Mukund M. Altekar, Pune V. Income-tax Officer,

ITA 1616/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7265 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-10-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRASANN A L JOSHI
• Keywords: Wrong claim
• Section: 54F; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1616/PUN/2015 / ASSESSMENT YEAR : 2012-13 MUKUND M. ALTEKAR, 108/31, BHARATI NIWAS SOCIETY, LANE 14, PRABHAT ROAD, PUNE 411 001 PAN : AANPA3588L . /APPELLANT VS. ITO, WARD-3(3), PUNE . / RESPONDENT ASSESSEE BY : SHRI PRASANNA L. JOSHI REVENUE BY : SHRI AJAY MODI DATE OF HEARING : 27.10.2017 / DATE OF PRONOUNCEMENT: 30.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-3, PUNE, DATED 19-10-2015 FOR THE A.Y. 2012-13. 2. ASSESSEE RAISED 8 GROUNDS WHICH REVOLVE AROUND T HE ISSUE OF DENYING OF EXEMPTION U/S.54F OF THE ACT IN RESPECT OF THE CAPI TAL GAINS INVESTED IN A RESIDENTIAL HOUSE WHICH IS BUILT ON A LEASEHOLD LAN D. AO HOLDS THAT THE SAID LAND IS NOT FULLY OWNED BY THE ASSESSEE. OTHERWISE, THE ASSESSEE PURCHASED THE LEASEHOLD INTEREST IN THE SAID LAND ALONG WITH SUPE RSTRUCTURE BUILT THEREON. 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACT THAT ASSESSEE IS AN INDIVIDUAL AND HOLDS SHARES IN A COMPANY OWNED BY THE ASSESSEE. HE IS THE MANAGING DIRECTOR OF THAT COMP ANY. THE SAID SHARES WERE ITA NO. 1616/PUN/2015 MUKUND M. ALTEKAR 2 SOLD OFFLINE AND EARNED CAPITAL GAINS IN THE A.Y. 2 011-12 AS WELL AS IN THE CURRENT A.Y. 2012-13. THE SAID CAPITAL GAINS WERE INVESTED IN HOUSE PROPERTY OF LAXMI PRASAD AS PER THE AGREEMENT DATED 18-06-2010 RELATI NG TO THE A.Y. 2011-12. ASSESSEE CLAIMED INVESTMENT OF THE SAID CAPITAL GAI NS TO THE EXTENT OF RS.64.55 LAKHS ON THE SAID PROPERTY IN THE A.Y. 2011-12. HO WEVER, IN THE SAID ASSESSMENT PROCEEDINGS, AO DENIED THE CLAIM ON OBSERVING THAT THE LAND ON WHICH HOUSE IS CONSTRUCTED IS A LEASEHOLD LAND. THIS ISSUE REACHE D THE TRIBUNAL FOR ADJUDICATION VIDE APPEAL IN ITA NO.1978/PUN/2014 AND THE SAME WA S ALLOWED IN FAVOUR OF THE ASSESSEE VIDE TRIBUNALS ORDER DATED 23-06-2017. C ONTENTS OF PARA NO.13 AND 14 ARE RELEVANT. 4. REFERRING TO THE SAID ORDER OF THE ASSESSMENT FO R A.Y. 2012-13, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E SOLD PART OF THE SHARES OFFLINE IN THIS YEAR ALSO AND EARNED CAPITAL GAINS AMOUNTING TO RS.3,30,46,007/- AND INVESTED THE SAME IN THE SAID RESIDENTIAL HOUSE AND THE DATE OF ACQUISITION OF THE HOUSE IS ON 16-05-2012. AFTER REDUCING THE CAP ITAL GAINS INVESTED THE ASSESSEE CLAIMED EXEMPTION U/S.54F IN THE A.Y. 2011 -12 AMOUNTING TO RS.64,55,304/-, THE ASSESSEE ADJUSTED THE CLAIM U/S /54F AMOUNTING TO RS.3,18,69,696/- AND ON THE BALANCE, OF GAINS, THE ASSESSEE PAID THE TAXES AS PER LAW. THUS, IT IS THE CASE OF THE ASSESSEE THAT THE AOS OBJECTION REGARDING DISALLOWABILITY OF CLAIM U/S.54F ON THE GROUND OF L EASEHOLD LAND STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA). THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE HAVE TO BE ALLOWED I N FAVOUR OF THE ASSESSEE. 5. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORD ERS OF THE AO AND THE CIT(A) DUTIFULLY. 6. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS O F THE REVENUE AUTHORITIES AND THE ORDER OF THE TRIBUNAL IN ASSESS EES OWN CASE IN ITA NO.1978/PUN/2014 ORDER DATED 23-06-2017 FOR THE A.Y . 2011-12. WE FIND THE ITA NO. 1616/PUN/2015 MUKUND M. ALTEKAR 3 TRIBUNAL VIDE PARA NOS. 13 AND 14 HAS DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE SAME : 13. WE FIND SIMILAR ISSUE OF NATURE OF LEASEHOLD R IGHTS ACQUIRED BY THE ASSESSEE AND THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTI ON 54F OF THE ACT, AROSE BEFORE THE TRIBUNAL IN ACIT VS. ASHA ASHOK BOOB (SU PRA) AND IT WAS HELD AS UNDER:- '10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT C ASE THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.30,78,228/-U/S.54 BEING LON G TERM CAPITAL GAIN ON SALE OF SHARES INVESTED TOWARDS PURCHASE OF A FL AT. THE ASSESSING OFFICER DENIED THE DEDUCTION ON THE GROUND THAT THE ASSESSEE HAS MADE THE CLAIM UNDER WRONG PROVISION AND THE CORRECT PRO VISION IS SECTION 54F. FURTHER THE ASSESSEE HAS NOT TAKEN POSSESSION OF TH E FLAT TILL THE DATE OF ASSESSMENT ORDER AND THE ASSESSEE IS ONLY A LESSEE AND THE LEASE IS FOR A PERIOD OF 999 YEARS AND THE ASSESSEE IS NOT T HE ABSOLUTE OWNER. WE FIND APART FROM CHALLENGING THE ABOVE CONTENTIO NS THE ASSESSEE HAD TAKEN ADDITIONAL GROUNDS BEFORE THE LD . CIT(A) ACCORDING TO WHICH THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,24,65 ,625/- TOWARDS THE COST OF RESIDENTIAL HOUSE AND THEREFORE THE CLAIM U /S. 54F SHOULD BE ALLOWED TO THE ASSESSEE TO THIS EXTENT AS AGAINST T HE AMOUNT OF RS.30,78,228/- INADVERTENTLY CLAIMED. ALTERNATIVELY IT WAS ARGUED THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,00,03,125/- WIT HIN THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGIN AL ASSET AND THEREFORE THE SAME SHOULD BE ALLOWED AS DEDUCTION U/S. 54F. W E FIND THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW CLAI M OF DEDUCTION U/S. 54F AMOUNTING TO RS.1,00,03,125/- WHICH THE ASSESSEE HA S PAID WITHIN THE PERIOD OF THREE YEARS FORM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. HE FURTHER OBSERVED THAT MERELY BECAUSE THE ASSESSEE H AS MADE A WRONG CLAIM U/S. 54 THE SAME CANNOT BE A GROUND TO DENY T HE BENEFIT OF DEDUCTION U/S. 54F TO WHICH THE ASSESSEE IS OTHERWI SE ELIGIBLE. AS REGARDS THE OBSERVATION OF THE ASSESSING OFFICER THAT THE A SSESSEE IS ONLY A LESSEE AND THE LEASE PERIOD IS ONLY 999 YEARS AND THEREFOR E, THE ASSESSEE IS NOT THE OWNER OF THE HOUSE, HE OBSERVED THAT THE LONG P ERIOD OF LEASE OF 999 YEARS IS AS GOOD AS PERMANENT. THE NATURE OF RIGHTS ENJOYED BY THE ASSESSEE ARE SUFFICIENT ENOUGH TO SHOW THAT THE ASS ESSEE IS OWNER OF THE PROPERTY AND THEREFORE SHE CAN BE TREA TED AS A PURCHASER FOR THE PURPOSE OF SECTION 54F. AS REGARDS THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT TAKEN OVER POSSESSION OF THE PROPERTY HE HELD THAT BY MAKING APPROXIMATEL Y 80% OF THE PAYMENT BEFORE THE TIME LIMIT OF THREE YEARS THE AS SESSEE ACQUIRED DOMINION OVER THE FLAT BEFORE THE PRESCRIBED TIME L IMIT. 11. AS REGARDS THE GROUND RAISED BY THE REVENUE THA T BY MAKING A WRONG CLAIM U/S. 54F THE ASSESSEE IS NOT ENTITLED TO CLAI M DEDUCTION U/S. 54F, WE FIND THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF P RUTHVI BROKERS AND SHAREHOLDERS P. LTD. (SUPRA) HAS HELD THAT AN ASSES SEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEF ORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION TO PERMIT SUCH ADDI TIONAL CLAIMS TO BE RAISED. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOU NT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS W HICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE WORDS 'COULD NOT HAV E BEEN RAISED' MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL A ND EACH CASE MUST BE ITA NO. 1616/PUN/2015 MUKUND M. ALTEKAR 4 CONSIDERED ON ITS OWN FACTS. IN THE INSTANT CASE TH E ASSESSEE HAS ALREADY MADE A CLAIM ALTHOUGH UNDER THE WRONG HEAD. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) A LLOWING THE CLAIM OF DEDUCTION U/S. 54F. 12. AS REGARDS THE ALLEGATION OF THE REVENUE THAT T HE ASSESSEE IS NOT THE ABSOLUTE OWNER OF THE PROPERTY SINCE HE IS A LESSEE AND THE LEASE IS FOR A PERIOD OF 999 YEARS, WE FIND THIS ISSUE ALSO STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MRS. PREMA P. SHAH (SUPRA). IN THE ABOVE DE CISION THE TRIBUNAL HAS HELD THAT THE LEASE IS VALID FOR A PERIOD OF 15 0 YEARS, WHICH IS IN PERPETUITY AND AS SUCH, THE ASSESSEE IS AS GOOD AS ABSOLUTE OWNER OF THE PROPERTY. IN THE INSTANT CASE THE LEASE IS FOR A PE RIOD OF 999 YEARS SUBJECT TO RENEWAL FOR FURTHER PERIOD OF 999 YEARS. FURTHER , AS PER CLAUSE 26 OF THE LEASE AGREEMENT, THE ASSESSEE ENJOYS ALL THE RI GHTS, I.E. TRANSFER, MORTGAGE, SUB-LEASE ETC. THEREFORE, IT CANNOT BE SA ID THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY.' 14. BOTH THE AUTHORITIES BELOW HAD RELIED ON THE RA TIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. T.N. ARAVINDA REDDY (SUPRA ) TO DENY THE CLAIM OF DEDUCTION TO THE ASSESSEE. IN THE FACTS OF THE SAID CASE, THE FAMILY PROPERTIES WERE PARTITIONED BETWEEN FOUR BROTHERS LEAVING IN C OMMON A LARGE HOUSE IN THE OCCUPATION OF THEIR MOTHER. THE ELDEST, WHO WAS THE RESPONDENT BEFORE THE APEX COURT, SOLD HIS OWN HOUSE AND OUT OF FUNDS RECEIVED , HE ACQUIRED THE COMMON HOUSE FROM HIS THREE BROTHERS, WHO EXECUTED THREE RELEASE DEEDS FOR CONSIDERATION OF RS.30,000/- EACH. THE QUESTION BEFORE THE APEX COURT WAS THAT WHETHER THESE THREE RELEASE DEEDS AMOUNT TO PURCHAS E OF HOUSE AND THEN THE ASSESSEE WOULD BE ENTITLED TO THE CLAI M OF BENEFIT OF SECTION 54(1) OF THE ACT I.E. THE QUESTION WAS W HETHER THE RELEASE DEEDS BY SHARERS IN FAVOUR OF ONE OF THEM WHEREBY J OINT OWNERSHIP OF ALL BECAME SEPARATE OWNERSHIP OF ONE AMOUNT TO PURC HASE OF HOUSE PROPERTY WITHIN THE MEANING OF SECTION 54(1) OF THE ACT. THE APEX COURT HELD THAT EACH RELEASE, IN THE SAID CIRCUMSTANCES, WAS A TRANSFER OF RELEASORS SHARE FOR CONSIDERATION TO THE RELEASEE. THE APEX COURT FURTHER HELD THAT THERE WAS NO REASON TO DIVORCE THE ORDINA RY MEANING OF THE WORD PURCHASE AS BUYING FOR PRICE OR EQUIVALENT PRICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS A DEBT OR FOR OTHER MONETARY CON SIDERATION FROM THE LEGAL MEANING OF THAT WORD IN SECTION 54(1) OF THE ACT. T HE ASSESSING OFFICER HAD REFERRED TO THE HON'BLE SUPREME COURTS DECISION AN D HAD OBSERVED THAT IT WAS HELD BY THE APEX COURT THAT THE WORD PURCHASE MUS T BE GIVEN ITS COMMON MEANING AS BUYING FOR A PRICE OR PAYMENT. WE DO NOT AGREE WITH THE PRINCIPLE APPLIED BY THE ASSESSING OFFICER AS THE DECISION OF THE HON'BLE SUPREME COURT HAS NOT BEEN CONSIDERED IN ENTIRETY. THE APEX COURT GOES ON TO SAY THAT PURCHASE IS AS BUYING FOR PRICE OR EQUIVALENT PRICE BY PAYME NT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR ANY OTHER MONETARY CONSI DERATION. THE HON'BLE SUPREME COURT FURTHER WENT ON TO SAY THAT IF YOU SE LL YOUR HOUSE AND MAKE A PROFIT, BUT IF YOU BUY OR BUILD AN ANOTHER HOUSE, S UBJECT TO THE CONDITIONS OF SECTION 54(1) OF THE ACT, YOU ARE EXEMPT. WE FIN D THAT THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT ON THE OTHER HAND HELPS T HE CASE OF ASSESSEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54/54 F OF THE ACT. REVERSING THE ORDER OF CIT(A), WE ALLOW THE CLAIM O F ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 7. FROM THE ABOVE DECISIONS/JUDGMENTS, IT IS CLEAR THAT, IN CASE OF LONG LEASE, THE ASSET IS CONSIDERED PURCHASED AND THE ASSESSEE IS CONSIDERED THE OWNER OF ITA NO. 1616/PUN/2015 MUKUND M. ALTEKAR 5 THE ASSET. FURTHER, IT IS EVIDENT THAT THE TRIBUNA L ALLOWED THE CLAIM OF DEDUCTION U/S.54F IN THE ASSESSEES OWN CASE RELYING ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. ASHA ASHOK BOOB (2015) 69 ITR 321 (TRIB.) (PUNE). THUS, THE LEASED LAND, ON WHIC H THE HOUSE IS RAISED, IS GOOD ENOUGH, WHEN IT COMES TO ALLOWING THE CLAIM OF DEDU CTION U/S.54F OF THE ACT. 8. BEFORE US, FOR THE FIRST TIME, LD. DR FOR THE RE VENUE RAISED ANOTHER ASPECT RELATING TO INVESTMENT OF CAPITAL GAINS IN INSTALME NTS OVER THE VARIOUS ASSESSMENT YEARS ON A SINGLE ELIGIBLE ASSET FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S.54F OF THE ACT. THIS ISSUE IS RAISED BY THE LD. DR FOR TH E FIRST TIME BEFORE US. IN OUR VIEW, SUCH CLAIM IS NOT ENTERTAINABLE IN PRINCIPLE. SUCH ARGUMENT OF THE LD. DR CONSTITUTES MAKING A NEW CASE WHICH WAS NOT THERE B EFORE THE AO/CIT(A). NOTWITHSTANDING THE SAME, WE ARE OF THE VIEW THAT T HIS IS ALSO COVERED IN FAVOUR OF THE ASSESSEE VIDE THE ORDER OF THE TRIBUNAL IN T HE CASE OF SMT. ANAGHA AJIT PATNEKAR VS. ITO REPORTED IN 9 SOT 685 (MUMBAI). T HE SAME IS RELEVANT FOR THE LEGAL PROPOSITION THAT THERE IS NO BAR IN SECTION 5 4F OF THE ACT FOR CLAIMING DEDUCTION SECOND TIME OR THIRD TIME IN THE SAME PRO PERTY IF THE COST OF THE RESIDENTIAL PROPERTY IS WITHIN THE CAPITAL GAINS AR OSE TO THE ASSESSEE OVER THE YEARS, PROVIDED THE DEDUCTION IS CLAIMED WITHIN TH E STIPULATED TIME IN SECTION 54F OF THE ACT. IN THIS CASE OF SMT. ANAGHA A. PATNEKAR (SUPRA), A SSESSEE EARNED CAPITAL GAINS IN A.Y. 1995-96 AND 1996-97 AND SOUGHT DEDUCT ION U/S.54F OF THE ACT IN RESPECT OF PURCHASE OF THE SAME RESIDENTIAL FLAT. THE TRIBUNAL HELD THE ISSUE IN FAVOUR OF ALLOWING CLAIM OF DEDUCTION US/.54F OF TH E ACT. THEREFORE, WE ARE OF THE VIEW THAT SUCH ARGUMENTS RAISED BY THE LD. DR F OR THE FIRST TIME SHOULD BE DISMISSED AS UNSUSTAINABLE. ACCORDINGLY, THE GROUN DS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO. 1616/PUN/2015 MUKUND M. ALTEKAR 6 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 30 TH OCTOBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-3, PUNE CIT 3, PUNE % , , A BENCH PUNE; / GUARD FILE.