NAYANA KIRIT PARIKH, MUMBAI V. ACIT 18(2), MUMBAI

ITA 2832/MUM/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2182 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Assessee Lawyers: RAJEN J DAMANI
• Keywords: Set aside
• Section: 54F; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2832/M/2013 ASSESSMENT YEAR: 2009-10 MRS. NAYANA KIRIT PARIKH, 101, JOY RESIDENCY, 12 TH ROAD, BESIDE RAMKRISHNA MISSION LANE, KHAR (WEST), MUMBAI 400 051 PAN: ABAPP4296Q VS. ACIT 18(2), MUMBAI - 400067 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJEN J. DAMANI, A.R. REVENUE BY : SHRI R.A. DHYANI, D.R. DATE OF HEARING : 13.05.2019 DATE OF PRONOUNCEMENT : 25.06.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 24.01.2013 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING DISALLOW ANCE OF RS.34,50,000/- AS MADE BY THE AO UNDER SECTION 54F OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE HAS SHOW N LONG TERM CAPITAL GAIN OF RS.1,25,10,645/- AFTER CLAIMIN G DEDUCTION ITA NO.2832/M/2013 MRS. NAYANA KIRIT PARIKH 2 UNDER SECTION 54F TO THE TUNE OF RS.1,54,50,250/-. ACCORDINGLY, AO ASKED THE ASSESSEE TO FILE THE NECESSARY DETAILS OF THE SAID CLAIM MADE BY THE ASSESSEE. THE ASSESSEE HAS ACQUI RED NEW RESIDENTIAL PROPERTY FOR RS.2,25,00,000/- VIDE AGR EEMENT DATED 18.03.2009 JOINTLY WITH HER HUSBAND AND INCURRED IN CIDENTAL EXPENDITURE OF RS.15,00,500/- THEREON. THUS AGGREG ATE COST COMES TO RS.2,40,00,500/- OF WHICH ASSESSEES SHARE WAS ONE HALF. THE ASSESSEE ALSO INCURRED EXPENDITURE ON CONSTRUCTION/IMPROVEMENT OF RS.34,50,000/- ON THE S AME FLAT TO MAKE IT HABITABLE AS PER THEIR STANDARD OF LIVING OF THE ASSESSEE AND CLAIMED THE DEDUCTION THEREOF UNDER SECTION 54F OF THE ACT. ACCORDING TO THE ASSESSEE THE SAID EXPENSES OF RS.3 4,50,000/- WAS INCURRED ON ELECTRIFICATION OF THE HOUSE, CIVIL WORK, DESIGN PLANNING, PLUMBING, FLOORING ETC. AND THEREFORE FOR MED PART OF THE COST OF THE FLAT. HOWEVER, ACCORDING TO THE AO THE SAID EXPENDITURE WAS NOT INCURRED ON CONSTRUCTION/IMPROV EMENT OF THE FLAT BUT ON FURNITURE FABRICATION AND PAINTING ETC. ACCORDING TO THE AO ALL THESE EXPENSES FALL UNDER THE CATEGOR Y OF EXPENDITURE BY WAY OF RENOVATION TO MAKE THE FLAT M ORE COMFORTABLE AND THEREFORE NOT LIABLE TO BE ALLOWAB LE AS PART OF COST OF FLAT AND FINALLY ADDED THE SAME TO THE INC OME OF THE ASSESSEE. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO ACCOUNT TH E CONTENTIONS OF THE ASSESSEE. THE LD. CIT(A) HELD THAT UNDER SE CTION 54F ONLY AMOUNT RELATING TO AGREEMENT VALUE, STAMP DUTY, REG ISTRATION CHARGES AND PROFESSIONAL CHARGES RELATED TO THE PUR CHASE OF NEW FLAT COULD BE CLAIMED BY THE ASSESSEE. THE LD. CIT (A) HELD THAT ITA NO.2832/M/2013 MRS. NAYANA KIRIT PARIKH 3 THE COST OF IMPROVEMENT OR COST OF RENOVATION ARE S UBSEQUENT TO THE PURCHASE AND THEREFORE CAN NOT BE ALLOWED AS DE DUCTION UNDER SECTION 54F OF THE ACT. THE LD. CIT(A) ALSO OBSERVED THAT THE ASSESSEE HAS INCURRED THE SAID EXPENSES OF RS.3 4,50,000/- ON THE RECONSTRUCTION OF THE HOUSE AND TO MAKE IT M ORE LAVISH AND THEREFORE JUSTIFIED THE ORDER OF AO IN DENYING THE EXPENDITURE INCURRED BY THE ASSESSEE OF RS.34,50,00 0/- UNDER SECTION 54F OF THE ACT. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS CLAIMED DE DUCTION OF RS.34,50,000/- AS PART OF THE COST OF THE FLAT WHIC H WAS DENIED BY THE AO ON THE GROUND THAT SAID EXPENSES WERE NOT INCURRED ON THE PURCHASE OF FLATS AND THEREFORE DID NOT FORM THE PART OF THE COST OF PURCHASE OF THE FLAT. THE ORDER OF AO WAS UPHELD BY THE LD. CIT(A) BY HOLDING THAT THE EXPENDITURE INCU RRED BY THE ASSESSEE WAS IN THE NATURE OF MAKING THE RESIDENTIA L PROPERTY MORE LAVISH WHILE THE BUILDER HAS PROVIDED THE FLAT COMPLETE IN ALL RESPECTS. AFTER EXAMINING THE FACTS ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE HAS INCURRED RS.34,5 0,000/- FOR REMODELING OF THE FLAT, PAINTING OF THE FLAT SO THA T THE SAME COULD BE MADE HABITABLE ACCORDING TO THE STANDARD OF LIVI NG OF THE ASSESSEE. IN OUR OPINION, THE SAID COST FORMS THE PART OF THE COST OF PURCHASE AND IS ADMISSIBLE EXPENDITURE UNDER SEC TION 54F OF THE ACT. THE CASE OF THE ASSESSEE IS SUPPORTED BY S EVERAL JUDICIAL RULINGS AS DISCUSSED HEREINAFTER. IN THE CASE OF G . SIVA RAMA KRISHNA, HYDERABAD VS. ASSESSEE (ITA NO.755/HYD/201 3) A.Y. 2007-08 IN WHICH THE CO-ORDINATE BENCH OF THE TRIBU NAL HAS HELD THAT EXPENDITURE INCURRED FOR THE PURPOSE OF REMODE LING OF THE ITA NO.2832/M/2013 MRS. NAYANA KIRIT PARIKH 4 FLAT IN NORMAL COURSE AFTER PURCHASING THE READYMAD E FLAT, THE SAID EXPENDITURE IS ALLOWABLE UNDER SECTION 54F OF THE ACT. IN THE CASE OF RUSTOM HOME VAKIL VS. ASSESSEE (ITA NO.4450/M/2014) THE CO-ORDINATE BENCH OF THE TRIBUN AL HAS HELD THAT EXPENDITURE INCURRED TOWARDS EXTERNAL EXT ENSIVE CIVIL, ELECTRICAL AND PAINTING WORKS INCLUDING NEW FLOORIN G, TILES, FITTINGS IN THE NEW RESIDENTIAL HOUSE PROPERTY PURC HASED BY THE ASSESSEE IN PUNE WERE CONSIDERED TO BE ALLOWABLE EX PENDITURE UNDER SECTION 54F OF THE ACT. IN THE CASE OF MRS. GULSHANBANOO R. MUKHI VS. JT. CIT (2002) 83 ITR 649 MUM, THE CO- ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT AMOUNT OF PURCH ASE INCLUDES OTHER NECESSARY EXPENDITURE IN THIS BEHALF TO MAKE THEIR RESIDENTIAL HOUSE HABITABLE AND WILL FORM THE PART OF THE COST OF THE NEW ASSETS. WE, THEREFORE, RESPECTFULL Y FOLLOWING THE SAME RATIO LAID DOWN IN THE VARIOUS DECISIONS AS DI SCUSSED HEREINABOVE , SET ASIDE ORDER OF LD. CIT(A) AND DIR ECT THE AO TO ALLOW THE DEDUCTION OF EXPENDITURE INCURRED BY THE ASSESSEE OF RS.34,5000/- UNDER SECTION 54F OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2019. SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25.06.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT ITA NO.2832/M/2013 MRS. NAYANA KIRIT PARIKH 5 THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.