ACIT-35(1), Mumbai V. SHRI. HIMANSHU CHAKRAWARTI , Mumbai

ITA 2311/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8064 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R BHOOPATHI
• Keywords: Cost of acquisition; TDS; Capital Gains
• Section: 143(3); 54

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI MAHAVIR SINGH, VICE- PRESIDENT AND SHRI N. K. PRADHAN, ACCOUNTANT MEMBER ITA NO.2311/MUM/2019 (ASSESSMENT YEAR 2013-14) ACIT- 35(1), ROOM NO.902, 9 TH FLOOR, KAUTILYA BHAWAN, G. BLOCK, BKC, BANDRA(E), MUMBAI-400051. VS. SHRI HIMANSHU CHAKRAWARTI, 2207/2208, ASHOK TOWERS, TOWER D, DR. S. S. RAO ROAD, PAREL, MUMBAI- 400012. P AN: ACGPC5033K APPELLANT RESPONDENT APPELLANT BY : SHRI R. BHOOPATHI (DR) REVENUE BY : SHRI DR. K. SHIVARAM WITH SHRI RAHUL HAKANI (AR) DATE OF HEARING : 21.10.2020 DATE OF PRONOUNCEMEN T : 11.01.2021 ORDER PER MAHAVIR SINGH, VICE-PRESIDENT; 1. THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-46, MUMBAI [FOR SHORT THE LD. CIT(A)] IN APPEAL NO. CIT (A)-46/ACIT-35(1)/298/2016-17 ORDER DATED 3 1.01.2019. ASSESSMENT WAS FRAMED BY THE ACIT CIRCLE-35(1), MUM BAI FOR ASSESSMENT YEAR 2013-14 VIDE HIS ORDER DATED 30.03.2016 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) FOR ALLOWANCE OF EXEMPTION UNDER SECTION 54 OF THE ACT IN REGARD TO THE CAPITAL GAINS ARISING OUT OF SALE OF FLAT INVESTED IN THE F LAT SITUATED AT CRESCENT BAY ITA NO. 2311 MUM 2019-SHRI HIMANSH U CHAKRAWARTI 2 APARTMENTS AT PAREL, MUMBAI. FOR THIS REVENUE HAS R AISED FOLLOWING EFFECTIVE GROUNDS 1 & 2. 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 1,06,85,199/- IN CRESCENT BAY FLAT, MUMBAI AND HAS DEPOSITED RS. 319 050001- IN THE CAPITAL GAIN ACCOUNT SCHEME FOR THE A. Y 2013-14 AND HENCE ONLY RS. 42590199/- IS ELIGIBLE FOR THE EXEMPTION U/S. 54 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT RELIEF ALLOWED BY HIM HAS REDUCED THE TOTAL INCOME OF THE ASSESSEE AS AGAINST THE RETURNED INCOME OFFERED FOR THE A. Y 2013-14. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DURING THE YEAR UNDER CONSIDERATION SOLD A HOUSE PROPERTY VIDE AGREEMENT DATED 01.11.2012 FOR A CONSIDERATION OF RS. 6.5 CRORES ON WHICH CAPITAL GA IN OF RS. 5,35,39,112/- AROSE. THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE CIT(A) CLAIMED THAT HE HAS PURCHASED A RESIDENTIAL HOUSE B EING FLAT NO. 3604 IN CRESCENT BAY APARTMENTS AT LOWER PAREL, MUMBAI FOR A TOTAL CONSIDERATION OF RS. 5,45,52,225/- AND THUS INVESTED THIS AMOUNT IN PURCHASE OF HOUSE UNDER ALLOTMENT VIDE LETTER DATED 05.01.2013 AND FO RMAL AGREEMENT WAS EXECUTED AND REGISTERED ON 01.01.2014. IT WAS CLAIM ED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE COST OF RESID ENTIAL HOUSE WAS MORE THAN THE AMOUNT OF CAPITAL GAINS AND THE AMOUNT OF CAPITAL GAIN WHICH WAS NOT APPROPRIATE TOWARDS THE PURCHASE COST OF THE NE W RESIDENTIAL HOUSE TILL THE DUE DATE OF FILING OF RETURN OF INCOME, WAS DEP OSITED IN A SEPARATE CAPITAL GAIN ACCOUNT OPENED FOR THIS PURPOSE. THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT ALLOWED EXEMPTION UNDER ITA NO. 2311 MUM 2019-SHRI HIMANSH U CHAKRAWARTI 3 SECTION 54 OF THE ACT ON THE CLAIM OF RS. 37,80,170 /- AGAINST THE PURCHASE OF HOUSE PROPERTY AT LUCKNOW. HOWEVER, THE ASSESSING O FFICER HAS NOT CONSIDERED OR ALLOWED EXEMPTION UNDER SECTION 54 OF THE ACT IN REGARD TO PURCHASE OF HOUSE BY ASSESSEE I.E. RESIDENTIAL HOUS E AT CRESCENT BAY PROJECT AT THE COST OF RS. 5.45 CRORES. THE ASSESSING OFFIC ER RESTRICTED THE CLAIM TO THE EXTENT OF RS. 37,80,170/- INVESTED IN PURCHASE OF FLAT AT NIRALA NAGAR, LUCKNOW BY OBSERVING AS UNDER: THE ASSESSEE DEDUCTED THE AMOUNT OF RS. 4,96,70,369 /- FROM THE NET CAPITAL GAINS OF RS. 5,35,39,112/ - TOWARDS THE CLAIM OF SE C 54 DEDUCTION AND PAID TAX ON THE BALANCE SUM OF RS.38,68,743/. ON CLOSER EXAMINATION OF THE COMPUTATION, IT BECOME S CLEAR THAT ASSESSEE HAS UNDULY AVAILED ALL THE MONIES INVESTED IN DIFFERENT PROJECTS/ FLAT/ ACCOUNT AS DEDUCTION FROM NET CAPITAL GAINS TO REDUCE HIS TAX LIABILITY. HENCE VIDE ORDER SHEET NOTING DATED 17.02.2016, THE ASSESSEE WAS SHO W-CAUSED TO EXPLAIN WHY BALANCE CAPITAL GAINS REMAINING AFTER EXECUTING THE PURCHASE AGREEMENT FOR PURCHASE OF FLAT AT NIRALA NAGAR, LUCKNOW FOR A CON SIDERATION OF 37,80,170/- WAS NOT OFFERED TO TAX AS SEC 54 ALLOWS DEDUCTION T OWARDS PURCHASE OF ONLY ONE HOUSE PROPERTY WHICH WAS EXHAUSTED WHEN THE AGR EEMENT FOR THE LUCKNOW FLAT WAS EXECUTED. MOREOVER, DEPOSITING THE SUM OF CAPITAL GAINS ACCRUED IN A CAPITAL GAINS ACCOUNT AS PER CAPITAL G AINS SCHEME, 1988, IS ENVISAGED ONLY IF THE CAPITAL GAINS REMAINS UNUTILI ZED AT THE TIME OF FILING OF RETURN WHEREAS IN THE CASE OF THE ASSESSEE, THE LUC KNOW AGREEMENT HAD ALREADY BEEN EXECUTED BY 29.07.2013 MOREOVER, THE A SSESSEE CANNOT CLAIM DEDUCTION TOWARDS MONIES INVESTED IN PROJECTS WHEN A HOUSE PROPERTY (LUCKNOW) HAS ALREADY BEEN PURCHASED. HENCE AFTER A CCOUNTING FOR THE PURCHASE CONSIDERATION OF THE LUCKNOW FLAT, THE BAL ANCE CAPITAL GAINS AS COMPUTED BELOW IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE A.Y 2013- 14. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND GO ING THROUGH THE FACTS THAT ITA NO. 2311 MUM 2019-SHRI HIMANSH U CHAKRAWARTI 4 THE ASSESSEE HAS PURCHASED A RESIDENTIAL FLAT IN CR ESCENT BAY APARTMENT AT PAREL, MUMBAI ON 04.12.2012 BY MAKING A PAYMENT OF RS. 11,00,000/- INITIALLY AND THEREBY FURTHER MAKING PAYMENTS AS SC HEDULED BELOW: DATE NAME OF BANK GROSS AMOUNT BANK CHARGES NET PAID 06.12.2012 HSBC BANK 1,100,000 - 1,100,000 05.01.2013 HSBC BANK 9,585,199 - 9,585,199 25.09.2013 SBI CAPITAL GAIN A/C 6,173,753 12,733 6,161,020 17.12.2013 SBI CAPITAL GAIN A/C 545,578 56 545,522 17.12.2013 SBI CAPITAL GAIN A/C 2,728,056 56 2,728,000 STAMP DUTY PAID 19.12.2013 SBI CAPITAL GAIN A/C 2,891,039 56 2,891,039 24.12.2013 HSBC BANK 35,240 - 35,240 04.12.2013 SBI CAPITAL GAIN A/C 2,828,807 56 2,828,751 07.05.2014 SBI CAPITAL GAIN A/C 3,111,681 56 3,111,625 10.07.2014 SBI CAPITAL GAIN A/C 3,111,681 56 3,111,625 10.09.2014 SBI CAPITAL GAIN A/C 3,111,681 56 3,111,625 01.12.2014 SBI CAPITAL GAIN A/C 3,111,681 56 3,111,625 26.03.2015 SBI CAPITAL GAIN A/C 3,111,681 56 3,111,625 14.06.2015 TDS-HSBC BANK 124,465 - 124,465 14.06.2015 TDS-HSBC BANK 31,117 - 31,117 16.06.2015 TDS-HSBC BANK 118,808 - 118,808 23.06.2015 TDS-HSBC BANK 31,117 - 31,117 26.06.2015 HSBC BANK 3,080,509 - 3,080,509 06.08.2015 TDS-HSBC BANK 31,264 - 31,264 14.08.2015 HSBC BANK 3.095,124 - 3,095,124 06.11.2015 HSBC BANK 3.095,124 - 3.095,124 28.11.2015 TDS-HSBC BANK 31,264 - 31,264 05.02.2016 HSBC BANK 3,099,580 - 3,099,580 54,184,449 13,237 54,171,212 5. THE CIT(A) FINALLY ALLOWED THE CLAIM OF ASSESSEE VI DE PARA-6.6 AS UNDER: 6.1.6. SINCE THE APPELLANT HAD INVESTED IN THE FLAT SITUATED AT CRESCENT BAY APARTMENT AT PARLE, MUMBAI FIRST AND IT WAS THE CHO ICE OF THE APPELLANT TO ITA NO. 2311 MUM 2019-SHRI HIMANSH U CHAKRAWARTI 5 CLAIM EXEMPTION ON ONE FLAT. THE INVESTMENT IN FLAT AT CRESCENT BAY APARTMENT PARLE, MUMBAI FULFILLED ALL THE NECESSARY CONDITION S WHICH ARE REQUIRED FOR CLAIMING EXEMPTION U/S. 54. THEREFORE, THE AO IS DI RECTED TO ALLOW EXEMPTION U/S. 54 IN RESPECT OF FLAT SITUATED AT CRESCENT BAY , PARLE, MUMBAI AND RE- COMPUTE THE LONG TERM CAPITAL GAIN AFTER TAKING VAL UE OF INVESTMENT IN THE FLAT AT CRESCENT BAY APARTMENT, PARLE, MUMBAI. 6. AGGRIEVED, THE REVENUE CAME IN APPEAL BEFORE THE TR IBUNAL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTED THAT THE ASSESS EE HAS SOLD A HOUSE PROPERTY FOR A CONSIDERATION OF RS. 6.50 CRORE ON W HICH A CAPITAL GAIN OF RS. 5,35,39,112/- WAS REALIZED. THIS FACT IS UNDISPUTED . IT IS ALSO A FACT THAT ASSESSEE HAS BOOKED A RESIDENTIAL FLAT IN CRESCENT BAY APARTMENTS AT PAREL, MUMBAI BY MAKING AN APPLICATION MONEY OF RS. 11,00, 000/- TO M/S L&T PAREL PROJECT LLP BY CHEQUE NO. 622032 DATED 04.12. 2012 ON 04.12.2012. THE ASSESSEE HAS ALSO MADE FURTHER PAYMENTS I.E. EA RNEST MONEY OF RS. 95,85,199/- BY CHEQUE NO. 622039 DATED 08.01.2013 I N FAVOUR OF M/S L&T PAREL PROJECT LLP. ACCORDINGLY, AN ALLOTMENT LETTER -CUM-AGREEMENT WAS ENTERED INTO BETWEEN THE BUILDER M/S L&T LLP AND TH E ASSESSEE ON 05.01.2013 MADE THE PAYMENTS AS REPRODUCED IN ABOVE PARAGRAPH AND A SCHEDULE IS GIVEN ABOVE PARAGRAPH NO.4. IT IS ALSO A FACT THAT THE PROPERTY AT LUCKNOW WAS PURCHASED VIDE AGREEMENT EXECUTED BY AS SESSEE ON 29.07.2013, WHICH IS LATER DATE. ORIGINAL PURCHASE WAS OF RESIDENTIAL FLAT IN CRESCENT BAY APARTMENTS AT PAREL, MUMBAI. IT IS A F ACT THAT THE ASSESSEE HAS KEPT THE MONEY EITHER IN CAPITAL GAIN ACCOUNT SCHEM E OR MADE PART PAYMENT ITA NO. 2311 MUM 2019-SHRI HIMANSH U CHAKRAWARTI 6 FOR PURCHASE OF RESIDENTIAL FLAT IN CRESCENT BAY AP ARTMENTS AT PAREL, MUMBAI AND THIS HAS A DIRECT NEXUS THAT THE CONSIDERATION RECEIVED FROM SALE OF RESIDENTIAL PROPERTY WAS INVESTED IN PURCHASE OF TH IS PROPERTY. HENCE, IT IS THE CHOICE OF THE ASSESSEE TO CLAIM EXEMPTION ON ON E FLAT AND CIT(A) RIGHTLY RESTRICTED THE SAME TO THE INVESTMENT MADE IN PURCH ASE OF RESIDENTIAL FLAT AT CRESCENT BAY APARTMENTS AT PAREL, MUMBAI. THE CIT(A )S DIRECTION TO THE ASSESSING OFFICER IS PERFECTLY WITHIN THE PROVISION S OF LAW. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND HENCE, THE SAM E IS CONFIRMED. 8. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.01.2021 SD/- SD/- N.K. PRADHAN MAHAVIR SINGH ACCOUNTANT MEMBER VICE - PRESIDENT MUMBAI, DATE: 11.01.2021 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST . REGISTRAR ITAT, M UMBAI