Ronny Singh Gulati, Gurgaon V. DCIT, New Delhi

ITA 2869/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8912 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 12-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Benefit of exemption
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.2869/DEL/2013 ASSESSMENT YEAR : 2007-08 RONNY SINGH GULATI, W-1/9 (FIRST FLOOR), DLF PHASE-3, GURGAON. PAN: AAHPG1682M VS. DCIT, CIRCLE-11(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.P. GUPTA, ADVOCATE DEPARTMENT BY : SHRI VIKRAM SAHAY, SR. DR DATE OF HEARING : 12.03.2015 DATE OF PRONOUNCEMENT : 12 .03.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT(A) ON 28.2.2013 IN RELATION TO THE ASSESSMENT Y EAR 2007-08. ITA NO.2869/DEL/2013 2 2. FIRST GROUND WAS NOT PRESSED BY THE LD.AR, WHIC H HEREBY STANDS DISMISSED. 3. SECOND GROUND IS AGAINST THE TREATMENT GIVEN TO THE STAMP DUTY OF RS.2,16,750/- PAID FOR THE REGISTRATION OF NEW HOUS E IN THE NAME OF THE ASSESSEE, AS NOT FORMING PART OF THE COST OF NEW A SSET FOR THE PURPOSE OF EXEMPTION U/S 54F OF THE INCOME-TAX ACT, 1961 (HERE INAFTER ALSO CALLED `THE ACT). 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SOLD CERTAIN SHARES FOR A SUM OF RS.49,26,773/-. EXEMPTION U/S 54F WAS CLAIMED TOWARDS PURCHASE PRICE OF HOUSE/FLAT FOR A SUM OF R S.43.35 LAC; STAMP DUTY OF RS.2,16,750/- PAID FOR REGISTRATION OF SUCH HOUSE IN THE NAME OF THE ASSESSEE; AND THE AMOUNT SPENT ON FITTINGS ETC . AT RS.3,75,100/-. THE ASSESSEE CLAIMED THAT THE PROFIT FROM SALE OF S HARES WAS EXEMPT IN VIEW OF THE ABOVE INVESTMENTS IN PURCHASE OF A NEW HOUSE PROPERTY. THE AO COMPLETED ASSESSMENT U/S 144. HOWEVER, THE ISSU ES IN THE PRESENT APPEAL CAME TO BE DECIDED BY THE LD. CIT(A) FOR THE FIRST TIME. THE ASSESSEE ARGUED THAT STAMP DUTY AMOUNTING TO RS.2,1 6,750/- PAID BY IT ITA NO.2869/DEL/2013 3 SHOULD BE CONSIDERED TOWARDS COST OF PURCHASE OF NE W ASSET AND THE BENEFIT OF EXEMPTION UNDER SECTION 54F BE ALLOWED. THE LD. CIT(A) REFUSED TO ACCEPT THIS ARGUMENT BY HOLDING THAT THE REGISTRATION WAS NOT AN ESSENTIAL REQUIREMENT FOR TRANSFER OF IMMOVABLE PROPERTY. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSI TION THAT THE ASSESSEE WAS OTHERWISE ENTITLED TO CLAIM THE BENEFIT OF EXEM PTION U/S 54F, WHICH FACT HAS NOT BEEN DENIED BY THE AO. THE ONLY DISPU TE IS AS TO WHETHER STAMP DUTY CHARGES PAID SHOULD BE CONSIDERED AS A P ART OF `COST OF NEW ASSET OR NOT. THERE IS NO QUARREL OVER THE PROPOS ITION THAT THIS STAMP DUTY WAS PAID IN RESPECT OF THE PROPERTY PURCHASED AMOUNTING TO RS.43.35 LAC, IN RESPECT OF WHICH THE ASSESSEE CLAI MED THE BENEFIT OF EXEMPTION U/S 54F. WE FAIL TO APPRECIATE THE VIEW POINT OF THE LD. CIT(A) IN NOT TREATING THE COST OF REGISTRATION A S PART OF COST OF NEW ASSET BY OPINING THAT IT WAS NOT AN ESSENTIAL REQUI REMENT FOR TRANSFER OF IMMOVABLE PROPERTY. REGISTRATION OF IMMOVABLE PROP ERTY CANNOT BE DISASSOCIATED FROM ITS PURCHASE. ONLY WHEN A PARTI CULAR PROPERTY IS ITA NO.2869/DEL/2013 4 REGISTERED IN THE NAME OF THE PURCHASER, THAT THE ENTIRE TRANSACTION OF PURCHASE FINALLY COMES TO AN END. SINCE THE ASSESS EE PAID STAMP DUTY AMOUNTING TO RS.2,16,750/- IN CONNECTION WITH THE R EGISTRATION OF THE PROPERTY IN HIS FAVOUR, FOR WHICH IT CLAIMED THE B ENEFIT OF EXEMPTION U/S 54F, WE CANNOT VIEW THE PAYMENT OF SUCH STAMP DUT Y AS INDEPENDENT OF COST OF NEW HOUSE. THE IMPUGNED ORDER IS OVERTURNE D ON THIS SCORE AND THE BENEFIT OF EXEMPTION U/S 54F IS ALLOWED ON THE AMOUNT OF STAMP DUTY PAID AS PART OF COST OF NEW ASSET. THIS GROUND IS ALLOWED. 6. THE ONLY OTHER ISSUE WHICH SURVIVES IN THIS APPE AL IS AGAINST TREATING THE AMOUNT OF RS.3,75,100/- INCURRED BY TH E ASSESSEE ON FITTINGS ETC., AS NOT PART OF THE COST OF NEW HOUSE. THE A SSESSEE CLAIMED THAT THE SAID SUM OF RS.3,75,100/- WAS PART OF THE COST OF N EW ASSET IN TERMS OF SECTION 54F. THE LD. CIT(A) OBSERVED THAT THE ASSE SSEE GOT HOLD OF BRAND NEW FLAT TO LIVE IN AND, HENCE, THERE WAS NO POINT IN TREATING SUCH AMOUNT AS A PART OF COST OF NEW ASSET. ON A SPECIF IC QUERY FROM THE BENCH, THE LD. AR COULD NOT FILE ANY DETAILS OF THE AMOUNT CLAIMED TO HAVE BEEN INCURRED ON FITTINGS ETC. IN OUR CONSIDE RED OPINION, WITHOUT ITA NO.2869/DEL/2013 5 EXAMINATION OF THE NATURE OF THE AMOUNT SPENT, THE DATES ON WHICH SUCH AMOUNT WAS SPENT, THERE CANNOT BE ANY DECISION ABOU T THE FORMATION OF THIS SUM AS PART OF COST OF NEW ASSET OR OTHERWISE. IT GOES WITHOUT SAYING THAT UNLESS THE PAYMENT IS EVIDENCED AS COST OF FIT TINGS ETC., THE SAME CANNOT BE TAKEN UP FOR CONSIDERATION AS TO WHETHER IT FORMS PART OF THE COST OF NEW ASSET. IN OTHER WORDS, THE AMOUNT SPENT ON FURNITURE ETC., WOULD AUTOMATICALLY GO OUT OF CONSIDERATION. ONCE I T IS SHOWN THAT THE AMOUNT IS INCURRED TOWARDS FITTINGS IN HOUSE, THEN THE POINT FOR CONSIDERATION IS THE OCCASION OF SUCH FITTINGS. IF THE DATE OF FITTINGS COINCIDE WITH THE OCCASION OF TAKING POSSESSION OF THE NEW HOUSE, THEN IT WILL ASSUME THE CHARACTER OF PART OF COST OF THE NE W HOUSE. IN THE OTHERWISE SITUATION, IT WILL NOT QUALIFY AS COST OF NEW HOUSE, BUT BE TREATED AS COST OF IMPROVEMENT, TO BE CONSIDERED AT THE TIME OF TRANSFER OF SUCH PROPERTY. IN THE ABSENCE OF ANY DETAILS OF THIS AMOUNT, WE SET ASIDE THE IMPUGNED ORDER ON THIS SCORE AND REMIT TH E MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH AS PER LAW AND IN CONFORM ITY WITH OUR ABOVE OBSERVATIONS, AFTER ALLOWING A REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. ITA NO.2869/DEL/2013 6 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.03.201 5. SD/- SD/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 12 TH MARCH, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.