LALITA P. MODI, MUMBAI V. ITO 25(2)(4), MUMBAI

ITA 1787/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7061 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M HEMALATHA
• Keywords: Capital asset; Revised return
• Section: 143(3); 54F; 2(14); 54

Judgement Text

1 ITA 1787/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.1787/MUM/2016 (ASSESSMENT YEAR: 2010-11) MRS. LALITA P MODI 404K, SUMER NAGAR SV ROAD, BORIVALI (W) MUMBAI-51 AANPM5906A VS ITO 32-(2)(1), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI NISHIT GANDHI RESPONDENT BY SMT. M HEMALATHA DATE OF HEARING 03-05-2018 DATE OF PRONOUNCEMENT 31-05-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-44, MUMBAI DATED 22-02-2016 AND IT PERTA INS TO AY 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED C1T (A)-44, MUMBAI ERRED IN CONFIRMING THE DENIAL OF DE DUCTION CLAIMED U/S. 54/54F OF THE ACT AMOUNTING TO RS.29,19,862/- OF THE IT. ACT, BY UPHOLDING THE LEARNED ASSESSING OFFICER'S CONTENTION THAT THE APPELLANT D OES NOT FULFILL THE SPECIFIED CONDITIONS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (APPEALS) ERRED IN ASSUMING THAT A CLAIM FOR DE DUCTION, WHICH HAD NOT BEEN MADE IN THE ORIGINAL RETURN OF INCOME CANNOT B E ENTERTAINED BY THE APPELLATE AUTHORITY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL 2 ITA 1787/MUM/2016 ENGAGED IN THE BUSINESS OF TRADING AND DEALING IN L ISTED SECURITIES, FILED HER RETURN OF INCOME FOR AY 2010-11 ON 28-10-2010 D ECLARING TOTAL INCOME OF RS.8,29,389. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT ON 18-03-2013 DETERMINING THE TOTAL INCOME AT RS.38,27,020 BY MAK ING DISALLOWANCE OF EXEMPTION CLAIMED U/S 54 / 54F OF THE INCOME-TAX AC T, 1961 TOWARDS LONG TERM CAPITAL GAIN DERIVED FROM SALE OF PROPERT Y. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS FILED WRITTEN SUBMISSION TO ARGUE THAT BY VIRTUE OF ALLOT MENT LETTER ISSUED, SHE ACQUIRED A RIGHT TO OBTAIN CONVEYANCE OF IMMOVABLE PROPERTY WHICH CONSTITUTE CAPITAL ASSET WITHIN THE MEANING OF SECT ION 2(14) OF THE I.T. ACT, 1961. SINCE SHE HAS TRANSFERRED LONG TERM CAP ITAL ASSET, BEING RIGHT IN AN IMMOVABLE PROPERTY, THE GAIN ARISING OUT OF S UCH TRANSFER IS ELIGIBLE FOR EXEMPTION U/S 54 / 54F OF THE ACT IF THE CONSID ERATION RECEIVED FROM THE PROPERTY HAS BEEN RE-INVESTED IN PURCHASE OF AN OTHER HOUSE PROPERTY. SINCE SHE HAD INVESTED SALE CONSIDERATIO N OF RESIDENTIAL PROPERTY, HAS RIGHTLY CLAIMED DEDUCTION U/S 54 / 54 F AND HENCE, THE AO WAS INCORRECT IN REJECTING CLAIM ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT MADE ANY CLAIM OF DEDUCTION U/S 54F BY FILING R EVISED RETURN IN VIEW 3 ITA 1787/MUM/2016 OF THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF CIT VS GOETZE INDIA LTD (2006) 284 ITR 223 (SC). 4. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO RELYING UPON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS GOETZE INDIA LTD (SUPRA) DISM ISSED THE APPEAL FILED BY THE ASSESSEE BY OBSERVING AS UNDER:- 3.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AS WELL AS THE WRITTEN SUBMISSION OF THE AR. I HAVE ALSO PERUSED THE DETAI LS FILED BY THE AR. THE FACTS OF THE CASE IT APPEARS THERE IS NO DISPUTE RE GARDING THE INCIDENCE OF CAPITAL GAIN. BOTH THE AO AND THE APPELLANT ARE IN AGREEMENT APPELLANT IS LIABLE FOR LONG TERM CAPITAL GAIN. THE ONLY DISPUTE THEREAFTER IS REGARDING ALLOWABILITY OF DEDUCTION U/S 54 OR U/S 54F. AS FAR AS THE ELIGIBILITY FOR DEDUCTION U/S 54 IS CONCERNED THE SAME IS NOT APPLI CABLE TO THE APPELLANT BECAUSE CAPITAL GAIN HAS NOT ARISEN IN THIS CASE FR OM TRANSFER OF A LONG TERM CAPITAL ASSET BEING BUILDINGS OR LAND APPURTENANT T HERE TO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABL E UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN OTHER WORDS, THE APPELLANT HAS NOT SOLD A RESIDENTIAL HOUSE WHICH IS A PRIMARY REQUIREMENT FOR DEDUCTION U/S 54. 3.4 THE SECOND ISSUE TO BE DECIDED HERE IS WHETHER THE AO SHOULD HAVE ALLOWED DEDUCTION U/S 54F AS REQUESTED BY THE APPEL LANT DURING THE ASSESSMENT PROCEEDINGS. IN THE GROUNDS OF APPEAL AS WELL AS IN THE WRITTEN SUBMISSIONS THE APPELLANT HAS TRIED TO CLAIM THAT B OTH SECTION 54 AND SECTION 54F ARE ON THE SAME FOOTING. HOWEVER, THESE TWO SEC TIONS ARE DIFFERENT IN THEIR SCOPE, APPLICATIONS AND ELIGIBILITY CONDITION S. FIRST OF ALL, IN SECTION 54, THE COMPUTATION OF DEDUCTIONS IS WITH REFERENCE TO THE AMOUNT OF CAPITAL GAIN WHILE IN SECTION 54F COMPUTATION OF DEDUCTION IS WI TH REFERENCE TO THE COST OF NEW ASSET. FURTHER ONE OF THE BASIC CONDITION FOR C LAIMING DEDUCTION U/S 54F IS THAT THE ASSESSE SHOULD NOT OWN MORE THAN ONE RE SIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET. FOR CLAIMING DEDUCTION U/S 54 THERE IS NO SUCH RESTRICTION. THUS IT IS NOT CORRECT TO SAY THAT MERELY BECAUSE AN ASSESSEE HAS SOLD SOME CAPITAL AS SET AND HAS INVESTED THE PROCEED TOWARDS A RESIDENTIAL HOUSE HE WILL BE AUTOMATICALLY ENTITLED FOR DEDUCTION U/S 54F. THE ASSESSEE HAS TO FULFILL CERT AIN CONDITIONS IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S54F, .5 AS STATED ABOVE THE AO HAS RELIED ON THE DEC ISION GIVEN BY HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT 284 ITR 223 (2006). IS CASE IT HAS BEEN HELD BY THE HON'BLE SUPREME COU RT THAT AN ASSESSEE NOT AMEND A RETURN FILED BY HIM FOR MAKING A CLAIM FOR DEDUCTION OTHER THAN BY FILING A REVISED RETURN. THE APPELLANT HAS NOT REBU TTED THE RATIO OF DECISION QUOTED BY THE AO. THUS AFTER CONSIDERING THE FACTS OF THE CASE AND THE LEGAL POSITIONS, GROUNDS OF APPEAL NO 1 IS DISMISSED. 4 ITA 1787/MUM/2016 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) ERRED IN CONFIRMING REJECTION OF DEDUCTION CLAIMED U/S 54 / 54F OF THE ACT MERELY ON THE TECHNICAL GROUND THAT SUCH CLAIM HAS NOT BEE N MADE BY FILING REVISED RETURN. OTHERWISE, NOWHERE THE LD.CIT(A) H AS POINTED OUT THAT THE CLAIM MADE U/S 54 / 54F IS NOT ELIGIBLE. THE L D.AR FURTHER SUBMITTED THAT THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS GOETZE INDIA LTD (SUPRA) IN ANY WAY DOES NOT IMP INGE THE RIGHTS OF THE APPELLATE AUTHORITIES TO DECIDE THE ISSUE, ALTHOUGH IT HAS RESTRICTED THE POWERS OF AO TO ADMIT NEW CLAIM WITHOUT FILING REVI SED RETURN. THEREFORE, THE LD.CIT(A) WAS INCORRECT IN REJECTING DEDUCTION CLAIMED U/S 54F OF THE ACT. 6. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). THE LD.DR FURTHER SUBMITTED THAT THE ASSES SEE FAILED TO MAKE A NEW CLAIM BY FILING REVISED RETURN AND HENCE, THE A O HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS GOETZE INDIA LTD (SUPRA ) WHICH CATEGORICALLY RESTRICTS THE POWER OF AO TO ADMIT ANY NEW CLAIM WI THOUT FILING REVISED RETURN OF INCOME. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE INCIDENCE OF CAPITAL GAIN AS BOTH THE AO AND THE ASSESSEE ARE IN AGREEME NT THAT THE 5 ITA 1787/MUM/2016 ASSESSEE IS ELIGIBLE FOR LONG TERM CAPITAL GAIN IN PURSUANCE OF RELINQUISHMENT OF HER RIGHT IN PROPERTY. THE ONLY DISPUTE IS WITH REGARD TO THE ALLOWABILITY OF DEDUCTION U/S 54 / 54F OF THE A CT. THE ASSESSEE INITIALLY MADE CLAIM U/S 54 OF THE ACT. HOWEVER, D URING ASSESSMENT PROCEEDINGS, ASSESSEE MADE CLAIM U/S 54F OF THE ACT . THE AO REJECTED ASSESSEES CLAIMS ON THE GROUND THAT THE ASSESSEE H AS MADE A NEW CLAIM OF EXEMPTION U/S 54F WITHOUT FILING REVISED R ETURN. THEREFORE, IN VIEW OF THE LAW LAID DOWN BY THE HONBLE SUPREME CO URT IN THE CASE OF CIT VS GOETZE INDIA LTD (SUPRA), THERE IS NO PROVIS ION TO ADMIT NEW CLAIM WITHOUT FILING REVISED RETURN OF INCOME. THE AO HA S TECHNICALLY ACCEPTED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54 OF THE INCOME-TAX ACT, 1961; HOWEVER, DENIED SUCH CLAIM ONLY FOR THE REASO N THAT SUCH CLAIM IS NOT MADE BY FILING REVISED RETURN OF INCOME BY RELY ING UPON THE DECISION OF CIT VS GOETZE INDIA LTD (SUPRA). ADMITTEDLY, TH E HONBLE SUPREME COURT IN THE SAID CASE CLEARLY STATED THAT THE POWE R OF AO IS RESTRICTED TO ADMIT A NEW CLAIM ONLY IF SUCH CLAIM IS MADE BY FIL ING REVISED RETURN OF INCOME. HOWEVER, IN THE SAME DECISION, THE COURT F URTHER REITERATED THAT THE FINDINGS OF THE COURT IN ANY WAY DOES NOT IMPIN GE THE POWERS OF THE APPELLATE AUTHORITIES TO ADMIT NEW CLAIM IF NECESSA RY FACTS REGARDING SUCH CLAIM IS ALREADY AVAILABLE BEFORE THE AO. IN THIS CASE, ADMITTEDLY, ALL NECESSARY FACTS REQUIRED FOR DEDUCTION U/S 54F ARE ALREADY AVAILABLE 6 ITA 1787/MUM/2016 BEFORE THE AO AS THE ASSESSEE HAS MADE A CLAIM U/S 54 OF THE INCOME- TAX ACT, 1961. WE FURTHER OBSERVE THAT SINCE THE P ROVISIONS OF SECTION 54 / 54F ARE BENEFICIAL PROVISIONS, WHICH NEED TO BE C ONSTRUED LIBERALLY SO AS TO ALLOW THE BENEFIT, IF OTHER CONDITIONS SPECIF IED IN THE SAID SECTIONS ARE FULFILLED. HENCE, WE ARE OF THE CONSIDERED VIE W THAT THE AO WAS ERRED IN NOT ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S 5 4F. HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT HI M TO ADMIT ASSESSEES ALTERNATE CLAIM OF DEDUCTION U/S 54F AND ALLOW SUCH CLAIM IF ASSESSEE HAS FULFILLED ALL CONDITIONS SPECIFIED THEREIN. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 31 ST MAY, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI