KAMLESH VIJAYKUMAR GANERIWALA, MUMBAI V. ASST CIT CIR 19(2), MUMBAI

ITA 167/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2116 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 234B; 54

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.167/MUM/2011 ASSESSMENT YEAR: 2007-08 MR. KAMLESH V. GANERIWALA, 401, KANTA APARTMENT, EAST AVENUE, SANTACRUZ (WEST), MUMBAI-400054 / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-19(2), PIRAMAL CHAMBERS, MUMBAI ( ! /ASSESSEE) ( ' / REVENUE) PAN. NO. AAEPG0949C ! / ASSESSEE BY SHRI NISHIT GANDHI ' / REVENUE BY SHRI ASGHAR ZAIN-DR # '$ % ! & / DATE OF HEARING : 30/11/2015 % ! & / DATE OF ORDER: 01/12/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 15/11/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND ARGUED BY THE LD. COUNSEL FOR THE A SSESSEE IS WITH RESPECT TO DENYING EXEMPTION U/S 54 OF THE ACT IS IN RESPECT TO ADDITIONAL EXPENDITURE OF RS.22,92,381/- , INCURRED BY THE ASSESSEE, ON AN OLD PREMISES PURCHASED BY HI M. KAMLESH VIJAYKUMAR GANERIWALA ITA NO.167/MUM/2011 2 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SHRI NISHIT GANDHI, CONTENDED THAT IN THE CASE OF SON OF THE ASSESSEE, SHRI RAJEEV KAMLESH, (ITA NO. 6433/MUM/2011) VIDE ORDER DATED 11/11/2013, THE APP EAL OF THE REVENUES WAS DISMISSED. THIS FACTUAL MATRIX W AS CONSENTED TO BE CORRECT BY SHRI ASGHAR ZAIN, LD. DR . 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 11/1 1/2013 FOR READY REFERENCE:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A) - 35, MUMBAI DATED 04-07-2011 AND IN THE SOL ITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTI ON OF THE ID. CIT(A) IN ALLOWING THE DEDUCTION CLAIMED BY THE ASS ESSEE U/S 54 OF THE INCOME TAX ACT, 1961 IN RESPECT OF EXPENDITURE OF RS. 14,69,000/- INCURRED TOWARDS IMPROVEMENT OF THE NEW RESIDENTIAL HOUSE. 2. 'THE ASSESSEE IN THE PRESENT- CASE IS AN INDIVID UAL WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 28-11-2007 DECLARING' TOTAL INCOME OF RS. 1,31,13,194/- COMPRI SING, INTER ALIA, THE LONG TERM CAPITAL GAIN ARISING FROM SALE OF HOU SE PROPERTY. WHILE COMPUTING THE LONG TERM CAPITAL GAIN, DEDUCTI ON U/S 54 OF THE ACT WAS CLAIMED BY THE ASSESSEE IN RESPECT OF INVES TMENT OF RS. 68,11,000/- MADE IN ACQUISITION OF NEW RESIDENTIAL HOUSE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE A.O. THAT THE AMOUNT SO INVESTED BY THE ASSESSEE IN ACQUISITI ON OF NEW KAMLESH VIJAYKUMAR GANERIWALA ITA NO.167/MUM/2011 3 RESIDENTIAL HOUSE WAS INCLUSIVE OF EXPENDITURE OF R S.14,69 ,000 / - INCURRED BY .THE ASSESSEE ON MAKING IMPROVEMENT IN THE NEW RESIDENTIAL HOUSE. ACCORDING TO HIM, THE SAID EXPEN DITURE INCURRED BY THE ASSESSEE WAS NOT ON ACCOUNT OF PURCHASE OF N EW HOUSE OR FOR MAKING THE SAID HOUSE HABITABLE AND THE ASSESSEE, T HEREFORE, WAS NOT ENTITLED FOR DEDUCTION U/ S 54 OF THE ACT TO TH E EXTENT OF RS. 14,69,000/-. ACCORDINGLY, HE DISALLOWED THE CLAIM O F THE ASSESSEE FOR DEDUCTION U / S 54 TO THE EXTENT OF RS. 14,69,000/ - IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 24-12-2009. 3. AGAINST THE ORDER PASSED BY THE A.O, U/S 143(3) OF THE ACT, APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE ID. CIT(A) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE ID. CIT(A) DIRECTED THE A.O. TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54 OF THE ACT IN RESPECT OF EXPENDITURE OF RS. 14,69.,000/- INCURRED ON IMPROVEMENT OF NEW RESIDENTIAL HOUSE FOR THE FOLLOWING REASONS GIVEN IN PARA NO. 3.3 OF HIS IMPUGNED ORDER:- '3.3 1 HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND THE STAND TAKEN BY THE A.O. ADMITTEDLY, THE A.O. DI D NOT DISPUTE THE FACT THAT THE APPELLANT INCURRED ADDITIONAL EXP ENSES OF RS.14 ,69,000 / - FOR IMPROVEMENTS IN THE FLOORING, FIXIN G TILES, PROVIDING ADDITIONAL KITCHEN PLATFORM AND IMPROVED ELECTRICAL WIRING AND PROVIDING LUSTER PAINT. THE ONLY OBJECTION OF THE A .O. IS THAT THE EXPENDITURE WAS INCURRED TO MAKE THE FLAT MORE COMF ORTABLE AND NOT FOR THE PURPOSE OF MAKING THE HOUSE HABITABLE. HE WAS OF THE OPINION THAT FLAT PROVIDED BY THE BUILDER WAS THERE FORE, IT WAS NOT NECESSARY FOR THE APPELLANT TO PROVIDE IMPROVEMENT TO THE FLAT. THE ABOVE REASONING GIVEN BY THE A.O. IS UNTENABLE. IT IS FOR THE ASSESSEE TO DECIDE WHAT TYPE OF BUILDING IS TO BE P URCHASED AND THERE IS NO RESTRICTION IN SECTION 54 TO HOLD THAT ONLY THE EXPENDITURE INCURRED FOR THE PURPOSE OF MAKING THE FLAT HABITABLE SHALL BE CONSIDERED AS EXEMPT U/S.54. AS PER SECTIO N 54, THE A.O. HAS TO ALLOW DEDUCTION U/S. 54 THE COST OF NEW RESI DENTIAL HOUSE KAMLESH VIJAYKUMAR GANERIWALA ITA NO.167/MUM/2011 4 AND IT IS FOR THE ASSESSEE TO SELECT THE QUALITY OF THE HOUSE. WHEN THE A.O. HAS NOT DISPUTED THE GENUINENESS OF EXPEND ITURE INCURRED BY THE APPELLANT TOWARDS PROVIDING ADDITIONAL AMENI TIES, THERE IS NO CASE FOR RESTRICTING THE DEDUCTION U/S 54. THE A BOVE VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE MUMBAI TRI BUNAL IN THE CASE OF SALEEM FAZELBHOY (106 ITO 167). IN THE CIRC UMSTANCES, THE A.O. IS DIRECTED TO ALLOW A FURTHER SUM OF RS. 14,69,000/- TOWARDS DEDUCTION U/S.54.' AGGRIEVED BY THE ORDER OF THE ID. CIT{A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. . WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. D.R. HAS STRONGLY. RELIED ON THE ORDER OF THE A.O. IN SUPPOR T OF REVENUE'S CASE ON THE ISSUE UNDER CONSIDERATION, IT IS OBSERVED TH AT A SIMILAR ISSUE HAS ALREADY BEEN CONSIDERED AND DECIDED BY THE TRIB UNAL IN THE CASE OF SALEEM FAZELBHOY VS . DY. CIT REPORTED IN 106 IT D 167 RELIED ON BY THE ID. CIT(A) IN HIS IMPUGNED ORDER WHEREIN IT WAS HELD THAT FOR THE' PURPOSE OF CLAIMING DEDUCTION/ EXEMPTION IN RESPECT OF INVESTMENT MADE IN RESIDENTIAL HOUSE, SUCH INVESTMENT WOULD NO T ONLY INCLUDE THE COST OF PURCHASE OF HOUSE BUT ALSO THE COST INC URRED IN MAKING THE SAID HOUSE HABITABLE. IT WAS HELD THAT THE EXPENDIT URE INCURRED IN MAKING THE HOUSE HABITABLE, THEREFORE, SHOULD BE CO NSIDERED AS INVESTMENT IN PURCHASE OF HOUSE FOR THE PURPOSE OF ALLOWING DEDUCTION/ EXEMPTION. AS RIGHTLY OBSERVED BY THE LD . CIT(A) IN THIS CONTEXT, IT IS FOR THE ASSESSEE TO SELECT THE QUALI TY OF HOUSE AND THE EXPENDITURE TO BE INCURRED ON MAKING THE HOUSE HABI TABLE NEEDS TO BE ASCERTAINED KEEPING IN VIEW SUCH QUALITY AND THE RE ASONABLENESS THEREOF. KEEPING IN VIEW THE DECISION OF THE CO-ORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF SALEEM FAZELBHOY (SUPRA) AN D HAVING REGARD TO THE FACTS OF THE PRESENT CASE AS APPRECIATED BY THE ID. CIT(A), WE ARE OF THE VIEW THAT THE EXPENDITURE IN QUESTION OF RS. 14,69,000/- HAVING BEEN-INCURRED BY THE ASSESSEE FOR THE PURPOS E OF MAKING THE NEW RESIDENTIAL HOUSE HABITABLE WAS ELIGIBLE FOR DE DUCTION U/S 54 OF THE ACT. IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALLOWI NG THE DEDUCTION U/S 54 OF THE ACT IN RESPECT OF EXPENDITURE INCURRE D ON IMPROVEMENT OF NEW RESIDENTIAL HOUSE OF MAKING THE SAME HABITAB LE AND DISMISS THE APPEAL FILED BY THE REVENUE. KAMLESH VIJAYKUMAR GANERIWALA ITA NO.167/MUM/2011 5 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, CONCLUSION DRAWN IN THE AFORESAID ORDER OF THE TRIB UNAL DATED 11/11/2013, ASSERTIONS MADE BY THE LD. RESPECTIVE C OUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT , AS CLAIMED BY THE LD. COUNSEL FOR THE ASSESSEE, IN THE CASE OF MR. RAJEEV KAMLESH (SON OF THE PRESENT ASSESSEE), THE AMOUNT O F RS.14,69,000/-, INCURRED BY THE ASSESSEE FOR MAKING IMPROVEMENT IN THE NEW RESIDENTIAL HOUSE TO MAKE TH E SAME HABITABLE, IDENTICALLY, THE AMOUNT WAS DISALLOWED U /S 54 WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, AGAINST WHICH THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). RELIEF WAS GR ANTED TO THE ASSESSEE AGAINST WHICH, REVENUE FILED BEFORE TH E TRIBUNAL. THE TRIBUNAL FOLLOWING THE DECISION IN TH E CASE OF SALEEM FAZELBHOY VS DCIT (106 ITD 167) AFFIRMED THE STAND OF THE LD. FIRST APPELLATE AUTHORITY AND DISMISSED THE APPEAL OF THE REVENUE BY HOLDING THAT THE CLAIMED EXPENDI TURE INCURRED BY THE ASSESSEE FOR MAKING THE NEW RESIDEN TIAL HOUSE HABITABLE WAS ELIGIBLE FOR DEDUCTION U/S 54 O F THE ACT. IN THE PRESENT CASE THE ASSESSEE CLAIMED TO HAVE IN CURRED THE EXPENSES OF RS.22,92,381/- FOR MAKING THE HOUSE HAB ITABLE. NO CONTRARY DECISION WAS PLACED ON RECORD BY THE RE VENUE, THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, ON IDENTICAL FACT, WE ALLOW THE APPEAL OF THE ASSESSEE ON THE KAMLESH VIJAYKUMAR GANERIWALA ITA NO.167/MUM/2011 6 ISSUE UNDER HAND AND DIRECT THE LD. ASSESSING OFFIC ER TO ALLOW THE CLAIMED EXPENDITURE U/S 54 OF THE ACT. SO FAR AS, LEVY OF INTEREST U/S 234A, 234B AND 234 C IS CONCERNED, THE SAME IS CONSEQUENTIAL IN NATURE. FINALLY, THE APPEAL OF THE ASSESSEE IS DISPOSED IN TERMS INDICATED HEREINABOVE. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF THE HEARING ON 30/11/2015. SD/- SD/- ( RAJENDRA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ( DATED : 01/12/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 # 1! ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1! / CIT(A)- , MUMBAI 5. 3'4 .! , 0 *+& * 5 , # $ / DR, ITAT, MUMBAI 6. 6 7$ / GUARD FILE. / BY ORDER, /3+! .! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI