Mohammadanif Sulatanali Pradhan, Ahmedabad V. DCIT, Circle-6(1), Ahmedabad

ITA 1797/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9696 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-11-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 14-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDHUT TRIVEDI
• Keywords: Set aside; Capital Gains
• Section: 54F; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO. 1797/AHD/2018 ( / ASSESSMENT YEAR : 2015-16) MOHAMMADANIF SULTANALI PRADHAN 1-5, CLASSIC SUNNY COMPLEX, SHAH E ALAM, TOLLNAKA AHMEDABAD-380 028 / VS. THE DCIT CIRCLE-6(1) AHMEDABAD-380 006 ./ ./ PAN/GIR NO. : ABCPP 1862 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HARDIK VORA, AR / RESPONDENT BY : SHRI VIDHUT TRIVEDI, SR.DR / DATE OF HEARING 21/11/2019 !'# / DATE OF PRONOUNCEMENT 06/01/2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)6, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-6 /182/17-18 DATED 09/07/2018 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 08/12/2017 RELEVANT TO ASSESSMENT YEAR (AY) 2015-1 6. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.1797/AHD/2018 MOHAMMADANIF SULTANALI PRADHAN VS. DCIT ASST .YEAR - 2015-16 - 2 - 1.01. THAT LEARNED CIT(APPEAL)-6, AHMEDABAD HAS ERRED I N CONFIRMING DISALLOWANCE U/S.54F OF THE INCOME TAX A CT, 1961 RS.64,22,882/-. 1.02. THAT VARIOUS REASONS ADVANCED BY LEARNED CIT(APPEAL )-6 AHMEDABAD WHILE CONFIRMING DISALLOWANCE OF CLAIM AR E CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 1.03. THEREFORE DISALLOWANCE OF RS.64,22,882/- U/S.54F OF THE INCOME TAX ACT5, 1961 CONFIRMED BY LEARNED CIT(APPEAL)-9, AHMEDABAD DESERVES TO BE DELETED. 2.00 THE APPELLANT CRAVES LEAVE TO ADD, AMEND, AL TER, EDIT, DELETE, MODIFY ANY OF THE GROUNDS OF APPEAL AT THE TIME OF OR BEFORE FINAL HEARING OF THE APPEAL. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO BY DENYING THE EX EMPTION CLAIMED UNDER SECTION 54F OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF LETTING O UT PROPERTY ON RENT AND HAVING INCOME FROM TIME DEPOSITS WITH BANK. THE ASS ESSEE IN THE YEAR UNDER CONSIDERATION HAS DECLARED INCOME UNDER THE H EAD CAPITAL GAIN AT RS. 23,84,101 AFTER CLAIMING THE EXEMPTION UNDER SE CTION 54F OF THE ACT AT 1,08,00,000.00. THE ASSESSEE IN SUPPORT OF THE EXEM PTION CLAIMED UNDER SECTION 54F OF THE ACT CONTENDED THAT HE HAS MADE INVESTMENT IN 2 BUNGALOWS WHICH ARE ADJACENT TO EACH OTHER BEARING NO. 18 AND 19 LOCATED AT SURVEY NO. 606/2, TPS NO. 92, SARKHEJ MAKARBA OKAF- FATEWADI OF MOUJE SARKHEJ , TAL VEJALPUR, DISTT AHM EDABAD. ITA NO.1797/AHD/2018 MOHAMMADANIF SULTANALI PRADHAN VS. DCIT ASST .YEAR - 2015-16 - 3 - 4. HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSE SSEE CAN CLAIM THE EXEMPTION UNDER SECTION 54F OF THE ACT WITH RESPECT TO THE INVESTMENT IN ONE BUNGALOW ONLY. ACCORDINGLY, THE AO COMPUTED THE EXEMPTION UNDER SECTION 54F OF THE ACT WITH RESPECT TO ONE BUNGALOW ONLY AMOUNTING TO 43,77,118.00 AND THUS, HE DISALLOWED THE EXCESS CLA IM UNDER SECTION 54F OF THE ACT FOR 64,22,882.00. THE AO ACCORDINGLY ADDED THE EXCESS BY THE ASSESSEE TO THE TOTAL INCOME OF THE ASSESSEE . AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARN ED CIT (A). 5. THE ASSESSEE BEFORE THE LEARNED CIT(A) SUBMIT TED THAT BOTH THE BUNGALOWS ARE IN THE SAME SOCIETY, ADJACENT TO EACH OTHER. AS SUCH BOTH THE BUNGALOWS ARE ONE UNIT FOR THE RESIDENTIAL PURP OSES. THEREFORE, HE CLAIMED THAT HE IS ENTITLED FOR THE DEDUCTION/ EXEM PTION FOR BOTH THE BUNGALOWS UNDER SECTION 54F OF THE ACT. 5.1. HOWEVER, THE LEARNED CIT(A) OBSERVED THAT THERE IS AN AMENDMENT UNDER THE PROVISIONS OF SECTION 54F OF THE ACT WHER E THE EXPRESSION PREVIOUSLY USED A RESIDENTIAL HOUSE HAS BEEN SUBS TITUTED WITH ONE RESIDENTIAL HOUSE. SUCH AMENDMENT IS EFFECTIVE WITH EFFECT FROM ASSESSMENT YEAR 2015-16 I.E. THE YEAR UNDER CONSIDE RATION. ACCORDINGLY THE LEARNED CIT(A) REJECTED THE CONTENTION OF THE A SSESSEE AND CONFIRMED THE ORDER OF THE AO. ITA NO.1797/AHD/2018 MOHAMMADANIF SULTANALI PRADHAN VS. DCIT ASST .YEAR - 2015-16 - 4 - BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AR BEFORE US REITERATED THE SUBMI SSIONS AS MADE BEFORE THE AUTHORITIES BELOW. ON THE OTHER HAND THE LEARNE R DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORDS. THERE IS NO DIS PUTE TO THE FACTS OF THE CASE AS DISCUSSED ABOVE. THEREFORE, WE ARE NOT INCL INED TO REPEAT THE SAME FOR THE SAKE OF BREVITY. THE ISSUE IN THE PRES ENT CASE RELATES WHETHER THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTIO N 54F OF THE ACT AGAINST THE LONG-TERM CAPITAL GAIN FOR THE INVESTME NT MADE IN THE TWO PROPERTIES WHICH ARE ADJACENT TO EACH OTHER AND USE D AS ONE RESIDENTIAL UNIT. INDEED, THE PROVISION OF LAW REQUIRES THAT T HE EXEMPTION WILL BE AVAILABLE TO THE ASSESSEE UNDER SECTION 54F OF THE ACT FOR THE INVESTMENT IN ONE RESIDENTIAL UNIT. 7.1. ADMITTEDLY, THERE ARE 2 UNITS BEARING SEPA RATE NUMBERS WHICH WERE PURCHASED BY THE ASSESSEE OUT OF THE LONG-TERM CAPITAL GAIN INCOME. BOTH THE UNITS ARE ADJACENT TO EACH OTHER AND THE S AME ARE USED SINGLE RESIDENTIAL UNIT. THUS THE QUESTION ARISES, EXEMPTI ON PROVIDED UNDER SECTION 54F OF THE ACT CAN BE DENIED TO THE ASSESSE E MERELY ON THE GROUND THAT THERE WERE TWO REGISTRIES OF THE PROPER TIES. IN OUR CONSIDERED VIEW, THE ANSWER STANDS IN FAVOUR OF THE ASSESSEE I N THE PRESENT FACTS AND ITA NO.1797/AHD/2018 MOHAMMADANIF SULTANALI PRADHAN VS. DCIT ASST .YEAR - 2015-16 - 5 - CIRCUMSTANCES. UNDER THE PROVISIONS OF THE ACT I.E. 54F OF THE ACT, THERE IS NO DEFINITION/CLARIFICATION PROVIDED ABOUT THE A REA OF THE RESIDENTIAL PROPERTY. IT MEANS, ONE ASSESSEE CAN BUY HUGE BUNGA LOW/PROPERTY SAY THOUSAND SQUARE METERS AND CAN CLAIM THE DEDUCTION SUBJECT TO THE CONDITIONS. SIMILARLY, THE OTHER ASSESSEE ON THE OT HER HAND ACQUIRED TWO DIFFERENT RESIDENTIAL PROPERTIES ADJACENT TO EACH O THER BUT BOTH THE PROPERTIES PUT TOGETHER HAS ONLY TWO HUNDRED SQUARE METERS BUT HE WILL BE EXTENDED THE BENEFIT OF THE EXEMPTION WITH RESPECT TO ONE UNIT ONLY BECAUSE OF THE REASON THAT THERE ARE TWO DIFFERENT PROPERTIES BASED ON REGISTRY DOCUMENTS. 7.2. THERE CAN BE A SITUATION THAT THE FAMILY OF THE ASSESSEE IS QUITE LARGE, COMPRISING OF SEVERAL MEMBERS IN THE FAMILY AND THEREFORE HE NEEDS TWO PROPERTIES ADJACENT TO EACH OTHER TO ACCO MMODATE HIS FAMILY MEMBERS. SO FROM THE POINT OF VIEW OF THE ASSESSEE, IT IS SINGLE PROPERTY BUT HE GOT TWO DIFFERENT PROPERTIES REGISTERED AS P ER THE REQUIREMENT OF THE BUILDER. THUS IN OUR CONSIDERED VIEW, THE ASSES SEE CANNOT BE DEPRIVED OF THE BENEFIT CONFERRED UNDER THE STATUTE MERELY O N THE REASONING THAT THERE WERE TWO DIFFERENT REGISTRIES OF THE BUILDING S/PROPERTIES. IT IS ALSO NOT A CASE OF THE REVENUE/ASSESSEE THAT BOTH THE PROPERTIES PURCHASED BY THE ASSESSEE WERE LOCATED IN DIFFERENT GRAPHICAL AREA. IN SUCH A SITUATION THE LAW AMENDED UNDER SECTION 54F OF THE ACT APPEARS TO BE APPLICABLE WHERE THE ASSESSEE BUYS TWO PROPERTIE S IN TWO DIFFERENT AREAS. ITA NO.1797/AHD/2018 MOHAMMADANIF SULTANALI PRADHAN VS. DCIT ASST .YEAR - 2015-16 - 6 - 7.3. MOREOVER, THE PRINCIPLES LAID DOWN BY THE COURTS CANNOT BE JUST BRUSHED ASIDE ON THE ASPECT OF DEFINING THE ONE RES IDENTIAL UNIT. IN THIS REGARD WE FIND SUPPORT AND GUIDANCE FROM THE JUDGME NT OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. SHRI D. A NANDA BASAPPA REPORTED IN 180 TAXMAN 4 WHEREIN IT WAS HELD AS UND ER: 6. THE CONTENTION OF THE REVENUE IS THAT THE PHRASE ' A' RESIDENTIAL HOUSE WOULD MEAN ONE RESIDENTIAL HOUSE AND IT DOES NOT APPEAR TO THE CORRECT UNDERSTANDING. THE EXPRESSION 'A' RESIDENTI AL HOUSE SHOULD BE UNDERSTOOD IN A SENSE THAT BUILDING SHOULD BE OF RE SIDENTIAL IN NATURE AND 'A' SHOULD NOT BE UNDERSTOOD TO INDICATE A SING ULAR NUMBER. THE COMBINED READING OF SECTIONS 54(1) AND 54F OF THE I NCOME-TAX ACT DISCLOSES THAT, A NON-RESIDENTIAL BUILDING CAN BE S OLD, THE CAPITAL GAIN OF WHICH CAN BE INVESTED IN A RESIDENTIAL BUILDING TO SEEK EXEMPTION OF CAPITAL GAIN TAX. HOWEVER, THE PROVISO TO SECTION 5 4 OF THE INCOME-TAX ACT, LAYS DOWN THAT IF THE ASSESSEE HAS ALREADY ONE RESIDENTIAL BUILDING, HE IS NOT ENTITLED TO EXEMPTION OF CAPITAL GAINS TA X, WHEN HE INVESTS THE CAPITAL GAIN IN PURCHASE OF ADDITIONAL RESIDENTIAL BUILDING. 7.4. IN VIEW OF THE ABOVE AND AFTER CONSIDERING T HE FACTS IN TOTALITY, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR T HE EXEMPTION PROVIDED UNDER SECTION 54F OF THE ACT IN THE PRESENT FACTS O F CIRCUMSTANCES. HENCE, WE SET ASIDE THE FINDING OF THE LEARNED CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1797/AHD/2018 MOHAMMADANIF SULTANALI PRADHAN VS. DCIT ASST .YEAR - 2015-16 - 7 - 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06/01/2020 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/01/2020 &.., .(.. / T.C. NAIR, SR. PS !'#' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-6, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 24.12.2019 ( WORD PROCESSED BY HONBLE AM IN HIS COMPUTER BY DRA GON ) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.12.2019/6.1.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.6.1.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6.1.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER