ABHAY R. AGGARWAL, MUMBAI V. ACIT 17(1), MUMBAI

ITA 3718/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0827 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: RAJEN J DAMANI
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3718/M/2016 ASSESSMENT YEAR: 2012-13 MR. ABHAY R. AGGARWAL, FLAT NO.15, VIJAY MAHAL, D ROAD, CHURCHGATE, MUMBAI- 400 020 PAN: AAAPA7909A VS. THE COMMISSIONER OF INCOME TAX (APPEALS)-28, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJEN J. DAMANI, A.R. REVENUE BY : SHRI M.C. OMI NINGSHEN, D.R. DATE OF HEARING : 01.01.2018 DATE OF PRONOUNCEMENT : 24.01.2018 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 06.05.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS ON SALE OF LAND BEING LONG TERM OF RS.1,80,01,574/- AND CLAIMED DED UCTION UNDER SECTION 54F OF THE ACT. THE DATE OF SALE OF THE OR IGINAL ASSET I.E. ITA NO.3718/M/2016 MR. ABHAY R. AGGARWAL 2 SHIKRAPUR LAND AT PUNE IS 3.08.2011 AND THE SALE CO NSIDERATION WAS OF RS.1,90,00,000/-. THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH MARVEL LANDMARK PVT. LTD. ON 21.11.2009 FOR ACQUISI TION OF A RESIDENTIAL HOUSE IN PUNE. THE SAME WAS TO BE CONS TRUCTED AS PER THE TERMS OF THE AGREEMENT UNDER CLAUSE 5(B) AND THE PO SSESSION WAS TO BE HANDED OVER ON OR BEFORE 31.12.2011. THE ASSESS EE HAS MADE VARIOUS PAYMENTS AGGREGATING TO 1,82,57,229/- BETWE EN THE DATE OF AGREEMENT AND DATE OF FILING OF THE RETURN ON 27.07 .2012. THUS, THE ASSESSEE HAS INVESTED ENTIRE CAPITAL GAIN FOR ACQUI SITION OF NEW RESIDENTIAL HOUSE. THE ASSESSING OFFICER (HEREINAF TER REFERRED TO AS THE AO) DISALLOWED THE ENTIRE CLAIM BUT THE LD. CIT (A) HAS ALLOWED THE CLAIM OF PAYMENT TO THE EXTENT OF RS.65,98,925/ - FOR THE PERIOD OF 27.07.09 TO 06.08.10 INCLUDING RS.55,52,000/- PAYME NT MADE TOWARDS RESIDENTIAL HOUSE PROPERTY TO THE BUILDER A ND RS.10,16,925/-, RS.30,000/- TOWARDS STAMP DUTY AND REGISTRATION CHA RGES RESPECTIVELY. 3. THE ASSESSEE IS IN APPEAL BEFORE US FOR NOT ALLO WING THE DEDUCTION UNDER SECTION 54F ON THE GROUND THAT LD. CIT(A) HAS ALLOWED ONLY THE PAYMENT WHICH WAS MADE AFTER THE D ATE OF TRANSFER OF CAPITAL ASSET I.E. FOR THE PERIOD FROM 08.08.11 TO 20.07.12 BUT DID NOT ALLOW THE PAYMENT MADE PRIOR TO THE TRANSFER OF THE ORIGINAL ASSETS. DURING THE COURSE OF HEARING THE LD. A.R. SUBMITTED THAT THE SIMILAR ISSUE IS COVERED BY THE DECISION OF MUMBAI ITAT IN THE CASE OF KISHORE H. GALAIYA VS. ITO (2012) 24 TAXMANN.COM 11 (MUM). ITA NO.3718/M/2016 MR. ABHAY R. AGGARWAL 3 4. THE LD. D.R. RELIED UPON THE ORDERS OF THE REVEN UE AUTHORITIES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS GRANTED THE DEDUCTION UNDER SECTION 54F UP TO RS.1,51,34,250/- AND REST OF THE AMOUNT OF RS.28,67 ,234/- WAS NOT QUALIFIED FOR 54F ON THE GROUND THAT SECTION 54F MA NDATES THAT HOLE OF SALE CONSIDERATION HAS TO BE INVESTED IN NEW RES IDENTIAL HOUSE AND AMOUNT NOT SO INVESTED HAS TO BE INVESTED IN SPECIF IED ASSETS. WE FIND THAT THE SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF MUSTANSIR I TEHSILDER VS. ITO IN ITA NO.610 8/M/2017 WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 10. SECTION 54 OF THE ACT PROVIDES THE CONDITION T HAT THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE SHOULD BE COMPLETED WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF OLD RESIDENTIAL HOUSE. ACCORDING TO LD A.R, SECTION 54 IS SILENT ABOUT COMMENCEMENT OF CONSTRUCTION AND HENCE COMMENCEMENT OF CONSTRUCTION CAN PRECEDE THE DATE OF SALE OF OLD ASSET. IN THE INSTANT CASE, THE ASSESSEE HAD BOOKED THE FLAT MUCH PRIOR TO THE DATE OF OLD FLAT. WE NOTICE THAT THE HON'BLE KARNAT AKA HIGH COURT HAS HELD IN THE CASE OF CIT VS. J.R.SUBRAMANYA BHAT (SUPRA) THAT CO MMENCEMENT OF CONSTRUCTION IS NOT RELEVANT FOR THE PURPOSE OF SEC. 54 AND IT IS O NLY THE COMPLETION OF CONSTRUCTION. THE ABOVE SAID RATIO WAS FOLLOWED IN THE CASE OF AS ST. CIT VS. SUBHASH SEVARAM BHAVNANI (2012)(23 TAXMANN.COM 94)(AHD. TRIB.). BOT H THESE CASES SUPPORT THE CONTENTIONS OF THE ASSESSEE. ACCORDINGLY, FOR THE P URPOSE OF SEC. 54 OF THE ACT, WE HAVE TO SEE WHETHER THE ASSESSEE HAS COMPLETED THE CONSTRUCTION WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF OLD ASSET. IN THE INST ANT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE TOOK POSSESSION OF THE NEW FLAT WITHIN THR EE YEARS FROM THE DATE OF SALE OF OLD RESIDENTIAL FLAT. ACCORDINGLY, WE ARE OF THE VI EW THAT THE ASSESSEE HAS COMPLIED WITH THE TIME LIMIT PRESCRIBED U/S 54 OF THE ACT. S INCE THE AMOUNT INVESTED IN THE NEW FLAT PRIOR TO THE DUE DATE FOR FURNISHING RETUR N OF INCOME WAS MORE THAN THE AMOUNT OF CAPITAL GAIN, THE REQUIREMENTS OF DEPOSIT ING ANY MONEY UNDER CAPITAL GAINS ACCOUNT SCHEME DOES NOT ARISE IN THE INSTANT CASE. FURTHER, THE HON'BLE HIGH COURT HAS HELD IN THE CASE OF K.C.GOPALAN THAT THER E IS NO REQUIREMENT THAT THE SALE PROCEEDS REALISED ON SALE OF OLD RESIDENTIAL HOUSE ALONE SHOULD BE UTILISED. 11. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T THE ASSESSEE IS ENTITLED FOR DEDUCTION OF FULL AMOUNT OF CAPITAL GAINS U/S 54 OF THE ACT, AS HE HAS COMPLIED WITH THE CONDITIONS PRESCRIBED IN THAT SECTION. ACCORDIN GLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO ALLOW THE DEDUCTI ON U/S 54 OF THE ACT AS CLAIMED BY THE ASSESSEE. ITA NO.3718/M/2016 MR. ABHAY R. AGGARWAL 4 6. RESPECTFULLY FOLLOWING THE SAME, WE FIND THAT IN THIS CASE THE TRIBUNAL HAS HELD THAT IF THE CONSTRUCTION OF NEW R ESIDENTIAL HOUSE IS COMPLETED WITHIN THREE YEARS FROM THE DATE OF OLD R ESIDENTIAL HOUSE AND SECTION 54 IS SILENT ABOUT COMMENCEMENT OF CONS TRUCTION. HENCE, THE COMMENCEMENT OF CONSTRUCTION CAN PRECEDE THE DATE OF OLD ASSETS. IN THIS CASE, THE DATE OF SALE OF ORIG INAL ASSET I.E. SHRIKARPUR LAND AT PUNE IS 30.08.2011 AND ASSESSEE HAS ENTERED INTO AGREEMENT WITH MARVEL LAND FOR ACQUISITION OF RESID ENTIAL HOUSE ON 21.1.2009 AND POSSESSION WAS HANDED OVER ON 31.12.1 1. THEREFORE, ASSESSEE HAS MADE PAYMENT PRIOR TO THREE YEARS ALSO . THEREFORE, THE LD. CIT(A) HAS NOT GRANTED 54 DEDUCTION WHICH INCLU DES MAINTENANCE CHARGES TO THE BUILDERS CANNOT BE ALLOW ED BUT WE FIND THAT IN THE CASE OF BINA K. JAIN 75 TAXMAN 145 WHER EIN IT IS HELD THAT THE MAINTENANCE CHARGES ALSO INCLUDE FOR PURCHASE O F PREMISES. WE FIND THAT IN THIS CASE THE DETAILS OF PAYMENTS ARE AS UNDER: TOTAL COST RS. COST OF NEW FLAT AS PER AGREEMENT 2,06,86,250 STAMP DUTY 10,16,960 REGISTRATION FEES 31,100 LEGAL FEES 3,940 SERVICE TAX & VAT ON CONSTRUCTION (8+9+15) 9,90,176 REIMBURS. OF TDS PAYABLE U/S 194IA (11+16) 45,393 COST OF MARBLE FLOORING DIFFERENTIAL 6,06,661 TOTAL 2,33,80,480 ADD: MAINTENANCE AND FACILITY MGMT. CHARGES 8,71,000 TOTAL COST 2,42,51,480 ITA NO.3718/M/2016 MR. ABHAY R. AGGARWAL 5 THE ASSESSEE HAS MADE VARIOUS PAYMENTS AGGREGATING RS.1,82,57,229/- BETWEEN THE DATE OF AGREEMENT AND THE DATE OF FILING OF THE RETURN ON 27.07.2012, WHICH IS EXCEEDING THE CAPITAL GAINS OF THE ORIGINAL ASSET. WE FIND THAT ALL THE LEGITIMAT E EXPENDITURE FOR STAMP DUTY, REGISTRATION, SERVICE TAX, VAT AND FLOO RING EXPENSES INCLUDED FOR ACQUIRING THE SAID FLAT IS ALLOWABLE A ND AS PER SECTION 54 OF THE ACT, THE ENTIRE CAPITAL GAIN WAS INVESTED FO R ACQUISITION OF NEW RESIDENTIAL HOUSE UNDER THE CONSTRUCTION BY PAYMENT TO THE BUILDER PRIOR TO DATE OF FILING THE RETURN OF INCOME AS ALL OWABLE UNDER THE PROVISIONS OF SECTION 54F. THEREFORE, WE ALLOW THE SAME. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2018. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.01.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.