Shri Maheshkumar Manilal Shah, Ahmedabad V. ITO, Ward-5(2)(3), Ahmedabad

ITA 2946/AHD/2017

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9765 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K GOYAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Question of law
• Section: 143(3); 54F; 201; 64; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI MAHESHKUMAR MANILAL SHAH B - 304, AARYAVART RESIDENCY, 19 MILAN PARK SOCIETY NR. SUYOJAN BUILDING, NAVRANGPURA, AHMEDABAD PAN: ACIPS7585A (APPELLANT) VS THE IT O , WARD - 5 ( 2)(3 ) , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI N.K. GOYAL , SR. D . R. ASSESSEE BY: SHRI S.N. DIVETIA , A.R. DATE OF HEARING : 04 - 12 - 2 019 DATE OF PRONOUNCEMENT : 17 - 12 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A), AHMEDABAD - 5 DATED 07 - 11 - 2 017 , IN PROCEEDINGS UNDER SECTION 1 4 3(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE SOLIT ARY ISSUE IN THE GROUND OF APPEAL OF THE ASSESSEE IS THE DISALLOWANCE OF EXEMPTION U/S. 54 TO THE EXTENT OF RS. 16 , 93 , 640/ - . I T A NO . 2946 / A HD/20 17 A SS ESSMENT YEAR 2011 - 12 I.T.A NO. 2946 /AHD/20 17 A.Y. 2011 - 12 PAGE NO SHRI MAHESHKUMAR MANILAL SHAH VS. IT O 2 3. THE ASSESSEE HAS FILED RETURN OF INCOME ON 19 TH MARCH, 2012 DECLARING TOTAL INCOME OF RS. 1 , 21 , 720/ - . THE ASSESSMENT ORDER U/ S. 14 3(3) OF THE ACT WAS PASSED ON18TH DECEMBER, 2003 ACCEPTING THE SAME INCOME. THEREAFTER, THE PR. CIT HAS PASSED ORDER U/S. 263 OF THE ACT DIRECTING THE ASSESSING OFFICER TO PASS THE ASSESSMENT AFRESH AFTER PROPER EXAMINATION, INQUIRY AND VERIFICATION OF THE ISSUES CITED IN THE ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) R.W.S. 263 OF THE ACT, THE ASSESSING OFFICER HAS CALLED DETAIL IN RESPECT OF LONG TERM CAPITAL GAIN OF RS. 30 , 26 , 970/ - WHICH WAS CLAIMED EXEMPT U/S. 54 OF THE ACT FO R INVESTING IN NEW RESIDENCE FOR RS. 40 LACS. THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS CLAIMED EXEMPTION U/S. 54 OF THE ACT FOR PURCHASE OF F LAT SITUATED AT B - 304, AARYAVRAT RESIDENCY, NAVRANGPURA, AHMEDABAD. THIS FLAT WAS PURCHASED JOINTLY AL ONG WITH HIS WIFE AND SON. IN VIEW OF THE PURCHASE OF NEW PROPERTY JOINTLY WITH WIFE AND SON, THE ASSESSING OFFICER HAS RESTRICTED THE EXEMPTION U/S. 54 OF THE ACT TO THE EXTENT OF 1/3 OF THE AMOUNT INVESTED IN THE NEW PROPERTY. CONSEQUENTLY , THE ASSESS ING OFFICER HAS DISALLOWED THE BALANCE AMOUNT OF RS. 16 , 93 , 640/ - AND TAXED IN THE HAND OF THE ASSESSEE AS LONG TERM CAPITAL GAIN . 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE REIT ERATING THE FACT REPORTED BY T H E ASSESSING OFFICER. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FILED PAPER BOOK COMPRISING COPIES OF DOCUMENT AND INFORMATION FURNISHED DURING ASSESSMENT AND APPELLATE PROCEEDINGS. THE L D. COUNSEL HAS CONTENDED THAT ENTIRE AMOUNT IN THE NEW RESIDENTIAL PROPERTY WAS INVESTED BY I.T.A NO. 2946 /AHD/20 17 A.Y. 2011 - 12 PAGE NO SHRI MAHESHKUMAR MANILAL SHAH VS. IT O 3 THE ASSESSEE FROM HIS BANK A/C. AND THE NAME OF WIFE AND SON WAS ONLY INCLUDED IN THE PURCHASE DEED JUST TO AVOID ANY LITIGATION AFTER HIS DEATH. THE LD. COUNSEL H AS ALSO PLACED RELIANCE ON THE VARIOUS DECISION S OF HIGH COURTS AS MENTIONED IN PAGE NO. 3 OF THE PAPER BOOK. THE LD. COUNSEL HAS ALSO PLACED RELIANCE ON T H E DECISION OF CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF KANAIYALAL MULJI BHAI PATEL S. ITO VIDE I TA 649/A HD/2016 ORDER DATED 02 - 02 - 2019 STATING THAT ON SIMILAR ISSUE THE CLAI M OF THE ASSESSEE WAS ALLOWED IN THAT CASE. THE LD. COUNSE L HAS PLEADED THAT CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE MADE BY T H E ASSESSING OFFICER WITHOUT CONSIDERING THE FACTS AS REPORTED ABOVE. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE ON THE ORDER OF LD. CIT(A). 6 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS UNDISPUTED FACT ASSESSEE HAS MADE TOTAL P AYMENTS FOR PURCHASE OF NEW PROPERTY AND THE A SSESSEE HAS FURNISHED COMPLETE DETAI L OF PAYMENT MADE FOR THE PURCHASE OF SAID PROPERTY. THE DETAIL OF HIS BANK ACCOUNT AND BANK STATEMENTS WERE VERIFIED BY THE ASSESSING OFFICER AND NO ADVERSE INFERENCE HAS B EEN DRAWN BY THE ASSESSING OFFICER AND RESTRICTED THE CLAIM OF EXEMPT U/S. 54F TO THE EXTENT OF 1/3 OF THE AMOUNT INVESTED IN THE NEW PROPERTY ON THE GROUND THAT THE NEW PROPERTY WAS HELD IN THE JOINT NAME OF THE ASSESSEE ALONG WITH HIS WIFE AND SON. ON T HIS CONTROVERY , WE HAVE GONE THROUGH THE ABOVE CITED DECISION OF CO - ORDINATE BENCH OF THE ITAT VIDE ITA NO. 64 9 /AHD/2016 WHEREIN THE SIMILAR ISSUE ON IDENTICAL FACTS HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION IS REPR ODUCED AS UNDER: - 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE FIND THAT ITAT IN THE CASE OF SHRI CHITRANG M. DAVE RENDERED IN ITA NO.2627/AHD/2017 (SUPRA) HAS ALLOWED THE EXEMPTION UNDER SECTION I.T.A NO. 2946 /AHD/20 17 A.Y. 2011 - 12 PAGE NO SHRI MAHESHKUMAR MANILAL SHAH VS. IT O 4 54F. IN THIS CASE, THE ASSESSEE HAS PURCHASED A FLAT IN A HOUSING SOCIETY AND INCLUDED THE NAME OF HIS FATHER ALONG WITH HIM. THE DEDUCTION WAS DISALLOWED TO THE ASSESSEE TO THE EXTENT OF THE SHARE OF HIS FATHER I.E. 50%, BUT TRIBUNAL ALLOWED THE DEDUCTION TO THE ASSESSEE. IN THE CASE OF CIT VS. KAMAL WAHAL, 351 ITR 04 (DEL), THE ASSESSEE PURCHASED NEW HOUSING IN THE NAME OF HIS WIFE. THE EXEMPTION WAS DISALLOWED UNDER SECTION 54F. HOWEVER, IT WAS ALLOWED BY THE CIT(A) AS WELL AS BY THE TRIBUNAL AND THE HON BLE DELHI HIGH COURT HAS UPHELD THE ORDER OF THE TR IBUNAL. HON BLE DELHI HIGH COURT HAS MADE REFERENCE TO THE DECISION OF HON BLE MADRAS HIGH COURT AS WELL AS KARNATAKA HIGH COURT. THE DISCUSSION MADE BY THE HON BLE DELHI HIGH COURT IS WORTH TO NOTE. IT READS AS UNDER: 7. WE HAVE NO HESITATION IN AGRE EING WITH THE VIEW TAKEN BY THE TRIBUNAL. APART FROM THE FACT THAT THE JUDGMENTS OF THE MADRAS AND KARNATAKA HIGH COURTS (SUPRA) ARE IN FAVOUR OF THE ASSESSEE, THE REVENUE FAIRLY BROUGHT TO OUR NOTICE A SIMILAR VIEW OF THIS COURT IN CIT V. RAVINDER KUMAR A RORA [2012] 342 ITR 38/[2011] 203 TAXMAN 289/15 TAXMANN.COM 307 . THAT WAS ALSO A CASE WHICH AROSE UNDER SECTION 54F OF THE ACT. THE NEW RESIDENTIAL PROPERTY WAS ACQUIRE D IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE. THE INCOME TAX AUTHORITIES RESTRICTED THE DEDUCTION UNDER SECTION 54F TO 50% ON THE FOOTING THAT THE DEDUCTION WAS NOT AVAILABLE ON THE PORTION OF THE INVESTMENT WHICH STANDS IN THE NAME OF THE ASSESSEE'S WIFE. THIS VIEW WAS DISAPPROVED BY THIS COURT. IT NOTED THAT THE ENTIRE PURCHASE CONSIDERATION WAS PAID ONLY BY THE ASSESSEE AND NOT A SINGLE PENNY WAS CONTRIBUTED BY THE ASSESSEE'S WIFE. IT ALSO NOTED THAT A PURPOSIVE CONSTRUCTION IS TO BE PREFERRED AS AG AINST A LITERAL CONSTRUCTION, MORE SO WHEN EVEN APPLYING THE LITERAL CONSTRUCTION, THERE IS NOTHING IN THE SECTION TO SHOW THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. AS A MATTER OF FACT, SECTION 54F IN TERMS DOES NOT REQUIRE THAT THE NEW RESIDENTIAL PROPERTY SHALL BE PURCHASED IN THE NAME OF THE ASSESSEE; IT MERELY SAYS THAT THE ASSESSEE SHOULD HAVE PURCHASED/CONSTRUCTED 'A RESIDENTIAL HOUSE'. 8. THIS COURT IN THE DECISION CITED ALONE ALSO NOTICED THE JUDGMENT OF THE MADRAS HIGH CO URT (SUPRA) AND AGREED WITH THE SAME, OBSERVING THAT THOUGH THE MADRAS CASE WAS DECIDED IN RELATION TO SECTION 54 OF THE ACT, THAT SECTION WAS IN PARI MATERIA WITH SECTION 54F. THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V. GURNAM SINGH [2010] 327 ITR 278/[2008] 170 TAXMAN 160 IN WHICH THE SAME VIEW WAS TAKEN WITH REFERENCE TO SECTION 54F WAS ALSO NOTICED BY THIS COURT. 9. IT THUS APPEARS TO US T HAT THE PREDOMINANT JUDICIAL VIEW, INCLUDING THAT OF THIS COURT, IS THAT FOR THE PURPOSES OF SECTION 54F, THE NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURCHASED EXCLUSIVELY IN HIS NAM E. IT IS MOREOVER TO BE NOTED THAT THE ASSESSEE IN THE PRESENT CASE HAS NOT PURCHASED THE NEW HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCONNECTED WITH HIM. HE HAS PURCHASED IT ONLY IN THE NAME OF HIS WIFE. THERE IS ALSO NO DISPUTE THAT THE ENTIR E INVESTMENT HAS COME OUT OF THE SALE PROCEEDS AND THAT THERE WAS NO CONTRIBUTION FROM THE ASSESSEE'S WIFE. 10. HAVING REGARD TO THE RULE OF PURPOSIVE CONSTRUCTION AND THE OBJECT WHICH SECTION 54F SEEKS TO ACHIEVE AND RESPECTFULLY AGREEING WITH THE JUDGMEN T OF THIS COURT, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN THE AFFIRMATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS ACCORDING DISMISSED WITH NO ORDER AS TO COSTS. 6. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS HIS S HARE TO THE EXTENT OF 1/4 TH IN THE HUF. THE OTHER MEMBERS OF HUF ARE NOT STRANGER. THEY ARE WIFE OF THE ASSESSEE AND TWO SONS. MONEY HAS ONLY BEEN CONTRIBUTED BY THE ASSESSEE. THEREFORE, TO OUR MIND, THE FACTS AS AVAILABLE IN THE DECISION OF HON BLE DE LHI COURT CITED SUPRA, ARE SQUARELY APPLICABLE ON THIS CASE. WE ALLOW THE APPEAL OF THE ASSESSEE, AND DIRECT THE AO TO GRANT EXEMPTION UNDER SECTION 54F OF THE INCOME TAX ACT TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . I.T.A NO. 2946 /AHD/20 17 A.Y. 2011 - 12 PAGE NO SHRI MAHESHKUMAR MANILAL SHAH VS. IT O 5 RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH AS CITED ABOVE ON SIMILAR ISSUE AND SIMILAR FACT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPE N C OURT ON 17 - 12 - 201 9 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 17 /12 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,