ACIT 18(1), MUMBAI V. BHARATKUMAR M. PARIKH, MUMBAI

ITA 3150/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8131 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: SATYENDRA LAHOTI
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA N O. 3150/MUM/2016 ( ASSESSMENT YEAR : 2011 12 ) ACI 18(1) R.NO.202, 2 ND FLOOR EARNEST HOUSE NARIMAN POINT MUMBAI 400 021 . APPELLANT V/S SHRI BHARATKUMAR M. PARIKH ARUNODAYA FLAT NO1001 10 TH FLOOR, OPP. NEW INDIA COLONY C.D. BARFIWALA MARG ANDHERI (W) MUMBAI 400 002 . RESPONDENT APPELLANT BY : SHRI M.C.OMININGSHEN RESPONDENT BY : SHRI SATYENDRA LAHOTI DATE OF HEARING 14/12/2017 DATE OF ORDER 15.12.2017 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGA INST ORDER DATED 11/ 02/ 201 6 OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 29 , MUMBAI FOR THE A.Y. 2011 12 . 2 ITA NO.3150/MUM/2016 SHRI BHARAT KUMAR M. PARIKH 2. THE ISSUE ARISING FOR CONSIDERATION IN THE PRESENT APPEAL RELATES TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION.54 OF THE ACT. 3. BRIEFLY THE FACTS ARE , THE ASSESSEE AN INDIVIDUAL WAS CO OWNER OF A HOUSE PROPERTY. IN THE RELEVANT PREVIOUS YEAR, THE SAID HOUSE PROPERTY WAS SOLD FOR A TOTAL CONSIDERATION OF RS. 17.50 CRORE. WHILE COMPUTING LONG TERM CAPITAL GAIN ON HIS 50% SHARE IN THE SALE CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION.54 OF THE ACT FOR AN AMOU NT OF RS.3,34,68,200/ TOWARDS PURCHASE OF A NEW RESIDENTIAL HOUSE. FOR VERIFYING THE GENUINENESS OF DEDUCTION CLAIMED UNDER SEC TION.54 OF THE ACT, THE ASSESSING OFFICER CALLED FOR THE DETAILS OF NEW RESIDENTIAL HOUSE PURCHASED BY THE ASSESSEE AND AFTER VERIFYING THE DETAILS FOUND THAT ASSESSEE HAS PURCHASED THREE RESIDENTIAL FLATS OUT OF WHICH COST OF TWO RESIDENTIAL FLATS WERE CLAIMED AS DEDUCTION UNDER SECTION.54 OF TH E ACT. REFERRING TO THE PROVISION OF SECTION 54 OF THE ACT, THE ASSESSING OFFICER WAS OF THE VIEW THAT DEDUCTION IS ALLOWED IN RESPECT OF INVESTMENT IN ONE RESIDENTIAL FLAT. HE OBSERVED THAT THE FLATS WERE CONSTRUCTED AS THREE INDEPENDENT UNIT S SEPARATED B Y DISTINCT WALLS CONSISTING OF SEPARATE AMENITIES REQUIRED FOR RES IDENTIAL PURPOSE LIKE SEPARATE LOUNGE , SEPARATE KITC HEN, SEPARATE LIVING ROOMS ETC. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CONVERTED TWO INDEPENDENT RESIDENTIAL HOUSES TO A SINGLE UNIT FOR 3 ITA NO.3150/MUM/2016 SHRI BHARAT KUMAR M. PARIKH RESIDENTIAL PURPOSE WITHOUT PRIOR PERMISSION AND SANCTION. THEREFORE, HE HELD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION.54 OF THE ACT IN RESPECT OF ONE RESIDENTIAL HOUSE AND ACCORDINGLY , REDUCED THE DEDUCTION UNDE R SECTION.54 OF THE ACT TO RS.1,95,69,600/ . 4. BEING AGGRIEVED OF THE PART DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION.54 OF THE ACT, ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. LD. FIRST APPELLATE AUTHORITY AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF PROVISION S CONTAINED UNDER SECTION.54 OF THE ACT WAS OF T HE VIEW THAT THE EXPRESSION A RESIDENTIAL HOUSE AS USE D IN SECTION 54 OF THE ACT WOULD NOT MEAN ONE RESIDENTIAL HOUSE. THEREFORE , REFERRING TO COUPLE OF JUDICIAL PRECEDENTS, LD. FIRST APPELLATE AUTHORITY CONCLUDED THAT THE ASSESSEE HAVING FULFILLED THE CONDITIONS OF SECTION 54 IS ELIGIBLE TO AVAIL THE DEDUCTION CLAIMED. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAME. 6. T HE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER. 7. LEARNED AUTHORISE D REPRESENTATIVE STRONGLY RELYING UPON THE REASONING OF THE FIRST APPELLATE AUTHORITY SUBMITTED THAT AS PER THE 4 ITA NO.3150/MUM/2016 SHRI BHARAT KUMAR M. PARIKH PROVISIONS OF SECTION 54 EXISTING DU RING THE RELEVANT PERIOD, THERE WAS NO RESTRICTION IN INVESTING THE CAPITAL GAI N IN MORE THAN ONE FLAT IF THEY ARE CONTIGUOUS AND IN THE SAME BUILDING. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I. CIT V/S. GEETA DUGAL 357 ITR 153 II. CIT V/S SMT. K.G. RUKMANIA MMA 331 ITR 211 8 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACT OBTAINING ON RECORD , THE ASSESSEE HAD PURCHASED TWO FLATS ADJACENT TO EACH OTHER AND HAS CONVERTED IT TO A SINGLE UNIT FOR RESIDENTIAL PURPOSE. I N RESPECT OF THE AFORESAID FLATS THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION.54 OF THE ACT. THE AFORESAID FACTUAL POSITION HAS NOT BEEN DISPUTED BY THE DEPARTMENT. THEREFORE, IT HAS TO BE EXAMINED WHETHER ASS ESSEES CLAIM OF DEDUCTION UNDER SECTION.54 OF THE ACT IN RESPECT OF THE AFORESAID FLATS IS ALLOWABLE. 10. ON A REFERENCE TO THE PROVISION CONTAIN ED UNDER SECTION.54 OF THE ACT AS EXI STED DURING THE RELEVANT PERIOD, IT IS SEEN THAT DEDUCTION FROM CHARGEAB ILITY TO LONG TERM CAPITAL GAIN WAS AL LOWABLE IF THE ASSESSEE INVESTS THE CAPITAL GAIN IN PURCHASE OR CONSTRUCTION OF A NEW RESIDENTIAL HOUSE WITHIN THE STIPULATED PERIOD. THE EXPRESSION A 5 ITA NO.3150/MUM/2016 SHRI BHARAT KUMAR M. PARIKH RESIDENTIAL HOUSE HAS BEEN INTERPRETED BY DIFFERENT HIGH COURTS I N A MANNER NOT TO MEAN ONE RESIDENTIAL HOUSE. IT HAS BEEN HELD THAT A RESIDENT IAL HOUSE CAN CONSIST OF MORE THAN ONE UNIT ADJACENT TO EACH OTHER IN THE SAME BUILDING . IN THIS CONTEXT, WE MAY REFER TO THE DECISIONS CITED BY LD. AUTHORISED REPRESENTATIVE. TH EREFORE, APPLYING THE RATIO LAID DOWN IN THE DECISIONS REFERRED TO ABOVE, IT HAS TO BE HELD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION.54 OF THE ACT IN RESPECT OF THE TWO FLATS, MORE SO, WHEN THE FLATS ARE ADJACENT TO EACH OTHER AND HAV E BEEN CONVERTED TO A SINGLE RESIDENTIAL UNIT. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. FIRST APPELLATE AUTHORITY IN ALLOWING ASSESSEES CLAIM OF DEDUCTION. THE GROUNDS RAISED ARE DISMISSED. 9. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.12.2017 SD/ - SD/ - SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 15.12.2017 6 ITA NO.3150/MUM/2016 SHRI BHARAT KUMAR M. PARIKH COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI