Deputy Commissioner of Income-tax, V. Shri Abhay Shantilal Parmar, Pune

ITA 2080/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8475 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Salary income; Additional evidence; Reasonable cause
• Section: 143(3); 54F; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS . SUSHMA CHOWLA , JUDICIAL MEMBER ITA NO. 2080 /PN/201 3 (ASSESSMENT YEAR: 20 09 - 10) DY. COMMISSIONER OF INCOME TAX, CIRCLE - 4, PUNE . . APPEL LANT VS. SHRI ABHAY SHANTILAL PARMAR, 289/2, MAHATMA PHULE PETH, NEW KALPATARU SOCIETY, PUNE PAN: ADVPP2096D . RESPONDENT DEPARTMENT BY : SHRI P.S. NAIK ASSESSEE BY : SHRI SUHAS BORA DATE OF HEARING : 0 1 - 10 - 2014 DATE OF PRON OUNCEMENT : 14 - 10 - 2014 ORDER PER SUSHMA CHOWLA, J M THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - II, PUNE DATED 26 - 08 - 2013 RELATING TO ASSESSMENT YEAR 2009 - 10 AGAINST THE ORDER PASSED U NDER SECTION 143(3) OF THE IN COME - TAX ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING THE EXEMPTION U/S. 54F OF THE INCOME TAX ACT, 1961 OF RS.33,70,410/ - WHEN THE ASSESSEE HAD INVESTED IN TWO ADJOINI NG FLATS AND THE PROVISIONS OF SECTION 54F OF THE ACT PROVIDE FOR DEDUCTION WITH RESPECT TO INVESTMENT IN 'A RESIDENTIAL HOUSE'. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE PROVISION OF SECTION 54F OF THE A CT WHICH PROVIDES EXEMPTION WITH RESPECT TO INVESTMENT IN A RESIDENTIAL HOUSE IS CLEAR REGARDING THE ELIGIBLE ASSET AND LEAVES NO ROOM FOR INTERPRETATION. ITA NO. 2080 /PN/201 3 2 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAD INVESTED IN TWO FLATS WHICH WAS EVIDENT FROM TWO REGISTERED AGREEMENTS AND THE CROSS SECTION MAP OF THE HOUSES ANNEXED TO THE REGISTERED DOCUMENTS SHOWING FLAT NOS. H - 1002 AND H - 1003 AS ADJACENT FLATS, WHICH WERE COMBINED FOR ASSESSEE'S CONVENIENCE. 4. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY OR ALL TIRE GROUNDS OF APPEAL. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION TO DEDUCTION UNDER SECTION 54F OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DURING THE Y EAR UNDER CONSIDERATION HAD DECLARED INCOME FROM SALARY, LONG TERM CAPITAL GAIN AND INTEREST INCOME O N LOANS AND BANK DEPOSITS. THE ASSESSEE HAD SOLD A JOINTLY OWNED PROPERTY FOR A TOTAL CONSIDERATION OF RS.7,52,96,250/ - . IN THE SAID PROPERTY THE ASSESSE E HAD DECLARED HIS SHARE OF CAPITAL GAIN BEING 1/7 TH SHARE, AGAINST WHICH THE ASSESSEE HAD CLAIMED DEDUCTION U NDER SECTION 54F OF THE ACT FOR A SUM OF RS.66,52,174/ - . THE ASSESSING OFFICER ON THE VERIFICATION OF THE DETAILS FOUND THAT THE ASSESSEE HAD INV ESTED IN TWO ADJOINING FLATS I.E. H - 1003 & H - 1002, TOTALING RS.71,53,856/ - . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 54F OF THE ACT PROVIDE FOR DEDUCTION WITH RESPECT TO INVESTMENT IN A RESIDENTIAL HOUSE. THE ASSESSING OFFIC ER THUS OBSERVED THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION WITH RESPECT TO THE INVESTMENT MADE IN ONE FLAT ONLY. THE ASSESSING OFFICER FURTHER WAS OF THE VIEW THAT THE ASSESSEE FOR HIS CONVENIENCE HAD COMBINED THE ADJOINING FLATS AND TREATED THE SAME T O BE A SINGLE UNIT IN ORDER TO AVAIL THE BENEFIT U NDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER REJECTING THE PLEA OF THE ASSESSEE HELD THAT THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U NDER SECTION 54F OF THE ACT WITH RESPECT TO THE INVESTMENT IN O NE RESIDENTIAL UNIT ONLY. ITA NO. 2080 /PN/201 3 3 5 . BEFORE THE CIT(A) THE ASSESSEE FILED THE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED IN PARA 3.1 AT PAGE S 3 TO 5 OF THE APPELLATE ORDER. THE ASSESSEE ALSO SUBMITTED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES WHICH INCLUDED A CLARIFICATION LETTER OF THE BUILDER STATING THAT THE PERMISSION WAS GIVEN TO THE ASSESSEE TO MAKE NECESSARY CHANGES AS REGARDS CONSTRUCTI ON OF A DOOR ON COMMON WALL BETWEEN THE TWO ADJACENT FLATS AND FURTHER DOCUMENT S WERE SUBMITTED . THE COPY OF THE SAID APPLICATION IS REPRODUCED IN PARA 3.2 AT PAGE S 6 AND 7 OF THE APPELLATE ORDER. THE CIT(A) FORWARDED THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER WHO, IN TURN FILED REMAND REPORT WHICH IS REPRODUCED IN PARA 3.4 A T PAGE 8 OF THE APPELLATE ORDER. THE ASSESSING OFFICER IN THE REMAND REPORT SUBMITTED THAT THE INSPECTOR OF CIRCLE 4 WAS DEPUTED FOR THE PHYSICAL VERIFICATION OF THE FLAT NOS. H - 1002 AND H - 1003 AND IN HIS REPORT DATED 09 - 05 - 2013 , IT WAS SUBMITTED THAT T HERE WAS A COMMON WALL BETWEEN THE TWO FLATS WHEREIN AN ENTRANCE WAS MADE TO FLAT NO. H - 1 003. IN THE RE - JOINDER THE ASSESSEE SUBMITTED THAT THE TWO ADJACENT FLATS WERE JOINED BECAUSE OF THE SIZE OF HIS FAMILY. THE CIT(A) CONSIDERED THE ADDITIONAL EVIDEN CE FILED BY THE ASSESSEE THAT IS THE CLARIFICATION LETTER FROM THE BUILDER ALLOWING THE ASSESSEE TO MAKE NECESSARY CHANGES. THE PLEA OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT BECAUSE OF PAUCITY OF TIME THE SAID DOCUMENT WAS NOT FURNISHED BEFORE THE ASSES SING OFFICER AND THE SAME SHOULD BE ADMITTED AS AN ADDITIONAL EVIDENCE. THE CIT(A) WAS OF THE VIEW THAT THE SAID ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE WENT TO THE RO OT OF THE MATTER AND AS THERE WAS A REASONABLE CAUSE FOR NOT SUBMITTING THE SAME D URING THE ASSESSMENT PROCEEDINGS, THE SAME MERITS TO BE ADMITTED AT THIS JUNCTURE. IN RESPECT OF THE MERIT OF THE ADDITIONAL EVIDENCE THE CIT(A) PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JOE B. FERNANDE S, ITA NO. 2080 /PN/201 3 4 ITA NO. 1467 OF 2007 (BOM) DATED 10 - 12 - 2008 AND THE RATIO LAID DOWN BY THE HON'BLE KARNA TA KA HIGH COURT IN THE CASE OF CIT VS. K.G. RUKMINIAMMA 331 ITR 211 (KAR.) AND FURTHER RATIO LAID DOWN BY THE DIFFERENT HIGH COURTS AND HELD THAT THE ASSESSEE WAS EN TITLED TO CLAIM OF DEDUCTION U NDER SECTION 54F OF THE ACT IN RESPECT OF THE TWO FLATS WHICH HAVE BEEN JOINED BY THE ASSESSEE. THE CIT(A) ALSO NOTED THAT THE TWO FLATS HAVE ONE KITCHEN, DINING ROOM AND LIVING ROOM BUT BECAUSE OF THE SIZE OF THE FAMILY TWO FLATS ADJACENT TO EACH OTHER WERE PURCHASED AND INTERCONNECTED AND USED AS ONE RESIDENTIAL HOUSE. 6 . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). THE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 7 . THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE CIT(A) AND RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JOE B. FERNANDES (SUPRA). 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRES ENT APPEAL IS IN RELATION TO CLAIM OF DEDUCTION U NDER SECTION 54F OF THE ACT. THE ASSESSEE HAD PURCHASED TWO ADJACENT FLATS AND HAD COMBINED THE SAID FLAT S TO USE THE SAME AS ONE UNIT. ON THE OTHER HAND THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HA D SOLD JOINTLY OWNED PROPERTY IN WHICH HE HA D 1/7 TH SHARE AND AGAINST THE INCOME ARISING FROM LONG TERM CAPITAL GAIN, HAD CLAIMED THE DEDUCTION U NDER SECTION 54F OF THE ACT ON ACCOUNT OF INVESTMENT IN TWO ADJOINING FLATS. THE ASSESSING OFFICER HAD RESTRIC TED THE SAID DEDUCTION U NDER SECTION 54F OF THE ACT TO INVESTMENT IN ONE OF THE FLATS AND HAD RE - WORKED THE I NCOME FROM CAPITAL GAIN. HOWEVER, THE CIT(A) HA D CONSIDERED THE ADDITIONAL EVIDENCE FILED BEFORE HIM AND AFTER ADMITTING THE SAME , HA D GIVEN A FIN DING THAT THE TWO FLATS PURCHASED BY THE ASSESSEE W ERE JOINED AND HAD A COMMON ENTRANCE ITA NO. 2080 /PN/201 3 5 AND IN ADDITION ONE KITCHEN, LIVING ROOM, DINING ROOM AND PLACE OF WORSHIP. THE SIZE OF THE FAMILY WAS L ARGE AND AS SUCH THEY PURCHASED TWO FLATS ADJACENT TO EACH OTHE R , INTERCONNECTED THE SAME AND USED THEM AS ONE RESIDENTIAL HOUSE. THE LD. DR FOR THE REVENUE HAS FAILED TO CONTROVERT THE SAID FINDING OF CIT(A). IN THE SAID FACTS AND CIRCUMSTANCES WHERE THE ASSESSEE HAD PURCHASED TWO ADJACENT FLATS AND COMBINED THE SA ME TO UTILIZE AS ONE UNIT THE ISSUE IS WHETHER THE ASSESSEE IS ENTITLED TO CLAIM OF DEDUCTION U NDER SECTION 54F OF THE ACT IN RESPECT OF THE SAID TWO ADJOINING FLATS. 9. SIMILAR ISSUE AR OSE BEFORE THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JOE B . FERNANDES (SUPRA) AND THE CIT(A) VIDE PARA 4.6 AT PAGE 16 OF THE APPELLATE ORDER HAS REFERRED TO THE FACTS AND THE DECISION OF THE CASE , WHICH IS AS UNDER: 4.6 'THE ASSESSEE HAD PURCHASED TWO ADJACENT FLATS WHICH WERE INTERCONNECTED AND USED AS ONE RESID ENTIAL HOUSE. ON THE ASSESSEE'S CLAIM FOR EXEMPTION U/SEC. 54F OF THE INCOME - TAX ACT, 1961 THE TRIBUNAL PASSED THE ORDER AS UNDER: 'IT HAS BEEN SHOWN TO US THAT INVESTMENT WAS MADE BY THE ASSESSEE HIMSELF FROM HIS BANK ACCOUNT IN RESPECT OF BOTH THE FLAT S I.E., FLAT NOS. 301 AND 302 AT COZY DWELL APARTMENTS AT BANDRA, MUMBAI. HOWEVER, THIS NEEDS VERIFICATION BY THE ASSESSING OFFICER. FURTHER THE FACT WHETHER THESE TWO APARTMENTS ARE BEING USED AS ONE RESIDENTIAL HOUSE OR NOT IS ALSO TO BE VERIFIED. ACCORD INGLY, THE ORDER OF THE CIT (A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO - (1) VERIFY THE FACT WHETHER INVESTMENT IN FLAT NOS. 301 AND 302 WAS MADE BY THE ASSESSEE FROM HIS OWN FUNDS, AND (2) WHETHER SUCH FLATS ARE AD JACENT TO EACH OTHER HAVING COMMON PASSAGE AND ARE BEING USED AS ONE RESIDENTIAL HOUSE. AFTER ASCERTAINING THESE FACTS THE ASSESSING OFFICER SHALL ALLOW THE EXEMPTION IN RESPECT OF BOTH THE FLATS IF IT IS FOUND THAT BOTH THE FLATS ARE BEING USED AS ONE RES IDENTIAL HOUSE AND THE INVESTMENT WAS MADE BY THE ASSESSEE HIMSELF. ' ITA NO. 2080 /PN/201 3 6 THE BOMBAY HIGH COURT UPHELD THE DECISION OF THE TRIBUNAL AND DISMISSED THE APPEAL FILED BY THE REVENUE. 10. T HE HON'BLE KARNA TA KA HIGH COURT IN THE CASE OF CIT VS. K.G. RUKMINIAMMA ( SUPRA) HAD CONSIDERED SIMILAR ISSUE WHERE THE ASSESSEE THEREIN HAD PURCHASED FOUR RESIDENTIAL FLATS AND COMBINED THE SAME FOR USE AS A SINGLE UNIT . T HE HON'BLE HIGH COURT HELD THE ASSESSEE TO BE ELIGIBLE FOR THE DEDUCTION U NDER SECTION 54F OF THE ACT. 11 . FOLLOWING THE PARITY OF REASONING, WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE E SPECIALLY IN THE ABSENCE OF ANY EVIDENCE BROUGHT TO OUR NOTICE TO ESTABLISH THAT THE FINDING OF THE CIT(A) REGARDING THE TWO FLATS BEING USED AS ONE UNIT WERE CONTRARY TO THE FACTS. IN THE ABSENCE OF SAME, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF OCTOBER, 2014. SD/ - SD/ - ( G.S. PANNU ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 14 TH OCTOBER , 2014. RK COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A) - I I, PUNE ; 4) THE CIT - I I , PUNE ; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. //TRUE COPY// BY ORDER //TRUE //MM/T COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE