MEENAKSHI SATISH VARMA, MUMBAI V. ITO (IT) 2(1), MUMBAI

ITA 1542/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7534 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI AMARJIT SINGH, JM ./ I.T.A. NO. 1542/MUM/2016 ( / ASSESSMENT YEAR: 2011 - 12 ) MRS. MEENAKSH I SATISH VARMA 100/101, SHER E PUNJAB SOCIETY, JYOTI PARADISE, MAHAKALI CAVES ROAD, ANDHERI (EAST), MUMBAI - 400 093 / VS. ITO(IT) - 2(1), SCINDIA HOUSE, MUMBAI - 400 038 ./ ./ PAN/GIR NO. AFAPV 5167 Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI RAM TIWARI / DATE OF HEARING : 24.01.2018 / DATE OF PRONOUNCEMENT : 04.04 .2018 / O R D E R PER S HAMIM YAHYA, A. M.: THIS A PPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 18.12.2015 AND PERTAINS TO THE A SSESSMENT YEAR 2011 - 12. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. CONFIRMING THE ACTION OF THE LEARNED AO IN NOT ALLOWING EXEMPTION U/S.54F AMOUNTING TO RS.62,73,840/ - OUT OF THE TOTAL EXEMPTION OF RS.1,61,84,180/ - CLAIMED BY THE APPELLANT ALLEGEDLY ON THE GROUND THAT THE RESIDENTIAL PROPERTY PURCHASED BY THE APPELLANT WAS REGISTERED I N HER SON'S NAME AND HENCE THE SAME DOES NOT QUALIFY FOR CLAIMING EXEMPTION U/S.54F. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT FUNDS FOR THE PURCHASE OF RESIDENTIAL FLAT WERE COMPLETELY UTILIZED 2 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA OUT OF THE SALE CONSIDERATION RECEIVED BY THE APPELLANT FR OM THE SALE OF CAPITAL ASSET. 2. CONFIRMING THE DISALLOWANCE OF THE SUM OF RS.50,30,239/ - OUT OF THE INDEXED COST OF THE CAPITAL ASSET DISPOSED OF. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SAID INDEXED COST OF RS.50,30,239/ - WAS ON ACCOUNT OF THE COST OF FURNISHING THE PROPERTY SOLD BY THE APPELLANT [ACTUAL COSTRS.28,75,559/ - ]. 3. IN THIS CASE, D URING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SOLD ONE FLAT BEARING NO.402, 9, JVPD, ANDHERI (W), MUMBAI, FOR A CONS IDERATION OF RS.3,56,40,000/ - ON 16/5/2010. T HE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE IN JULY, 2003 FOR A TOTAL SUM OF RS.1,34,79,370/ - . AFTER CLAIMING THE INDEX COST OF ACQUISITION THE LONG TERM CAPITAL GAIN HAS BEEN WORKED OUT TO RS.1,49,40,579/ - . FURTHER THE ASSESSEE ALSO CLAIMED DEDUCTION U/S.54F OF THE I . T. ACT, 1961 ON THE BASIS OF PURCHASE OF TWO RESIDENTIAL PROPERTIES BY MAKING A TOTAL INVESTMENT OF RS.1,61.84,180/ - IN THE MONTH OF JUNE, 2011. FROM THE DETAILS SUBMITTED BEFORE THE ASSESSING O FFICER IT WAS FOUND THAT FLAT NO.703, 7 TH FLOOR, C - WING, RUSTORNJEE ELANZA BUILDING, MAIAD (W), MUMBAI WAS BOUGHT FOR A TOTAL CONSIDERATION OF RS.99,10,340/ - INCLUDING THE STAMP DUTY AND REGISTRATION CHARGES. THE SAID FLAT IS REGISTERED IN THE NAME OF THE ASSESSEE HERSELF. THE ASSESSING OFFICER FURTHER NOTICED THAT OF THE TWO FLATS ON WHICH DEDUCTION U/S54F WAS CLAIMED, FLAT NO.704 IN THE SAME BUILDING AS MENTIONED ABOVE HAD BEEN PURCHASED FOR A TOTAL CONSIDERATION OF RS.62,73,840/ - INCLUDING STAMP DUTY AND REGISTRATION CHARGES. THIS PROPERTY WAS FOUND TO BE REGISTERED IN THE NAME OF ONE SHRI NAMIT VERMA WHO HAPPENS TO BE THE SON OF THE ASSESSEE. THE ASSESSING OFFICER THEREFORE OBSERVED THAT SINCE FLAT NO.704 WAS NOT REGISTERED IN THE NAME OF THE ASSESSEE TH EN WHY SHOULD THE SAID CLAIM OF 54F NOT BE REJECTED. IN REPLY BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTED 3 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA THAT AS PER THE RATIO IN THE DECISION OF CIT - XII VS. KAMA L WAHAL (2013) (84 CCH 024)(DELHI) THE HON'BLE DELHI HIGH COURT HAS HELD THAT LAW DOE S NOT REQUIRE THAT THE NEW HOUSE HAS TO BE IN THE NAME OF THE TAXPAYER. IT MERELY REQUIRES PURCHASE OR CONSTRUCTION OF THE NEW HOUSE BY THE TAXPAYER, WHICH IS SATISFIED IF THE FUNDS ARISING FROM THE SALE OF THE OLD HOUSE ARE UTILIZED FOR SUCH PURCHASE OR C ONSTRUCTION OF NEW HOUSE. 4. IT WAS FURTHER SUBMITTED THA T THE NEW HOUSE WAS PURCHASED IN THE NAME OF SON OF THE ASSESSEE AND THE ENTIRE INVESTMENT IN SECOND PROPERTY HAS BEEN MADE OUT OF THE SALE PROCEEDS OF THE ASSESSEE. HOWEVER , THE ASSESSING OFFICER W AS NOT CONVINCED. HE REFERRED TO THE PROVISIONS OF SECTION 54F OF THE ACT . HE FOUND THAT THE PROVISIONS OF THE ACT ARE VERY SPECIFIC AND THERE IS NO ANY LEGAL INTERPRETATION. HE FURTHER OBSERVED THAT THE ASSESSEE HAS NOT EXPLAINED THE NATURE OF THE MONEY T RANSACTION TO THE SON OF THE ASSESSEE, I.E., LOAN ADVANCE, GIFT, ETC. THAT ANY MONEY TRANSACTION IN THE EYES OF LAW HAS TO BE SPECIFIED IN ORDER TO EXAMINE THE TAXABILITY OF SUCH INCOME UNDER THE PROVISION OF THE ACT BOTH IN THE HANDS OF THE ASSESSEE AND T HE SON OF THE ASSESSEE. THAT BY SIMPLY STATING THE SECOND PROPERTY HAS BEEN PURCHASED IN THE NAME OF THE SON OF THE ASSESSEE TO THE SALE PROCEEDS OF THE ASSESSEE DOES NOT FALL FOR EXEMPTION U/S. 54F OF THE ACT. HENCE , THE ASSESSING OFFICER HELD THAT THE CL AIM OF EXEMPTION U/S. 54F OF THE ACT IS NOT AVAILABLE TO THE ASSESSEE ON INVESTMENT MADE IN FLAT NO. 704 AS SHE HAS NO LEGAL OWNER OF THE ASSESSEE. T HAT THE ASSESSEE MIGHT HAVE EXTENDED THE MONEY TO HER SON OUT OF LOVE AND AFFECTION TOWARDS HER SON AND FOR OTHER REASONS, BUT SHE CANNOT CLAIM OWNERSHIP OVER THE PROPERTY AND ACCORDINGLY, EXEMPTIONS OR OTHERWISE UNDER 4 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA THE VARIOUS PROVISIONS OF THE INCOME - TAX ACT, 1961 FOR THE SIMPLE REASON THAT THE SECOND PROPERTY WAS PURCHASED OUT OF THE MONEY GIVEN TO HER SO N. THAT IN VIEW OF THE AFORE - STATED DISCUSSION, THE CLAIM OF DEDUCTION U/S. 54F WAS REJECTED AND ACCORDINGLY, THE SUM OF RS.62,73,840/ - WAS BROUGHT TO TAX UNDER THE HEAD LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 5. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WITH RESPECT TO THE PROPERTY SOLD HAS INCLUDED A SUM OF RS.28,75,559/ - AS FURNI TURE COST AND CLAIMED INDEXED COST OF ACQUISITION. DESPITE SEVERAL REQUEST, THE ASSESSEE NEVER PRODUCED ANY EVIDENCE FOR THE SAID E XPENDITURE. HENCE, AS THE ASSESSEE DID NOT CORROBORATE THE CLAIM OF COST OF FURNITURE, THE ASSESSING OFFICER DISALLOWED THE SAME. 6. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ASSESSEES SUBMISSION REGARDING T HE CLAIM OF DEDUCTION ON ACCOUNT OF FLATS PURCHASED IN HER OWN NAME. HE DECIDED T HE ISSUE AGAINST THE ASSESSEE AS UNDER: I HAVE GONE THROUGH THE FACTS OF THE CASE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS SOLD ONE FLAT AND HAS PURCHASED TWO RESIDENT IAL PROPERTIES AGAINST WHICH DEDUCTION U/S.54F IS BEING CLAIMED. WHILE ONE OF THE FLATS IS REGISTERED IN THE NAME OF THE APPELLANT THE SECOND FLAT IS FOUND REGISTERED IN THE NAME OF HER SON. THE SECOND FLAT WHICH IS REGISTERED IN THE NAME OF THE SON IS NOT JOINTLY REGISTERED WITH THE NAME OF THE APPELLANT. THE APPELLANT HAS SUBMITTED VARIOUS DECISIONS TO CLAIM DEDUCTION ON THE FLAT REGISTERED IN HER SONS NAME. HOWEVER, THE SAID CLAIM OF THE APPELLANT CANNOT BE ACCEPTED IN LIGHT OF THE DECISION IN THE CASE OF PRAKASH VS. ITO 173 TAXMANN 311 (BOM.) 2008. IT HAS BEEN HELD THAT THE NEW RESIDENTIAL PROPERTY SHOULD BE PURCHASED BY THE ASSESSEE IN HIS/HER OWN NAME. THEREFORE, KEEPING THE RATIO OF THIS CASE AND CONSIDERING THAT IT IS FROM THE JURISDICTIONAL COURT T HE ISSUE IS DECIDED AGAINST THE APPELLANT. THIS GROUND IS ACCORDINGLY DISMISSED. 5 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA 7. AS REGARDS THE COST OF ADDITION TO THE FLAT SOLD, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE DISALLOWANCE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: I HAVE GONE THROUGH THE FACTS OF THE GROUND AND I FIND THAT THE APPELLANT WAS UNABLE TO PROVIDE ANY EVIDENCE BEFORE THE A.O. OR NOW IN APPEAL TO JUSTIFY THE COST OF FURNITURE AT RS.28,75,550/ - . DURING THE COURSE OF APPEAL THE APPELLANT HAS ONLY REFERRED TO A NNEXURE A IN THE SALE DEED WHICH MENTIONS THE FURNITURE, FIXTURE AND FITTINGS AS LISTED IN THE SAID ANNEXURE BEING THE FOLLOWING : 1. FIVE AIR CONDITIONERS 2. THREE BEDS 3. THREE WARDROBES 4. FANS 5. SOFA SET 6. CENTRE TABLE FROM THIS LIST THERE IS NO CR EDIBLE REASON TO ACCEPT THAT THE INDEXED COST OF ACQUISITION OF THE SAID FURNITURE AND FIXTURES BEING ADOPTED AT RS.28,75,559/ - . I AM IN AGREEMENT WITH THE A.O. THAT IT IS FOR THE TAXPAYER TO CLEARLY PROVIDE THE EVIDENCE OF ANY CLAIM THAT IS BEING MADE IN THE COMPUTATION OF INCOME. SINCE THE APPELLANT HAS FAILED TO DO SO, THE ACTION OF THE A.O. IN DISALLOWING THE SAID AMOUNT TOWARDS COMPUTATION OF THE INDEX COST OF THE ACQUISITION OF THE SAID PROPERTY IS UPHELD. THIS GROUND IS ACCORDINGLY DISMISSED. 8. AG AINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT UPON SALE OF THE EARLIE R FLAT, THE ASSESSEE HAS PURCHASED TWO ADJACENT FLATS ONE IN THE NAME OF THE ASSESSEE AND ONE IN THE NAME OF THE SON. THIS WAS DONE ON ACCOUNT OF EXPEDIENCY A S T HE ASSESSEE AND HER SON BOTH RESIDE S ABROAD . P URCHASE IN TWO NAMES W ILL ALLOW PROPER SUPERVISIO N OF THE FLAT WHEN ONE OF THE PERSON COME TO INDIA. ANOTHER REASON FOR PURCHASE IN SONS NAME WAS THE BYE LA WS OF THE SOCIETY, 6 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA ACCORDING TO WHICH TWO FLATS CANNOT BE GIVEN IN ONE NAME. AS REGARDS THE COST OF IMPROVEMENT ALSO THE LD. COUNSEL OF THE ASSESSEE COULD NOT GIVE ANY FURTHER EVIDENCE. 10. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THERE IS A DIRECT DECISION OF HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF PRAKASH VS. INCOM E TAX OFFICER & ORS , REPORTED IN (2009) 312 ITR 40 (BOM) IN THE SAME ISSUE. HENCE, HE SUBMITTED THAT THE HONBLE HIGH COURT S DECISION PRECEDEN T OVER THE DECISION OF HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. KAMAL WAHAL (2013) 351 ITR 4 (DEL ) REFERRED BY THE LD. COUNSEL OF THE ASSESSEE. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT ASSESSEE IN THIS CASE HAS PURCHASED TWO FLATS, ONE IS REGISTERED IN HER OWN NAME AND ANOTHER ONE IS REGISTERED IN THE NA ME OF HER SON. ASSESSEE WANTS EXEMP T I ON U /S. 54F ON ACCOUNT OF BOTH THE FLATS. THE A UTHORITIES BELOW HAVE NOT GRANTED EXEMPTION ON ACCOUNT OF FLAT REGISTERED IN THE NAME OF THE SON. HERE WE MAY GAINFULLY REFER TO THE PROVISION OF SECTION 54F AS UNDER: CAP ITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. 54F. (1) SUBJECT TO THE PROVISIONS OF SUB - SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY .. PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB - SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1), THEN, ( I ) THE AMOUNT BY WHICH ( A ) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS 7 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA PROVIDED IN CLAUSE ( A ) OR, AS TH E CASE MAY BE, CLAUSE ( B ) OF SUB - SECTION (1), EXCEEDS ( B ) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1 ) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 12. WE FIND THAT SECTION 54F DOES NOT PROVIDES FOR DEDUCTION FOR EXEMPTION FOR PURCHASE OF FLAT S IN NAME OF OTHER PERSONS OTHER THAN THE ASSESSEE. THE REASONING GIVEN BY THE AUTHORITIES BELOW ARE QUITE COGENT, MOREOVER THERE IS A DIRECT DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF PRAKASH VS. CIT [2009] 312 ITR 40 (BOM) W HEREIN A SIMILAR CL AIM OF EXEMPTION U/S. 54F OF THE ACT WAS MADE ON ACCOUNT OF A NEW PROPERTY PURCHASED IN ADOPTED SON'S NAME. THE SAME WAS HELD TO BE NOT ALLOWABLE BY THE HONOURABLE JURISDICTIONAL HIGH COURT. IN VIEW OF A DIRECT DECISION OF HONOURABLE JURISDICTIONAL HIGH CO URT, IN OUR CONSIDERED OPINION , THE ORDER OF OTHER HIGH COURT R ELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE DOESN'T SUPPORT THE CASE OF THE ASSESSEE. 12. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT , WE DO NOT FIND ANY INFIRMITY IN THE ORDER' S OF AUTHORITIES BELOW. HENCE , WE AFFIRM THE SAME . 13. AS REGARDS THE DISALLOWANCE OF COST OF IMPROVEMENT AND INDEXATION THEREOF, WE AGREE WITH THE AUTHORITIES BELOW THAT WITHOUT ANY EVIDENCE OF THE INCURRING OF THE 8 ITA NO. 1542/MUM/2016 MRS. MEENAKSHI SATISH VARMA EXPENDITURE , NO ALLOWANCE AND INDEXATI ON THEREOF CAN BE PERMITTED. HENCE , WE AFFIRM THE ORDER OF AUTHORITIES BELOW ON THIS ISSUE ALSO. 14. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.04.2018 SD/ - SD/ - ( AMARJIT SINGH ) (S HAMIM YAHYA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 04.04.2018 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI