ACIT CIR 1, THANE V. HANMANT D. JAGDALE, THANE

ITA 4356/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2443 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 22-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Cost of acquisition
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MU MBAI BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4356/MUM/2013 ASSESSMENT YEAR: 2008-09 ACIT CIRCLE-1, ASHAR I.T. PARK, 6 TH FL OOR, B WING, ROOM NO. 22, ROAD NO. 16Z, WAGLE INDUSTRIAL ESTATE, THANE (W),- 400604. VS. SHRI HANMANT D. JAGDALE, PROP. M/S ROHIT ENTERPRISES, GR. FLOOR, TAMANNA CHS, PADA NO. 2, YASHODHAN NAGAR, LOKMANYA NAGAR, THANE (W)- 400606. PAN: ACNPJ7172P (APPELLANT) (RESPONDENT) REVENUE BY : SH. NEIL PHILIP (D R) ASSESSEE BY : SH SUBODH RATNAPA RKHI (AR) DATE OF HEARING : 22.07.2016 DATE OF PRONOUNCEMENT : 14.10.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS PRESENT APPEAL UNDER SECTION 253OF INCOM E TAX ACT (ACT) IS DIRECTED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-II, THANE D ATED 15.02.2013 FOR AY 2008-09. THE REVENUE HAS RAISED ONLY ONE GROUND O F APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HONBLE CIT(A) ERRED IN ALLOWING THE ASSESSEES CLAIM OF EX EMPTION U/S. 54F ONLY ON THE BASIS OF ALLOTMENT LETTER ALTHOUGH NO SALE A GREEMENT OR CONVEYANCE AGREEMENT OR PAYMENT HAS BEEN MADE IN RESPECT OF TH E FLAT NO. 2102. THE CIT (A) FAILED TO APPRECIATE THAT CONDITIONS LAID D OWN U/S. 54F ARE NOT FULFILLED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE RELEVANT AY ON 24.11.2009 DECLARING TOTAL INCOME OF RS. 69,0 9,222/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. THE AO WHILE MAKI NG THE ASSESSMENT BESIDES OTHER DISALLOWANCE DISALLOWED THE EXEMPTION CLAIMED U/S. 54F OF THE ACT. 2 ITA NO. 4356/M/13- HANMANT D. JAGDALE. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE ASSESSEE SUCCEEDED IN APPEAL BEFORE THE CIT(A). AGGRIEVED BY THE ORDER OF CIT (A) THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 3. WE HAVE THE DEPARTMENTAL REPRESENTATIVE (DR) FOR TH E REVENUE AND THE LD AR FOR THE ASSESSEE, THE LD DR FOR THE REVENUE ARGUED THAT AS PER THE DETAIL FURNISHED BY THE ASSESSEE THE ASSESSEE RECEIVED RS. 59,76,000/- TOWARDS SALE OF 3600 SHARES OF HAPPY HOME HEALTH CLUB PVT. LTD. AND AFTER INDEXATION COST OF ACQUISITION THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN (LTCG) OF RS. 59,36,089/-. THE ASSESSEE FURTHER CLAIMED TO HAVE P URCHASED NEW FLAT DURING THE YEAR UNDER CONSIDERATION AND CLAIMED DEDUCTION OF R S. 55,62,600/- U/S. 54F IN RESPECT OF NEW FLAT NO. 2102, CENTRE POINT, MULUND (EAST), MUMBAI AND ALSO PAID ADVANCE FOR BOOKING A FLAT WITH SHREE SIDDHIVI NAYAK ENTERPRISES FOR RS. 30,00,000/- AND AS SUCH WAS NOT ENTITLED FOR DEDUCT ION U/S. 54F. THE LD. DR FURTHER ARGUED THAT CIT(A) ERRED IN ALLOWING THE DE DUCTION IN RESPECT OF FLAT NO.2102, CENTRE POINT, MULUND(EAST), MUMBAI.THE CAS E LAW CITED BY CIT(A) IN ITS ORDER ARE DISTINGUISHABLE TO THE FACTS OF THE P RESENT CASE. THE LD. DR FOR THE REVENUE PRAYED THAT THE FINDING OF CIT(A) BE REVERS ED AND THAT THE FINDING OF AO MAY BE RESTORED. ON THE OTHER HAND, THE LD AR FOR THE ASSESSEE ARGUED THAT GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL THAT NO SALE AGREEMENT OR CONVEYANCE AGREEMENT OR PAYMENT HAS MADE IN RESPECT OF FLAT NO. 2102 IS ITSELF ERRONEOUS. THE AR FOR ASSESSEE WOULD ARGUE THAT ASSESSEE SOLD 3600 SHARE OF HAPPY HOME HEALTH CLUB PVT. LTD. FOR RS. 5 9,76,000/- ON 11.08.2007 AND AFTER DEDUCTING INDEX COST OF ACQUISITION THE A SSESSEE DECLARED LTCG AT RS. 59,36,089/-. ASSESSEE PURCHASED/CONSTRUCTED A NEW F LAT AT 21 ST FLOOR, WING- 2102, CENTRE POINT, MULUND (EAST), MUMBAI FOR RS.55 ,62,600/- AND WAS ENTITLED TO CLAIM DEDUCTION U/S. 54F OF THE ACT. ALL THESE D ETAILS WHEN REQUIRED BY AO WAS FURNISHED WITH DOCUMENTARY EVIDENCE WHICH INCLU DES COPY OF ALLOTMENT LETTER DATED 21.01.2008 FOR FLAT NO.2102 IN THE BUI LDING CONSTRUCTED BY ASSESSEE HIMSELF BEING A PROPRIETOR OF M/S ROHIT ENTERPRISES WHEREIN THE INVESTMENT OF RS.56,00,000/- WAS MADE/CLAIMED BY THE ASSESSEE. TH E AO RAISED OBJECTION THAT FLAT NO.2102 WAS ALREADY ALLOTTED TO MR. RAJAN M. C HOPRA VIDE ALLOTMENT LETTER 3 ITA NO. 4356/M/13- HANMANT D. JAGDALE. DATED 26.06.2007 FOR A CONSIDERATION OF RS. 50,00,0 00/-, HENCE, THE SAME COULD NOT BE ALLOTTED TO ASSESSEE. THE AO FURTHER OBJECTE D THAT ASSESSEE HAD ADVANCED RS. 30,00,000/- TO SHREE SIDDHIVINAYAK ENTERPRISES FOR BOOKING OF OTHER FLAT. THE ASSESSEE EXPLAINED TO THE AO VIDE HIS REPLY DAT ED 27.12.2010 (COPY OF WHICH IS AVAILABLE AT PAGE. 26 OF PB), THE ASSESSEE EXPLAINED THAT THE FLAT PURCHASED BY ASSESSEE FROM PROPRIETARY CONCERN WAS DULY RECORDED IN THE BOOKS OF ACCOUNT OF M/S ROHIT ENTERPRISES. FLAT NO. 2102 WAS NOT ALLOTTED TO MR. RAJAN CHOPRA, IN FACT FLAT NO. 1502 AND 1901 WERE A LLOTTED TO MR. & MRS. RAJAN CHOPRA. RAJAN M. CHOPRA HAS ALREADY CANCELLE D THE BOOKING OF FLATS AND HIS ADVANCES WERE TREATED AS UNSECURED LOAN AND ASS ESSEE PAID INTEREST AFTER DEDUCTING TDS AND THUS THE AMOUNT PAID BY MR. RAJAN CHOPRA WAS PURELY IN ADVANCE AND THERE WAS NO SALE/PURCHASE OF FLATS TO HIM IN RESPECT OF BOOKING OF FLATS. IN RESPECT OF ADVANCE OF FLAT IN SIDDHIVINAY AK ENTERPRISES THE ASSESSEE EXPLAINED THAT THE SAID FLAT HAD NOT BEEN CONSTRUCT ED AND NO AGREEMENT WAS EXECUTED. ONLY ADVANCE OF RS. 30,00,000/- WAS PAID TO THE BUILDER. THE AO DENIED THE EXEMPTION U/S. 54F IN RESPECT OF FLAT AT CENTRE POINT, MULUND FOR THE REASONS THAT NO AGREEMENT IS AVAILABLE BUT IN RESPE CT OF ADVANCE TO SIDDHIVINAYAK ENTERPRISES, THE AO CONSIDERED ONLY P ART ADVANCE WITHOUT ANY VALID AGREEMENT OF FLAT PURCHASED TO DENY EXEMPTION . IN FACT, THE FLAT HAS NOT BEEN CONSTRUCTED AND THE BOOKING WAS CANCELLED AND THE ASSESSEE HAS RECEIVED THE AMOUNT OF BOOKING WHICH IS DULY SHOWN IN THE BO OKS OF ACCOUNTS. THE LD. AR FOR THE ASSESSEE ARGUED THAT THE ASSESSEE WAS E NTITLED FOR EXEMPTION U/S. 54F OF THE ACT AND THE ORDER OF LD CIT(A) DOES NOT SUFFER FROM ANY ILLEGALITY OR INFIRMITY . 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF T HE LD REPRESENTATIVES OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE A SSESSEE SOLD THE SHARE ON 11.08.2007 GIVING RISE TO EARN LTCG WHICH WAS INVES TED IN A CONSTRUCTION OF FLAT NO. 2102, CENTRE POINT, MULUND AND AS PER ARCH ITECT CERTIFICATE DATED 11.06.2010 THE PROJECT WAS 100% COMPLETE, HENCE, TH E AMOUNT OF CAPITAL GAIN WAS INVESTED WITHIN THREE YEARS FROM THE DATE OF SA LE OF SHARES. THIS FACT IS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, OTHERWISE AO HAS ALSO NOT 4 ITA NO. 4356/M/13- HANMANT D. JAGDALE. DISPUTED THE INVESTMENT OF RS. 56,00,000/- ON 31.03 .2008, THE LANGUAGE OF SECTION 54F OF STATUTE MADE IT CLEAR THAT NO CAPITA L GAIN TO BE CHARGED IN CASE THE INVESTMENT IS MADE IN A CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS. ADMITTEDLY, IN THE PRESENT CASE THE AS SESSEE HAS INVESTED THE LTCG FOR THE PURCHASE OF NEW HOUSE BEFORE 31.03.2008. TH US, THE ASSESSEE WAS QUALIFIED FOR CLAIMING EXEMPTION U/S. 54F OF THE AC T. SO FAR AS PROVISO TO SECTION 54F(1) IS CONCERNED THE DEDUCTION CAN BE DE NIED, IF ASSESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAT THE NEW ASSETS ON THE DATE OF TRANSFER OF ORIGINAL ASSET, THE ASSESSEE ONLY MADE ADVANCE O F RS. 30,00,000/- WITH M/S SIDDHIVINAYAK ENTERPRISES ON 11.03.2008 WHICH HAS B EEN CANCELLED SUBSEQUENTLY AND THE ASSESSEE HAD RECEIVED BACK TH E ADVANCE PAYMENT WHICH HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT (PER PAGE NO .37/38 OF P/B). THUS, THE ASSESSEE NOT OWNED MORE THAN ONE RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF ORIGINAL ASSETS (SHARES). 5. IN VIEW OF THE ABOVE DISCUSSION, THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT, WHICH HAS BEEN CORRECTLY APPRECIATED BY LD. CIT(A) IN THE IMPUGNED ORDER. HENCE, WE DO NOT FIND ANY ILLEGALITY OR INFI RMITY IN THE ORDER PASSED BY CIT(A). IN THE RESULT, THE APPEAL OF THE REVENUE HA S NO FORCE AND THE SAME IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4 TH DAY OF OCT 2016. SD/- SD/- B.R. BASKARAN PAWAN SINGH (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) MUMBAI; DATED 14/10/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE C