 3. Heard both the parties and perused the material available on record. We note that the assessee is a Veterinary Doctor having practice in Nagpur. The ld. AR, Shri Rajesh Loya submits that the assessee sold his plot of land for Rs.75,00,000/- on 20-10-2012 and considering the cost of acquisition, declared Long Term Capital Gain at Rs.73,76,957/-. The assessee invested Capital Gain arising out of said sale of immovable property in two adjacent residential flats in Lodha Builders at Dombivili (E), Mumbai. The said two flats adjacent to each other and located in the same building and floor and referred to Page No. 52 of the paper book. He submits that the assessee paid consideration for the said two adjacent flats separately vide two registered Sale Deed and referred to Page Nos. 1 to 57 of the paper book for a consideration of Rs.34,39,306 and Rs.35,89,757/-. Out of the Capital Gain declared by the assessee, deposited in capital account of Rs.3,39,626/- (Rs.73,76,957/- - Rs.70,37,331/-). The AO denied the exemption claimed u/s. 54F of the Act by noting both the said flats are independent and separate executed through different Sale Deeds. The said flats were not converted into single house or flat and the Sale Deeds does not provide that the said flats were converted into single unit and the property tax also paid separately for each flat along with the said observation and in the absence of sanctioned plan the AO restricted the exemption to the flat having greater value of Rs.35,89,757/- and denied exemption to other flat valuing of Rs.34,39,306/-. 4. We note that the CIT(A) noted that the assessee himself admitted that the said two flats cannot be converted into one single unit as the building permission plan does not support the changes as per the buyers need. The CIT(A) also further observed that neither door is common nor have these two flats been combined to make one residential unit, thereby, the CIT(A) held the view of AO is justifiable. 3 ITA No. 115/NAG/2017, A.Y. 2013-14 5. The contention of Shri Rajesh Loya is that the assessee purchased said two flats in its residential purpose and he made the said two units as one flat by opening a door and made the same as single unit and drew our attention at Page No. 58 of the paper book. Further, he placed reliance in various case laws which are placed on record from Page Nos. 62 to 81 of the paper book. Further, he submits because of the conditions set out in Sale Deeds the assessee is not suppose to make major changes and drew our attention to specific conditions contained in Agreement to Sell at Point L which is at Page No. 4 and Point 6.1 at Page No. 6 and also Point 11.1 at Page No. 7 of the paper book. Apart from the case laws furnished through paper book, Shri Loya also placed on the decision of Hon’ble High Court of Bombay in the case of CIT Vs. Devdas Naik reported in 366 ITR 12 (Bom) and argued by referring the decision in the case of Ms. Sushila M. Jhaveri reported in 107 ITD 327 the Hon’ble High Court of Bombay held that the acquisition of the flats may have been done independently but eventually they are a single unit house for the purpose of residence. The ld. DR, Shri Vitthal Bhosale vehemently opposed the submissions of ld. AR and argued the AO and CIT(A) clearly stated that the two flats purchased by the assessee were through different Sale Deeds and the property taxes also being paid separately. There is no evidence on record to show that the said two flats were converted into single flat. The AO examined the issue in detail and denied the exemption in the absence of required evidence showing that the said two flats are as one unit. Regarding the decision of Hon’ble High Court of Bombay where ld. DR, Shri Bhosale reported no contrary decision to that effect. 6. We note that the Special Bench of ITAT in the case of Ms. Sushila M. Jhaveri reported in 107 ITD 327 (Mumbai)(SB) which is at Page No. 60 of the paper book and on perusal of the same it is observed that by the 4 ITA No. 115/NAG/2017, A.Y. 2013-14 various decisions the Tribunal allowed exemption in respect of investments made in two adjacent or contiguous units converted into one residential house by having common passage/stair case, common kitchen, etc. intended to be used as single house for the residence of the family. We note in the present case, the registered Agreement of Sale for Flat No. 701 at Page Nos. 1 to 28 shows that it is a 1BHK having carpet area of 195 Sq. Ft., one four wheeler open parking. The registered Agreement of Sale for Flat No. 702 which is at Page Nos. 29 to 57 of the paper book discloses the flat type is 1BHK having carpet area of 495 Sq.Ft. with one four wheeler open parking. The typical floor plan for the said two flats are at Page Nos. 24 and 52 for the said two flats respectively wherein we note that the flats are located adjacent to each other having common stair-case, lobby and lift etc. The conversion said to have been made by the assessee making the said two flats into one unit is in the plan of which at Page No. 58 wherein we note that the assessee made modification by opening common wall between two living and dining areas of Flat Nos. 701 and 702. Therefore, it is noted and we find force in the arguments of the ld. AR that the two adjacent flats are being used as single residential unit by opening the common wall between the two living and dining areas. 7. Coming to the decision of Hon’ble High Court of Bombay in the case of Devdas Naik (supra) we note that the Hon’ble High Court was pleased to observe that the decision of Special Bench of ITAT in the case of Ms. Sushila M. Jhaveri (supra) has been confirmed by this Court in the case of CIT Vs. Raman Kumar Suri in Income Tax Appeal No.6962 of 2010, vide order dated 27-11-2012. Therefore, as discussed above the Special Bench in the case of Ms. Sushila M. Jhaveri (supra) held exemption is allowable u/s. 54F of the Act if the two adjacent or contiguous untis converted into one residential house by having common passage/stair case, common 5 ITA No. 115/NAG/2017, A.Y. 2013-14 kitchen etc. intended to be used as single house for the residence of the family. 8. In the present case, as we noted above that two adjacent flats converted into one unit by opening a common wall between two living and dining area and being used as single unit for residential purpose of the assessee, therefore, in our opinion, the ratio of Hon’ble High Court of Bombay is applicable to the case on hand. Thus, we hold that the assessee is entitled to claim deduction u/s. 54F of the Act for entire amount which was invested in purchase of two adjacent flats bearing Flat Nos. 701 and 702 as single unit. Thus, the order of CIT(A) is not justified and it is set aside. The grounds raised by the assessee are allowed. 9. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 10 th January, 2022. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER ऩ ु णे / Pune; ददनाांक / Dated : 10 th January, 2022. रवव आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : 1. अऩीऱाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(A)-1, Nagpur 4. The CIT-1, Nagpur 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, नागऩ ू र, / DR, ITAT, Nagpur. 6. गार्ड फ़ाइऱ / Guard File. //सत्यावऩत प्रतत// True Copy// आदेशान ु सार / BY ORDER, वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩ ु णे / ITAT, Pune