ITO, Ward 2(2), Pune V. Hashit Vithalbhai Bavaria, Pune

ITA 2112/PUN/2012

• Counselvise Citation: 211224514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2112/PN/2012 A.Y. 2009-10 ITO, WARD 2(2), PUNE APPELLANT VS. HASHIT VITHALBHAI BAVARIA, FT. NO.C-12, GLORIA UTOPIA SOC., WANOWRIE, PUNE 411040 PAN: AGVPB6427D RESPONDENT ITA NO.2113/PN/2012 A.Y. 2009-10 ITO, WARD 2(2), PUNE APPELLANT VS. PAYAL HASHIT BAVARIA, FT. NO.C-12, GLORIA UTOPIA SOC., WANOWRIE, PUNE 411040 PAN: AGVPB6430G RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI PRA MOD SHINGTE DATE OF HEARING: 12.12.2013 DATE OF ORDER : 24.12.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THE APPEALS FILED BY THE REVENUE PERTAIN TO T HE SAME FAMILY I.E. HUSBAND AND WIFE ON COMMON ISSUE, SO IT IS BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2 THE REVENUE HAS TAKEN THE FOLLOWING COMMON GROUNDS IN BOTH THE APPEALS. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THERE IS NO LIABILITY ON THE ASSESSEE TO PAY CAPITAL GAIN TAX AS THE CASE SQUARELY FALLS U/S .54F OF THE I.T. ACT, 1961. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN NOT APPRECIATING THAT THE ASSESSING OFFI CER, ON PHYSICAL VERIFICATION OF THE SITE, FOUND THAT THE F LAT AND THE PENT HOUSE ON DIFFERENT FLOORS WERE SELF CONTAINED UNITS HAVING SEPARATE KITCHENS AND AS SUCH THE RATIO OF T HE DECISION OF ITAT MUMBAI IN THE CASE OF SUSHILA JHAV ERI SQUARELY APPLIES TO THE CASE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE NO.1 I.E. HASHIT VITHALBHAI BAVARIA IS AN INDIVIDUAL AND DERIVES INCOME FROM HOUSE PROPERTY, TRADING AND MANUFACTURING OF ICE CREAM, INCOME FROM CAPITAL GAI N AND OTHER SOURCES. THE ASSESSEE FILED THE RETURN OF INCOME DE CLARING TOTAL INCOME OF RS. NIL AND THE SAME HAS BEEN ASSESSED U/ S.143(3) DETERMINING TOTAL INCOME OF RS.51,36,015/-. ASSESS ING OFFICER NOTICED THAT THE ASSESSEE HAD SOLD A PROPERTY AT HA DAPSAR WHICH WAS JOINTLY HELD BY HIM ALONG WITH HIS WIFE MRS.PAY AL H BAVARIA (ASSESSEE NO.2) TO M/S JOHNSON LIFT PVT. LTD., FOR A TOTAL CONSIDERATION OF RS. 3,05,00,000/-. THE ASSESSEE OU T OF THE SAID SALE PROCEEDS UTILIZED THE SAID AMOUNT FOR THE PURC HASE OF ONE FLAT AND PENT HOUSE AT 'WATER EDGE', FLAT NO 1004 A ND 1104 ON THE 10 TH , 11 TH AND 12 TH FLOOR AT PIMPLE NILAKH, HAVELI, PUNE FOR A TOTAL AMOUNT OF RS.2,84,88,000/-. THE ASSESSING OFFICER F URTHER NOTICED THAT THE PURCHASE DEED EXECUTED BY THE ASSE SSEE WITH M/S OM SAGAR DEVELOPERS DT 12-02-2009, THE PURCHASE , OF ONE FLAT AND ONE PENT HOUSE WAS EXECUTED IN A SINGLE AG REEMENT WITH THE DEVELOPER AND THE EXEMPTION U/S.54F OF THE I.T. ACT, WAS CLAIMED. THE ASSESSING OFFICER ALLOWED PARTIAL EXEM PTION U/S.54F 3 AND DISALLOWED SUM OF RS.51,63,230/- ON THE PRESUMP TION THAT THE INVESTMENT IN THE HOUSE PROPERTY WAS IN TWO DIF FERENT FLATS. MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORITY , WHO HAVING CONSIDERED THE SUBMISSIONS ON BEHALF OF ASSESSEE AL LOWED THE CLAIM OF THE ASSESSEE, SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA SUBMITTED THAT CIT(A) ERRED IN HOLDING THAT THERE IS NO LIABILITY ON ASSESSEE TO PAY CAPITAL GA IN TAX AS THE CASE SQUARELY FALLS U/S.54F OF ACT. CIT(A) ERRED IN NO T APPRECIATING THAT THE ASSESSING OFFICER, ON PHYSICAL VERIFICATIO N OF THE SITE, FOUND THAT THE FLAT AND THE PENT HOUSE ON DIFFERENT FLOORS WERE SELF CONTAINED UNITS HAVING SEPARATE KITCHENS AND A S SUCH THE RATIO OF THE DECISION OF ITAT MUMBAI IN THE CASE OF SUSHILA JHAVERI SQUARELY APPLIES TO THE CASE. SO, ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. O N THE OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED T HAT ASSESSING OFFICER HAS ERRED IN COMPUTING CAPITAL GA INS ON SALE OF PROPERTY BY DISALLOWING ASSESSEES CLAIM U/S.54F BY TREATING THE PART OF INVESTMENT IN HOUSE PROPERTY AS INTANGIBLE U/S.54F. ASSESSING OFFICER OUGHT TO HAVE BEEN CONSIDERED THE FACT THAT ENTIRE HOUSE PROPERTY INVESTMENT WAS MADE IN ONE HO USE SITUATED IN THE SAME BUILDING AND WAS FOR THE PURPO SE OF ASSESSEES OWN UTILIZATION. ACCORDINGLY, ORDER OF THE CIT(A) SHOULD BE UPHELD. 3. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT ISSUE BEFORE US IS REGARDING T HE CLAIM OF EXEMPTION U/S.54F OF IT ACT. ASSESSING OFFICER DIS ALLOWED THE SAME BY TREATING PART OF THE INVESTMENT IN HOUSE PR OPERTY INTANGIBLE U/S.54F OF IT ACT. THE STAND OF THE ASS ESSEE HAS BEEN THAT AN ENTIRE INVESTMENT IN THE HOUSE PROPERTY WAS IN FLATS SITUATED IN THE SAME BUILDING. IT IS UNDISPUTED TH AT ASSESSEE HAD SOLD A PROPERTY HELD JOINTLY ALONG WITH HIS WIFE SI TUATED AT HADAPSAR TO M/S. JOHNSON LIFT PVT. LTD., ON 18.09.2 008 FOR A 4 TOTAL CONSIDERATION OF RS.3,05,00,000/- WHICH WAS P URCHASED BY THE ASSESSEE ON 03-12-2005 FOR TOTAL CONSIDERATION OF RS.22,00,000/-. THE ASSESSEE OUT OF THE SALE PROCEE DS HAD PURCHASED ONE FLAT AND PENT HOUSE AT 'WATER EDGE' B EARING FLAT NO.1004 AND 1104 SITUATED ON 10 TH , 11 TH AND 12 TH FLOOR LOCATED AT PIMPLE NILAKH, HAVELI, PUNE FOR A TOTAL CONSIDERATI ON OF RS.2,84,88,000/- ON 12-02-2009 FROM M/S OM SAGAR DE VELOPERS. THE ASSESSING OFFICER OBSERVED THAT THE PURCHASE DE ED EXECUTED WITH M/S OM SAGAR DEVELOPERS UNDER A SINGLE AGREEME NT HAD PURCHASED ONE FLAT AND ONE PENT HOUSE AND HAD CLAIM ED EXEMPTION U/S.54F. THE ASSESSING OFFICER ON VERIFIC ATION OF THE APPROVED SANCTIONED PLAN FILED BY THE DEVELOPER FOU ND THAT FLAT NO.1004 WAS ON THE 10 TH FLOOR AND FLAT NO.1104 WAS ONE THE 11 TH FLOOR OF THE BUILDING E-2. THE ASSESSING OFFICER FO UND THAT THE TWO RESIDENTIAL UNITS HAD SEPARATE KITCHENS THOUGH A SI NGLE AGREEMENT WAS EXECUTED WITH THE DEVELOPER. THE ASS ESSING OFFICER THUS HELD THAT THE EXEMPTION U/S 54F WAS AL LOWABLE IN RESPECT OF ONE RESIDENTIAL HOUSE AND ACCORDINGLY AL LOWED THE EXEMPTION FOR ONLY ONE UNIT U/S.54F. THE STAND OF ASSESSEE HAS BEEN THAT PROPERTY AT HADAPSAR HELD JOINTLY WITH HI S WIFE PAYAL H. BAVARIA WAS SOLD AND THE CAPITAL GAINS ARISING OUT OF THE ABOVE OF RS.1,24,20,815/- BEING 50% SHARES WAS REINVESTED TO WARDS PURCHASE OF NEW RESIDENTIAL PROPERTY AND CLAIMED EX EMPTION U/S.54F. THE ASSESSING OFFICER HOWEVER HAS RESTRICT ED THE EXEMPTION TO RS.72,57,585/- AND HAS COMPUTED THE CAPITAL GAINS WHILE DETERMINING THE TOTAL INCOME AT RS.51,35,015/ -. 50% OF SHARE OF THE PROPERTY WHICH WAS HELD JOINTLY WITH H IS WIFE WAS SOLD AND THE ENTIRE SALE PROCEEDS WERE INVESTED IN A SINGLE RESIDENTIAL UNIT VIDE AGREEMENT DATED 12-02-2009 EN TERED WITH OM SAGAR DEVELOPERS AND THE ASSESSEE AND HIS WIFE, WHICH IS NOT IN DISPUTE. THE AFORESAID CONSIDERATION WAS COMPO SITE FOR THE ENTIRE UNIT AND THE DRAWING OF THE FLAT INDICATES T HAT THE TOP FLOOR DUPLEX FLAT AND THE FLAT ON THE 10 TH FLOOR WHICH WAS JUST DOWN 5 BELOW, THERE WAS A PROVISION FOR INTERNAL STAIRCASE WHICH CONNECTED THE UPPER FLOOR FLAT. THIS FACT WAS EXAM INED BY THE ASSESSING OFFICER AND HE FOUND THE PROVISION FOR ST AIR CASE EXISTED AND THERE WAS ACTUALLY NO SEPARATE KITCHEN AS POINTED OUT BY THE ASSESSING OFFICER. THE FAMILY CONSISTED OF NEARLY FIFTEEN MEMBERS WHICH INCLUDED HIS PARENTS, THREE CHILDREN AND HIS BROTHER'S FAMILY ALSO STAYS AT LONDON AND ON VISIT TO INDIA STAYED IN THE SAME HOUSE AND ALSO HIS MARRIED SISTER AND F AMILY. THE ENTIRE UNIT WAS PREPARED TO BE USED AS A SINGLE RES IDENTIAL UNIT AND THE PURCHASE WAS MADE AS A SINGLE UNIT BY WAY O F A SINGLE AGREEMENT AND ON COMPOSITE CONSIDERATION AND THAT T HE FLAT ON THE 10 TH FLOOR WAS CONNECTED TO THE DUPLEX FLAT ABOVE BY AN INTERNAL STAIR CASE. THE RATIO OF MUMBAI ITAT IN T HE CASE OF ITO VS. MS. SUSHILA M JAVERI (2007) 107 ITD 321 (MUM) S B WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE BECAUSE IN S AID CASE, THE ASSESSEE REINVESTED IN TWO FLATS ONE SITUATED AT VE RSOVA AND ANOTHER AT BANDRA I.E. IN TWO DIFFERENT LOCATION AN D THEREFORE, IT WAS NOT A CASE OF ADJACENT FLATS. THE ASSESSEE HAS INVESTED THE CAPITAL GAINS IN TWO RESIDENTIAL UNITS LOCATED ON S AME LOCATION AND COULD BE USED AS SINGLE WORKABLE UNIT. ACCORDI NGLY, ASSESSEE WAS ENTITLED FOR EXEMPTION U/S.54F AND THIS VIEW IS FORTIFIED BY THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K.G. RUKMINIAMMA (2011) 331 ITR 211 (KAR). THESE REASON ED FINDINGS OF CIT(A) NEED NO INTERFERENCE FROM OUR SI DE. WE UPHOLD THE SAME. 4. SIMILAR ISSUE AROSE IN ASSESSEES WIFES CASE IN ITA NO.2113/PN/2012. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, ORDER OF CIT(A) ALLOWING EXEMPTION IN CA SE OF THE ASSESSEES WIFE PAYAL H. BAVARIA NEED NO INTERFEREN CE FROM OUR SIDE. WE UPHOLD THE SAME. 5. IN THE RESULT, BOTH THE APPEALS FILED BY REVENUE ARE DISMISSED. 6 PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 24 TH OF DECEMBER, 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 24 TH DECEMBER 2013 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE