INCOME TAX OFFICER 20(2)(2), MUMBAI V. MR. MOHAMMED ESSA PATEL, MUMBAI

ITA 5222/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3239 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 10-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: GIRISH P JAIN
• Keywords: Capital asset; Tax effect
• Section: 54; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM ITA NO. 5222 /MUM/ 2017 (ASSESSMENT YEAR:2013 - 14 ) ITO 20(2)(2) 2 ND FLOOR, R. NO. 212, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI VS. MR. MOHAMMED ESSA PATEL 2 ND FLOOR, B WING, HALIM MANZIL, 64, MORLAND ROAD, MUMBAI CENTRAL, MUMBAI - 400 014 PAN/GIR NO. AARPP 5323 N ( REVENUE ) : ( ASSESSEE ) & CROSS OBJECTION NO. 329/MUM/2018 (ARISING OUT OF ITA NO. 5222 /MUM/ 2017) (ASSESSMENT YEAR:2013 - 14 ) MR. MOHAMMED ESSA PATEL 2 ND FLOOR, B WING, HALIM MANZIL, 64, MORLAND ROAD, MUMBAI CENTRAL, MUMBAI - 400 014 VS. ITO 20(2)(2) 2 ND FLOOR, R. NO. 212, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI PAN/GIR NO. AARPP 5323 N (ASSESSEE) : ( REVENUE ) REVENUE BY : SHRI D. G. PANSARI ASSESSEE BY : SHRI GIRISH P. JAIN DATE OF HEARING : 04.02.2019 DATE OF PRONOUNCEMENT : 27.02 .2019 O R D E R PER SHAMIM YAHYA, A. M.: TH IS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 32, MUMBAI (LD.CIT(A) FOR SHORT) DATED 31.05.2017 FOR THE ASSESSMENT YEAR (A.Y. FOR SHORT) 2013 - 14. 2. THE GROUNDS OF APPEAL RAISED IN REVENUES APPEAL READ AS UNDER: 2 ITA NO. 5222/MUM/2017 & CO NO. 329/MUM/2018 (I) 'ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW, THE LD CIT(A) ERRED IN GRANTING RELIEF U/S 54 OF THE INCOME TAX ACT, 1961 IGNORING THE FACTS THAT ASSESSEE DID NOT FULFIL THE CONDITIONS AS LAID DOWN IN THE SECTION 54 OF THE INCOME TAX ACT, 1961 FOR CLAIMING RELIEF UNDER THE SAID SECTION.' (II) 'ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW, THE LD CIT(A) ERRED IN GRANTING RELIEF U/S 54 OF THE INCOME TAX ACT, 1961 IGNORING THE FACTS THAT AS PER THE ENQUIRY DONE BY THE ASSESSING OFFICER WITH BMC, EVEN AFTER FOUR YEARS ALSO, NEITHER THE BUILDING PLAN NOR COMMENCEMENT CERTIFICATE BY APPROPRIATE AUTHORITY WAS ISSUED TO THE BUILDER.' (II) 'ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW, THE LD CIT(A) ERRED IN GRANTING RELIEF U/S 54 OF THE INCOME TAX ACT, 1961 IGNO RING THE FACTS THAT AS PER BOOKS OF ACCOUNT OF THE M/S MAGNUM CONSTRUCTION, THE BUILDER, THE ASSESSEE IS SHOWN AS UNSECURED LOAN PARTY AND NOT AS ADVANCE FOR FLAT BOOKING.' (III) 'ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW, THE LD CIT(A) ERRED I N GRANTING RELIEF U/S 54 OF THE INCOME TAX ACT, 1961 IGNORING THE FACTS THAT AS PER BOOKS OF ACCOUNT OF THE M/S MAGNUM CONSTRUCTION, THE BUILDER, THE ASSESSEE IS SHOWN AS UNSECURED LOAN PARTY AND NOT AS ADVANCE FOR FLAT BOOKING.' (IV) 'ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW, THE LD CIT(A) ERRED IN GRANTING RELIEF U/S 54 OF THE INCOME TAX ACT, 1961 IGNORING THE FACTS THAT HON'BLE ITAT IN THE CASE OF MRS. LATA VASUDEV VS ADDL.CIT - 19(3) HELD THAT TENTATIVE ALLOTMENT LETTER ISS UED BY BUILDER WILL NOT JUSTIFY THE CLAIM OF PURCHASE OF CAPITAL ASSETS FOR AVAILING THE CLAIM OF U/S 54F OF THE INCOME TAX ACT, 1961 FURTHER HELD THAT EVEN PROPOSED SITE PLAN WAS YET TO BE APPROVED AND STRUCTURE WAS ALSO NOT IN EXISTENCE H ENCE, TRANSACTIONS OF BOOKING OF FLAT IS ONLY A TENTATIVE ALLOTMENT LETTER AND THE SAME COULD NOT BE TERMED AS TRANSFER OF ANY CAPITAL ASSET FOR AVAILING OF THE CLAIM U/S 54F OF THE INCOME TAX ACT, 1961 .' (VI) THE APPELLANT PRAYS THAT THE ORDER OF CIT (A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 3. A T THE OUTSET, IT TRANSPIRES THAT THE TAX EFFECT OF THE RELIEF GRANTED BY THE LD. C IT(A) IS BELOW RS.20 LACS, AS PER THE LIMIT FIXED CBDT FOR FILING THE APP EAL BEFORE THE ITAT VIDE CBDT CIRCULAR NO. 3/2018, F. NO. 279/MISC.142/2007 - ITJ (PT) DATED 11TH JULY, 2018 ISSUED BY CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA. 4. WE HAVE GONE THROUGH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THE GROUNDS OF APPEAL. IT HAS BEEN FOUND THAT THE TAX EFFECT IN THE APPEAL IS LESS THAN RS. 20 LACS. 3 ITA NO. 5222/MUM/2017 & CO NO. 329/MUM/2018 5. THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) FAIRLY AGREE D TO THE ABOVE PROPOSITION THAT THIS APPEAL IS NOT MAINTAINABLE IN LIGHT OF THE ABOVE SAID CBDT CIRCULAR. HE ALSO DID NOT POINT THAT THESE APPEALS FALL IN THE EXCEPTIONS CARVED OUT IN THE ABOVE SAID CIRCULAR. 6. ACCORDINGLY, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 7 . THE GROUNDS OF APPEAL RAISED IN ASSESSEES CROSS OBJECTION READS AS UNDER: 1. ON ENQUIRY MADE BY THE A.O. IT WAS FOUND THAT BUILDING IN WHICH THE ASSESSEE HAS BOOKED THE FLAT WAS NOT PREPARED AT THE TIME OF BOOKING. THIS WAS ALSO A REASON IN DENYING DEDUCTION US.54 OF IT ACT 1961.ON THIS ISSUE ASSESSEE RELIED ON THE CASE OF 5/7N. HASMUKH N. GALA VS. ITO - 20(1)(3) MUMBAI ITAT WHEREIN IT WAS HELD THAT THERE WAS NO REQUIREMENT TO PRODUCE AN AGREEMENT WHEN LETTER OF ALLOTMENT ALONGWITH PROOF OF PAYMENT CLEARLY ESTABLISHED THAT ASSESSEE HAD INVESTED TOWARDS ACQUISITION OF A NEW RESIDENTIAL HOUSE. ALSO ASSESSEE IS ELIGIBLE FOR DEDUCTION US. 54 OF IT 1961 EVEN THOUGH THERE IS DELAY IN COMPLETION OF CONSTRUCTION BY BUILDER AND SUCH DELAY IS BEYOND CONTROL OF THE ASSESSEE. 2. THE RESPONDENT HAD SOLD HIS JOINTLY HELD RESIDENTIAL PROPERTY AND INVESTED THIS AMOUNT IN NEW RESIDENTIAL HOUSE PROPERTY WITHIN STIPULATED TIME AND THEREBY CLAIMED DEDUCTION US.54 OF IT ACT 1961. HOWEVER MEREL Y ON THE BASIS OF ACCOUNTING TREATMENT GIVEN BY MAGNUM CONSTRUCTION THE LEARNED ASSESSING OFFICER TREATED THE INVESTMENT MADE BY THE APPELLANT AS UNSECURED LOAN AND DENIED THE DEDUCTION UNDER SEC.54. ON THIS ISSUE ASSESSEE RELIED ON THE CASE OF RAJIVKUMAR N. BODAWAL SURAT VS. LTO - 9(3) SURAT AHMADABAD TRIBUNAL IN WHICH IT WAS CONCLUDED THAT NO ADDITION COULD BE MADE IN RESPECT OF DIFFERENCE ON ACCOUNT OF DIFFERENCE IN LEDGER ACCOUNT OR ON ACCOUNT OF DIFFERENCE IN ACCOUNTING ERRORS. 3. AGGRIEVED BY THE ORDE R PASSED BY THE ASSESSING OFFICER AND JOINT COMMISSIONER RESPONDENT APPLIED TO THE COMMISSIONER OF INCOME TAX [APPEALS). 4. CIT (APPEALS) HEARD THE CASE FILED AND BASED ON THE FACTS OF THE CASE PERMITTED THE RESPONDENT TO CLAIM BENEFITS U/S 54 OF THE INC OME TAX ACT. 8. THE CROSS OBJECTION BY THE ASSESSEE SUPPORTS THE ORDERS OF THE LD. CIT(A). SINCE WE HAVE ALREADY DISMISSED THE REVENUE'S APPEAL AGAINST THE LD.CIT(A)'S ORDER AS ABOVE, THIS CROSS OBJECTION BECOMES INFRUCTUOUS AND IS ACCORDINGLY DISMISSED AS SUCH. 4 ITA NO. 5222/MUM/2017 & CO NO. 329/MUM/2018 9. IN THE RESULT, THIS APPEAL BY THE REVENUE IS DISMISSED AND THE ASSESSEE'S CROSS OBJECTION IS D ISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 . 0 2 . 2 0 1 9 S D / - S D / - ( AMARJIT SINGH ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 7 . 0 2 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI