ITO 19(2)(4), MUMBAI V. MANJU DAYALDAS JETHWANI, MUMBAI

ITA 3356/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93164 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 54

Judgement Text

MS MANJU D JETHWANI ITA NO. 3356 /M/201 2 CO 115/MUM/201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI . . , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIA L MEMBERITA ITA NO. : 3356 /MUM/20 1 2 ( ASSESSMENT YEAR: 200 8 - 0 9 ) INCOME TAX OFFICER - 19(1)(1) , ROOM NO. 319, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400 012 VS MS MANJU D JETHWANI , 501, MORU MILAP BUILDING, 15 TH ROAD, KHAR (WEST), MUMBAI - 400 052 . : PAN: ABRPM 4292 N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI YOGESH KAMAT RESPONDENT BY : SHRI BHPENDRA SHAH CO 116/MUM/201 3 ARISING OUT OF ITA NO. : 3356/MUM/2012 , AY 2008 - 09 MS MANJU D JETHWANI , MUMBAI - 400 052 VS INCOME TAX OFFICER - 19(1)(1), MUMBAI - 400 012 (APPELLANT) CROSS OBJECTOR (RESPONDENT) APPELLANT CROSS OBJECTOR BY : SHRI BHPENDRA SHAH RESPONDENT BY : SHRI YOGESH KAMAT /DATE OF HEARING : 14 - 05 - 2015 / DATE OF PRONOUNCEMENT : 08 - 07 - 2015 ORDER PER AMIT SHUKLA , J.M. : THE A FORESAID APPEAL AND CROSS OBJECTION HAS BEEN FILED BY THE REVENUE AND THE ASSESSEE AGAINST IMPUGNED ORDER DATED 2 2 . 0 2 .201 2 PASSED BY CIT(A) - 30, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 200 8 - 0 9. THE REVENUE IN THE GROUNDS OF APPEAL HAS RAISED FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) HAS ERRED IN DIRECT ING T O ALLOW THE EXEMPTION U/S 54 OF THE IT ACT CLAIMED BY THE ASSESSEE FOR TWO FLATS IGNORING THE FACTS THAT THE ASSESSEE HAS PURCHASED TWO MS MANJU D JETHWANI ITA NO. 3356 /M/201 2 CO 115/MUM/201 3 2 DIFFERENT RESIDENTIAL UNITS VIDE SEPARATE AGREEMENTS WHICH WERE REGISTERED SEPARATELY AND AS S UCH VIOLATED THE CONDITIONS SPECIFIED UNDER PROVISION OF SECTION 54(1) OF THE ACT WHICH PROVIDES FOR DEDUCTIONS IN RESPECT OF ONE RESIDENTIAL HOUSE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISAL LOWANCE U/S 54 OF THE I.T. ACT AFTER RELYING ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF SUSHI L A M JHAVERI (107 ITD 321) WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. . 2. THE MAIN CONTROVERSY INVOLVED IS WHETHER THE EXEMPTION U/S 54 IS AVAILA BLE TO THE ASSESSEE WHEN SHE HAD INVESTED THE LONG - TERM - CAPITAL - GAIN IN PURCHASING OF TWO ADJOINING FLATS HAVING ONE PASSAGE AND COMMON KITCHEN. THE AO HAS RESTRICTED THE CLAIM OF EXEMPTION U/S 54 AT RS. 1,36,33,100/ - IN RESPECT OF ONE FLAT , AS AGAINST CLA IM OF RS. 2,45,96,000/ - CLAIMED BY THE ASSESSEE FOR THE TWO FLATS, WHICH WERE JOINED TOGETHER HAVING COMMON PASSAGE AND KITCHEN. 3. AT THE APPELLATE STAGE, THE MATTER WAS REMANDED TO THE AO FOR MAKING A SPOT ENQUIRY TO VERIFY THE CLAIM OF THE ASSESSEE WHE THER THE TWO ADJOINING FLATS ARE BEING USED AS ONE UNIT OR NOT . THE AO VIDE LETTER DATED 23.01.2012 SUBMITTED THE FOLLOWING REPORT : AS PER YOUR HONOURS DIRECTION, I HAD APPOINTED WARD INSPECTOR, SMT. BINDU SAJIVEN TO MAKE ENQUIRY OF THE FLATS BEARING NO . 601 AND 602, GITANJALI BUILDING, KHAR (W), MUMBAI 52 ALONG WITH STILT CAR PARKING NO. 4 & 5 IN THE CASE OF ABOVE SAID ASSESSEE AND WARD INSPECTOR, SMT. BINDU SAJIVEN HAS SUBMITTED REPORT VIDE DATED 11.01.2012 STATING THAT FLAT IS A SINGLE UNIT WITH ONE E NTRANCE, ONE KITCHEN, FOUR BEDROOMS, ONE PUJA ROOM, MS MANJU D JETHWANI ITA NO. 3356 /M/201 2 CO 115/MUM/201 3 3 ONE HALL AND ONE SERVANTS ROOM WITH ATTACHED BATHROOM ALONG WITH STILT PARKING NOS. 4 & 5 AND AS PER INSPECTORS REPORT THE SAID FLATS SHOULD BE TREATED AS SINGLE UNIT. THE INSPECTORS REPORT HAS ALREADY BEEN FORWARDED VIDE THIS OFFICE LETTER DATED 19.01.2012. THUS, ON THE BASIS OF THE REMAND REPORT , THE CIT(A) OBSERVED THAT THE TWO FLATS HAVE BEEN TREATED AS A SINGLE UNIT BY THE ASSESSEE AND AS PER THE ENQUIRY OF THE AO DONE THROUGH I TI . THEREAFTER, THE LD. CIT(A) REFERRED AND RELIED UPON THE DECISION OF ITAT, SPECIAL BENCH IN THE CASE OF ITO VS SUSHILA M JHAVERI REPORTED IN 107 ITD 32 AND DIRECTED THE AO TO GRANT EXEMPTION U/S 54 FOR BOTH THE F L ATS. 4. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SMT. K G RUKMINIMMA REPORTED IN [2011] 331 ITR 021 AND CATENA OF OTHER DECISIONS OF THE TRIBUNAL WHEREAS, T HE LD. DR, STRONGLY RELIED UPON ORDER OF THE AO. 5 . AFTER CONSIDERING THE R IVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDER , WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD PURCHASED TWO ADJOINING FLATS, WHICH HAS BEEN TREATED AS A SINGLE UNIT HAVING FOUR BEDROOMS, ONE COMMON ENTRANCE AND ONE COMMON KITCHEN . T HIS HAS BEEN REPORTED BY THE IT I BEFORE THE AO, WHO HAS ADMITTED IN THE REMAND REPORT DATED 23.01.2012. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF C IT VS. ANANDA BAS A PPA REPORTED IN [2009] 223 CTR (KR 186) AND LATER ON THE DECISION OF CIT VS SMT. K G RUKMINI MMA ( SUPRA ) HAS HELD THAT THE PHRASE RESIDENTIAL HOUSE IN SECTION 54 CANNOT BE CONSTRUED AS A SINGULAR. IN THAT CASE, FOUR RESIDENTIAL FLATS JOINED TOGETHER WERE HELD TO CONSTRUE A RESIDENTIAL HOUSE. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT I S AS UNDER: THE CONTEXT IN WHICH THE EXPRESSION 'A RESIDENTIAL HOUSE' IS USED IN S. 54 MAKES IT CLEAR THAT IT WAS NOT THE INTENTION OF THE MS MANJU D JETHWANI ITA NO. 3356 /M/201 2 CO 115/MUM/201 3 4 LEGISLATION TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESIDENTIAL HOUSE. IF THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD 'ONE'. AS IN THE EARLIER PART, THE WORDS USED ARE BUILDINGS OR LANDS WHICH ARE PLURAL IN NUMBER AND THAT IS REFERRED TO AS 'A RESIDENTIAL HOUSE', THE ORIGINAL ASSET. AN ASSET NEWLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE 'A RESIDENTIAL HOUSE'. THEREFORE THE LETTER 'A' IN THE CONTEXT IT/S USED SHOULD NOT BE CONSTRUED AS MEANING 'SINGULAR'. BUT, BEING AN INDEFINITE ARTICLE, THE SAID EXPRESS/EL SHOULD BE READ IN CONSONANCE WITH THE OTHER WORDS 'BUILDINGS' AND 'LANDS' AND, THEREFORE, THE SINGULAR 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VIRTUE OF S. 13(2) OF THE GENERAL CLAUSES ACT. CIT VS. D. ANANDA BASAPPA (2009) 223 CTR (KAR) 186 6 . SIMILARLY, IN VAR IOUS OTHER DECISIONS OF THE CO - ORDINATE BENCHES OF THE ITAT , T HIS PRINCIPLE HAS BEEN CONSISTENTLY ACCEPTED . T HEREFORE, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE CONCLUSION DRAWN BY THE CIT(A) THAT EXEMPTION U/S 54 SHOULD BE GRANTED TO THE ASSESSEE FOR BOTH THE FLATS BEING FLAT 601 AND 602 AS THEY HAVE BEEN JOINED TOGETHER AND TREATED AS A SINGLE UNIT WITH COMMON ENTRANCE AND ONE KITCHEN. 7 . ACCORDINGLY THE REVENUES APPEAL IS TREATED AS DISMISSED. 8 . IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED FOL LOWING GROUNDS: THE LD. CIT(A) ERRED IN NOT ALLOWING THE DEDUCTION OF SUM OF RS. 2,50,000/ - BEING PAID FOR BROKERAGE ON ACCOUNT OF ACQUIRING NEW PROPERTY 9 . THE ASSES S EE HAS CLAIMED A PAYMENT OF RS. 2,50,000/ - FROM THE BROKER AS BROKERAGE ON ACCOUNT OF ACQUIRING NEW PROPERTY. BOTH THE AUTHORITIES HAVE GIVEN CATEGORICAL FINDING THAT THE MS MANJU D JETHWANI ITA NO. 3356 /M/201 2 CO 115/MUM/201 3 5 ASSESSEE COULD NOT FURNISH ANY EVIDENCE OF PAYMENT OF BROKERAGE AND EVEN BEFORE US NO SUCH DOCUMENT OR EVIDENCE HAVE BEEN FILED TO REBUT SUCH A FINDING OF FACT. ACCORDING LY, THE CLAIM AS WELL AS THE GROUND RAISED IN THE CROSS OBJECTION IS DISMISSED. 1 0 . IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JU LY , 2015. SD/ - SD/ - ( . . ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 8 TH JU LY , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 30 , MUMBAI 4) THE CIT CITY - 19 , MUMBAI . 5) , , / THE D. R. B BENCH, MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS