Mukund M. Altekar, Pune V. Deputy Commissioner of Income-tax,

ITA 1978/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9326 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N HONAV AR
• Assessee Lawyers: SUNIL PATHAK; PRASANN A L JOSHI
• Keywords: Capital asset; Gift; Additional evidence; Wrong claim; Revised return
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO. 1978 /PUN/20 14 / ASSESSMENT YEAR : 2011 - 12 MUKUND M. ALTEKAR 108/31, BHARATI NIWAS SOCIETY, LANE 14 PRABHAT ROAD, PUNE - 411 004 / APPELLANT PAN : AANPA3588L / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(2) , PUNE. / RESPONDENT A PPELLANT BY : SHRI SUNIL PATHAK & SHRI PRASANNA L. JOSHI R ESPONDENT BY : SHRI A. N HONAV AR , JCIT / DATE OF HEARING : 25 .05.2017 / DATE OF PRONOUNCEMENT : 23 .06.2017 / ORDER PER SUSHMA CHOWLA , JM THIS APPEAL FILED BY THE ASSES SEE IS AGAINST THE ORDER OF CIT(A) - I , PUNE DATED 28 .0 8 .20 1 4 RELATING TO ASSESSMENT YEAR 2011 - 12 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO AS WELL AS THE LD. CIT(APPEALS) ERRED IN DENYING EXEMPTION TO THE APPELLANT CLAIMED FROM HIS LONG TERM CAPITAL GAINS U/S 54 AND U/S 54F FOR REASONS WHICH ARE WRONG AND INCORRECT AND THE APPELLANT PRAYS THAT THE SAID EXEMPTION BE ALLOWED TO HIM. 2 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR 2. LD. CIT (APPEALS) AND LD. AO MISINTERPRETED THE WORD PURCHASED USED IN SECTIONS 54 AND 54F OF THE INCOME TAX ACT, 1961. 3. LD. CIT (APPEALS) ERRED IN NOT CONSIDERING THE FACT THAT RESIDENTIAL HOUSE IS A BUILDING AND NOT MERE LAND. 4. LD. CIT (A) ERRED IN INTERPRETING THE DOCUMENTS IN THE REAL SENSE PERTAINING TO ACQUISITION OF THE HOUSE BY APPELLANT AND IT CANNOT BE SAID THAT THE APPELLANT HAS MERELY PURCHASED LEASEHOLD INTEREST AND NOT A RESIDENTIAL HOUSE. 5. LD. CIT (APPEALS) HAS NOT APPLIE D THE PRECEDENTS IN PROPER PERSPECTIVE. 6. LD. CIT (APPEALS) SHOULD HAVE CONSIDERED THAT RIGHT IN THE LAND COUPLED WITH SUPERSTRUCTURE IS A RESIDENTIAL HOUSE AND AS SUCH THE REQUISITE CONDITIONS IN SECTIONS 54 AND 54D STAND FULFILLED. 7. LD. CIT (APPEALS ) SHOULD HAVE CONSIDERED THAT PROVISIONS OF SECTIONS 54 AND 54F DO NOT REQUIRE ABSOLUTE OWNERSHIP OVER THE LAND AS ALSO OVER THE BUILDING. 8. LD. CIT (APPEALS) SHOULD HAVE CONSIDERED THAT PROVISIONS OF SECTION 54 AND 54F STIPULATE THAT AN ASSESSEE SHOULD CONTINUE HIS OWNERSHIP OF THE HOUSE FOR 3 YEARS ONLY. 3. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD ALSO RAISED THE ADDITIONAL GROUND OF APPEAL AND HAD ALSO FILED ADDITIONAL EVIDENCE. HOWEVER, BOTH THE ADDITIONAL GROUND OF APPEAL AND THE ADDITIONAL EVIDENCE FILED HAS BEEN WITHDRAWN BY THE ASSESSEE. HENCE, THE ADDITIONAL GROUND OF APPEAL IS NOT BEING REFERRED TO. 4. THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS IN RELATION TO THE CLAIM OF DEDUCTION UNDER SECTIONS 54 AND 54 F OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME AND HAD THEN REVISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.30,74,052/ - . THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD DECLARED LONG TERM CA PITAL GAINS ON SALE OF HOUSE PROPERTY OF LAXMI PRASAD AS PER AGREEMENT TO SELL DATED 18.06.2010. THE ASSESSEE HAD DECLARED THE LONG TERM CAPITAL GAINS AT RS.64,55,304/ - AND HAD FURTHER CLAIMED THE EXEMPTION UNDER SECTIONS 54 AND 54F OF THE ACT FOR INVESTM ENT IN THE NEW HOUSE. DURING 3 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED FOR VARIOUS DOCUMENTS AND THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT PURCHASED OR CONSTRUCTED THE NEW HOUSE AS PER THE ELIGIBILITY CONDITIONS OF SEC TIONS 54 AND 54F OF THE ACT. THE ASSESSEE HAD MERELY ENTERED IN TO LEASE RENT AGREEMENT WITH MR . MINOO NOSHI NANAVATY FOR LEASEHOLD PROPERTY . THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY THE CLAIM OF DEDUCTION UNDER SECTIONS 54 AND 54F OF THE ACT SHOULD NOT BE DISALLOWED, IN VIEW OF THE PROVISIONS OF THE ACT. THE ASSESSEE POINTED OUT THAT BY VIRTUE OF DEFINITION IN SECTION 27(IIIB) READ WI TH CLAUSE (F) OF SECTION 269UA OF THE ACT , WHERE THE ASSESSEE HAD ACQUIRED A NY RIGHTS FOR A TERM NOT LESS THAN TWELVE YEARS AND WHERE THE POSSESSION OF THE PROPERTY HAS BEEN RECEIVED BY THE ASSESSEE, THEN THE ASSESSEE IS DEEMED TO BE THE OWNER OF SAID HOUS E PROPERTY. HE FURTHER POINTED OUT THAT UNEXPIRED PERIOD OF LEASE WAS 27 YEARS WHICH WAS ACQUIRED BY THE ASSESSEE, AS SUCH, THE ENTIRE INVESTMENT IN HOUSE PURCHASED BY THE ASSESSEE WOULD QUALIFY FOR THE PURPOSES OF SECTION 54/54F OF THE ACT. THE ASSESSEE HAD ACQUIRED LEASEHOLD INTEREST IN PROPERTY AT MAHAB A LESHWAR, WHEREIN THE LANDS WERE BEING ALLOTTED ON LEASEHOLD BASIS BY THE GOVERNMENT OF MAHARASHTRA AND THE LEASE WERE RENEWED FROM YEAR TO YEAR AFTER EXPIRY OF LEASE PERIOD. THE SAID ASSIGNMENT OF LEAS E RIGHTS WERE ON THE PAYMENT OF CERTAIN AMOUNTS AND WHERE ANY LEASEHOLD RIGHTS IN A PROPERTY ARE ACQUIRED, THEN THE SAME ARE TRANSFERRED TO THE OWNERS NAMES. THE ASSESSEE FURTHER POINTED OUT THAT THE HOUSE CONSTRUCTED ON LEASEHOLD LAND STILL REMAINS A HOUSE PROPERTY VALUED ON THE BASIS OF NET MAINTAINABLE RENT. WHERE THE ASSESSEE HAD EXCLUSIVE RIGHTS TO CONTINUE TO POSSESS AND ENJOY THE HOUSE PROPER TY BOTH LEGALLY AND BENEFICIALLY AS ITS OWNER WITH UNFETTERED RIGHTS OF USE AND ENJOYMENT, THEN THE ASSESSEE IS ENTITLED TO CLAIM THE SAID DEDUCTION UNDER SECTIONS 54 AND 4 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR 54F OF THE ACT. THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 54/54F OF T HE ACT. 6. THE CIT(A) HOWEVER, HELD THAT WHERE THE OWNERSHIP OF LEASEHOLD PROPERTY WAS WITH THE GOVERNMENT AUTHORITIES, THEN IT COULD NOT BE TERMED AS SOLELY VESTED WITH THE ASSESSEE AND IT COULD NOT BE SAID THAT THE ASSESSEE HAD LEGAL TITLE OVER THE SAID PROPERTY. ACCORDINGLY, THE DEDUCTION CLAIMED UNDER SECTIONS 54 AND 54F OF THE ACT AGAINST LONG TERM CAPITAL GAINS WAS DENIED TO THE ASSESSEE. THE CIT(A) REJECTED THE CONTENTION OF ASSESSEE REFERRING TO THE WORDS USED IN SECTION 54 OF THE ACT I.E. PURCH ASE OR CONSTRUCTION OF NEW RESIDENTIAL HOUSE . THE CIT(A) OBSERVED THAT IT WAS QUITE OBVIOUS THAT THE SAME SHOULD BE AS A OWNER AND NOT PERPETUAL LESSEE OR ASSIGNOR OR LICENSEE OR TENANT. THE CIT(A) HELD THAT THE ESSENTIAL REQUIREMENT FOR APPLICATION OF PROVISIONS OF SECTION 54/54F OF THE ACT WAS THAT THE ASSESSEE HAD TO ACQUIRE / BUY A PROPERTY AS A OWNER AND NOT BY ANY OTHER MODE LIKE LEASE, ASSIGNMENT, ETC. WHERE THE ASSESSEE WAS ENJOYING THE RIGHTS BY VIRTUE OF AGREEMENT OF ASSIGNMENT OR DEED OF ASSI GNMENT ARE ONLY AS AN ASSIGN EE AND NOT AS A OWNER, BY TAKING POSSESSION OF THE PROPERTY AS PER THE AGREEMENT OF ASSIGNMENT, COULD NOT BE CONSIDERED AS OWNERSHIP AS POSSESSION HAS BEEN TAKEN AS A LESSEE OR ASSIGNEE AND NOT AS AN OWNER OF THE SAID PROPERTY. THE SECOND ARGUMENT OF THE ASSESSEE I.E. REFERENCE TO PROVISIONS OF SECTION 27(IIIB) READ WITH CLAUSE (F) OF SECTION 269UA OF THE ACT THAT A PERSON HAVING LEASEHOLD RIGHTS FOR MORE THAN TWELVE YEARS IN PROPERTY INCLUDING THE PERIOD OF RENEWAL OF LEASE , IF ANY , HAS TO BE CONSIDERED AS DEEMED OWNER, WAS FOUND TO HAVE NO MERIT, WHEREIN THE DEEMED OWNERSHIP WAS FOR A LIMITED PURPOSES OF SECTION S 22 TO 26 OF THE ACT WHICH RELATE TO COMPUTATION OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE OTHER AR GUMENTS OF THE ASSESSEE THAT WHILE EXECUTING AND 5 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR REGISTERING THE DEED OF ASSIGNMENT DATED 16.05.2012 , HE HAD PAID STAMP DUTY AS APPLICABLE TO CONVEYANCE OF IMMOVABLE PROPERTY , AS THE STAMP AUTHORITIES VIEW ED IT AS CONVEYANCE, WAS ALSO FOUND TO BE NOT SUSTA INABLE IN LAW BY THE CIT(A). THE CONVEYANCE UNDER THE RELEVANT ACT WAS ONLY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AND THE SAME COULD NOT BE CONSIDERED AS CONVEYANCE OF THE TILE OF THE PROPERTY TO THE ASSESSEE AS OWNER. REFERENCE WAS MADE TO THE TERMS OF LEASE AGREEMENT IN THIS REGARD. THE CIT(A) HELD THAT WHERE THE ASSESSEE WAS THE ASSIGNEE HAD ONLY ACQUIRED RESTRICTED RIGHTS OF POSSESSION AND ENJOYMENT OF THE SAID PROPERTY DURING THE PERIOD OF LEASE AND THE ASSESSEE HAD NOT PURCHASED A NEW PROPERTY AS AN OWNER AS REQUIRED UNDER SECTION 54/54F OF THE ACT AND CONSEQUENTLY, THE ORDER OF ASSESSING OFFICER IN DENYING THE DEDUCTION UNDER SECTION 54/54F OF THE ACT WAS UPHELD BY THE CIT(A). 7. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF CIT(A). 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE STANDS COVERED BY THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN ACIT VS. ASHA ASHOK BOOB (2015) 69 ITR (TRIB) 321 (PUNE) . IT WAS FURTHER POINTED OUT BY THE LEARNED AU THORIZED REPRESENTATIVE FOR THE ASSESSEE THAT BOTH THE AUTHORITIES BELOW RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CIT VS. T.N. ARAVINDA REDDY (1979) 120 ITR 46 (SC), WHICH IN FACT HELPS THE ASSESSEE. HE FURTHER POINTED OUT THAT THE ASSESSEE HAD PAID LEASEHOLD RIGHTS FOR 30 YEARS WHICH WAS RENEWABLE AND THE TOTAL CONSIDERATION PAID WAS RS.3.65 CRORES PLUS STAMP DUTY. THE ASSESSEE HAD SOLD THE ORIGINAL ASSET AND THE CAPITAL GAINS WORKED OUT AT RS.64 LAKHS WAS CLAIMED AS EXEMPT AGAINST THE COST OF PURCHASE OF THE SAID LEASEHOLD RIGHTS. OUR ATTENTION WAS DRAWN TO THE COMPUTATION OF INCOME AT PAGE 56 OF THE PAPER BOOK IN THIS REGARD. HE FURTHER REFERRED TO THE MEMORANDUM OF ASSIGNMENT DATED 10.07.2010 WHICH IS PLACED AT PAGES 1 TO 10 6 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR OF THE PAPER BOOK AND ALSO REFERRED TO THE ORDER OF COLLECTOR, UNDER WHICH THE LEASEHOLD INTEREST IN THE SAID PROPERTY WAS TRANSFERRED TO THE ASSESSEE. THE DOCUMENT IN MARATHI IS PLACED AT PAGES 24 AND 25 ALONG WITH ITS ENGLISH TRANSLATION AT PAGES 21 TO 23 OF THE PAPER BOOK. THE DEED OF ASSIGNMENT DATED 16.05.2012 IS PLACED AT PAGES 26 TO 50 OF THE PAPER BOOK. HE REFERRED TO THE PROVISIONS OF SECTION 27(IIIB) OF THE ACT, WHICH DEFINES THE OWNER AND THE PROVISIONS OF CLAUSE (F) OF SECTION 269UA(1) OF THE ACT, WHICH TALKS ABOUT THE LEASE FOR 12 YEARS AND THE REQUIREMENT WAS THAT IN SUCH CASES, THE ASSESSEE IS DEEMED TO BE THE OWNER OF SUCH ASSET WHICH WAS LEASED OUT AND THE LEASE PERIOD WAS FOR MORE THAN 12 YEARS. 9. THE LEARNED DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST CLAIM OF DEDUCTION UNDER SECTIONS 54 AND 54F OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD DECLARED LONG TERM CAPITAL GAINS AT RS. 64,55,304/ - AND THERE IS NO DISPUTE IN RESPECT OF COMPUTATION OF AFORESAID LONG TERM CAPITAL GAINS. HOWEVER, THE ASSESSEE FURTHER HAD CLAIMED THE DEDUCTION UNDER SECTION 54/54F OF THE ACT IN RESPECT OF INVESTMENT MADE FOR PURCHASE OF LEASEHOLD RIGHTS IN PROPERTY AT MAHAB A LESHWAR. THE ASSESSEE CLAIMED THAT IT HAD BOUGHT THE SAID LEASEHOLD RIGHTS, WHEREIN THE TERM OF LEASE WAS FOR 30 YEARS BUT WHEN THE ASSESSEE PURCHASED IT FROM EARLIER OWNER, UNEXPIRED LEASE PERIOD WAS 27 YEARS. THE STATE GOVERNMENT IN MAHAB A LESHWAR WAS ISSUING THE LAND ON LEASEHOLD BASIS AND BEFORE EXPIRY OF LEASE, FURTHER RENEWING THE LEASE FROM YEAR TO YEAR. SUCH PRACTICE WAS BEING CARRIED OUT BY THE GOVERNMENT AT MAHAB A LESHWAR FOR THE PAST SEVERAL YEARS. THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION UNDER 7 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR THE AGREEMENT FOR ASSIGNMENT DATED 10.07.2010 HAD PURCHASED THE LEASEHOLD RIGHT S IN THE PROPERTY FROM ONE MINOO NOSHI NANAVATY FOR TOTAL CONSIDERATION OF RS.3. 6 5 CRORES. THE ASSESSEE FURTHER HAD PAID STAMP DUTY ON THE REGISTRATION OF SAID D OCUMENT. THE PROPERTY OWNED BY THE ASSESSEE IS IN HILL STATION, WHEREIN THE STATE GOVERNMENT WAS ALLOTTING THE LAND ON LEASEHOLD BASIS. THE PERUSAL OF THE PREAMBLE OF THE AGREEMENT REFLECTS THAT THE LEASE FOR THE SAID LAND WAS ISSUED ON 04.11.1938 BETWEE N THE GOVERNOR OF BOMBAY AS LESSOR AND MR. RASHID DINSHAW KHAMBATTA AS LESSEE FOR A PERIOD OF 30 YEARS FROM 22.04.1938 . THEREAFTER, THE LEASE WAS FURTHER RENEWED BY THE ORDER OF DISTRICT COLLECTOR FOR A FURTHER PERIOD OF 30 YEARS UP TO 30.07.1977 AND WAS AGAIN RENEWED FOR 30 YEARS UP TO 31.07.2007 . THE SAID LAND WAS BEQUEATHED TO MR. DARA, LEGAL HEIR OF RASHID DINSHAW KHAMBATTA , WHO IN TURN, GIFTED THE SAID PROPERTY TO MINOO NOSHIR NANAVATY. THE NAME OF THE SAID PERSON WAS MUTATED AS ASSIGNOR BY THE COLLECTOR, SATARA VIDE ORDER DATED 08.01.1989 . THE ASSESSEE ACQUIRED THE LEASEHOLD, POSSESSORY AND ALL THE OTHER RIGHTS OF SAID PROPERTY FROM MINOO NOSHIR NANAVATY, WHO HAD REPORTED TO ASSESSEE THAT THE GOVERNMENT LEASE FOR THE SAID LAND HAD EXPIRED ON 31 .07.2007 , H E HAD APPLIED FOR RENEWAL OF THE SAME, BUT THE SAME WAS PENDING WITH THE GOVERNMENT OF MAHARASHTRA. THE ASSESSEE ACQUIRED ALL THE RIGHTS OF THE PROPERTY I.E. LEASEHOLD AND POSSESSORY ON AS IS WHERE IS BASIS FROM THE ASSIGNOR AND THE ASSIGNEE ALSO UNDERTOOK TO PURSUE THE MATTER OF RENEWAL WITH THE REVENUE AUTHORITIES OBTAINING AND / OR RENEWING LEASE IN RESPECT OF THE SAID PROPERTY IN HIS FAVOUR AT HIS OWN COST AND EXPENSES. THE CONSIDERATION WHICH WAS AGREED UPON BETWEEN THE PARTIES WAS RS.3.65 CRORES . THE COLLECTOR, SATARA RENEWED THE LEASE FOR FURTHER PERIOD OF 30 YEARS FROM 01.08.2007 VIDE ITS ORDERS DATED 03.03.2012 AND 17.03.2012. THE NAME OF ASSESSEE WAS ALSO SUBSTITUTED AND PERMISSION WAS GIVEN FOR THE TRANSFER OF GOVERNMENT LEAS EHOLD LAND AT MAHABALESHWAR FOR RESIDENTIAL PURPOSE 8 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR TO THE ASSESSEE BEFORE US ON CERTAIN TERMS AND CONDITIONS. THE COPY OF SAID DOCUMENT IN MARATHI IS PLACED AT PAGES 24 AND 25 OF THE PAPER BOOK WITH ENGLISH TRANSLATION AT PAGES 21 TO 23 OF THE PAPER BOOK . IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND DOCUMENTATION, THE QUESTION WHICH ARISES IS WHETHER THE ASSESSEE IS THE OWNER OF SAID LAND OR IS A LESSEE OF THE SAID LAND, WHEREIN IT HAS NOT ACQUIRED ANY RIGHTS OF POSSESSION AS IS THE REQU IREMENT UNDER SECTION 54/54F OF THE ACT. 11. UNDER THE PROVISIONS OF SECTION 54 OF THE ACT, WHERE THE CAPITAL GAINS ARISES FROM THE TRANSFER OF LONG TERM CAPITAL ASSET BEING BUILDINGS OR LANDS APPURTENANT THERETO AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THE ASSESSEE WITHIN STIPULATED PERIOD HAS PURCHASED OR CONSTRUCTED ONE RESIDENTIAL HOUSE IN INDIA , THEN THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION ON ACCOUNT OF COST OF SUCH RESIDENTIAL HOUSE SO PURCHASED OR CONSTRUCTED, AS PER THE ACT. SIMILARLY, UNDER SECTION 54F OF THE ACT, WHERE LONG TERM CAPITAL GAINS ARISES FROM TRANSFER OF ANY LONG TERM C APITAL ASSET NOT BEING A RESIDENTIAL HOUSE AND THE ASSESSEE WITHIN STIPULATED PERIOD HAS PURCHASED OR CONSTRUCTED ONE RESIDENTIAL HOUSE IN INDIA, THEN AS PER THE PROVISIONS OF THE SAID SECTION, THE ASSESSEE IS ENTITLED TO CLAIM SET OFF OF VALUE OF THE SAID CONSIDERATION AGAINST THE LONG TERM CAPITAL GAINS ARISING IN HIS HANDS. THE QUESTION WHICH HAS TO BE SEEN IS THE INTERPRETATION OF THE TERM PURCHASED OR CONSTRUCTION OF RESIDENTIAL HOUSE. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE HAD ACQUIRED LEASEHOLD RIGHTS OF RESIDENTIAL HOUSE IN MAHABALESHWAR. THE ASSESSEE UNDOUBTEDLY, WAS A LESSEE , AS AGAINST THE GOVERNMENT OF MAHARASHTRA, WHO HAD ASSIGNED THE RIGHTS IN FAVOR OF ASSESSEE , UNDER WHICH THE ASSESSEE WAS ENJOYING THE RIGHTS IN THE SA ID PROPERTY I.E. RIGHT TO SELL, TRANSFER, CONVEY THE SAID LEASEHOLD PROPERTY 9 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR AND EVEN HAD THE RIGHT OF POSSESSION AND ALL RIGHTS IN THE SAID PROPERTY. THE SAID RIGHTS IN THE CASE OF ASSESSEE WERE ASSIGNED BY THE ORIGINAL LESSOR KNOWN AS ASSIGNOR OF THE AG REEMENT FOR PRICE OF RS.3.65 CRORES, WHICH WAS PURCHASED BY THE ASSESSEE, WHICH IN TURN, PURCHASED THE LEASEHOLD, POSSESSORY AND ALL RIGHTS OF THE SAID PROPERTY FOR THE SAID PRICE. THE COLLECTOR, SATARA HAD TRANSFERRED THE LEASEHOLD RIGHTS IN THE PROPERTY TO THE ASSESSEE VIDE ORDER DATED 26.04.2012 SUBJECT TO CERTAIN CONDITIONS FOR THE BALANCE PERIOD OF LEASE I.E. FOR 27 YEARS , PURSUANT TO WHICH DEED OF ASSIGNMENT WAS AGAIN EXECUTED ON 16.05.2012 BY MINOO NOSHIR NANAVATY IN FAVOUR OF ASSESSEE. THE COPY OF TRANSFER OF LEASE DOCUMENT IN MARATHI ARE PLACED AT PAGES 24 AND 25 ALONG WITH ITS ENGLISH TRANSLATION AT PAGES 21 TO 23 OF THE PAPER BOOK. THE DEED OF ASSIGNMENT DATED 16.05.2012 IS PLACED AT PAGES 26 TO 50 OF THE PAPER BOOK. THE NAME OF ASS ESSEE WAS MUTATED IN THE LAND RECORDS BY THE OFFICE OF MAHABALESHWAR HILL STATION MUNICIPALITY, VIDE ORDER DATED 13.05.2013 . THE LETTER IN MARATHI IS PLACED AT PAGE 52 ALONG WITH ENGLISH TRANSLATION AT PAGES 51 OF THE PAPER BOOK. 12. UNDER THE PROVISIO NS OF SECTION 27(IIIB) READ WITH CLAUSE (F) OF SECTION 269UA OF THE ACT, IT IS PROVIDED THAT A PERSON WHO ACQUIRES ANY RIGHTS IN A BUILDING OR PART THEREOF FOR A PERIOD WHICH IS NOT LESS THAN 12 YEARS, THEN THE ACQUIRER OF THE SAID PROPERTY IS DEEMED TO BE THE OWNER OF THAT BUILDING AND WHERE THE SAID PROPERTY BY WAY OF SALE O R EXCHANGE OR LEASE IS SO TRANSFERRED INCLUDING THE POSSESSION BEING TAKEN OR RETAINED IN PART PERFORMANCE , THEN THE SAID TRANSACTION IS DEEMED TO BE THE TRANSFER OF PROPERTY. THE ASSESSEE UNDOUBTEDLY, HAD PURCHASED THE LEASEHOLD RIGHTS IN THE SAID PROPERTY, WHEREIN THE LESSOR WAS GOVERNMENT OF MAHARASHTRA. THE ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFF ICER THAT IN CASE OF 112 LEASE D PROPERTIES IN 10 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR MAHABALESHWAR, GOVERNMENT VIDE RESOLUTION DATED 25.05.1999 , WHEREIN LEASES HAD BEEN GIVEN FROM 1834 TO 1917 FOR 233 HECTARES, HAD RENEWED THESE LEASES EVEN THOUGH LEASE PERIOD HAD EXPIRED FROM 1949 TO 1982. TH E GOVERNMENT ALSO PROVIDED FOR ASSIGNMENT OF LEASE RIGHTS ON PAYMENT OF CERTAIN AMOUNTS. IN THE CASE OF HOUSE PURCHASED BY THE ASSESSEE EVEN MUTATIONS OVER THE YEARS OF OWNERS HAD NOT BEEN TAKEN ON RECORD, YET THE GOVERNMENT BY ORDERS DATED 08.01.1981 AND 27.01.1981 ALLO TTED THE LEASEHOLD RIGHTS TO BE TRANSFERRED TO THE RIGHT OWNERS NAME, WHO IN TURN, ASSIGNED THE SAME TO THE ASSESSEE. IN OTHER WORDS, PERSONS WHO ARE THE LESSEE OF THE SAID PROPERTIES CONTINUES TO ENJOY THE RIGHTS IN THE PROPERTY INCLUDING POSSESSORY RIGHTS AND THE LEASE IS RENEWED FROM YEAR TO YEAR. THE ASSESSEE HAD ACQUIRED THE LEASE FOR REMAINING PERIOD OF 27 YEARS WHICH WAS MORE THAN THE PERIOD OF 12 YEARS PROVIDED IN THE ACT AND THE ASSESSEE IS THE OWNER OF SAID LEASEHOLD RIGHTS OF TH E PROPERTY , VIDE THE SAID DEED OF ASSIGNMENT , WHICH IS A MEMORANDUM OF ASSIGNMENT , BETWEEN THE PARTIES CANNOT BE TERMED AS DEED OF LEASE I.E. RENT. THE HOUSE WHICH IS CONSTRUCTED ON SUCH LEASEHOLD LAND REMAINS A HOUSE PROPERTY AND THE ASSESSEE HAVING EXCL USIVE RIGHTS TO CONTINUE TO ENJOY THE POSSESSION OF SAID PROPERTY , IS THE OWNER OF SAID ASSET WHERE HE ALSO CAN EXERCISE THE RIGHT OF TRANSFER IN THE SAID PROPERTY TO ANY OTHER PERSON. THE RIGHTS ENJOYED BY THE ASSESSEE ARE THE BUNDLE OF RIGHTS WHICH ARE ENJOYED BY THE ASSESSEE AS OWNER AND CONSEQUENTLY, WHERE THE ASSESSEE HAS ACQUIRED NEW ASSET AS OWNER, IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54/54F OF THE ACT. 13. WE FIND SIMILAR ISSUE OF NATURE OF LEASEHOLD RIGHTS ACQUIRED BY THE ASSESSEE AND THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTION 54F OF THE ACT , AROSE BEFORE THE TRIBUNAL IN ACIT VS. ASHA ASHOK BOOB (SUPRA) AND IT WAS HELD AS UNDER: - 11 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE ASSESSEE H AD CLAIMED DEDUCTION OF RS.30,78,228/ - U/S.54 BEING LONG TERM CAPITAL GAIN ON SALE OF SHARES INVESTED TOWARDS PURCHASE OF A FLAT. THE ASSESSING OFFICER DENIED THE DEDUCTION ON THE GROUND THAT THE ASSESSEE HAS MADE THE CLAIM UNDER WRONG PROVISION AND THE COR RECT PROVISION IS SECTION 54F. FURTHER THE ASSESSEE HAS NOT TAKEN POSSESSION OF THE FLAT TILL THE DATE OF ASSESSMENT ORDER AND THE ASSESSEE IS ONLY A LESSEE AND THE LEASE IS FOR A PERIOD OF 999 YEARS AND THE ASSESSEE IS NOT THE ABSOLUTE OWNER. WE FIND APAR T FROM CHALLENGING THE ABOVE CONTENTIONS THE ASSESSEE HAD TAKEN ADDITIONAL GROUNDS BEFORE THE LD. CIT(A) ACCORDING TO WHICH THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,24,65,625/ - TOWARDS THE COST OF RESIDENTIAL HOUSE AND THEREFORE THE CLAIM U/S. 54F SHOULD BE ALLOWED TO THE ASSESSEE TO THIS EXTENT AS AGAINST THE AMOUNT OF RS.30,78,228/ - INADVERTENTLY CLAIMED. ALTERNATIVELY IT WAS ARGUED THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,00,03,125/ - WITHIN THE PERIOD OF THREE YEARS FORM THE DATE OF TRANSFER OF THE OR IGINAL ASSET AND THEREFORE THE SAME SHOULD BE ALLOWED AS DEDUCTION U/S. 54F. WE FIND THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW CLAIM OF DEDUCTION U/S. 54F AMOUNTING TO RS.1,00,03,125/ - WHICH THE ASSESSEE HAS PAID WITHIN THE PERIOD OF THREE YEA RS FORM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. HE FURTHER OBSERVED THAT MERELY BECAUSE THE ASSESSEE HAS MADE A WRONG CLAIM U/S. 54 THE SAME CANNOT BE A GROUND TO DENY THE BENEFIT OF DEDUCTION U/S. 54F TO WHICH THE ASSESSEE IS OTHERWISE ELIGIBLE. AS REGARDS THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS ONLY A LESSEE AND THE LEASE PERIOD IS ONLY 999 YEARS AND THEREFORE, THE ASSESSEE IS NOT THE OWNER OF THE HOUSE, HE OBSERVED THAT THE LONG PERIOD OF LEASE OF 999 YEARS IS AS GOOD AS PERMANENT. THE NATURE OF RIGHTS ENJOYED BY THE ASSESSEE ARE SUFFICIENT ENOUGH TO SHOW THAT THE ASSESSEE IS OWNER OF THE PROPERTY AND THEREFORE SHE CAN BE TREATED AS A PURCHASER FOR THE PURPOSE OF SECTION 54F. AS REGARDS THE ALLEGATION OF THE ASSESS ING OFFICER THAT THE ASSESSEE HAS NOT TAKEN OVER POSSESSION OF THE PROPERTY HE HELD THAT BY MAKING APPROXIMATELY 80% OF THE PAYMENT BEFORE THE TIME LIMIT OF THREE YEARS THE ASSESSEE ACQUIRED DOMINION OVER THE FLAT BEFORE THE PRESCRIBED TIME LIMIT. 11. AS REGARDS THE GROUND RAISED BY THE REVENUE THAT BY MAKING A WRONG CLAIM U/S. 54F THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S. 54F, WE FIND THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS AND SHAREHOLDERS P. LTD. (SUPRA) HAS HELD THAT AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE WORDS COULD NOT H AVE BEEN RAISED MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE MUST BE CONSIDERED ON ITS OWN FACTS. IN THE INSTANT CASE THE ASSESSEE HAS ALREADY MADE A CLAIM ALTHO UGH UNDER THE WRONG HEAD. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ALLOWING THE CLAIM OF DEDUCTION U/S. 54F. 12. AS REGARDS THE ALLEGATION OF THE REVENUE THAT THE ASSESSEE IS NOT THE ABSOLUTE OWNER OF THE PROPERTY SINCE HE IS A LESSEE AND THE LEASE IS FOR A PERIOD OF 999 YEARS, WE FIND THIS ISSUE ALSO STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MRS. PREMA P. SHAH (SUPRA). IN THE ABOVE DECISION THE TRIBUNAL HAS HEL D THAT THE LEASE IS VALID FOR A PERIOD OF 150 YEARS, WHICH IS IN PERPETUITY AND AS SUCH, THE ASSESSEE IS AS GOOD AS ABSOLUTE OWNER OF THE PROPERTY. IN THE INSTANT CASE THE LEASE IS FOR A PERIOD OF 999 YEARS SUBJECT TO RENEWAL FOR FURTHER PERIOD OF 999 YEAR S. FURTHER, AS PER CLAUSE 26 OF THE LEASE AGREEMENT, THE ASSESSEE ENJOYS ALL THE RIGHTS, I.E. TRANSFER, MORTGAGE, SUB - LEASE ETC. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY. 12 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR 14. BOTH THE AUTHORITIES BELOW HAD RELIED ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. T.N. ARAVINDA REDDY (SUPRA) TO DENY THE CLAIM OF DEDUCTION TO THE ASSESSEE. IN THE FACTS OF THE SAID CASE, THE FAMILY PROPERTIES WERE PARTITIONED BETWEEN FOUR BROTHERS LEAVING IN COMMON A LARGE HOUSE IN THE OCCUPATION OF THEIR MOTHER. THE ELDEST, WHO WAS THE RESPONDENT BEFORE THE APEX COURT, SOLD HIS OWN HOUSE AND OUT OF FUNDS RECEIVED, HE ACQUIRED THE COMMON HOUSE FROM HIS THREE BROTHERS, WHO EXECUTED THREE RELEASE DEEDS FOR CONSIDERATION OF RS .30,000/ - EACH. THE QUESTION BEFORE THE APEX COURT WAS THAT WHETHER THESE THREE RELEASE DEEDS AMOUNT TO PURCHASE OF HOUSE AND THEN THE ASSESSEE WOULD BE ENTITLED TO THE CLAIM OF BENEFIT OF SECTION 54(1) OF THE ACT I.E. THE QUESTION WAS WHETHER THE RELEASE DEEDS BY SHARERS IN FAVOUR OF ONE OF THEM WHEREBY JOINT OWNERSHIP OF ALL BECAME SEPARATE OWNERSHIP OF ONE AMOUNT TO PURCHASE OF HOUSE PROPERTY WITHIN THE MEANING OF SECTION 54(1) OF THE ACT . THE APEX COURT HELD THAT EACH RELEASE, IN THE SAID CIRCUMSTANCE S, WAS A TRANSFER OF RELEASORS SHARE FOR CONSIDERATION TO THE RELEASE E . THE APEX COURT FURTHER HELD THAT THERE WAS NO REASON TO DIVORCE THE ORDINARY MEANING OF THE WORD PURCHASE AS BUYING FOR PRICE OR EQUIVALENT PRICE BY PAYMENT IN KIND OR ADJUSTMENT T OWARDS A DEBT OR FOR OTHER MONETARY CONSIDERATION FROM THE LEGAL MEANING OF THAT WORD IN SECTION 54(1) OF THE ACT. THE ASSESSING OFFICER HAD REFERRED TO THE HON'BLE SUPREME COURTS DECISION AND HAD OBSERVED THAT IT WAS HELD BY THE APEX COURT THAT THE WORD PURCHASE MUST BE GIVEN ITS COMMON MEANING AS BUYING FOR A PRICE OR PAYMENT. WE DO NOT AGREE WITH THE PRINCIPLE APPLIED BY THE ASSESSING OFFICER AS THE DECISION OF THE HON'BLE SUPREME COURT HAS NOT BEEN CONSIDERED IN ENTIRETY. THE APEX COURT GOES ON TO SAY THAT PURCHASE IS AS BUYING FOR PRICE OR EQUIVALENT PRICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR ANY OTHER MONETARY CONSIDERATION. THE HON'BLE SUPREME COURT FURTHER WENT ON TO SAY THAT IF YOU SELL YOUR HOUSE AND MAKE A PROFIT, BUT IF YOU B U Y O R BUIL D AN 13 ITA NO. 1978 /PUN/201 4 MUKUND M ALTEKAR ANOTHER HOUSE, SUBJECT TO THE CONDITIONS OF SECTION 54(1) OF THE ACT, YOU ARE EXEMPT. WE FIND THAT THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT ON THE OTHER HAND HELPS THE CASE OF ASSES SEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54/54F OF THE ACT. REVERSING THE ORDER OF CIT(A), WE ALLOW THE CLAIM OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 15. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON THIS 23 RD DAY OF JUNE , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 23 RD JUNE , 2017 . GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (A) - I , PUNE. 4. THE CIT - I , PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // /ASSISTANT REGISTRAR , / ITAT, PUNE .