NISHI CHOUBEY, MUMBAI V. CIT 17, MUMBAI

ITA 3353/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9388 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PCR
• Keywords: Capital asset; Benefit of exemption
• Section: 143(3); 54F; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO.3353/MUM/2014 ASSESSMENT YEAR: 2009 - 10 NISHI CHOUBEY 11/138, POORNIMA BLDG., INDULAL BHUVA MARG, WADALA (W), MUMBAI - 400031 VS. CIT - 1 7 , MUMBAI. APPELLANT RESPONDENT PAN NO. ABYPC7882R ASSESSEE BY : SHRI SHREY SUSHIL JOSHI, AR REVENUE BY : SHRI N.P. SINGH, CIT( DR ) DATE OF HEARING : 06/07/2017 DATE OF PRONOUNCEMENT: 27/09/2017 ORDER PER N.K. PRADHAN, A.M . THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10 . THE APPEAL IS DIRECTED AGAINST THE ORDER U/S 263 OF THE INCOME TAX ACT 1961, (THE ACT) PASSED BY THE COMMISS IONER OF INCOME TAX (CIT) - 17 , MUMBAI. 2. THE 1 ST GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE CIT ERRED IN APPLYING THE PROVISIONS OF SECTION 263 TO THE CASE OF THE ASSESSEE AND TREATING THE ASSESSMENT ORDER AS ERRONEOUS. THE 2 ND GROUND RAISED IN 3353 /MUM/2014 2 THIS APPEAL IS T HAT THE CIT ERRED IN CONSIDERING 17.10.2008 AS THE DATE OF SALE OF PROPERTY INSTEAD OF 07.10.2008 AND THEREBY DENYING THE ASSESSEE DEDUCTION U/S 54 OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR T HE AY 2009 - 10 ON 30.09.2009 DECLARING TOTAL INCOME OF RS.16,49,800/ - . THE ASSESSING OFFICER (AO) MADE THE ASSESSMENT U/S 143(3) ON 09.12.2011 AT A TOTAL INCOME OF RS.17,15,760/ - . THE CIT, ON EXAMINATION OF RECORD FOUND THAT THE ASSESSEE HAD EARNED LONG TERM CAPITAL GAINS (LTCG) ON SALE OF PROPERTY WHICH WAS CLAIMED EXEMPT U/S 54 F TO THE TUNE OF RS.48,00,331/ - . THE CIT OBSERVED THAT THE PURCHASE DEED WAS SIGNED ON 17.09.2007 WHEREAS THE SALE OF PROPERTY TOOK PLACE ON 17.10.2008. THUS THE CIT HELD THAT EXE MPTION U/S 54F WOULD BE AVAILABLE IF THE FLAT WAS PURCHASED AFTER 17.10.2007 NOT BEFORE. THEREFORE, HE SET ASIDE THE ORDER OF THE AO WITH A DIRECTION TO HIM TO COMPLETE THE ASSESSMENT AFRESH AFTER DISALLOWING CLAIM OF EXEMPTION U/S 54F. 4. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT DURING THE RELEVANT ASSESSMENT YEAR, THERE WAS A SALE AGREEMENT FOR THE FLAT AT RUNWAL TOWERS FOR RS.70,00,000/ - WHICH WAS ENTERED INTO ON 07.10.2008. THIS RESULTED IN A LTCG OF RS.48,03,923/ - AGAINST WHICH THE ASSE SSEE CLAIMED EXEMPTION U/S 54 TO THE TUNE OF RS.48,00,313/ - BY PURCHASING PROPERTIES AT POORNIMA BUILDING. HE FILED A PAPER BOOK (P/B) SHOWING THE RELEVANT DATES IN RESPECT OF THE ABOVE TRANSACTIONS . 3353 /MUM/2014 3 REFERENCE WAS ALSO MADE BY HIM TO THE FOLLOWING CLAUSES OF THE AGREEMENT IN RESPECT OF PROPERTIES AT POORNIMA BUILDING : (I) CLAUSE 2 OF THE ABOVE AGREEMENT CLEARLY STATES THAT UNLESS THE BALANCE CONSIDERATION OF RS.34,00,000/ - WAS RECEIVED BY 21.11.2007, THE AGREEMENT WOULD STAND CANCELLED EVEN IF IT WAS REGISTERED WITH THE SUB REGISTRAR OF ASSURANCES. (II) SUB CLAUSE (G) OF CLAUSE 3 OF THE AGREEMENT STATES THAT THE TRANSFEREE (ASSESSEE) WOULD BE PUT INTO QUIET AND PEACEFUL POSSESSION OF THE SAID PREMISES ONLY AFTER MAKING FULL PAYMENT TO THE TRANSFE ROR. IT IS STATED BY HIM THAT ON 01.10.2007, BANK OF BARODA SANCTIONED THE APPLICATION FOR HOME LOAN OF THE ASSESSEE SUBJECT TO THE CONDITION MENTIONED IN POINT NO. 20 THAT THE SELLERS HAD TO PRODUCE A LETTER CONFIRMING THAT THE SALE DEED IS VALID AND RE MAINS IN FORCE AS THE APPLICANT HAS ONLY PAID A PART OF THE SALE AMOUNT . THE LD. COUNSEL PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BEENA K JAIN (1996) 217 ITR 363 . THUS IT IS STATED BY HIM THAT WHERE THE PAR TIES HA D CLEARLY INTENDED THAT DESPITE THE EXECUTION AND REGISTRATION OF SALE DEED, TRANSFER BY WAY OF SALE WOULD BECOME EFFECTIVE ONLY ON PAYMENT OF THE ENTIRE SALE CONSIDERATION, IT HAD TO BE HELD THAT THERE WAS NO TRANSFER OF LAND. ALSO IT IS STATED B Y HIM THAT THE CIT HAS WRONGLY CONSIDERED 17.10.2008 TO BE THE SALE DATE OF FLAT AT RUNWAL TOWERS INSTEAD OF THE AGREEMENT DATED 07.10.200 8. 3353 /MUM/2014 4 FURTHER IT IS STATED BY HIM THE DETAILED INQUIRY WAS MADE BY THE AO DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE ASSESSEE BE ALLOWED DEDUCTION U/S 54 F OF THE ACT. 5. PER CONTRA THE LD. DR SUPPORTS THE ORDER PASSED BY THE CIT AND SUBMITS THAT ACTION U/S 263 IS VALID WHERE THE ASSESSMENT ORDER IS PASSED WITHOUT APPLICAT ION OF MIND BY THE AO AND WITHOUT CONDUCTING PROPER INQUIRY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT M ATERIALS ON RECORD. THE REASONS FOR OUR DECISION ARE GIVEN BELOW. IN RESPECT OF PURCHASE OF PROPERTY AT POORNIMA BUILDING, T HE F OLLOWING FACTS EMERGE FROM THE DOCUMENTS FILED BY THE ASSESSEE IN THE P/B. PARTICULARS DATE AMOUNT (RS.) PAGE OF THE P/B AGREEMENT FOR SALE 17.09.2007 6,00,000/ - 31 - 50 LOAN SANCTIONED BY BANK OF BARODA 01.10.2007 22 - 25 BANK OF BARODA CHEQUE DATE 08.10.2007 34,00,000/ - 26 DATE OF HANDING OVER POSSESSION 10.10.2007 27 - 28 WE ALSO FIND THAT THE AGREEMENT FOR SALE OF THE FLAT AT RUNWAL TOWERS WAS ENTERED ON 07.10.2008 IN PLACE OF 17.10.2008 MENTIONED BY THE CIT IN THE ORDER U/S 263 DATED 04.03.2014 PASSED BY HIM. THAT THE DATE IS 07.10.2008 IS EVIDENT ON THE FACE OF AGREEMENT FOR S ALE . 3353 /MUM/2014 5 A SIMILAR ISSUE AROSE BEFORE THE HONBLE BOMBAY HIGH COURT IN SMT. BEENA K. JAIN (SUPRA). IN THAT CASE THE ASSESSEE HAD SOLD OFF ICE PREMISES ON 23 RD JULY, 1987, WHICH RESULTED IN LONG TERM CAPITAL GAINS OF RS.24,05,050/ - . PRIOR TO THE SALE SHE HAD ENTERED INTO AN AGREEMENT FOR PURCHASE OF A RESIDENTIAL FLAT WHICH AGREEMENT WAS DATED 4 TH SEPT EMBER 1985. THE AGREEMENT WAS FOR PURCHAS E OF A FLAT FOR A TOTAL CONSIDERATION OF RS.12,26,751/ - . ON THE DATE OF THE AGREEMENT OF SALE, THE ASSESSEE PAID A SUM OF RS.1,35,000/ - AS EARNEST MONEY. THIS AGREEMENT WAS REGISTERED ON 27 TH OCTOBER 1985. THE CONSTRUCTION OF THE FLAT WAS FINALLY COMPLETED IN JULY, 1988. THE ASSESSEE PAID THE CONSIDERATION AMOUNT OF RS.10,44,375/ - PLUS RS.47,376 / - ON 29 TH JULY, 1988, AND SHE WAS PUT IN POSSESSION OF THE SAID FLAT ON 30 TH JULY, 1988. THE ASSESSEE CLAIMED THE BENEFIT OF EXEMPTION UNDER SECTION 54F OF THE ACT. T HE TRIBUNAL ALLOWED HER EXEMPTION ON RS.11,04 ,423/ - U/S 54F OF THE ACT. THE HONBLE HIGH COURT AGREED WITH THE ORDER OF THE ITAT. TO SUM UP, THE HONBLE BOMBAY HIGH COURT HAS HELD IN THE ABOVE CASE THAT THE RELEVANT DATE FOR THE PURPOSE OF SECTION 54F IS WHEN THE PETITIONER PAID THE FULL CONSIDERATION AMOUNT ON THE FLAT BECOMING READY FOR OCCUPATION AND OBTAINED POSSESSION OF THE FLAT, AND NOT ON THE DATE OF REGISTRATION OF THE AGREEMENT OF PURCHASE. THE ISSUE IN THE INSTANT CASE IS WHETHER THE ASSESSEE HAS PURCHASED WITHIN ONE YEAR BEFORE THE DATE OF TRANSFER ONE RESIDENTIAL HOUSE? THE CIT HAS NOT DISPUTED 10.10.2007 I.E. THE DATE ON WHICH POSSESSION WAS HANDED OVER TO THE ASSESSEE OF THE PROPERTY AT POORNIMA BUILDING. WE 3353 /MUM/2014 6 FIND TH AT THE SALE OF THE FLAT AT RUNWAL TOWERS TOOK PLACE ON 07.10.2008 AS PER THE AGREEMENT FOR SALE AS PER PAGE 71 - 97 OF THE P/B. THUS FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN SMT. BEENA K. JAIN (SUPRA) WE HOLD THAT THE ASSESSEE HAS FULFI LLED THE CONDITION LAID DOWN IN SECTION 54 F OF THE ACT. ACCORDINGLY, WE CANCEL THE ORDER U/S 263 PASSED BY THE CIT. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/09/2017. SD/ - SD/ - (MAHAVIR S INGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/09/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI