Sh. Shivaji Sarkar, Ghaziabad V. ITO, New Delhi

ITA 4534/DEL/2014

• Counselvise Citation: 453420114 RSA 2014
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 03-08-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 19-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHIVAJI SARKAR HUF
• Keywords: Capital asset
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 4 5 3 4/DEL/2014 AY: 200 1 - 02 SH. SHIVAJI SARKAR VS. ITO, WARD 40(2) B 18, GROUND FLOOR NEW DELHI PARIVAHAN APARTMENT GH 1, VASUNDHARA GHAZIABAD 201 012 PAN: AMOPS 6850 J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SHIVAJI SARKAR (HUF) RESPONDENT BY : S MT. RAKHI VIMAL, JCIT ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD.CIT(A) - XXVII, NEW DELHI DATED 30.05.2015 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 200 1 - 02 . 2. FACTS IN BRIEF : - THE BRIEF FACTS OF THE CASE ARE NARRATED AT PARA 3 OF THE LD.CIT(A) S ORDER, WHICH IS EXTRACTED HEREIN BELOW FOR READY REFERENCE. 3. THE APPELLANT IS AN ASSOCIATE PROFESSOR IN INDIAN INSTITUTE OF MASS COMMUNICATION AND THE RETURN OF INCOME WAS FILED ON 31.07.2001 DECLARING A TOTAL INCOME OF RS. 1,72,189/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE SUBSEQUENT ASSESSMENT YEAR 2002 - 03, IT WAS NOTICED THAT APPELLANT HAD TA KEN POSSESSION OF APARTMENT NO. B - 18, PARIVAHAN APARTMENTS, VASUNDHARA, ON 15.01.20 02 ONLY . THE ASSESSING OFFICER NOTICED THAT THE APPELLANT HAD CLAIMED INTEREST ON BORROWED CAPITAL OF RS.93,125/ - - IN THE EARLIER ASSESSMENT Y EAR 200 01 - 02 AND THEREFORE THE ASSESSMENT FOR THAT YEAR WAS RE - OPENED. AS THE CLAIM OF INTEREST ON BORROWED CAPITAL WAS NOT ALLOWABLE UNDER SECTION 24(VI) OF THE INCOME TAX ACT, 1961FOR ASSESSMENT YEAR 2001 - 02, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 TO THE APPELLANT ON 14.05.2004 FOR THAT ASSESSMENT YEAR. IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED THE APPELLANT'S CLAIM FOR INTEREST ON BORROWED CAPITAL OF RS. 93,125/ - ON THE GROUND THAT THE HOUSE PROPERTY NAMELY ITA 4534/DEL/2014 A.Y. 2001 - 02 SH. SHIVAJI SARKAR 2 APARTMENT NO. B - 18, PARIVAHAN APARTM ENTS, VASUNDHARA, WAS ACQUIRED BY THE APPELLANT ONLY ON 15.01.2002 AND THEREFORE, THE APPELLANT IS NOT ELIGIBLE FOR INTEREST DEDUCTION UNDER SECTION 24(VI) OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 200 01 - 02. AS PER THIS RE - ASSESSMENT ORDER, THE APPEL LANT CAN CLAIM INTEREST ON BORROWED CAPITAL ONLY FROM THE YEAR IN WHICH THE PROPERTY IS ACQUIRED AS PER THE PROVISIONS OF SECTION 24(VI) OF THE INCOME TAX ACT, 1961. THE ASSESSMENT WAS ACCORDINGLY COMPLETED U/S I47 R.W.S. 143(3) ON 28.02.2006. 3. ON APPEAL THE FIRST APPELLATE AUTHORITY HELD THAT THE ACTUAL OSSESSION OF THE HOUSE PROPERTY WAS GIVEN TO THE ASSESSEE ONLY ON 15.1.2002 AND H ENCE THE CLAIM OF DEDUCTION OF INTEREST U/S 24(VI) OF THE ACT CANNOT BE A LLOWED DURING THE YEAR. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE ME ON THE FOLLOWING GROUNDS. 1. THE ORDER PASSED BY THE LD.CIT(A) IS BAD. 2. S.24 CLEARLY STATES THAT WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCTED, REPAIRED, RENEWED OR RECONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITA L . 3. RELIEF BE GIVEN AS CLAIMED. 5 . I HAVE HEARD SHRI SHIVAJI SARKAR , THE LD.ASSESSEE IN PERSON AND MRS.RAKHI VIMAL, THE LD.JCIT ON BEHALF OF THE REVENUE. 6. THE DELHI F BENCH OF THE TRIBUNAL IN THE CASE OF MR.PRAV EEN GUPTA V. ACIT , IN I.T.A. NO. 2558/DEL/2010 FOR THE A SSESSMENT Y EAR 2007 - 08 , VIDE ORDER DATED 13TH AUGUST 2008 , HAS HELD THAT BY MAKING PAYMENT TO THE BUILDER AND HAVING RECEIVED ALLOTMENT LETTER IN LIEU THEREOF, THE ASSESSEE WILL BE HOLDING A CAPITAL ASSET AND THEREFORE THE BENEFIT OF INDEXATION HAS TO BE GRANTED TO THE ASSESSEE ON THE BASIS OF ACQUIRING THE SAID ASSET. ITAT WHILE HOLDING SO OBSERVED AT PARA 29, PAGE 9 AS UNDER : - ITA 4534/DEL/2014 A.Y. 2001 - 02 SH. SHIVAJI SARKAR 3 '29. ACCORDING TO THE AFOREMENTIONED DEFINITION, CAPITAL ASSET MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE WHETHER OR NOT CONNECTED WITH THE BUSINESS OR PROFESSION AND IT EXCLUDES CERTAIN ITEMS WHICH WHILE CONSIDERING THE FACTS OF THE PRESENT CASE ARE NOT RELEVANT. THEREFORE, IT HAS TO BE SEEN THAT WHETHER BY ENTERING INTO AN AGREEMENT VIDE WHICH THE ASSESSEE WAS ALLOTTED A PARTICULAR FLAT BY ALLOTMENT LETTER WHETHER THE ASSESSEE HA S HELD ANY ASSET OR NOT? BY ENTERING INTO AN AGREEMENT TO ALLOT A FLAT, THE ASSESSEE HAS IDENTIFIED A PARTICULAR PROPERTY WHICH HE IS INTENDED TO BUY FROM THE BUILDER AND THE BUILDER IS ALSO BOUND TO PROVIDE THE APPLICANT WITH THAT PROPERTY BY ACCEPTING CE RTAIN ADVANCE AMOUNT AND MAKING AGREEMENT FOR BALANCE PAYMENT AS SCHEDULED IN THE AGREEMENT. THUS, GOING INTO THE PROVISIONS, IT IS NOT NECESSARY THAT TO CONSTITUTE A CAPITAL ASSET THE ASSESSEE MUST BE THE OWNER BY WAY OF A CONVEYANCE DEED IN RESPECT OF T HAT ASSET FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. THE ASSESSEE HAD ACQUIRED A RIGHT TO GET A PARTICULAR FLAT FROM THE BUILDER AND THAT RIGHT OF THE ASSESSEE ITSELF IS A CAPITAL ASSET. THE WORD 'HELD' USED IN SECTION 2 (14) AS WELL AS EXPLANATION TO SECT ION 48 CLEARLY DEPICTS THAT ASSESSEE MUST HAVE SOME RIGHT IN THE CAPITA ASSET WHICH IS SUBJECT TO TRANSFER. BY MAKING THE PAYMENT TO THE BUILDER AND HAVING RECEIVED ALLOTMENT LETTER IN LIEU THEREOF, THE ASSESSEE WILL BE HOLDING CAPITAL ASSET AND, THEREFORE , THE BENEFIT OF INDEXATION HAS TO BE GRANTED TO THE ASSESSEE ON THE BASIS OF PAYMENTS MADE BY HIM FOR ACQUIRING THE SAID ASSET AND THE ASSESSEE HAS RIGHTLY CLAIMED THE INDEXATION BENEFIT FROM THE DATES WHEN HE HAS MADE THE PAYMENTS TO THE BUILDER. THEREFO RE, WE SEE FORCE IN THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO PROVIDE THE BENEFIT OF INDEXATION TO THE ASSESSEE IN THE MANNER IN WHICH THE ASSESSEE HAS CLAIMED.' 6.1 . THE CBDT IN THE CIRCULAR RELATING TO TAX EXEMPTION U/S 54F, DIRECT ED THAT THE CRUCIAL DATE IS THE DATE OF ALLOTMENT OF THE FLAT BY THE INSTITUTION AND TAKING POSSESSION WAS ONLY A FOLLOW UP ACTION AND A FORMALITY. 6.2 . BEFORE ME THE ASSESSEE FILED A LETTER FROM THE COOPERATIVE SOCIETY CONFIRMING ALLOTMENT OF THE SAID A PARTMENT TO THE ASSESSEE. THE LETTER WAS DT. 5.1.1999 RELATING TO THE A.Y. 1999 - 2000. IT WAS LATER THAT THE ALLOTMENT WAS CONFIRMED VIDE LETTER DT. 12.11.2000 RELATING TO THE F.Y. 2000 - 2001. THE ASSESSEE SUBMITS THAT HE WAS IN ACTUAL POSSESSION OF TH E HOUSE FROM ITA 4534/DEL/2014 A.Y. 2001 - 02 SH. SHIVAJI SARKAR 4 THE DATE OF ALLOTMENT AND WAS CARRYING ON INTERIOR FURNISHINGS AND SUCH OTHER ACTIVITIES. 7. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT THE DATE OF ACQUISITION IN THE CASE ON HAND , IS THE DATE OF ALLOTMENT OF THE FLAT AND THE SAID DEDUCTION SHOULD BE GRANTED TO THE ASSESSEE U/S 24 OF THE ACT. 8 . IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH S EPTEMBER, 2015. SD/ - ( J. SUDHAKAR REDDY ) ACCOUNTANT MEMBER DATED: THE 11 TH SEPTEMBER, 2015 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST.REGISTRAR, ITAT