VIKRAM LULLA, MUMBAI V. ITO (IT) 3(1)(1), MUMBAI

ITA 1627/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0362 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJASWAROOP LD SR DR
• Assessee Lawyers: ASHOK PATIL LD
• Keywords: Capital asset
• Section: 143(3); 54F; 54

Judgement Text

ITA.NO.1627/MUM/2017 VIKRAM LULLA ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.1627/MUM/2017 ( ASSESSMENT YEAR: 2012-13) VIKRAM LULLA 53B, JOLLY MAKER 1 95-97, CUFFE PARADE COLABA,MUMBAI-400 005 VS. INCOME TAX OFFICER (INTERNATIONAL TAXATION)-3(1)(1) SCINDIA HOUSE MUMBAI-400 038 ! ' PAN/GIR NO. AAIPK-3773-A ( !# APPELLANT ) : ( $%!# RESPONDENT ) ASSESSEE BY : ASHOK PATIL, LD. AR REVENUE BY : POOJA SWAROOP, LD. SR. DR & DATE OF HEARING : 26/07/2018 '() / DATE OF PRONOUNCEMENT : 12/09/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2012-13 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-57 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-57/ARR.218/2016-17 DATED 28/11/2016 BY RAISING FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] ERRED IN CONFIRMING T HE ORDER OF THE ASSESSING OFFICER [AO] IN DISALLOWING THE CLAIM OF EXEMPTION U/S 54 OF THE INCOME TAX ITA.NO.1627/MUM/2017 VIKRAM LULLA ASSESSMENT YEAR-2012-13 2 ACT, 1961, BEING CAPITAL GAINS ARISING FROM THE SAL E OF A RESIDENTIAL HOUSE IN INDIA, AND THE SAME INVESTED IN ANOTHER HOUSE PROPE RTY IN HONG KONG. 2. THE CIT(A) ERRED IN NOT FOLLOWING THE DECISIONS OF JURISDICTIONAL TRIBUNAL WHICH ARE FAVOUR OF THE APPELLANT, BUT CHOSE TO FOLLOW TH E DECISION IN CASE OF THE ORDER OF THE AHMEDABAD TRIBUNAL AND JURISDICTIONAL TRIBUNAL WHERE THE ISSUE INVOLVED IS WAS WITH RESPECT TO SECTION 54F AND NOT SECTION 54. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER (INTERNATIONAL TAXATION)-3(1)(1), MUMBAI [A O] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 30/03/2015 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT RS.418.33 LACS AFTER DENIAL OF DEDUCTION U/S 54 AS AGAINST RETURNED INCOME OF RS.6 .64 LACS E-FILED BY THE ASSESSEE ON 16/06/2012. AS EVIDENT FROM GROUND, THE SUBJECT MATTER OF THIS APPEAL IS DENIAL OF DEDUCTION U/S 54 TO THE ASSESSEE. 2. BRIEFLY STATED, THE ASSESSEE BEING NON-RESIDENT INDIVIDUAL REFLECTED LONG TERM CAPITAL GAIN [LTCG] OF RS.411.69 LACS FROM SALE OF A FLAT NO.25A, MAHER APARTMENT CO-OP. HSG. SOCIETY AND CLAIMED DEDUCTION U/S 54 ON THE STRENGTH OF INVESTMENT IN ANOTHER HOU SE PROPERTY SITUATED AT HONG KONG. HOWEVER, LD. AO PRIMARILY RELYING ON THE DECISION O F AHMEDABAD TRIBUNAL RENDERED IN LEENA J.SHAH [6 SOT 721] OPINED THAT THE DEDUCTION U/S 54 WAS NOT AVAILABLE TO THE ASSES SEE AGAINST INVESTMENT MADE OUTSIDE INDIA. CONSEQUENTLY, DEDUCT ION U/S 54 WAS DENIED TO THE ASSESSEE AND TAXABLE LTCG WAS ASSESSED @ RS.411.69 LACS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 28/11/2 016 WHEREIN THE STAND OF LD. AO GOT CONFIRMED AGAINST WHICH THE ASS ESSEE IS IN FURTHER APPEAL BEFORE US. ITA.NO.1627/MUM/2017 VIKRAM LULLA ASSESSMENT YEAR-2012-13 3 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI ASHOK PATIL, DREW OUR ATTENTION TO THE FACT THAT THE STATUTORY P ROVISIONS OF SECTION 54, AS THEY STOOD AT THE RELEVANT TIME, DID NOT PROHIBIT INVESTMENT OUTSIDE INDIA AND THEREFORE, THE ASSESSE E WAS ELIGIBLE TO CLAIM THE SAID DEDUCTION. WHILE PLACING RELIANCE ON SEVERAL JUDGMENTS OF THIS TRIBUNAL, LD. AR DREW OUR ATTENTION TO THE FAC T THAT THE AFORESAID DECISION OF AHMEDABAD TRIBUNAL HAS SUBSEQUENTLY BEEN REVERSED BY HONBLE GUJARAT HIGH COURT WHICH DEMOLISHES THE WHOLE BASIS OF DISALLOWANCE AS TAKEN BY THE REVENUE. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR], MS. POOJA SWAROOP SUBMITTED THAT IF SUCH DEDUCTIONS ARE ALLOWED, THE WHOLE PURPOSE OF INTROD UCING INCENTIVE PROVISIONS WOULD GET DEFEATED. 5. AT THE OUTSET, WE DEEM IT FIT TO REPRODUCE RELEV ANT STATUTORY PROVISIONS AS CONTAINED IN SECTION 54, AS THEY STOO D AT THE RELEVANT TIME:- PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE. 54. (1)SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WH ERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, BEI NG BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' (HEREAFTER IN THI S SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS WITHIN A PERI OD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLA CE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE , THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME -TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SA Y, . (EMPHASIS, BEING SUPPLIED BY US) THE WORDS CONSTRUCTED A RESIDENTIAL HOUSE HAS BEEN SUBSTITUTED WITH THE WORDS CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA BY FINANCE ACT, ITA.NO.1627/MUM/2017 VIKRAM LULLA ASSESSMENT YEAR-2012-13 4 2014 W.E.F 01/04/2015. UPON CAREFUL ANALYSIS OF THE SAME, WE FIND THAT THE WORDS IN INDIA HAS BEEN BROUGHT TO THE STATUTE W.E.F. 01/04/2015 O NLY AND PRIOR TO THAT THERE WAS NO RESTRICTION AS SUCH WITH RESPECT TO THE LOCATION OF THE PROPERTY BEFORE THE AFORESAID DEDUC TION COULD BE CLAIMED BY THE ASSESSEE. THE STATED AMENDMENT, IN OUR OPINI ON, BEING SUBSTANTIVE IN NATURE, WAS ONLY PROSPECTIVE IN NATURE AND WAS NOT APPLICABLE FOR THE ASSESSEE AT THE RELEVANT POINT O F TIME, THE AY BEING 2012-13. PRIOR TO THE AFORESAID AMENDMENT, IN OUR V IEW, THERE WAS NO BAR FOR THE TAXPAYER MAKING INVESTMENTS OUTSIDE IND IA IN RESIDENTIAL HOUSE PROPERTY TO GET THE BENEFIT OF DEDUCTION U/S. 54 PROVIDED OTHER CONDITIONS ARE FULFILLED. 6. SO FAR AS THE DECISION OF AHMEDABAD TRIBUNAL RENDERED IN LEENA J.SHAH AS RELIED UPON BY THE LOWER AUTHORITIES IS CONCERNE D, WE FIND THAT THE AFORESAID DECISION HAS ALREADY BEEN REVERSED BY HONBLE GUJARAT HIGH COURT VIDE LEENA JUGALKISHOR SHAH VS. ACIT [72 TAXMANN.COM 185 14/06/2016] AND THEREFORE, THE SAME COULD NOT HELP REVENUE IN A NY MANNER. AS PER HONBLE COURT, PRIOR TO THE AMENDMEN T THE ONLY STIPULATION WAS TO INVEST IN A NEW RESIDENTIAL PROP ERTY AND THERE WAS NO SCOPE FOR IMPORTING THE REQUIREMENT OF MAKING SUCH INVESTMENT IN A RESIDENTIAL PROPERTY LOCATED IN INDIA. WE FIND THAT THE STIPULATIONS AS TO INVESTMENT, IN SECTION 54 & 54F ARE PARI-MATERIA THE SAME. 7. THE REVENUE HAS NOT DISPUTED THAT FACT THAT THE INVESTMENT IN HONG KONG HAS BEEN MADE BY THE ASSESSEE IN A RESIDENTIAL PROP ERTY OUT OF THE IMPUGNED CAPITAL GAINS. IN VIEW OF THE STATED POSIT ION, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE WAS ENTITLED F OR THE DEDUCTION U/S 54 ON ACCOUNT OF AFORESAID INVESTMENTS. OUR VIEW IS DULY FORTIFIED BY THE ITA.NO.1627/MUM/2017 VIKRAM LULLA ASSESSMENT YEAR-2012-13 5 CATENA OF JUDGMENT RENDERED BY THIS TRIBUNAL, FEW O F WHICH ARE LISTED BELOW:- CONSIDERING THE TOTALITY OF FACTS, WE DIRECT LD. AO TO ALLOW THE AFORESAID DEDUCTION U/S 54 TO THE ASSESSEE TO THE EXTENT OF I NVESTMENT MADE. 8. RESULTANTLY, THE ASSESSEES APPEAL STAND ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2018. SD/- SD/- (SAKTIJIT DEY) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :12.09.2018 SR.PS:-THIRUMALESH 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 FILE / BY ORDER, (DY./ASSTT.REGISTRAR) / ITAT, MUMBAI NO. TITLE ITA NO. ORDER DATED 1. 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