GIRIJA SINGH, MUMBAI V. ITO 35 (1)(4), MUMBAI

ITA 283/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7683 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 30-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS JYOTILAKSHMI NAYAK
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH G,MUM BAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.283/MUM/2017 (ASSESSMENT YEAR- 2012-13) SMT. GIRIJA SINGH 303, EBONY, TOWER NO.1, THE ORCHARD RESIDENCY, 146, LBS MARG, GHATKOPAR (W), MUMBAI-400086 PAN: ABGPS5477E VS. ITO-35(1)-4, C-12, BANDRA MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWIN CHHAG ( AR) REVENUE BY : MRS. JYOTI LAKSHMI NAYAK (DR) DATE OF HEARING : 30.03.2017 DATE OF PRONOUNCEMENT : 30.03.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS) [FOR SHORT THE CIT(A)] 46, MUMBAI DATED 14.10.2016 FOR ASSES SMENT YEAR (AY) 2012-13. THE ASSESSEE HAS RAISED SOLITARY GROUND OF APPEAL THAT THE LOWER AUTHORITIES ERRED TO RESTRICT THE DEDUCTION UNDER SECTION 54 TO ONE HOUSE, CONTRA RY TO THE LAW AND WITHOUT APPRECIATING THE VARIOUS CITED DECISION BEFORE THE LD. CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RET URN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 23.07.2012. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 29.03.2015. IN THE RETURN OF INCOME, THE ASSESSE E CLAIMED DEDUCTION U/S 54 OF THE ACT ON PURCHASE OF TWO FLATS IN GHATKOPAR, MUMBAI F OR RS. 92,58,900/- AND RS. 94,06,250/- RESPECTIVELY. TO VERIFY THE FACTS THE A SSESSING OFFICER (AO) DEPUTED THE WARD INSPECTOR TO VERIFY THE STATUS OF THE PROPERTI ES PURCHASED. THE INSPECTOR 2 ITA NO. 283/M/2017 SMT. GIRI JA SINGH REPORTED THAT FLAT NOS. 303 & 304 ARE TWO SEPARATE UNITS WHICH HAVE BEEN RENTED OUT TO TWO DIFFERENT FAMILY MEMBERS. THE AO AFTER GIVING T HE OPPORTUNITY OF HEARING TO THE ASSESSEE RESTRICTED THE DEDUCTION U/S 54 FOR ONE PR OPERTY FOR RS. 94,06,250/-. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF RESTRIC TING THE CLAIM OF DEDUCTION U/S 54 OF THE ACT WAS SUSTAINED. THUS, FURTHER AGGRIEVED BY T HE ORDER OF LD. CIT(A), THE PRESENT APPEAL IS FILED BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR AT THE OUTSET SUBMITTED THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED IN HIS FAVOUR BY THE DECISION OF MUMBAI TRIBUNAL IN SHRI MAHESH KUMAR PODDAR V/S ITO IN ITA NO. 1511/MUM/2016 DATED 24.06.2016. THE LD. DR FOR THE REVENUE STRONGLY OPPOSED THE CONTENTION OF LD. AR OF ASSESSEE AND WOULD SUBMIT THAT THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIF FERENT. THE ASSESSEE HAS PURCHASED TWO DIFFERENT RESIDENTIAL HOUSES WHICH ARE LET OUT BY H ER TO DIFFERENT TENANTS. THUS, LD. DR FOR THE REVENUE DISPUTED THE CONTENTION OF LD. AR T HAT ISSUE RAISED IN THE PRESENT APPEAL IS COVERED IN HIS FAVOUR. THE LD. AR OF THE ASSESSEE WAS ASKED TO EXPLAIN AND SUBSTANTIATE HIS CLAIM WHICH IS RAISED IN THE GROUN DS OF APPEAL BEFORE THE TRIBUNAL. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE WORD CONSTRUCTED A RESIDENTIAL HOUSE WAS SUBSTITUTED BY FINANCE ACT, 2014 W.E.F. 01.04.2015 BY THE WORD CONSTRUCTED ONE RESIDENTIAL HOUSE IN INDIA. IT WA S FURTHER ARGUED THAT THE AMENDMENT IS PROSPECTIVE IN NATURE AND BECAME EFFECTIVE W.E.F . 01.04.2015. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF SHRI MAHESH KUMAR PODDAR (SUPRA), DECISION OF HONBLE BOMBAY HIGH COU RT IN CIT V/S GODAVARIDEVI SARAT (113 ITR 589) (BOM) AND DECISION OF HONBLE MADRAS HIGH COURT IN CIT V/S SMT. V.R. KARPAGAM (ITA NO. 301 OF 2014) DATED 18.0 8.2014. ON THE OTHER HAND, LD. DR FOR THE REVENUE ON MERIT SUPPORTED THE ORDER OF AUTHORITIES BELOW AND WOULD ARGUE THAT AMENDMENT MADE IN SECTION 54 FOR SUBSTIT UTION OF WORD A BY ONE IS CLARIFICATORY IN NATURE AND THUS RETROSPECTIVE IN NATURE AS PER THE DECISION OF HONBLE BOMBAY HIGH COURT IN GLENMARK PHARMACEUTICALS LTD. (324 ITR 199). THE LD. DR FOR THE REVENUE FURTHER ARGUED THAT DECISION OF HONBLE MADRAS HIGH COURT IN CIT V/S V.R. KARPAGAM (SUPRA) IS DIFFERENT ON FACTS. IN THE SAID CASE, THE ASSESSEE RECEIVED THE 3 ITA NO. 283/M/2017 SMT. GIRI JA SINGH PROPERTY IN LIEU OF PORTION OF SURRENDER OF DEVELOP MENT RIGHT AND THE RATION OF THE DECISION IS NOT APPLICABLE ON THE FACTS OF THE PRES ENT CASE. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER(S) OF AUTHORITIES BELOW. THE AO WHILE FRAMING THE ASSE SSMENT OBSERVED THAT DURING THE YEAR, THE ASSESSEE IS SOLD PROPERTY IN DELHI AND EA RNED LONG TERM CAPITAL GAIN (LTCG) OF RS. 1,67,15,000/-. THE ASSESSEE HAS PURCH ASED TWO FLATS I.E. FLAT NO. 303 & 304 IN GHATKOPAR FOR RS. 92,58,900/- AND RS. 94,06, 250/-. THE ASSESSEE WAS SHOW- CAUSED AS TO WHY THE DEDUCTION U/S 54 SHOULD NOT BE RESTRICTED TO ONE HOUSE, THE ASSESSEE FILED ITS REPLY VIDE REPLY DATED 19.03.201 5 AND RELIED UPON THE DECISION OF DCIT V/S VIKAS OBEROI IN ITA NO. 4362/M/2011. ON TH E BASIS OF DECISION IN DCIT VS VIKAS OBEROI (SUPRA) THE ASSESSEE EXPLAINED THAT IN THE SAID CASE THE ASSESSEE PURCHASED TWO CONTIGUOUS FLAT THAT COMMON WALL. THE COURT WAS OF THE OPINION THAT FLATS ON DIFFERENT FLOORS BEING UTILIZED FOR DIFFER ENT PURPOSES ALSO QUALIFY TO BE CONSIDERED AS A RESIDENTIAL HOUSES. IT WAS ALSO S UBMITTED THAT IN THE SAID CASE THE AO WAS DIRECTED TO RE-COMPUTE THE EXEMPTION U/S 54F BY TREATING BOTH THE UNITS AS COMPRISING OF (A RESIDENTIAL HOUSE FOR THIS PURPOSE ). THE CONTENTION AND THE RELIANCE MADE BY ASSESSEE WERE NOT ACCEPTED BY AO. ON RELYIN G UPON THE DECISION OF K.G. VYAS V/S ITO 16 ITD 195 (BOM TRIB.) WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE BUYS MORE THAN ONE FLAT IN THE SAME BUILDING FOR AC COMMODATING A LARGE FAMILY, MAINTAINING A COMMON KITCHEN AND COMMON RATION CARD AND QUALIFY FOR ELIGIBLE FOR DEDUCTION AND FURTHER ON THE DECISION OF MRS. GULSH ANBANOO R. MUKHI V/S JCIT 83 ITD 649 (MUM TRIB.) WHEREIN IT WAS HELD THAT STATUT E UNAMBIGUOUSLY PROVIDES FOR DEDUCTION U/S 54 FOR ONE RESIDENTIAL HOUSE ONLY. TH E AO FURTHER RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN ANAND B ASAPPA V/S ITO 309 ITR 329 (KAR.) WHEREIN ADJACENT RESIDENTIAL UNITS WERE USED AS SINGLE RESIDENTIAL HOUSE AND WAS QUALIFIED FOR EXEMPTION U/S 54 OF THE ACT. THE FURTHER AO RELIED UPON THE REPORT OF WARD INSPECTOR, WHEREIN IT WAS REPORTED THAT BOT H THE FLATS ARE TWO SEPARATE UNITS AND HAVE BEEN RENTED OUT TO TWO DIFFERENT FAMILY ME MBERS. THE LD. CIT(A) WHILE CONSIDERING THE APPEAL OF THE ASSESSEE ALSO RELIED UPON THE REPORT OF WARD INSPECTOR THAT THERE WERE TWO SEPARATE RESIDENTIAL UNITS/HOUS ES AND WERE RENTED OUT TO TWO DIFFERENT FAMILY MEMBERS AND THUS, (THEY) RESIDENTI AL UNIT WERE NOT FORM PART OF ONE 4 ITA NO. 283/M/2017 SMT. GIRI JA SINGH RESIDENTIAL HOUSE. THE LD. CIT(A) WHILE RELIED UPO N THE DECISION OF JURISDICTIONAL HIGH COURT IN SUSHILA JHAVERI CONFIRMED THE ACTION OF AO. 5. WE MAY FURTHER REFER THAT SPECIAL BENCH OF MUMBAI T RIBUNAL IN CASE OF SUSHILA JHAVERI HELD THAT BENEFIT OF SECTION 54 COULD BE EX PEND TO EXCLUDE MULTIPLE UNIT, IF IT IS DEMONSTRATED THAT THEY WERE ADJACENT AND FUNCTIONIN G AS ONE UNIT. THOUGH, WE ARE CONSCIOUS THAT SECTION 54 IS A BENEFICIARY LEGISLAT ION. THE CAPITAL GAIN EARNED ON SALE OF PROPERTY USED FOR RESIDENCE IS AVAILABLE ONLY TO AN INDIVIDUAL OR HUF. THE BENEFIT MUST BE CLAIMED WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEAR AFTER THE DATE OF TRANSFER OF OLD HOUSE. THE ASSESSEE/ TAX PAYER SHOU LD ACQUIRE ANOTHER RESIDENTIAL HOUSE OR SHOULD CONSTRUCT THE RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE HOUSE. AFTER THE AMENDMENT IN S ECTION 54 AND 54F IN THE ACT BY FINANCE ACT 2014 EFFECTIVE FROM 01.04.2015 I.E. FRO M AY 2015-16 THE EXEMPTION CAN BE CLAIMED ONLY IN RESPECT OF ONE RESIDENTIAL H OUSE PURCHASED OR CONSTRUCTED IN INDIA. AS THE WORDS CONSTRUCTED A RESIDENTIAL HOUS E HAS BEEN SUBSTITUTED BY THE WORDS CONSTRUCTED ONE RESIDENTIAL HOUSE IN INDIA BY FINANCE ACT 2014 W.E.F. 01.04.2015. IN THE PRESENT CASE, THE ASSESSEE HAS P URCHASED RESIDENTIAL UNITS WHICH ARE ADJACENT TO EACH OTHER I.E. FLAT NO.303 AND 304. TH E RESIDENTIAL UNITS ARE ACQUIRED AFTER SALE OF HOUSE PROPERTY IN DELHI. THE AMENDMENT BROU GHT ON THE STATUTE BOOK IS APPLICABLE W.E.F. 01.04.2015. THE HONBLE DELHI HIGH COURT IN CIT V/S GITA DUGGAL 357 ITR 153(DEL.) HELD THAT MERELY BECAUSE A RESIDENTIAL HOUSE CONSISTS OF SEVE RAL UNITS WITH INDEPENDENT RESIDENTIAL UNITS WOULD NOT TAKE AWAY THE BENEFIT O F DEDUCTION U/S 54 OF THE ACT. FURTHER THE HONBLE MADRAS HIGH COURT IN CIT V/S V. R. KARPAGAM (SUPRA) HELD THAT AMENDMENT IN SECTION 54F CAME INTO EFFECT ONLY FROM 01.04.2015. PRIOR TO SAID AMENDMENT, IT IS CLEAR THAT A RESIDENTIAL HOUSE WOU LD INCLUDE MULTI/RESIDENTIAL UNIT. WE HAVE CONSIDERED THE CONTENTION OF LD. DR FOR THE REVENUE, WHEREIN LD. DR FOR THE REVENUE STRONGLY CONTENDED THAT THE AMENDMENT MADE IN SECTION 54 AND 54F IS CLARIFICATORY IN NATURE AND HAVE RETROSPECTIVE EFFE CT. HOWEVER, HONBLE MADRAS HIGH COURT IN CIT V/S V.R. KARPAGAM (SUPRA) IN PARA 10 OF THE JUDGMENT HAS HELD THAT THE LEGISLATURE HAS S PECIFICALLY MENTIONED THAT THE AMENDMENT IN SECTION 54 TAKES EFFECT FROM 01.04.201 5 ONLY. THUS, IN VIEW OF THE ABOVE DISCUSSION AND WE RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH 5 ITA NO. 283/M/2017 SMT. GIRI JA SINGH COURT IN CIT V/S GITA DUGGAL (SUPRA) ACCEPT THE APP EAL OF THE ASSESSEE AND ALLOWED THE DEDUCTION CLAIMED U/S 54 OF THE ACT. 6. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. PARTIES ARE LEFT TO BEAR THEIR OWN COST. NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 0 TH MARCH, 2017. SD/- SD/- (B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 30/03/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/