ACIT 16(1), MUMBAI V. MOTI RAMANAND SAGAR, MUMBAI

ITA 1880/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9708 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN SR
• Keywords: Depreciation
• Section: 143(3); 54F; 32; 54

Judgement Text

ITA NO.1880/M/2015 MOTI RAMANAND SAGAR ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1880/MUM/2015 ( / ASSESSMENT YEARS: 2011-12) ASSISTANT COMMISSIONER OF INCOME TAX 16(1) ROOM NO.439 AAYKAR BHAVAN M.K.MARG MUMBAI - 400 0 20 / VS. MOTI RAMANAND SAGAR 12A, SAGAR VILLA JVPD SCHEME VILLE PARLE(W) MUMBAI 400 049 ! ./ ./PAN/GIR NO. AAPPS-2468-F ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : T.A.KHAN (SR.AR) / DATE OF HEARING : 27/07/2017 / DATE OF PRONOUNCEMENT : 31 /07/2017 ITA NO.1880/M/2015 MOTI RAMANAND SAGAR ASSESSMENT YEAR-2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2011- 12 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4 [CIT(A)], MUMBAI DATED 12/01/2015 QUA RELIEF PROVIDED TO THE ASSESSEE U/S 54F OF THE INCOME TAX ACT, 1961. NONE HAS APPE ARED ON BEHALF OF THE ASSESSEE AND THEREFORE, WE PROCEED TO DISPOSE-O FF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEA RING LD. DEPARTMENTAL REPRESENTATIVE. 2. FACTS LEADING TO THE DISPUTE ARE THAT THE ASSESS EE BEING RESIDENT INDIVIDUAL WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 31/12/20 13 AT RS.314.83 LACS AS AGAINST RETURNED INCOME OF RS.64. 98 LACS E-FILED BY THE ASSESSEE ON 28/09/2011. THE ASSESSEE HAS BEEN D ENIED EXEMPTION OF RS.235.58 LACS U/S 54F AND THE SAME IS THE SUBJE CT MATTER OF THIS APPEAL. 2.1 DURING IMPUGNED AY, THE ASSESSEE EARNED LONG TERM CAPITAL GAINS [LTCG] OF RS.235.58 LACS ON TRANSFER OF CERTAIN LAND TO A PARTNERSHIP FIRM NAMELY MAN SAGAR INFRASTRUCTURE AND CLAIMED DEDUCTION U/S 54F SINCE IT MADE INVESTMENT OF RS.682.76 LACS TOWARDS PURCHASE OF NEW RESIDENTIAL HOUSE. HOWEVER, IT WAS NOTED THA T, AT THE TIME OF INVESTMENT, THE ASSESSEE OWNED ONE RESIDENTIAL HOUS E SITUATED AT FLAT NO. 502, SAGAR BHAWAN IN INDIVIDUAL CAPACITY AND ALSO HELD UNDIVIDED SHARE IN ANOTHER RESIDENTIAL HOUSE SITUATED AT POORNA APARTMENT JOINTLY WITH HIS DAUGHTER WHICH LED THE LD. AO TO DENY THE EXEMPTION U/S 54F CLAIMED BY THE ASSESSEE SINCE THE SECTION, AS A PRE -CONDITION, ITA NO.1880/M/2015 MOTI RAMANAND SAGAR ASSESSMENT YEAR-2011-12 3 POSTULATED OWNERSHIP OF NOT MORE THAN ONE RESIDENTI AL HOUSE BY ASSESSEE AT THE TIME OF INVESTMENT, TO MAKE ASSESSE E ELIGIBLE TO CLAIM THE SAID DEDUCTION. THE ASSESSEE CONTENDED THAT IT WAS HOLDING ONLY ONE HOUSE PROPERTY IN THE STATUS OF INDIVIDUAL AND JOIN T OWNERSHIP IN ANOTHER HOUSE WAS NO IMPEDIMENT TO THE CLAIM OF THE ASSESSE E. RELIANCE WAS PLACED ON VARIOUS JUDICIAL PRONOUNCEMENTS FOR THE C ONTENTION BUT NOT CONVINCED, LD. AO DENIED THE SAID DEDUCTION AND ADD ED THE RESULTANT LTCG TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 12/01/2015 AND RAISED SIMILAR CONTENTIONS. AFTER CAREFUL CONSIDERATION OF THE SAM E, THE LD. CIT(A) AGREED WITH THE CLAIM OF THE ASSESSEE BY MAKING FOL LOWING OBSERVATION:- 5.2 . GROUND OF APPEAL NO.1[ DENIAL OF CLAIM U/S 54F RS. 235,58,883/-]; 5.2.1 HAVING CAREFULLY AND DISPASSIONATELY CONSIDER ED THE FACT AND CIRCUMSTANCES OF THE CASE, IT IS NOTED THAT DURING THE PREVIOUS YEAR REL EVANT TO A Y 2011-12, THE APPELLANT HAD INTRODUCED THE LAND SITUATED AT BARODA INTO THE PAR TNERSHIP FIRM, NAMELY, M/S MANSAGAR INFRASTRUCTURE (THE FIRM) AS HIS SHARE. THE APPELLA NT HAS OFFERED CAPITAL GAIN WITHIN THE MEANING OF SECTION 45(3) OF THE I.T. ACT, 1961 AND CONSIDERATION WAS STATED AS THE AMOUNT CREDITED. IN THE BOOKS. OF ACCOUNTS OF THE FIRM. TH E SAID LAND WAS HELD BY THE APPELLANT FOR MORE THAN 36 MONTHS. THUS, THE INTRODUCTION OF LAND BY THE APPELLANT IN THE SAID FIRM, GAVE RISE TO THE LONG TERM CAPITAL GAIN OF RS,2,35,58,68 3/-. THE APPELLANT INVESTED A SUM OF RS.6,82,76,081 WITHIN STIPULATED PERIOD IN THE NEW RESIDENTIAL HOUSE AND CLAIMED EXEMPTION U/S 54F OF THE ACT. ON THE DATE OF TRANSFER OF THE SAID LAND AT BARODA THE APPELLANT OWNED ONE RESIDENTIAL HOUSE IN HIS INDIVIDUAL CAPACITY AT AND AS FIAT NO 502, SAGAR BHAVAN ,JVPD, MUMBAI. BESIDES THE ABOVE REFERRED HOUSE, HE ALSO H AD UNDIVIDED SHARE IN ANOTHER RESIDENTIAL HOUSE JOINTLY HELD WITH HIS DAUGHTER MS . MEENAKSHI SAGAR AT POORNA APARTMENT. THE A.O. CONFRONTED THE APPELLANT AND OBTAINED APPE LLANT'S REPLY ON 30.12.2013. THE A.O. HAS NOT ACCEPTED THE APPELLANT'S CONTENTION BECAUSE THE APPELLANT OWNED MORE THAN ONE RESIDENTIAL HOUSE, WHOLLY OR PARTLY, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET AS STATED BY HIM IN PARAGRAPH. NO.5. 2 OF THE RELEVANT ASSESSMENT ORDER. . 5.2. 2 IT IS NOT DISPUTED THAT THE APPELLANT DID NO T OWN FULLY AND WHOLLY MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET IN HIS CAPACITY OF A RESIDENT INDIVIDUAL. THE SECOND R ESIDENTIAL HOUSE AT KURLA APARTMENT WAS JOINTLY OWNED BY MORE THAN ONE PERSON THE A.O. HAS DENIED APPELLANTS CLAIM OF EXEMPTION U/S 54F OF THE ACT ON THE GROUND THAT APPELLANT WAS ALREADY A CO-OWNER OF ANOTHER FLAT SIMILAR FACTS HAVE BEEN CONSIDERED AND DECIDED BY T HE JURISDICTIONAL BENCH OF HONBLE ITAT IN THE CASE OF ITO.WARD 22(3)(3) VS. RASIKLAL N.SATRA REPORTED AS (2006) 98 ITD 335 (MUM ). HONBLE ITAT HAS HELD THAT WHERE THE PROPERTIES OWNED BY MORE THAN ONE PERSON IT ITA NO.1880/M/2015 MOTI RAMANAND SAGAR ASSESSMENT YEAR-2011-12 4 CANNOT BE SAID THAT ANY ONE OF THEM IS THE OWNER OF THE PROPERTY. JOINT OWNERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHIP. OWNERSHIP OF A RESIDENTIAL HOUSE MEANS OWNERSHIP TO THE EXCLUSION OF ALL OTHERS. HONBLE ITAT CONCLUDED THA T THE ASSESSEE WAS NOT THE OWNER OF A RESIDENTIAL HOUSE, JOINTLY OWNED BY THE ASSESSEE A ND HIS WIFE, ON THE DATE OF TRANSFER OF ORIGINAL ASSET WITHIN THE, MEANING OF SECTION 54F O F THE ACT. 5.2.3 HONBLE ITAT, CHENNAI BENCH IN THE CASE OF ACIT. CENTRAL CIR.3(1), CHENNAI VS. SHRI K. SURENDRAKUMAR (ITA NO.1234/MDS/2010 DATED 12.08. 2011 ) HAS ALSO HELD THAT IN THE CIRCUMSTANCES THE FINDING OF THE LD.CIT(A) HOLDING THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION U/S 54F OF THE ACT US ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. HONBLE ITAT HAS ALSO CONSIDERED AND RELIED ON THE DECISION GIVEN BY HON'BLE SUPREME COURT IN THE CASE OF SETH BANARSI DAS GUPTA VS. CIT(166 ITR 783) (SC) WHEREIN IT HAS BEEN HELD THAT A FRACTIONAL OWNERSHIP WAS NOT SUFFI CIENT FOR CLAIMING EVEN FRACTIONAL DEPRECIATION U/S 32 OF THE ACT. 5.2.4 HONBLE MADRAS HUGH COURT IN THE CASE OF DR. SMT. P. K. VASANTHI RANGARAJAN VS. COMMISSIONER OF INCOME TAX CHENNAI (252 CTR 336 ) (MAD.) HAS HELD IN SIMILAR CIRCUMSTANCES THAT JOINT OWNERSHIP OF A PROPERTY CO ULD NOT BE HELD TO STAND IN ASSESSEE WAY OF CLAIMING EXEMPTION U/S 54 OF THE ACT. A READING OF SECTION 54 OF THE ACT CLEARLY POINTS OUT THAT THE HOLDING OF THE RESIDENTIAL HOUSE AS ON THE DATE OF TRANSFER HAS RELEVANCE TO THE STATUS OF THE ASSESSEE AS ON INDIVIDUAL OR AS HUF. IN THE PRESENT CASE THE APPELLANT OWNS WHOLLY AND FULLY ONLY ONE RESIDENTIAL HOUSE IN HIS INDIVIDUAL CAPACITY, THE SECOND FLAT IS OWNED JOINTLY WITH HIS DAUGHTER AND THEREFORE; THE SECOND FLAT OWNED IN THE CAPACITY OF AOP OR BOI OR IN ANY OTHER CAPACITY, CANNOT BE A DISQUA LIFICATION FOR CLAIMING EXEMPTION U/S.54 OF THE ACT. 5.2.5 HONBLE BOMBAY HIGH COURT IN THE CASE OF PRAKASH V/S. ITO 312 ITR 40 (BOM) HAS HELD THAT SECTION 54F OF THE ACT CONTEMPLATES ONLY INVESTMENT IN RESIDENTIAL PROPERTY BY THE ASSESSEE. SECTION 54 OF THE ACT REFERS TO THE ASSES SEE, BEING AN INDIVIDUAL OR A HUF. INCIDENTALLY, BOTH ARE DIFFERENT LEGAL ENTITIES. 5.2.6. HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT FOR GRANTING THE EXEMPTION UNDER SECTION 54F OF THE. ACT, THE CONDIT ION PRESCRIBED IN THAT PROVISO TO THE SAID SECTION IS THAT THE ASSESSEE BEING AN INDIVIDUAL OR A HUF, SHOULD NOT OWN MORE THAN ONE RESIDENTIAL HOUSE IN THE STATUS OF AN INDIVIDUAL OR HUF AS ON DATE OF HIS TRANSFER. THUS, THE CONDITION IN THE PROVISO HAS TO GO WITH THE UNDERST ANDING OF THE SAME STATUS STIPULATED IN THE PARENT PROVISION UNDER SECTION 54F OF THE ACT. IN T HIS CASE, THE APPELLANT OWNED A RESIDENTIAL HOUSE ALONG WITH HIS DAUGHTER UNDER A JOINT OWNERSH IP OR AS A CO-OWNER THEREIN, THE OWNERSHIP IN A STATUS OTHER THAN THAT OF INDIVIDUAL /HUF WOULD NOT RESULT IN THE DENIAL OF EXEMPTION T OF THE ACT. STRONG RELIANCE IS PLACED O N THE FOLLOWING DECISIONS:- (I) ITO. WARD 22(3)(3) VS. RASIKLAL N. SATRA REPORT ED AS (2006) 98 ITD 335 (MUM). (II) ACIT. CENTRAL CIR. 3(1), CHENNAI VS. SHRI K. S URENDRAKUMAR (ITA NO.1234/MDS?2010 DATED 12.08.2011) (III) SETH BANARSI DAS GUPTA VS. CIT(166 ITR 783) ( SC) (IV) DR. SMT. P.K. VASANTHI RANGARAJAN VS. COMMISSI ONER OF INCOME TAX CHENNAI (252 CTR 336) (MAD.) (V) PRAKASH V/S. ITO 312 ITR 40 (BOM) 5.2.7. IN VIEW OF THE ABOVE, GROUND OF APPEAL NO.A IS ALLOWED. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE PROVISIONS OF SECTION 54F AND CONTENDED THAT TO CLAIM THE BENEFIT ITA NO.1880/M/2015 MOTI RAMANAND SAGAR ASSESSMENT YEAR-2011-12 5 UNDER THE SAID SECTION, THE ASSESSEE MUST NOT HOLD MORE THAN ONE HOUSE PROPERTY WHETHER SINGLY OR JOINTLY AND THEREF ORE, IN THE PRESENT CASE, SINCE ASSESSEE OWNED TWO PROPERTIES, THE DEDU CTION WAS RIGHTLY DENIED TO HIM. 5. WE HAVE HEARD THE CONTENTIONS AND PERUSED RELEVA NT MATERIAL ON RECORD. WE NOTE THAT THE LD. CIT(A) HAS GRANTED REL IEF TO ASSESSEE BY PLACING RELIANCE ON MANY JUDICIAL PRONOUNCEMENTS WH ERE A LIBERAL VIEW HAS BEEN TAKEN BY VARIOUS COURTS / AUTHORITIES AS I T IS WELL SETTLED THAT BENEFICIAL PROVISIONS SHOULD BE CONSTRUED LIBERALLY . WE FIND THAT THE RATIO OF DECISION OF MADRAS HIGH COURT RENDERED IN DR. SMT. P. K. VASANTHI RANGARAJAN VS. COMMISSIONER OF INCOME TAX CHENNAI ( 252 CTR 336) (MAD.) SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. THE HONBLE COURT HAS CLEARLY HELD THAT JOINT OWNERSHIP OF A PROPERTY COULD NOT BE HELD TO STAND IN ASSESSEES WAY OF CLAIMING EXEMPTION U/S 5 4 OF THE ACT. THE LD. DR COULD NOT POINT OUT ANY CONTRARY DECISION IN REVENUES FAVOR. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW OF THE H ONBLE MADRAS HIGH COURT, WE ARE INCLINED TO CONFIRM THE ORDER OF LD. CIT(A), THE SAME BEING IN TUNE WITH VARIOUS JUDICIAL PRONOUNCEMENT AS RIGH TLY NOTED BY LD. CIT(A). 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NO.1880/M/2015 MOTI RAMANAND SAGAR ASSESSMENT YEAR-2011-12 6 MUMBAI; DATED : 31 .07.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI