Sri Moiz Shabbir Vadnagenwala, CHENNAI V. ACIT, CHENNAI

ITA 272/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6060 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M PALANICHAMY
• Assessee Lawyers: G BASKAR
• Keywords: Capital asset
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , ' , % & BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.272/MDS/2016 %' ' /ASSESSMENT YEAR: 2009-10 SRI MOIZ SHABBIR VADNAGENWALA, NO.201, RASAPPA CHETTY STREET, CHENNAI-600 003. VS. THE ASST. COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-XI, 1 ST FLOOR, KANNAMMAI BUILDING, 611, ANNA SALAI, CHENNAI-600 006. [PAN: AADPM 4282 F ] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.G.BASKAR, ADV. )*( + /RESPONDENT BY : MR.M.PALANICHAMY, JCIT + /DATE OF HEARING : 10.10.2017 + /DATE OF PRONOUNCEMENT : 10.10.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.272/MDS/2016 IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5 , CHENNAI, IN ITA NO.161/CIT(A)-5/13-14 DATED 28.01.2016 FOR THE AY 2 009-10. 2. MR.M.PALANICHAMY, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.G.BASKAR, ADV., REPRESENTED ON BEHALF OF THE ASS ESSEE. ITA NO.272/MDS/2016 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ONLY ISSU E IN THE ASSESSEES APPEAL WAS AGAINST THE ACTION OF THE LD.CIT(A) IN C ONFIRMING THE DENIAL OF THE EXEMPTION U/S.54F TO AN EXTENT OF RS.24,30,000/ -. IT WAS A SUBMISSION THAT THE ASSESSEE HAD SOLD A LAND AT PER UNGUDI FOR A CONSIDERATION OF RS.1,14,00,000/-. THE SAID LAND W AS SOLD ON 03.05.2008 AND WAS ORIGINALLY PURCHASED ON 15.02.1989. THE AS SESSEE HAD ENTERED INTO A CONSTRUCTION AGREEMENT WITH M/S.AKSHAYA HOME S PVT. LTD., ON 16.04.2007 FOR THE CONSTRUCTION OF A FLAT. THE FIR ST PAYMENT WAS MADE TO M/S.AKSHAYA HOMES PVT. LTD. ON 10.01.2007 FOR AN AM OUNT OF RS.5.00 LAKHS. THE AO HAD DISALLOWED THE PAYMENT MADE BY T HE ASSESSEE TO M/S.AKSHAYA HOMES PVT. LTD., IN RESPECT OF THE ACQU ISITION OF THE NEW FLAT FOR A PERIOD FROM 10.01.2007 TO 10.03.2007 ON THE G ROUND THAT THE SAID PAYMENT HAD BEEN MADE ON A PERIOD PRIOR TO ONE YEAR BEFORE THE SALE OF THE ORIGINAL ASSET. IT WAS A SUBMISSION THAT THE A SSESSEE HAD REGISTERED UNDIVIDED SHARE IN RESPECT OF THE FLAT PURCHASED ON 19.11.2008 AND THE POSSESSION OF THE FLAT WAS ALSO TAKEN ON 19.11.2008 . IT WAS A SUBMISSION THAT THE REGISTRATION OF HANDING OVER OF THE SAID N EW FLAT WAS WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF THE TRANSFER O F THE ORIGINAL ASSET AND CONSEQUENTLY IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.BEENA K. JAIN REPORTED IN 217 ITR 3 63, THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF SEC.54F. ITA NO.272/MDS/2016 :- 3 -: 4. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE ORDER OF THE AO AND THE LD.CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT .BEENA K. JAIN REFERRED TO SUPRA, THE HONBLE HIGH COURT HAS HELD AS FOLLOWS: UNDER S. 54F OF THE IT ACT, IN THE CASE OF AN ASSES SEE IF ANY CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE, AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEAR S AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE, PURCHASED A RESIDENTIAL HOUSE, THE CAPI TAL GAIN SHALL BE DEALT WITH AS PROVIDED IN THAT SECTION. AS PER THE SECTION CERTAIN EXEMPTION HAS TO BE ALLOWED IN RESPECT OF THE CAPITAL GAINS TO BE CALCULATED AS SET OUT THEREIN. THE DEPARTMENT CONTENDS THAT THE ASSESSEE DID NOT PURCHASE THE RESIDENTIAL HOUSE EIT HER ONE YEAR PRIOR TO OR TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WHICH RESULTED IN THE LONG-TERM CAPITAL GAINS. ACCORDING TO THE DEPARTMENT, THE AGREEMENT FOR PURCHASE OF THE NEW F LAT WAS ENTERED INTO MORE THAN ONE YEAR PRIOR TO THE SALE. HENCE, THE PETITIONER IS NO T ENTITLED TO THE BENEFIT UNDER S. 54F. IN OUR VIEW, THE TRIBUNAL HAS RIGHTLY NEGATIVED THIS C ONTENTION AND HAS HELD THAT THE NEW RESIDENTIAL HOUSE HAD BEEN PURCHASED BY THE ASSESSE E WITHIN TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WHICH RESULTED IN LONG-TERM CAPITAL G AINS. THE TRIBUNAL HAS HELD THAT THE RELEVANT DATE IN THIS CONNECTION IS 29TH JULY, 1988 , WHEN THE PETITIONER PAID THE FULL CONSIDERATION AMOUNT ON THE FLAT BECOMING READY FOR OCCUPATION AND OBTAINED POSSESSION OF THE FLAT. THIS HAS BEEN TAKEN BY THE TRIBUNAL AS TH E DATE OF PURCHASE. THE TRIBUNAL HAS LOOKED AT THE SUBSTANCE OF THE TRANSACTION AND COME TO THE CONCLUSION THAT THE PURCHASE WAS SUBSTANTIALLY EFFECTED WHEN THE AGREEMENT OF PU RCHASE WAS CARRIED OUT OR COMPLETED BY PAYMENT OF FULL CONSIDERATION ON 29TH JULY, 1988 , AND HANDING OVER OF POSSESSION OF THE FLAT ON THE NEXT DAY. 6. THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY H IGH COURT IN THE CASE OF SMT.BEENA K. JAIN, WHEN APPLIED TO THE PRES ENT CASE SHOWS THAT THE ASSESSEE HAS GOT CONSTRUCTED THE NEW FLAT AFTER COMPLETION OF THE CONSTRUCTION ON 19.11.2009 I.E. WITHIN THE TWO YEAR S PERIOD FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET. IN THESE CI RCUMSTANCES, AS THE ASSESSEE HAS CONSTRUCTED THE FLAT WITHIN THE TWO YE ARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR BENEFIT OF DEDUCTION U/S.54F. RESPECT FULLY APPLYING THE PRINCIPLES LAID DOWN IN THE HONBLE BOMBAY HIGH COU RT REFERRED TO SUPRA, ITA NO.272/MDS/2016 :- 4 -: THE AO IS DIRECTED TO GRANT THE ASSESSEE THE BENEFI T OF DEDUCTION U/S.54F AS CLAIMED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 10, 2017, AT CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P GEORGE ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) % /JUDICIAL MEMBER /CHENNAI, 2 /DATED: OCTOBER 10, 2017. TLN + )%34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 )%% /DR 3. 6 ( ) /CIT(A) 6. ' /GF