ITO, New Delhi V. Smt. Kusum Gupta, Delhi

ITA 5180/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3709 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 30-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: VIKAS BANSAL
• Keywords: Cost of acquisition
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DLEHI BEFORE SHRI G.D. AGRAWAL, PRESIDENT AND SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 5180/DEL/2016 ASSESSMENT YEAR: 2012-13 INCOME-TAX OFFICER, VS SMT. KUSUM GUPTA, WARD 40(3), CIVIC CENTRE, 429, DEEPALI, PITAMPURA. NEW DELHI NEW DELHI. (PAN: AAJPG6889Q) C.O. NO.346/DEL/2016 (IN I.T.A. NO. 5180/DEL/2016) ASSESSMENT YEAR: 2012-13 SMT. KUSUM GUPTA, VS INCOME-TAX OFFICER, 429, DEEPALI, PITAMPURA. WARD 40(3), CIVIC CENTRE , NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI VIKAS BANSAL, CA DEPARTMENT BY: SHRI RAVI KANT GUPTA, SR. DR ORDER PER K. NARSIMHA CHARY, JM CHALLENGING THE ORDER DATED 1.7.2016 IN APPEAL NO 8 7/15-16 FOR ASSESSMENT YEAR 2012-13 PASSED BY THE LEARNED CIT(A)- 14, NEW DELHI (FOR SHORT 2 HEREINAFTER CALLED AS THE LEARNED CIT(A)), THE RE VENUE PREFERRED THIS APPEAL WHEREAS SUPPORTING THE REASONING GIVEN BY THE LEARNE D CIT(A) WHILE DELETING THE ADDITION MADE BY THE LEARNED AO, ASSESSEE PREFERRED THE CROSS OBJECTION. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM HOUSE PROPERTY, CAPITAL GAIN AND INTEREST INCO ME. FOR THE ASSTT. YEAR 2012- 13, ASSESSEE FILED THE RETURN OF INCOME ON 25.6.201 2 DECLARING A TOTAL INCOME OF RS.8,42,980/- AFTER CLAIMING DEDUCTION OF RS.1 LAC UNDER CHAPTER VI A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED AS THE AC T). DURING THE COURSE OF SCRUTINY, THE LEARNED AO NOTICED THAT THE ASSESSEE SOLD PROPERTY BEARING NO. F- 19/14, SECTOR 8, ROHINI, DELHI FOR A CONSIDERATION OF RS.1.20 CRORES AND AGAINST THIS AMOUNT, THE ASSESSEE CLAIMED THE FOLLOWING DEDUCTIO NS : I) RS.17,48,768/- PERPETUAL LEASE DEED DATED 9.1.1989; II) RS.2,81,934/- CONVEYANCE DEED DATED 28.9.1993 III) RS.6,52,174/- CONSTRUCTED IN FY 1993-94 IV) RS.6,06,740/- AGREEMENT TO SELL DATED 17.5.2004 3. LD. AR SUBMITS THAT THE ASSESSEE EXPLAINED TO TH E LEARNED AO THAT UNDER PERPETUAL LEASE DATED 9.1.89, THE COST OF ACQUISITI ON WAS RS.17,48,768/- WHEREAS THE INDEXED COST OF ACQUISITION OF 50% OF THE PLOT FROM ONE SHRI RAM KAILASH GUPTA WAS RS.6,06,740/-; THE COST UNDER CONVEYANCE WAS R S.2,81,934/-; AND INDEXED COST OF CONSTRUCTION OF THE HOUSE WAS RS.6,52,174/-. HO WEVER, THE LEARNED AO TOOK INTO CONSIDERATION THE COST OF ACQUISITION RS.17,48 ,768/- AND ALSO THE COST UNDER CONVEYANCE DATED 28.9.1993 AT RS. 2,81,934/-, BUT R EFUSED TO CONSIDER THE PURCHASE PRICE IN RESPECT OF THE 50% SHARE OF SHRI RAM KAIL ASH GUPTA AND THE CONSTRUCTION COST. IN RESPECT OF DEDUCTION CLAIMED UNDER SECTIO N 54 OF THE ACT, HE WAS OF THE OPINION THAT AFTER SELLING THE RESIDENTIAL PROPERTY WHAT WAS PURCHASED BY THE 3 ASSESSEE WAS ONLY BASEMENT AND GROUND FLOOR WHICH W AS GIVEN ON RENT TO TECHNIA INSTITUTE AND APPLIED STUDIES, WHICH IS EVIDENTLY A COMMERCIAL PURPOSE, AS SUCH, THE ASSESSEE IS NOT ENTITLED FOR THE DEDUCTION U/S 54 OF THE ACT. 4. IN APPEAL, LEARNED CIT(A) FOUND THAT THE PROPER TY PURCHASED WAS A RESIDENTIAL PROPERTY BUT WAS USED FOR COMMERCIAL PU RPOSE AND IT IS NOT THE REQUIREMENT OF LAW THAT THE PROPERTY SHALL BE USED ONLY FOR RESIDENTIAL PURPOSES. ON THIS PREMISES, LEARNED CIT(A) HELD THAT THE ASSE SSEE IS ENTITLED TO THE BENEFIT UNDER SECTION 54 OF THE ACT. HE FURTHER DELETED TH E DISALLOWANCE OF RS. 12,58,914/- IN RESPECT OF THE PURCHASE COST OF 50% SHARE OF SHR I RAM KAILASH GUPTA, THE CONSTRUCTION COST, AND THE ADDITION OF HOUSE TAX AM OUNT OF RS.29,830/- MADE BY THE LD. AO. HENCE, THE REVENUE IS IN THIS APPEAL WHEREA S ASSESSEE PREFERRED THE CROSS OBJECTION SUPPORTING THE FINDINGS OF THE LEARNED CI T(A). 5. IT IS THE ARGUMENT OF THE LEARNED AR THAT IN SO FAR AS THE COST OF ACQUISITION OF 50% OF THE SHARE OF RAM KAILASH GUPTA AND THE HO USE TAX ARE CONCERNED, THEY ARE WELL SUPPORTED BY THE DOCUMENTS AND ON CONSIDER ATION OF THESE DOCUMENTS, THE LEARNED CIT(A) FOUND THAT THE ADDITION OF RS.6,06,7 40/- CLAIMED BY THE ASSESSEE FOR ACQUIRING 50% SHARE FROM RAM KAILASH GUPTA AND THE HOUSE TAX AMOUNT DESERVES TO BE DELETED. THERE IS NO DISPUTE FROM THE REVENU E AS TO THE ASSESSEE PRODUCING THE COPY OF THE SALE DEED DATED 17.05.2004 OR THE C ORRECTNESS OF THE CONTENTS OF THE SAME. SO ALSO THE REVENUE DOES NOT DISPUTE THE PRO DUCTION OF THE COPY OF THE PROPERTY TAX RETURNS OF THE SAID PROPERTY ALONG WIT H BANK STATEMENTS EVIDENCING THE PAYMENT OF PROPERTY TAX AMOUNTING TO RS.29,830/-. IT IS ONLY ON A PERUSAL OF THESE DOCUMENTS, LD. CIT(A) ACCEPTED THE CONTENTION OF TH E ASSESSEE. THERE IS NO REASON FOR US NOT TO UPHOLD THE SAME AND WE ARE CONVINCED THAT THE CLAIM OF THE ASSESSEE IN RESPECT OF THE DELETION OF RS.29,830/- AND RS.6, 06,740/- IS RIGHTLY ACCEPTED BY 4 THE LEARNED CIT(A). SINCE THERE IS NOTHING PERVERS E IN SUCH FINDINGS WE UPHOLD THE SAME. 6. NOW COMING TO THE COST OF CONSTRUCTION OF RS.6,5 2,174/- THERE IS NO DISPUTE THAT THE PROPERTY SOLD BY THE ASSESSEE WAS A RESIDE NTIAL BUILDING WHEREAS THE PROPERTY ACQUIRED UNDER LEASE DEED DATED 9.1.89 AND THE CONVEYANCE DEED IN RESPECT OF 50% SHARE OF SHRI RAM KAILASH GUPTA ARE ONLY IN RESPECT OF A VACANT PLOT. THEREFORE, IT GOES WITHOUT SAYING THAT SUBSE QUENT TO THE ACQUISITION OF THE VACANT PLOT CONSTRUCTION OF HOUSE TOOK PLACE AND ME RELY BECAUSE THE ASSESSEE DID NOT PRODUCE THE EVIDENCE OF CONSTRUCTION THAT TOO B EYOND THE PERIOD OF 18 YEARS, LEARNED AO DISALLOWED THE SAME. ACCORDING TO US, L EARNED CIT(A) IS RIGHT IN HIS APPROACH THAT ASKING FOR THE EVIDENCE OF CONSTRUCTI ON WHICH TOOK PLACE QUITE A LONG TIME BACK AND FOR NON PRODUCTION OF CONSTRUCTION OF BILLS, DISALLOWING THE COST OF CONSTRUCTION CANNOT BE SUSTAINED. ON THIS ASPECT A LSO, THE REASONING OF THE LEARNED CIT(A) IS IMPECCABLE . WE ARE IN AGREEMENT WITH TH E FINDINGS OF THE LEARNED CIT(A) THAT ANY RECORD OF MORE THAN SIX YEARS OLD I S NOT REASONABLE. DISALLOWANCE ON THIS ASPECT IS DELETED. 7. NOW COMING TO THE CLAIM BY THE ASSESSEE U/S 54 O F THE ACT, IT IS NOT IN DISPUTE THAT THE ASSESSEE ACQUIRED THE HABITABLE PR OPERTY WITH BASEMENT AND GROUND FLOOR AND AS A MATTER OF FACT, SUCH A PROPERTY WAS LET OUT ON A MONTHLY RENT. IN SO FAR AS THE NATURE OF THE PROPERTY AS TO WHETHER IT IS HABITABLE OR NOT, THERE IS NO DISPUTE. WHEN ONCE THE PROPERTY IS HABITABLE, THE NATURE OF WHICH IS SO AS ON THE DATE OF ACQUISITION, THE QUESTION IS WHETHER THE SU BSEQUENT LETTING OUT THE PROPERTY FOR A COMMERCIAL PURPOSE WOULD TAKE OUT THE CASE FR OM THE AMBIT OF SECTION 54 OF THE ACT. UNDISPUTED FACTS IN THIS CASE MAKE IT AMPL Y CLEAR THAT BY ACQUIRING A HABITABLE PROPERTY THE ASSESSEE FULFILLS THE NECESS ARY CONDITIONS REQUIRED FOR CLAIMING THE BENEFIT U/S 54 OF THE ACT. AS A MATTE R OF FACT, LEARNED CIT(A), ON A 5 PERUSAL OF RECORD WHICH INCLUDES THE SALE DEED REGI STERED WITH SUB REGISTRAR AND OTHER DOCUMENTS LIKE PROPERTY TAX, RECEIPTS, FOUND THAT THE PROPERTY ACQUIRED BY THE ASSESSEE WAS A RESIDENTIAL PROPERTY. ON THIS AS PECT, NOTHING CONTRARY IS BROUGHT BEFORE US. IN SUCH CIRCUMSTANCES, SUBSEQUENT LETTIN G OUT THE PROPERTY, WHICH COULD BE IN THE NATURE OF COMMERCIAL ACTIVITY, WILL NOT R ELATE BACK TO VITIATE THE CLAIM OF THE ASSESSEE U/S 54 OF THE ACT. WE ARE, THEREFOR E, OF THE CONSIDERED OPINION THAT LEARNED CIT(A) RIGHTLY APPLIED THE RATIO LAID DOWN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ASHOK SYAL VS CIT (2012) 209 TAXMAN 376 AND FOUND THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTIO N U/S 54 OF THE ACT. WE DO NOT FIND ANY REASON TO DISTURB THE SAME. WE, THEREFORE , WHILE UPHOLDING THE FINDINGS OF LEARNED CIT(A), FIND THE APPEAL OF THE REVENUE AS DEVOID OF MERITS AND IS LIABLE TO BE DISMISSED. IN VIEW OF THIS FINDING, THE CROSS OBJECTION PREFERRED BY THE ASSESSEE BECAME INFRUCTUOUS AND IS ALSO DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE S AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (K. NARSIMHA CHARY) PRESIDENT JUDICIAL MEMBER DATED: 29 TH JANUARY, 2018 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR