LATE . SUBHASH S. JOGELKAR, MUMBAI V. ITO 26(1)(1), MUMBAI

ITA 2069/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7666 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: DEEPAK P TIKEKA R
• Keywords: Capital asset; Benefit of exemption
• Section: 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SHRI VIJAY PAL RAO (JM) I.T.A. NO.2069/MUM/2011 (A.Y. 2007-08 ) LATE SHRI SUBHASH S. JOGLEKAR, GR. FLOOR, 29-C, CHAUDHARI HOUSE, KHOTACHI WADI, V.P. ROAD, GIRGAUM, MUMBAI-400 004. PAN: ABEPJ 7558 H VS. INCOME-TAX OFFICER-26(1)(1), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI DEEPAK P. TIKEKAR. RESPONDENT BY SHRI O .A. MAO. DATE OF HEARING 02-01-2012 DATE OF PRONOUNCEMENT 06 -01-2012 O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 25-01-2011 IN RELATION TO ASSESSMENT YEAR 2007-08. 2. THE ONLY GROUND IS AGAINST THE CONFIRMATION OF D ENIAL OF EXEMPTION U/S. 54 OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAD TWO HOUSE PROPERTIES WHICH HE SOLD DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND CLAIMED EXEMPTION U/S.54. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE HOUSE PROPERTY WAS PURCHASED BY THE ASSESSEE ON 24-09-2007, WHEREAS THE AMOUNT OF CAPITAL GAIN WAS DEPOSITED BY THE ASSESSEE IN HIS SAVINGS BANK ACCOUNT RATHER THAN UN DER THE PRESCRIBED CAPITAL GAINS SCHEME ACCOUNT, 1988. ON BEING SHOW CAUSED AS TO WHY THE EXEMPTION S HOULD NOT BE DENIED, THE ASSESSEE STATED THAT THE OLD HOUSE, WHICH WAS A LONG-TERM CAPITAL ASSET, WAS SOLD ON 25-01-2007 AND A NEW RESIDENTIAL HOUSE WAS PURCHASED ON 24-09-2007. DURING THE INTERVENING PER IOD, THE AMOUNT WAS PLACED IN THE SAVINGS BANK ITA NO.2069/M/2011 LATE SUBHASH S.JOGLEKAR. 2 ACCOUNT. THE AO NOTED THE PROVISIONS OF SEC. 54(2) A ND HELD THAT THE EXEMPTION COULD NOT BE ALLOWED F OR THE REASON THAT THE REQUIREMENT FOR AVAILING THE E XEMPTION U/S.54 IS TO DEPOSIT THE AMOUNT OF CAPITAL GAIN IN THE CAPITAL GAINS SCHEME ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN WHICH, IN THIS CASE, WAS 31 -07- 2007. AS THE ASSESSEE DEPOSITED THE AMOUNT OF CAPITA L GAIN IN HIS S.B. ACCOUNT AND ON 24-09-2007 UTILIZ ED THE SAME FOR PURCHASING A NEW RESIDENTIAL HOUSE, THE EXEMPTION WAS NOT AVAILABLE. THE LD. CIT(A) ECHOE D THE ASSESSMENT ORDER ON THIS POINT. 4. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ONLY REASON FOR DENIAL OF EXEMPTION BY THE AO U/S. 54 IS THAT THE ASSESSEE DID NOT DEPOSIT TH E AMOUNT OF CAPITAL GAIN IN THE PRESCRIBED CAPITAL GA IN SCHEME ACCOUNT AS PER THE MANDATE OF SEC. 54(2). T HE UNDISPUTED FACTS ARE THAT THE ASSESSEE FILED HIS RE TURN ON 12-07-2007 AS AGAINST THE DUE DATE OF 31-07 - 2007. THE OLD HOUSE WAS SOLD ON 25-01-2007 AND THE N EW RESIDENTIAL HOUSE WAS PURCHASED ON 24-09- 2007. AS PER THE AO, THE AMOUNT OF CAPITAL GAIN EMAN ATING FROM THE TRANSFER OF OLD HOUSE OUGHT TO HAVE BEEN DEPOSITED IN THE CAPITAL GAIN SCHEME ACCOUNT B EFORE 31-07-2007 INSTEAD OF THE SAVINGS BANK ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE NEGOTIATIONS FOR PURCHASE OF NEW RESIDENTIAL HOUSE WERE GOING ON BEFORE THE DUE DATE ITSELF AND THE DELAY IN REGISTRATION TOOK PLACE BECAUSE OF THE SELLERS DAUGHTER HAD GONE ABROAD AND ONLY ON HER A RRIVAL IN INDIA THE REGISTRATION OF PROPERTY COULD BE EXECUTED. IF WE CAREFULLY GO THROUGH THE PROVISIONS OF SECTION 54, IT BECOMES PATENT THAT EXEMPTION IS AVAILABLE IF THE AMOUNT OF ELIGIBLE CAPITAL GAIN IS INTER ALIA EITHER UTILIZED FOR PURCHASING A NEW HO USE WITHIN TWO YEARS FROM THE DATE OF TRANSFER OF RESIDENTIAL HOUSE AS PER SUB-SECTION (1) OR IT IS DEPOSITED IN THE PRESCRIBED BANK ACCOUNT BEFORE THE FURNISHING OF RE TURN OF INCOME UNDER SECTION 139 AS PER SUB-SECTIO N (2) OF SECTION 54. THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF FATHIMA BAI VS. ITO (2009) 32 DTR (KAR.) 243 HAS HELD THAT EXEMPTION U/S. 54 CANNOT BE DENIED WHERE THE AMOUNT OF CAPITAL GAIN IS UTILIZED FOR THE PURPOSE OF INVESTMENT IN NEW RESIDENTIAL HO USE WITHIN THE TIME ALLOWED U/S. 139(4) OF THE ACT, BEING THE EXTENDED DUE DATE. SIMILAR VIEW HAS BEEN T AKEN BY THE HONBLE GAUHATI HIGH COURT IN CIT VS. RAJESH KUMAR JALAN 2006) 286 ITR 274 (GAU). ADVERTI NG TO THE FACTS OF THE INSTANT CASE IT IS NOTICED T HAT THE ASSESSEE PURCHASED NEW HOUSE ON 24-09-2007 WHIC H IS WELL WITHIN THE PERIOD OF TWO YEARS OF THE TRANSFER OF OLD HOUSE AS PER SUB-SECTION (1) OF SEC TION 54 AND BEFORE THE EXTENDED DUE DATE U/S. 139(4) FALLING ON 31-03-2008 I.E. ONE YEAR FROM THE END OF T HE RELEVANT ASSESSMENT YEAR. IN OUR CONSIDERED OPINION, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DENYING THE BENEFIT OF EXEMPTION U/S./54 TO THE ITA NO.2069/M/2011 LATE SUBHASH S.JOGLEKAR. 3 ASSESSEE WE, THEREFORE, OVERTURN THE IMPUGNED ORDER O N THIS ISSUE AND ORDER FOR THE GRANTING OF EXEMPTION. 5. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THE 06 TH DAY OF JANUARY, 2012. SD/- SD/- (VIJAY PAL RAO) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 06 TH JANUARY, 2012. NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-28,MUMBAI. 4 CIT-26,MUMBAI. 5.DR,E BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST .REGISTRAR, ITAT, MUMBAI.