SATISH S. PRABHU, MUMBAI V. ASST CIT CIR 27(3), NAVI MUMBAI

ITA 1843/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1728 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Assessee Lawyers: ADITYA R AJGAONKAR
• Keywords: Revised return
• Section: 54F; 201; 13; 54; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBERAND SHRI M. BALAGANESH , ACCOUNTANT MEMBER ITA NO. 1843 /MUM. /2017 ( ASSESSMENT YEAR : 20 12 13 ) SATISH S. PRABHU B 2/1001, SARASWATI CHSL N.G. ACHARYA MARG, CHAMBUR MUMBAI 400 071 PAN AAIPP0075C . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 27(3), MUMBAI . RESPONDENT ASSESSEE BY : SHRI ADITYA R. AJGAONKAR REVENUE BY : SHRI V. VINOD KUMAR DATE OF HEARING 16.09.2019 DATE OF ORDER 06.12.2019 O R D E R PER SAKTIJIT DEY. J.M. A FORESAID APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 7 TH FEBRUARY 201 7 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 25 , MUMBAI, FOR THE ASSESSMENT YEAR 2012 13. 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 54/54F OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2 SATISH S. PRABHU 3. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS A CHARTERED ACCOUNTANT BY PROFESSION. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 30 TH SEPTEMBER 2012, DECLARING TOTAL INCOME OF ` 25,92,570. THE ASSESSEE WAS OWNER OF TWO FLATS VIZ. FLATS NO.B 6 AND B 15, IN SHREE SARAS WATI CO OPERATIVE HOUSING SOCIETY, CHEMBUR. FLAT NO.B 15, WAS PURCHASED BY THE ASSESSEE HIMSELF ON 21 ST JULY 2013, FOR A SALE CONSIDERATION OF ` 7.50 LAKH, EXCLUDING STAMP DUTY, REGISTRATION CHARGES AND SOCIETY TRANSFER FEE. WHEREAS, FLAT NO.B 6, WAS INHER ITED BY THE ASSESSEE ON THE DEATH OF HIS FATHER IN THE YEAR 1997. IT IS STATED THAT ASSESSEES FATHER HAD PURCHASED THE SAID FLAT IN THE YEAR 1970, FOR A CONSIDERATION OF ` 8,000. SUBSEQUENTLY, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE HOU SING SOCIETY AND M/S. NAV DURGA CONSTRUCTION CO. ON 19 TH NOVEMBER 2005, FOR RE DEVELOPMENT OF THE PROPERTY. AS PER THE TERMS OF THE SAID DEVELOPMENT AGREEMENT, THE ASSESSEE RECEIVED TWO NEW FLATS BEING FLAT NO.B 2/1001 AND FLAT NO.B 3/101, AGAINST SURRENDE R OF THE OLD FLATS BEING FLAT NO.B 6 AND B 15 RESPECTIVELY. AS AGAINST SURRENDER OF FLAT NO.B 15 AND THE NEW FLAT RECEIVED IN CONSEQUENCE THEREOF, THE ASSESSEE OFFERED CAPITAL GAIN AND SIMULTANEOUSLY CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT IN THE RET URN OF INCOME. INSOFAR AS THE NEW FLAT RECEIVED IN LIEU OF OLD FLAT NO.B 6, THE ASSESSEE NEITHER OFFERED IT INITIALLY TO CAPITAL GAIN NOR 3 SATISH S. PRABHU CLAIMED ANY DEDUCTION UNDER SECTION 54/54F OF THE ACT. SUBSEQUENTLY, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE FILED A LETTER OFFERING THE CAPITAL GAIN ARISING FROM FLAT NO.B 6, AND CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT IN RESPECT OF THE NEW RESIDENTIAL FLAT RECEIVED ON SURRENDER OF FLAT NO.B 6. INSOFAR AS THE CAPITAL GAIN IN RESPECT OF FL AT NO.B 15, PURCHASED BY THE ASSESSEE HIMSELF AND THE NEW FLAT RECEIVED IN LIEU THEREO F ON RE DEVELOPMENT, THE ASSESSING OFFICER ALLOWED ASSESSEES CLAI M OF DEDUCTION UNDER SECTION 54 OF THE ACT. HOWEVER, IN RESPECT OF THE NEW FLAT RECEIVED ON SURRENDER OF OLD FLAT NO.B 6, THE ASSESSING OFFICER DID NOT ALLOW ASSESSEES CLAIM OF DEDUCTION ON THE REASONING THAT THE DEDUCTION WAS NEITHER CLAIMED IN THE RETURN OF INCOME FILED BY HIM NOR BY FILING ANY REVISE D RETURN OF INCOME. FURTHER, HE HELD THAT FLAT NO.B 6, BEING A RESIDENTIAL PREMISE, THE ASSESSEE CANNOT BE ALLOWED DEDUCTION UNDER SECTION 54F OF THE ACT ON TRANSFER OF SUCH PROPERTY. IN THIS CONTEXT, HE OBSERVED , MERELY BECAUSE THE OLD A S WELL AS NEW FLAT WAS USED BY THE ASSESSEE AS OFFICE, IT WILL NOT CHANGE ITS CHARACTER AS A RESIDENTIAL HOUSE. ACCORDINGLY, HE DISALLOWED ASSESSEES CLAIM OF DECUTION UNDER SECTION 54F OF THE ACT IN RESPECT OF THE FLAT RECEIVED ON SURRENDER OF OLD FLAT NO .B 6. THE ASSESSEE CHALLENGED THE AFORESAID DECISION OF THE ASSESSING OFFICER BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER, LEARNED 4 SATISH S. PRABHU COMMISSIONER (APPEALS) ALSO SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. REITERATING THE STAND TAKEN BEFORE T HE DEPARTMENTAL AUTHORITIES, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THERE IS NO DISPUTE THAT THE ASSESSEE WAS THE OWNER OF TWO FLATS AT THE TIME OF ENTERING INTO DEVELOPMENT AGREEMENT AND ON SURRENDER OF THESE TWO FLATS, THE ASSESSEE RECEIVED TWO NEW FLATS AFTER RE DEVELOPMENT. HE SUBMITTED , THE FLAT INHERITED FROM THE FATHER WAS USED BY THE ASSESSEE AS AN OFFIC E, THEREFORE, IT WAS NOT SHOWN IN THE BOOKS AND BEING THOUGHT OF AS A COMMERCIAL PROPERTY ASSESSEE NEITHER OFFERED CAPITAL GAIN NOR CLAIME D DEDUCTION UNDER SECTION 54/54F IN THE RETURN OF INCOME . HOWEVER, IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A LETTER OFFERING CAPITAL GAIN AND CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. HE SUBMITTED , SINCE THE INHERITED FLAT WAS USED AS AN OFFICE BEFORE AND AFTER DEVELOPMENT OF THE PROPERTY, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. HE SUBMITTED , IF ACCORDING TO THE DEPARTMENTAL AUTHORITIES THE FLAT IS A RESIDENTIAL PROPERTY, THE ASSESSEE HAS TO BE ALLOWED DEDUCTION UND ER SECTION 54 OF THE ACT IRRESPECTIVE OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, AS THERE CANNOT BE ANY ESTOPPEL AGAINST LAW. HE SUBMITTED , SINCE THE ASSESSING OFFICER HAS ALLOWED DEDUCTION UNDER SECTION 54 OF THE ACT IN RESPECT OF ONE FLAT , DEDUCTION UNDER SECTION 54 OF THE ACT AGAINST 5 SATISH S. PRABHU THE OTHER FLAT SHOULD ALSO BE ALLOWED. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THOUGH BEFORE THE DEPARTMENTAL AUTHORITIES, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT, HOWEVER , DEDUCTION CAN BE ALLOWED TO THE ASSESSEE U NDER THE APPLICABLE PROVISION . IN THIS CONTEXT, HE SUBMITTED , THE ASSESSEE HAS RAISED ADDITIONAL GROUND CLAI MING DEDUCTION UNDER SECTION 54 OF THE ACT. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE ASSE SSEE HAD DELIBERATELY SUPPRESSED THE FACT THAT HE WAS THE OWNER OF ONE MORE FLAT AND HAS RECEIVED A NEW FLAT ON SURRENDER OF THAT FLAT. THEREFORE, ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 /54F OF THE ACT WAS NOT ALLOWABLE. FURTHER, HE SUBMITTED , SINCE THE FLAT TRANSFERRED BY THE ASSESSEE WAS A RESIDENTIAL PROPERTY , CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IS NOT ALLOWABLE. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTED FACTS ARE, THE ASSESSEE WAS THE OWNER O F TWO FLATS IN A HOUSING SOCIETY. ONE FLAT WAS PURCHASED BY THE ASSESSEE HIMSELF , WHEREAS , THE OTHER ONE WAS INHERITED FROM HIS FATHER. SUBSEQUENTLY, THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH HOUSING SOCIETY AND THE DEVELOPER AND IN TERMS OF THE SAID AGREEMENT, THE ASSESSEE SURRENDERED TWO FLATS OWNED BY HIM AND 6 SATISH S. PRABHU IN LIEU OF THESE TWO FLATS RECEIVED TWO NEW FLATS FROM THE DEVELOPER. AS REGARDS THE FLAT PURCHASED BY THE ASSESSEE HIMSELF AND THE NEW FLAT RECEIVED AGAINST THAT , THE ASSESSING OFF ICER HAS ALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT. THE DISPUTE IS ONLY WITH REGARD TO TH E SECOND FLAT INHERITED FROM HIS FATHER. AS TRANSPIRES FROM THE RECORD , IN THE RETURN OF INCOME THE ASSESSEE NEITHER OFFERED THE CAPITAL GAIN F ROM THE SECOND FLAT NOR CLAIMED ANY DEDUCTION UNDER SECTION 54/ 54F OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, TH R OUGH A LETTER SUBMITT ED BEFORE THE ASSESSING OFFICER THE ASSESSEE OFFERED CAPITAL GAIN IN RESPECT OF SECOND FLAT AND CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER HAS DISALLOWED THE DEDUCTION CLAIMED PRIMARILY FOR TWO REASONS; FIRSTLY, THE CLAIM WAS NOT MADE EITHER IN THE ORIGINAL RETURN OF INCOME OR BY WAY OF A REVISED RETURN OF INCOME. SECONDLY; THE FLAT TRANSFERRED BEING A RESIDENTIAL PROPERTY, NO DEDUCTION UNDER SECTION 54F OF THE ACT CAN BE ALLOWED. WHEREAS, LEARNED COMMISSIONER (APPEALS) HAS SUSTAINED THE SAID DISALLOWANCE ON THE REASONING THAT THE ASSESSEE HAS SUPPRESSED THE OWNERS HIP OF THE SECOND FLAT AND THE RESULTANT CAPITAL GAIN AND FURTHER , THE FLAT SOLD BEING A RESIDENTIAL PROPERTY, DEDUCTION UNDER SECTION 54F OF THE ACT CANNOT BE ALLOWED. THUS, FROM THE AFORESAID FACTS, IT IS CLEAR THAT THE ASSESSEE HAS TRANSFERRED TWO FLATS AND IN LIEU OF THOSE TWO FLATS HAS RECEIVED TWO NEW FLATS ON RE DEVELOPMENT. MERELY BECAUSE 7 SATISH S. PRABHU THE ASSESSEE DID NOT OFFER OR DISCLOSE THE CAPITAL GAIN FROM THE SECOND FLAT IN THE RETURN OF INCOME WOULD NOT DISENTITLE HIM FROM AVAILING THE STATUTORY DEDUCTION IF OTHERWISE HE IS ENTITLED TO IT . THEREFORE , WE ARE UNABL E TO ACCEPT THE REASONING OF LEARNED COMMISSIONER (APPEALS) THAT SINCE THE ASSESSEE DID NOT DISCLOSE THE OWNERSHIP OF THE SECOND FLAT, HE WILL NOT BE ENTITLED TO DEDUCTION UNDER SECTION 54F OF THE ACT. AS REGARDS THE SECOND ASPECT OF THE ISSUE , WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 54 OR 54F OF TH E ACT, FROM THE FACTS ON RECORD IT IS CLEAR THAT ACCORDING TO THE DEPARTMENTAL AUTHORITIES, THE FLAT TRANSFERRED BEING A RESIDE NTIAL PROPERTY, THE ASSESSEE CAN CLAIM DEDUCTION ONLY UNDER SECTION 54 OF THE ACT. IF THAT IS THE CASE, THE DEDUCTION CLAIMED BY THE ASSESSEE SHOULD HAVE BEEN ALLOWED UNDER THE CORRECT PROVISION. MERELY BECAUSE THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECT ION 54F OF THE ACT, BY TREATING THE FL AT AS A COMMERCIAL PROPERTY, ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT CANNOT BE DISALLOWED IF THE ASSESSEE FULFILLS THE CONDITION S OF SECTION 54 OF THE ACT. IN THE FACTS OF THE PRESENT CASE, THE DEPART MENTAL AUTHORITIES HAVE NO DOUBT THAT THE FLAT TRANSFERRED BY THE ASSESSEE IS A RESIDENTIAL FLAT AND ON RE DEVELOPMENT THE ASSESSEE HAS ALSO RECEIVED A RESIDENTIAL FLAT. THAT BEING THE CASE, THE ASSESSEE IS CERTAINLY ENTITLED FOR DEDUCTION UNDER SECTION 54 OF THE ACT. MERELY BECAUSE THE ASSESSEE CLAIMED A DEDUCTION UNDER THE WRONG PROVISION, 8 SATISH S. PRABHU HIS CLAIM CANNOT BE DISALLO WED IF IT IS ALLOWABLE UNDER A DIFFERENT PROVISION . IN VIEW OF THE AFORESAID, WHILE ADMITTING THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BE ING PURELY A LEGAL GROUND WHICH CAN BE DECIDED WITHOUT REQUIRING INVESTIGATION INTO FRESH FACTS, WE DIRECT THE ASSESSING OFFICER TO ALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT IN RESPECT OF THE SECOND FLAT. ADDITIONAL GROUNDS ARE ALLOWE D. CONSEQUENTLY, THE GROUND RAISED BY THE ASSESSEE CLAIMING DEDUCTION UNDER SECTION 54F OF THE ACT HAVING BECOME REDUNDANT IS DISMISSED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN C OURT ON 06.12.2019 SD/ - M. BALAGANESH ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 06.12.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI