Hanumant Changdeo Nakhate, Pune V. Deputy Commissioner of Income-tax, Circle - 8, Pune

ITA 373/PUN/2019

AI Insights

The case involves Shri Hanumant Changdeo Nakhat appealing against the order of the Commissioner of Income Tax (Appeals)-6, Pune, which upheld the disallowance of a section 54F deduction claim of Rs.62,12,500 by the DCIT, Circle-8, Pune. The primary legal issue was the eligibility of the assessee to claim a deduction under section 54F for reinvesting long-term capital gains in two residential units, despite a statutory amendment that restricted such relief to one residential house effective from 01.04.2015. The Tribunal referenced several precedents and a coordinate bench decision which supported the assessee's position, leading to the allowance of the deduction for the purchase of two units. However, the Tribunal rejected the claim for deductions related to payments made to the assessee's sisters, citing lack of evidence that these payments were exclusively for the purpose of acquiring or improving a capital asset.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137864 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowedPartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2022
• Assessment Year: misc
• Appeal Filed On: 04-01-2022
• Other Referred Cases: Arunkumar Purushottamlal Khanna vs. PCIT (Central), Pune, Malabar Industrial Co. vs. CIT, CIT vs. Smt. K.G. Rukmaniamma, CIT vs. Geeta Dugal, CIT vs. V.R. Karbagam, CIT vs. Gumanmal Jain
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 263; 54F; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMASHALI, ACCOUNTANT MEMBER ITA No.373/PUN/2019 Assessment Year 2015-16 Shri Hanumant Changdeo Nakhat, Bapu Niwas, Ram Nagar, Rahatani, Pune – 411 017. PAN ACYPN6082D vs The DCIT, Circle-8, Pratyakshakar Bhavan, Dr. Ambedkar Marg, Nr. Akurdi Rly Station, Pradhikaran, Pune PIN 411 044. Appellant Respondent Assessee by : -None- Revenue by : Shri Ramnath P Murkunde Date of hearing : 01.12.2022 Date of pronouncement : 12.12.2022 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for Assessment Year 2015-16 is directed against the Commissioner of Income Tax (Appeals)-6, Pune’s order dated 12.12.2018 passed in appeal No.PN/CIT(A)- 6/DCIT Cir-8/10225/2017-18, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short “the Act”]. 2. Case called twice. None appears at assessee’s behest. It emerges during the course of hearing that he has filed his written submissions dated 10.08.2022. The same are taken on record. 3. The assessee’s former substantive ground raised in the instant appeal challenges correctness of both the lower authorities action denying section 54F deduction claim amounting to 2 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. Rs.62,12,500/- during the course of assessment proceedings dated 08.12.2017 as upheld in the CIT(A)'s order as follows : 3 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. 4. Learned DR vehemently argued that both the lower authorities have rightly disallowed assessee’s impugned section 54F 4 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. deduction claimed in light of statutory amendment restricting such a relief only qua one residential house w.e.f. 01.04.2015. We note that this tribunal’s coordinate bench’s order in Arunkumar Purushottamlal Khanna, Pune vs. PCIT (Central), Pune in ITA.No. 181/PUN/2021 dated 06.07.2022 has rejected the Revenue’s identical stand qua re-investment in residential properties made between 01.04.2014 to 31.03.2015 as follows : 5. “Both the learned representatives reiterated their respective stands against and in support of the learned PCIT’s impugned revision directions. The first and foremost issue that arises for our apt adjudication is regarding the allowability of assessee’s section 54F deduction claim regarding reinvestment of his long term capital gains in the foregoing twin residential units. We make it clear that hon’ble apex court’s landmark decision in Malabar Industrial Co. vs. CIT (2000) 243 ITR 83 (SC) has settled the law long back that an assessment has to be both erroneous as well as prejudicial to interest of the Revenue; simultaneously, before the CIT or the PCIT; as the case may be, invoke his section 263 revision jurisdiction. Their lordships further hold that such an exercise would not be sustainable in case the Assessing Officer takes one of the two possible views. And also that it is his not each and every case that the impugned revision jurisdiction would stand attracted when the CIT/PCIT is of the opinion that the Assessing Officer’s view 5 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. could be substituted in section 263 proceedings. 6. We keep it in mind the foregoing well defined parameters of the CIT/PCIT’s revision jurisdiction and revert to the fact of the instant case. Learned CIT-DR vehemently argued that the legislature has amended the clinching statutory expression “a residential house” in section 54F(1) vide Finance Act, 2014 w.e.f. 1.4.2015 by substituting the same with “one residential house in India” only. Meaning thereby that the assessee’s impugned deduction claim of having reinvested his long term capital gains in the twin residential units had been wrongly allowed by the Assessing Officer. Mr. Gupta further sought to highlight the learned PCIT detailed discussion that there was no indication about the assessee had converted the foregoing twin residential units into one as it has been his case before us. 7. We find no merit in the Revenue’s foregoing arguments qua allowability of assessee’s section 54F deduction. We wish to repeat here that he had very well purchased the twin residential units in the year 2014 (supra) itself whereas the clinching amendment to section 54F(1) is applicable with prospective effect from 1.4.2015 only. Case law CIT vs. Smt. K.G. Rukmaniamma 331 ITR 291 (Kar.), CIT vs. Geeta Dugal 357 ITR 153 (Delhi), CIT vs. V.R. Karbagam 373 ITR 122 (Mad.) and CIT vs. Gumanmal Jain 394 ITR 666 (Mad.) have already rejected the Revenue’s identical stand thereby holding that 6 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. “a residential house” for the purpose of section 54F(1) deduction can indeed cover multiple units in same or different towers or residential blocks; as the case may be. This is indeed coupled with the fact that the assessee’s corresponding sale agreements had also purchased the right of passage of lobby or carpet area(s) intervening the foregoing twin flats nos.3123 and 3124 (supra) as it is evident from perusal of the sole plea page 160 in his paper book. We take into account all these facts as well as various judicial precedents quoted hereinabove to hold that the learned PCIT has erred in treating the assessee’s reinvestment of capital gains in purchase of these two flats totalling to Rs.5,30,60,200/- as wrongly allowed u/s 54F in the Assessing Officer’s regular assessment (supra). The assessee succeeds in his first and foremost grievance in very terms therefore. 4.1. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee’s instant former substantive ground. 5. Next comes assessee’s second substantive ground that both the lower authorities have erred in law and on facts in disallowing payment of Rs.39.47 lakhs paid to his sisters. Learned CIT(A)'s detailed discussion in issue reads as under : 7 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. 8 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. 9 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. 6. We have given our thoughtful consideration to the assessee’s pleadings and find no force in his instant second substantive grievance. This is for the precise reason that neither the assessee has been able to prove the impugned payment(s) incurred wholly and exclusively in connection with the transfer or favouring the as cost of acquisition or cost of any improvement of the capital asset nor there is any material before us that he perfected his title by making these payments in any manner, whatsoever in light of sec.48 of the Act. That being the case, we find no reason to interfere 10 ITA.No.373/PUN/2019 Shri Hanumant Changdeo Nakhat, Pune. with the CIT(A)'s foregoing detailed discussion. The assessee fails in his instant latter substantive ground. 7. No other ground has been raised in the instant appeal. 8. This assessee’s appeal is partly allowed in above terms. Order pronounced in the open Court on 12 th December, 2022. Sd/- Sd/- (GD PADMASHALI) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 12 th December, 2022 VBP/- Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5 . DR, ITAT, “A” Bench, Pune. 6. Guard File. BY ORDER, // TRUE COPY // Senior Private Secretary ITAT, Pune.