Smt. Sukiana Parvez Ali Khan, Mohali V. ITO, W-6(3), Mohali

ITA 1366/CHANDI/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4909 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Benefit of exemption
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHSMD, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.1366/CHD/2017 ASSESSMENT YEAR: 2009-10 SMT. SUKIANA PARVEZ ALI KHAN VS. THE ITO # 2030, SECTOR-71 WARD 6(3), MOHALI MOHALI PAN NO. AWKPK1411B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. MOHIT DHIMAN REVENUE BY : SHRI. MANJIT SINGH DATE OF HEARING : 23/05/2018 DATE OF PRONOUNCEMENT : 12/06/2018 ORDER PER DR. B.R.R. KUMAR: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-2, CHANDIGARH DT. 02/06/2017. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT THE ORDER U/S 250(6) DATED 02.06.2017 PASSED B Y THE ID. CIT (A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. (A) THAT THE ID. CIT(A) HAS ERRED IN UPHOLDING T HE DISALLOWANCE OF RS. 27,00,000 MADE U/S 54 AS THE APPELLANT HAD DULY INV ESTED THE AMOUNT IN PURCHASE OF RESIDENTIAL FLAT WITHIN THE PRESCRIBED TIME. (B) WITHOUT PREJUDICE TO THE ABOVE, THE ID. CIT(A) HAS ERRED IN EVEN DISALLOWING THE EXEMPTION U/S 54 TO THE APPELLANT O N CAPITAL GAINS ARISING ON INDIVIDUAL FLAT(S) AGAINST THE CORRESPONDING INVEST MENT MADE IN FLAT(S) WHILE TREATING EACH FLAT AS A SEPARATE UNIT. 3. THAT THE ID. CT (A) HAS ERRED IN EVEN DISALLOWIN G THE EXEMPTION U/S 54 TO THE TUNE OF ACTUAL INVESTMENT OF RS. 15,00,000/- MA DE BY THE APPELLANT IN THE ADJACENT FLAT PURCHASED BY HER WITHIN THE PRESCRIBE D PERIOD. 4. THAT THE ID. CIT(A) HAS ERRED IN DISALLOWING THE EXEMPTION U/S 54 TO THE APPELLANT WITHOUT APPRECIATING THE FACT THAT SHE WA S PREVENTED BY SUFFICIENT CAUSE FROM NOT INVESTING THE ENTIRE AMOUNT OF CAPIT AL GAINS IN THE RESIDENTIAL FLAT. 5. THAT THE ID. CIT(A) HAS ERRED IN DISALLOWING THE DEDUCTION U/S 24(B) OF RS. 99,239 (I.E. RS. 273825 LESS RELIEF ALLOWED BY CIT( A) OF RS. 1,74,586). 2 3. BRIEF FACTS ON THE ISSUE ARE THAT DURING THE REL EVANT PERIOD, ASSESSEE HAS DECLARED LONG TERM CAPITAL GAINS AMOUNTING TO RS. 1 ,73,927/- ON SALE OF HOUSE PROPERTY NO. 103 AND 104 IN MALAD, MUMBAI. THIS PRO PERTY WAS SOLD FOR A CONSIDERATION OF RS. 1,10,50,000/-. THE ASSESSEE HA S CLAIMED EXEMPTION OF RS. 54,00,000/- U/S 54 OF THE ACT ON THE GROUND THAT SH E HAS PURCHASED TWO FLATS FOR RS. 27,00,000/- EACH AT SUNCITY, BADDI, SOLAN IN HI MACHAL PRADESH FROM M/S SHAKUM INFRASTRUCTURE DEVELOPMENT LTD. 4. THE ASSESSING OFFICER NOTED THAT THESE TWO FLATS PURCHASED BY THE ASSESSEE ARE AT DIFFERENT FLOORS AND DO NOT CONSTIT UTE IS SINGLE UNIT AND THEREFORE, THE BENEFIT OF EXEMPTION U/S 54 IS AVAILABLE TO THE ASSESSEE IN RESPECT OF ONE RESIDENTIAL HOUSING. ASSESSING OFFICER FURTHER NOTE D THAT FOR THE ONE FLAT FULL PAYMENT HAS BEEN MADE HOWEVER FOR THE ANOTHER FLAT NO. B-2/402 ONLY RS. 15,00,000/- HAS BEEN PAID AND THEREFORE, ASSESSING OFFICER RESTRICTED THE EXEMPTION U/S 54 IN RESPECT OF THE FLAT FOR WHICH F ULL PAYMENT HAS BEEN MADE AND THE BALANCE AMOUNT OF RS. 28,10,034/- WAS BROUG HT TO TAX AS LONG TERM CAPITAL GAINS FOLLOWING THE DECISION OF MUMBAI TRIB UNAL SPECIAL BENCH IN THE CASE OF SUSHILA M JHAVRI (2007) 107 ITD 327. 5. THE LD. AR MADE SUBMISSIONS AS UNDER:- (I) THAT THE ASSESSING OFFICER HAS ALLOWED THE CLAI M TO THE APPELLANT AMOUNTING TO RS. 27,00,000/- ONLY AGAINST ONE UNIT OF TWO ADJOINING FLATS PURCHASED AT BADDI. SECTION 54 ENTITLES THE ASSESSE E FOR A FULL DEDUCTION OF RS. 54,00,000/- AGAINST THE TWO FLAT WHICH WERE ADJ OINING WITH EACH OTHER AS IS EVIDENT FROM THE FLAT NUMBERS WHICH ARE B-2/5 02 AND B-2/402. (II) LD. AR PLACED RELIANCE ON THE FOLLOWING DECISI ONS:- A. CIT V/S GITA DUGGAL {357 ITR153} (DELHI HC) B. CIT VS. K.G. RUKMINIAMMA (2011) (196 TAXMAN 87) (KAR) C. CIT VS. SH. GUMANMAL JAIN (TCA NO. 33 OF 2017) D ATED 03.03.2017 (MAD) 3 6. ASSESSING OFFICER HAS GIVEN A FINDING THAT THE A SSESSEE PURCHASED TWO FLATS NO. B-2/502 AND B-2/402 WHICH ARE AT DIFFERENT FLOO RS IN THE BUILDING AT SUNCITY, BADDI WHICH DO NOT CONSTITUTE A ONE SINGLE UNIT. AS SESSING OFFICER HAS ALSO NOTED THAT FOR THE SECOND FLAT, ASSESSEE HAD MADE PAYMENT ONLY OF RS. 15,00,000/- AGAINST THE VALUE OF RS. 27,00,000/-. THEREFORE, TH E FULL INVESTMENT HAS NOT BEEN MADE DURING THE STIPULATED PERIOD. 7. THE LD. DR RELIED ON THE ORDER OF ITAT, MUMBAI S PECIAL BENCH HAS CONSIDERED THE ISSUE OF EXEMPTION U/S 54 OF THE ACT IN THE CASE OF MS. SUSHILA M JHAVRI (SUPRA) AND HELD THAT EXEMPTION U/S 54 AND 5 4F OF THE ACT WOULD BE ALLOWABLE IN RESPECT OF ONE RESIDENTIAL HOUSE ONLY. 8. HOWEVER, WE FIND THAT IN THE SAME JUDGMENT IT IS MENTIONED THAT WHERE MORE THAN ONE UNIT PURCHASED WHICH ARE ADJACENT TO EACH OTHER AND ARE CONVERTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDEN CE BY HAVING COMMON PASSAGE, COMMON KITCHEN ETC., IT WOULD BE A CASE OF INVESTMENT IN ONE RESIDENTIAL HOUSE. IN THE INSTANT CASE THE APPELLAN T HAS PURCHASED TWO FLATS AT DIFFERENT FLOORS ONE ABOVE THE OTHER AND MADE IT ON E SINGLE RESIDENTIAL DUPLEX UNIT. THEREFORE, THE ASSESSEE IS ENTITLED TO EXEMPT ION IN RESPECT OF INVESTMENT IN BOTH THE HOUSES. 9. FURTHER BEFORE US, THE ASSESSEE HAS ARGUED THAT THE PAYMENT OF RS. 15 LACS HAS BEEN PAID FOR THE SECOND FLAT WITHIN THE D UE TIME AND THE REMAINING PART COULD NOT BE PAID DUE TO LITIGATION ENTERED WI TH THE BUILDER OWING TO NON- COMPLETION OF THE CONSTRUCTION, BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM. THE DOCUMENTS RELEVANT TO THE LITIGATION ARE ALSO PLACED BEFORE US. IT WAS SUBMITTED THAT IT IS DUE TO THE ONGOING LITIGATION THE REMAINING AMOUNT WAS NOT PAID. SINCE THE AMOUNTS WERE NOT PAID BECAUSE OF TH E REASONS BEYOND CONTROL, 4 BASED ON THE RATIONALE GIVEN BY THE HONBLE DELHI C OURT IN THE CASE OF CIT VS. R.L. SOOD 108 TAXMAN 227 THE ASSESSEE IS ELIGIBLE F OR EXEMPTION. 10. HENCE, KEEPING IN VIEW THAT SINCE THE TWO FLATS MAKE A SINGLE DWELLING UNIT AND KEEPING IN VIEW THE JUDGMENTS QUOTED BY THE LD. AR, THE RESTRICTING THE BENEFIT OF EXEMPTION U/S 54 TO THE ASSESSEE TO ONE UNIT ONLY CANNOT BE ACCEPTED. THE ADDITION MADE BY THE A.O OF RS. 28,10 ,034/- TO THE LONG TERM CAPITAL GAIN IS THEREFORE, DELETED. 11. REGARDING THE GROUND NO. 5 OF THE APPEAL, THE A SSESSEE HAS PAID INTEREST OF RS. 1,13,838/- AND RS. 1,21,496/- TOWARDS THE HO USING LOAN, THE SAME MAY BE ALLOWED AFTER DUE VERIFICATION OF THE CERTIFICATE A S PER SECTION 24(B) OF THE INCOME TAX ACT,1961 IN THE HANDS OF THE ASSESSEE. 12. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12/06/2018 AG COPY TO: 1.THE APPELLANT, 2. THE RESPONDENT, 3. THE CIT(A), 4. THE CIT, 5. THE DR