ITO 7(2)(1), MUMBAI V. RAJIV BHOLANATH GUPTA, MUMBAI

ITA 1698/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3035 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JIGNES SHAH
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1698/MUM/2013 ASSESSMENT YEAR: 2009-10 ITO-7(2)(1), ROOM NO.621A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. SHRI RAJIV BHOLANATH GUPTA, 1103, RAHEJA ACROPOLIS, ATLANTIC DEONAR CHEMBUR, MUMBAI-400088 ( / REVENUE) ( ! ' /ASSESSEE) PAN. NO. AABPG9848F ! ' / ASSESSEE BY SHRI JIGNES SHAH / REVENUE BY SHRI B.S. BIST-DR # $ % ' & / DATE OF HEARING : 16/06/2016 % ' & / DATE OF ORDER: 16/06/2016 ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 13/12/2012 FOR ASSESSMENT YEAR 2009-10 OF THE LD. F IRST APPELLATE AUTHORITY, MUMBAI. THE ONLY GROUND RAISED IN THE PRESENT APPEAL IS WITH RESPECT TO ALLOWING EXEMPTIO N U/S 54 OF INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) HOLDI NG THAT THE DATE OF PURCHASE IS THE DATE ON WHICH AGREEMENT FOR PURCHASE IS REGISTERED, WITHOUT APPRECIATING THAT T HE DATE OF AGREEMENT HAS TO BE CONSIDERED AS THE DATE OF PURCH ASE. 2. DURING HEARING THE LD. DR, DEFENDED THE ADDITIO N MADE BY THE LD. ASSESSING OFFICER TAXING THE LONG T ERM CAPITAL GAINS OF RS.74,77,895/- AND DISALLOWING CLAIMED EXE MPTION U/S 54 OF THE ACT. ON THE OTHER HAND, THE LD. COUNS EL FOR THE ASSESSEE, DEFENDED THE ORDER OF THE FIRST APPELLATE AUTHORITY BY PLACING RELIANCE UPON THE DECISION IN SMT. SUNDA R KAUR SUJAN SING GADH (205) 3 SOT 206 (MUM.) ORDER DATED 27/02/2005, PURSHOTTAM GOVIND BHAI VS ITO (1985) 13 ITD 939 (BOM.), CIT VS BEENA K. JAIN (1994) 75 TAXMAN 1 45 (BOM.), VINOD KUMAR JAIN VS CIT (2010) 195 TAXMAN 1 74 (P & H) AND CIT VS R. L. SOOD (2000) 245 ITR 227 (DEL. ). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE SHOWED LONG TERM CAPITAL GAIN ON SALE OF RESIDENTIAL PROPERTY AT RS.74,77,895/- AND CLAIMED THE SAME AS EXEMPT U/S 54 OF THE ACT. IN LIEU OF INVESTMENT MADE BY ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 3 THE ASSESSEE IN NEW RESIDENTIAL PROPERTY. THE CLAIM ED EXEMPTION WAS DISALLOWED BY THE LD. ASSESSING OFFIC ER ON THE PLEA THAT THE ASSESSEE SOLD THE RESIDENTIAL PROPERT Y AFTER MORE THAN ONE YEAR OF PURCHASE OF NEW RESIDENTIAL PROPER TY. THE ASSESSEE VIDE LETTER DATED 21/11/2011, SUBMITTED TH E COPY OF THE AGREEMENT BEFORE THE ASSESSING OFFICER FOR CONS TRUCTION OF RESIDENTIAL PROPERTY, WHICH WAS ENTERED INTO AN AGR EEMENT ON 09/08/2006 AND THE CONSTRUCTION WAS COMPLETED ALONG WITH THE POSSESSION 08/01/2009. THE STAND OF THE LD. AS SESSING OFFICER AND ALSO OF THE LD. DR IS THAT FOR AVAILING THE EXEMPTION U/S 54 HAS TO SATISFY THAT THE NEW ASSET CAME INTO EXISTENCE WITHIN ONE YEAR BEFORE AND TWO YEARS AFTE R THE SALE OF RESIDENTIAL PROPERTY. WE FIND THAT THE RESIDENTI AL PROPERTY WAS SOLD ON 01/09/2008, WHEREAS, THE PURCHASE OF NE W RESIDENTIAL PROPERTY WAS ON 09/08/2006, MEANING THE REBY THE SAME WAS WITHIN TWO YEARS BEFORE THE SALE OF TH E EARLIER RESIDENTIAL FLAT. THE POSSESSION OF THE NEW PROPERT Y WAS TAKEN ON 08/01/2009. THE STAND OF THE REVENUE IS THAT THE ASSESSEE PURCHASED THE FLOAT ON 09/08/2006 AND SUBS TANTIAL PAYMENTS WERE MADE BY HIM BEFORE THE SALE OF THE OL D PROPERTY, THUS, THE DELAY IN COMPLETING THE PROCEDU RE BY THE BUILDER AND HANDING OVER THE POSSESSION TO THE PURC HASE DID NOT CHANGE THE DATE OF PURCHASE. WE NOTE THAT THE O LD FLAT WAS PURCHASED ON 31/05/2001 FOR RS.21,38,860/- AND SOLD ON 01/09/2008 FOR RS.1,04,00,000/-. THE DATE OF AGR EEMENT OF THE FLAT UNDER CONSTRUCTION WAS 09/08/2006, WHER EAS THE POSSESSION OF THE CONSTRUCTED PROPERTY WAS TAKEN ON 08/01/2009 (AS PER LETTER FROM M/S K. RAHEJA UNIVER SAL PVT. ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 4 LTD.) AT THE COST OF RS.1,02,13,685/-. THE FACTUAL MATRIX WAS DULY EXAMINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AND HE HAS JUSTIFIABLY PLACE RELIANCE UPON THE DECISION IN CIT VS H.K. KAPOOR (1998) 234 ITR 753(A LL.), CIT VS J.R. SUBRAMANYA BHATT (1987) 165 ITR 571 (KAR.) . THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 09/08/2006 WITH M/S K. RAHEJA UNIVERSAL PVT. LTD. FOR PURCHASE OF A FLAT (NO.1103). THE BUILDER DEMOLISHED THE OLD STRUCTUR E ON THE LAND AND COMMENCED CONSTRUCTION. AS PER THE AGREEM ENT, THE ASSESSEE AGREED TO PURCHASE THE FLAT VIDE LETTE R DATED 12/02/2008 AND WAS INFORMED THAT THE BUILDER HAS OB TAINED OCCUPATION CERTIFICATE FROM THE MUNICIPALITY. WE F IND THAT THERE ARE VARIOUS DECISIONS WITH RESPECT TO THE DAT E WHETHER IT IS TO BE CONSIDERED THE DATE OF AGREEMENT OR THE DA TE OF THE POSSESSION. ADMITTEDLY, THROUGH AGREEMENT DATED 09/08/2006, THE ASSESSEE ACQUIRED THE VALUABLE RIGH T BUT CANNOT BE SAID THAT THE NEW FLAT WAS PURCHASED. O N THE DATE OF AGREEMENT, THE BUILDING WAS UNDER CONSTRUCTION A ND THE ASSESSEE PAID INSTALLMENTS TO THE BUILDER AS HAS BE EN REFLECTED AT PAGE 19 OF THE IMPUGNED ORDER. THE ASS ESSEE SOLD THE EARLIER RESIDENTIAL FLAT FOR RS.4,41,00,000/-, AS PER AGREEMENT DATED 13/01/1997 AND THE SALE PROCEEDS WE RE INVESTED TO PURCHASE OF ANOTHER RESIDENTIAL HOUSE. THE CIRCULAR NO. 471 DATED 15/10/1986 AND FURTHER CIRCU LAR NO.672 DATED 16/12/1993 CLARIFIED THE POSITION BY H OLDING THAT IN THE CASE OF CONSTRUCTION OF RESIDENTIAL FLA T AND NOT THE DATE OF PURCHASE OF THE FLAT IS TO BE CONSIDERED. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BEENA K. J AIN (1994) ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 5 75 TAXMAN 145 (BOM.), WHEREIN, ASSESSEE CLAIMED EXE MPTION U/S 54F OF THE ACT BY MAKING INVESTMENT IN THE RESI DENTIAL HOUSE. THE ASSESSEE SOLD THE PREMISES ON 23/07/1987 RESULTING INTO LONG TERM CAPITAL GAIN OF RS.24,05,0 50/-. THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 04/09/1985 FOR PURCHASE OF A FLAT FOR RS.12,26,751/- AND THE SALE WAS REGISTERED ON 27/10/1985. THE ASSESSEE PAID CONSIDE RATION AMOUNT ON 29/07/1988 AND GOT THE POSSESSION OF THE FLAT ON 30/07/1988. THE ASSESSEE CLAIMED BENEFIT OF EXEMPTI ON U/S 54 OF THE ACT. THE HONBLE HIGH COURT, AFTER CONSID ERING THE FACT, HELD THAT THE DATE OF POSSESSION IS THE RELEV ANT DATE FOR THE PREMISES INSTEAD OF DATE OF AGREEMENT AND DATE OF REGISTRATION. IDENTICALLY HONBLE PUNJAB & HARYANA HIGH COURT IN VINOD KUMAR JAIN VS CIT (2010) 195 TAXMAN 174 DECIDED IN FAVOUR OF THE ASSESSEE. THE RATIO LAID D OWN IN CIT VS R.L. SOOD (245 ITR 227)(DEL.) AND SMT. SHASHI SH ARMA VS CIT (224 ITR 106)(MP) DECIDED IN FAVOUR OF THE ASSE SSEE. EVEN OTHERWISE, WHEN TWO VIEWS ARE POSSIBLE, WHICH FAVOU RS THE ASSESSEE, HAS TO BE PREFERRED. WE ARE, USEFULLY, RE PRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 54 OF T HE ACT FOR READY REFERENCE AND ANALYSIS:- 54. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER O F A LONG-TERM CAPITAL ASSET, BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS C HARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' (HEREAF TER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WIT HIN A PERIOD OF THREE YEARS AFTER THAT DATE[CONSTRUCTED, ONE RES IDENTIAL HOUSE IN INDIA], THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 6 INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WI TH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SA Y, (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN THE COST OF THE RESIDENTIAL HOUSE SO PURCHASED OR CONSTRUCTED (HERE AFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE DIFFEREN CE BETWEEN THE AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVI OUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PER IOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE NIL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHA RGED UNDER SECTION 45; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRA NSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTI ON, AS THE CASE MAY BE, THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAPITAL GAIN. (2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT APP ROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF T HE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM F OR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSI TED BY HIM BEFORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING M ADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFIC ATION IN THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILIS ED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NE W ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEM ED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR C ONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SE CTION (1), THEN, (I) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED U NDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 7 (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SU CH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. FROM THE READING OF SECTION 54(1), IT IS CLEAR THAT SECTION CONCERNS TWO TYPE OF HOUSE PROPERTY, NAMELY (I) ORI GINAL ASSET AND (II) THE NEW ASSET. ORIGINAL ASSET HERE MEANS THE HOUSE PROPERTY ON THE TRANSFER WHEREOF THE CAPITAL GAIN A RISES. THE NEW ASSET REFERS TO THE PROPERTY WHICH HAS BEEN PUR CHASED OR CONSTRUCTED WITHIN THE STIPULATED PERIOD. THE RATIO LAID DOWN IN CIT VS D. ANANDA BASAPPA (2009) 309 ITR 329 (KAR N.) SLP DISMISSED ; (2010) 320 ITR (ST.) 19(SC). TO AVAIL T HE EXEMPTION, THE TAXPAYER HAS TO DEPOSIT THE APPROPRI ATE AMOUNT OF CAPITAL GAINS IN THE SPECIFIED BANKS BY T HE DUE DATE OF FURNISHING OF RETURN OF INCOME LAID DOWN IN SECTION 139(1) OF THE ACT. SINCE, THE FACTS MENTIONED IN TH E IMPUGNED ORDER ARE NOT IN DISPUTE, THEREFORE, CONSIDERING TH E TOTALITY OF FACTS AND JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINA BOVE, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 16/06/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDE R SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ( DATED : 16/06/2016 F{X~{T? P.S/. . . ITA NO. 1698/MUM/2013 RAJIV BHOLANATH GUPTA 8 %$&'()(*& / 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. 34 .' , 0 *+& * 5 , # $ / DR, ITAT, MUMBAI 6. 6$ / GUARD FILE. / BY ORDER, /3+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI