SIMI KHANNA, MUMBAI V. ACIT 35 (3), MUMBAI

ITA 2076/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0583 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: SUSHIL U LAKHANI
• Keywords: Revised return
• Section: 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 2076/MUM/2017 ASSESSMENT YEAR: 2010 - 11 MS. SIMI KHANNA, 1110, ECOSTAR, VISHWESHWAR NAGAR, GOREGAON (EAST), MUMBAI 400063 PAN: AGEPK5653P VS. THE ACIT 35(3), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUSHIL U. LAKHANI (AR) REVENUE BY : SHRI V. JUSTIN (DR) DATE OF HEARING: 08 /11 /201 7 DATE OF PRONOUNCEMEN T: 07 / 02 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 02/01/2017 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 46 , MUMBAI , FOR THE A S S ESSMENT YEAR 2012 - 13 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. T HE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER BY RAISING THE FOLLOWING GRO UND S : - GROUND NO. 1: CAPITAL GAIN ON SALE OF RESIDENTIAL HOUSE PROPERTY TREATED AS SHORT TERM CAPITAL GAIN AMOUNTING TO RS. 32,86,739/ - THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN TREATING CAPITAL GAIN ON SALE OF RESIDENTIAL HOUSE PROPERTY A SHORT TERM CAPITAL GAIN & IN UPHOLDING THE DISALLOWANCE MADE BY THE LD. A.O. ON ACCOUNT OF NOT ALLOWING EXEMPTION U/S 54 OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT: 2 ITA NO. 20 76 / MUM/2017 ASSESSMENT YEAR: 2010 - 11 (I) THE PERIOD OF HOLDING IS TO BE DETERMINED FROM THE DATE OF POSSESSION AND NOT FROM THE DATE OF AGR EEMENT. (II) ALTERNATIVELY & WITHOUT PREJUDICE, THOUGH THE ASSESSEE BECAME OWNER BY WAY OF AGREEMENT ASSESSEE WOULD BECOME THE BENEFICIAL OWNER ONLY ON THE COMPLETE PAYMENT. GROUND NO. 2: GENERAL THE AO O RDER BEING CONTRARY TO EVIDENCE , LAW AND FACTS OF THE C ASE SHOULD BE AMENDED OR MODIFIED IN THE LIGHT OF THE GROUND DEDUCED ABOVE. 3. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 19,48,715/ - . REVISED RETURN WAS ALSO FILED. THE RETURN WAS PROCESSED U/S 143 (1). SUBSEQUENTLY, THE CASE WAS RE - OPENED U /S 147 OF THE ACT. IN RESPONSE TO THE NOTICE ISSUED U/S 142 (1), THE ASSESSEE SUBMITTED THE DETAILS CALLED FOR BY THE AO. IT WAS NOTICED THAT THE ASSESSEE AND HER HUSBAND, BEING JOINT OWNERS, SOLD THEIR FLAT FOR A TOTAL CONSIDERATION OF RS. 26,67,631/ - AND THE ASSESSEE CLAIMED EXEMPTION TO THE EXTENT OF HER SHARE U/S 54 OF THE ACT. I T WAS NOTICED THAT AGREEMENT FOR PURCHASE OF THE SAID PROPERTY WAS EXECUTED ON 03.03 .2006 . THE AGREEMENT FOR SALE OF THE SAID PROPERTY WAS EXECUTED ON 20.06.2009 AND AGREEMENT FOR PURCHASE OF NEW PROPERTY WAS EXECUTED ON 22.09.2008. ACCORDINGLY, T HE AO ASKED THE ASSESSEE AS TO WHY EXEMPTION U/S 54 SHOULD NOT BE DISALLOWED SINCE, THE PROPE RTY WAS UNDER CONSTRUCTION AND THE SAME WAS NOT HELD BY THE ASSESSEE FOR THREE YEARS. THE ASSESSEE CONTENDED THAT THE RESIDENTIAL PROPERTY ON THE FIRST FLOOR IN TOWER - C AT OBEROI WOODS, MG GOREGAON (EAST), WAS ALLOTMENT IN THEIR FAVOUR VIDE LETTER OF DATED 29.03.2005. T HE AGREEMENT FOR SALE OF THE SAID PROPERTY WAS REGISTERED ON 03.03.20 09. HENCE , THE PROPERTY WAS HELD BY THE ASSESSEE FOR MORE THAN THREE YEARS. THE ASSESSEE RELYING ON THE VARIOUS JUDGMENTS OF THE HONBLE HIGH COURTS AND THE VARIOUS BENCHES OF THE TRIBUNAL CONTENDED THAT THE DATE OF ALLOTMENT OF THE FLAT IS THE DATE OF PURCHASED FOR THE PURPOSES OF SECTION 54/54F OF THE ACT . 3 ITA NO. 20 76 / MUM/2017 ASSESSMENT YEAR: 2010 - 11 HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND DENIED THE CLAIM OF THE ASSESSEE HOLDING THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 54 OF THE ACT AND ADDED THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS INCOME FROM SHORT TERM CAPITAL GAIN. IN THE FIRST APPEAL , THE LD. CIT (A) AFFIRMED THE ACTION OF THE AO. 4. BEFORE US, THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED THE ACTION OF THE AO. THE LD. COUNSEL FURTHER POINTED OUT THAT THE ASSESSEE AND HER HUSBAND , BEING CO - OWNER OF THE SAID FLAT, SOLD THE SAME AND T HE HUSBAND OF THE ASSESSEE CLA IMED EXEMPTION U/S 54 IN RESPECT OF HIS SHARE OF SALE CONSIDERATION. THE AO DISALLOWED THE CLAIM ON THE GROUND THAT THE APPELLANT HAS NOT HELD THE PROPERTY IN QUESTION FOR THREE YEARS. IN APPEAL, THE LD. CIT (A) RELYING ON THE VARIOUS JUDGMENTS OF THE HIGH COURT S AND THE CBDT CIRCULAR NO. 672 DATED 16.12.1993 REVERSED THE FINDINGS OF THE LD. CIT (A) AND ALLOW ED THE EXEMPTION U/S 54/54F TO THE EXTENT OF HIS SHARE I.E., RS. 32,86,739/ - . THE LD. COUNSEL FURTHER SUBMITTED THAT THERE IS NO REASON FOR TAKING DIVE RGENT VIEWS IN THE IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE. T HE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE AO HAS NOT PASSED THE ASSESSMENT ORDER IN ACCORDANCE WITH THE LAW LAID DOWN BY THE VARIOUS HIGH COURTS AND THE DECISION S OF VARIOUS BENCHES O F THE TRIBUNAL , THE LD. CIT(A) OUGHT TO HAVE SET ASIDE THE ASSESSMENT ORDER . THE LD. C OUNSEL INVITED OUR ATTENTION TO THE DECISION OF ITAT, MUMBAI IN THE CASE OF ANITA D KANJANI VS. ACIT (MUM) ITAT (2017) TAXMANN.COM 67 (MUM TRIB.) IN WHICH , THE TRIBUNAL H AS HELD THAT THE HOLDING PERIOD SHOULD BE COMPUTED FROM THE DATE OF ISSUE OF ALLOTMENT LETTER AND NOT ON THE DATE OF REGISTRATION OF CONVEYANCE DEED. 5. ON THE OTHER HAND, THE LD. DE PARTMENTAL REPRESENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE THE FULL AND FINAL PAYMENT OF THE CONSIDERATION WAS MADE MUCH LATER THEN THE DATE OF AGREEMENT , THE ASSESSEE HAD NO RIGHT ON THE SAID PROPERTY AS ON THE DATE OF EXECUTION OF AGREEMENT. SINCE, THE P OSSESSION OF SAID FLAT WAS TAKEN BY THE 4 ITA NO. 20 76 / MUM/2017 ASSESSMENT YEAR: 2010 - 11 ASSESSEE IN MAY, 2009 , THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE MATERIAL PLACED ON RECORD. WE NOTICE THAT IN THE CASE OF THE CO - OWNER OF THE SAME PROPE RTY, THE LD.CIT (A) HAS ALLOWED EXEMPTION U/S 54 OF THE ACT TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSEE IN THE LIGHT OF THE VARIOUS JUDGMENTS OF THE HIGH COURTS AND THE DECISIONS OF THE ITAT. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT (A) PASSED IN THE CASE OF THE CO - OWNER READS AS UNDER: 5.3 I HAVE CONSIDERED THE APPELLANTS SUBMISSION. IN THIS CASE APPELLANT HAD BOOKED A RESIDENTIAL PROPERTY IN OBEROI WOODS, FLAT C - 105, GOREGAON (E), MUMBAI 400063 ON 29.03.2005 BY MAKING INI TIAL PAYMENT OF RS. 5,12,750/ - .BEFORE 20.06.2006 APPELLANT HAD PAID 50% OF HIS SHARE OF RS. 13,22,895/ - . AGREEMENT FOR THE PURCHASE OF FLAT WAS EXECUTED ON 15.2.2006 AND REGISTERED ON 31.3.2006. THE CONSTRUCTION WAS COMPLETED ON 03.5.2008 AND FLAT WAS POSS ESSED ON 27.5.2009 AND SOLD ON 20.6.2009. APPELLANT CONSIDERED DATE OF ALLOTMENT OF FLAT I.E. 29.03.2005 AS DATE OF ACQUISITION AND COMPUTED THE LONG TERM CAPITAL GAIN (LTCG). AS APPELLANTS DATE OF ACQUISITION IS CONSIDERED AS DATE OF ALLOTMENT, IT COMPLE TE 3 YEARS OF OWING THE PROPERTY, HENCE THE APPELLANT HAD COMPUTED LONG TERM CAPITAL GAIN AND CLAIMED EXEMPTION U/S 54 FOR RS. 26,59,277/ - . HOWEVER, AO HAD DISALLOWED THE CLAIM OF THE APPELLANT ON THE GROUND THAT APPELLANT HAD ONLY TAKEN POSSESSION OF THE PROPERTY ON 27.5.2009, HENCE ACCORDING TO AO THE APPELLANT HAD NOT OWNED PROPERTY ON 27.5.2009, HENCE ACCORDING TO AO THE APPELLANT HAD NOT OWNED PROPERTY FOR MORE THAN 3 YEARS CONSIDERING THE DATE OF POSSESSION AND DATE OF SALE OF THE PROPERTY, HENCE CLA IM OF EXEMPTION U/S 54 IS DISALLOWED AND COMPUTED STCG ON THE PROPERTY. IN VIEW OF THE ABOVE DECISION OF DELHI HIGH COURT WHICH IS UPHELD BY SUPREME COURT AND ALSO ABOVE CIRCULAR OF THE BOARD, AO HAS TO COMPUTE THE CAPITAL GAIN BY CONSIDERING THE DATE O F ALLOTMENT OF PROPERTY AS DATE IF ACQUISITION. FOR THE PURPOSE OF SECTION 54/54F HERE IN THIS CASE DATE OF ALLOTMENT FOR THE APPELLANT IS 29.3.2005 ON WHICH DATE APPELLANT HAD PAID INITIAL PAYMENT AND RECEIVED ALLOTMENT LETTER. THIS DATE HAS TO BE 5 ITA NO. 20 76 / MUM/2017 ASSESSMENT YEAR: 2010 - 11 CONSIDE RED AS DATE OF ACQUISITION AND CAPITAL GAINS HAS TO BE COMPUTED. IN THIS CASE, DATE OF ALLOTMENT IS CONSIDERED AS DATE OF ACQUISITION THEN APPELLANT HAD RIGHT UPON THE PROPERTY FOR MORE THAN 3 YEARS, HENCE APPELLANT IS ELIGIBLE FOR EXEMPTION U/S 54/54F FRO M THE LONG TERM CAPITAL GAIN EARNED. APPELLANTS CLAIM OF EXEMPTION U/S 54/54F FOR RS. 32,86,739/ - IS ALLOWED. 7. SINCE, THE EXEMPTION CLAIMED BY THE CO - OWNER IN RESPECT OF THE SAME PROPERTY HAS BEEN ALLOWED BY THE LD. CIT (A), THE LD. CIT (A) IN THE P RESENT CASE HAS NO REASON TO DEVIATE FROM THE DECISION TAKEN BY THE CIT (A) IN THE CASE OF THE ASSESSEE WHO IS ALSO A CO - OWNER OF THE SAID PROPERTY. WE ALSO NOTICE THAT THE ORDER OF THE LD. CIT (A) PASSED IN THE CASE OF MR. ANIL KHANNA IS BASED ON THE DECI SION OF THE HONBLE DELHI HIGH COURT PASSED IN THE CASE OF GULSHAN MALLIK VS. CIT (SUPRA) AND ALSO IN ACCORDANCE WITH THE CBDT CIRCULAR NO. 672 DATED 16.12.1993 AND ALSO IN ACCORDANCE WITH THE DECISION OF THE CO - ORDINATE BENCH RENDERED IN ANITA K KALYANI V S. ACIT (SUPRA) . HENCE, TAKING INTO CONSIDERATION THE ENTIRE FACTS OF THE CASE AND THE DECISION OF THE LD. CIT (A) PASSED IN THE ASSESSEES CO - OWNERS CASE, WE ALLOW THE SOLE GROUND OF APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD . CIT(A) . ACCORDINGLY, WE DIRECT THE AO TO ALLOW THE EXEMPTION U/S 54 OF THE ACT CLAIMED BY THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2010 - 2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH FEBRUA RY, 2018 . SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 07 / 02/2018 ALINDRA, PS 6 ITA NO. 20 76 / MUM/2017 ASSESSMENT YEAR: 2010 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI