SHALINI ANAND MURTHY, MUMBAI V. ASST CIT 12(2), MUMBAI

ITA 535/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93153 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 21-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: RONAK G DOSHI
• Section: 143(3); 54F

Judgement Text

SMT. SHALINI ANAND MURTHY ITA NO. 535 /M/201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBERITA ITA NO. : 535 /MUM/20 1 3 ( ASSESSMENT YEAR: 2008 - 09 ) SMT. SHALINI ANAND MURTHY, EASTER ENGINEERING COMPANY, 2 ND FLOOR, JEEVAN UDYOG, 278, DR A B ROAD, FORT, MUMBAI - 400 001 .: PAN: ABRPM 4292 N VS ASST CIT 12(2), 1 ST FLOOR, ROOM NO. 123, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RONAK G DOSHI RESPONDENT BY : SMT N V NADKARNI /DATE OF HEARING : 28 - 0 4 - 2 015 / DATE OF PRONOUNCEMENT : 08 - 07 - 2015 ORDER PER AMIT SHUKLA , J.M. : THE A FORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 1 6. 1 0.201 2 PASSED BY CIT(A) - 24 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 200 8 - 09 . THE ASSESSEE IN ITS GROUNDS OF APPEAL HAS RAISED FOLLOWING GROUNDS: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO IN DISALLOWING THE EXEMPTION CLAIMED U/S 5 4F OF THE INCOME TAX ACT, 1961 (THE ACT). 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A) FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT THE APPELLANT DID NOT OWN MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSE T, ON DATE OF SMT. SHALINI ANAND MURTHY ITA NO. 535 /M/201 3 2 TRANSFER OF ORIGINAL ASSET, AND IS ACCORDINGLY ENTITLED TO EXEMPTION U/S 54F OF THE ACT. 3 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A) FAILED TO APPRECIATE THAT MERELY IF THE APPELLANT IS THE OWNER THEREOF A ND INCOME FROM LEASE OF COMMERCIAL PROPERTY IS OFFERED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY, IT DOES NOT TANTAMOUNT TO BEING A RESIDENTIAL HOUSE 4 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A) FAILED TO APPR ECIATE AND OUGHT TO HAVE HELD THAT THE SUPREME COURT DECISION IN THE CASE OF GOETZE INDIA (284 ITR 323) HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSES S EE SUBMITTED THAT GROUND NO. 4 IS NOT PRESSED A ND ACCORDINGLY , THE SAME IS TREATED AS DISMISSED . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSES S EE HAD FILED THE RETURN OF INCOME ON 28.09.2008 DECLARING TOTAL INCOME OF RS. 1,02,45,230/ - WHEREIN SHE HAD SHOWN INCOME FROM CAPITAL GAIN FROM SALE OF SHARES OF LUWA INDIA PRIVATE LTD AND MADE A CLAIM OF EXEMPTION U/S 54EC IN THE FOLLOWING MANNER: DATE OF TRANSFER 3 RD APRIL 2007 SALE CONSIDERATION 5,55,00,000 ACQUISITION DETAILS FINANCIAL YEAR COST INDEXED COST 1993 - 94 5,00,000 11,29,098 NET GAIN 5,43,70,902 EXEMPTION CLAIMED 54EC: INVESTMENT IN BONDS RS. 3,50,00,000 TAXABLE CAPITAL GAINS RS. 1,93,70,902 4. THE LD. AO, HOWEVER DENIED THE CLAIM OF EXEMPTION U/S 54EC ON THE GROUND THAT THE ASSESSEE HAS INVESTED A SUM OF RS. SMT. SHALINI ANAND MURTHY ITA NO. 535 /M/201 3 3 3,50,00,00 0/ - IN STATE BANK OF INDIA , CAPITAL GAIN ACCOUNT INSTEAD OF LONG - TERM SPECIFIED ASSET AS PRESCRIBED U/S 54EC. FURTHER, HE HAS ALSO DENIED THE CLAIM OF EXEMPTION US/ 54F AS THE ASSESSEE IS THE OWNER OF TWO RESIDENTIAL PROPERTIES, WHICH ARE GIVEN ON RENT AND THE ASSESSEE HAD SHOWING INCOME FROM SUCH PROPERTIES AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY, HE TAXED THE ENTIRE LONG - TERM - CAPITAL GAIN AT RS. 5,43,70,902 / - . 5. BEFORE THE LD. CIT(A), THE ASSES S EE HAS SUBMITTED THAT THE ASSESSEE IS OWNER OF TWO P ROPERTIES, NAMELY: I. FLAT NO. C - 006, LAVENDER BLOCK, RAHEJA ENCLAVE, 236 RACE COURSE ROAD, COIMBATORE - 641 002 (PROPERTY I) II. FLAT NO. 1222, 12 TH FLOOR, ANSAL TOWER, 38, NEHRU PLACE, NEW DELHI - 110 019 (PROPERTY II) IT WAS SUBMITTED THAT PR OPERTY NO. I WAS A RESIDENTIAL PROPERTY, WHEREAS, THE PROPERTY AT NEW DELHI IN ANSAL TOWER, NEHRU PLACE, WAS PURELY A COMMERCIAL PROPERTY. THE DETAILS OF ACQUISITION OF THE COMMERCIAL PROPERTY WAS ALSO GIVEN THE DETAIL OF WHICH HAS BEEN INCORPORATED BY THE CIT(A) FROM PAGES 2 TO 4 OF THE APPELLATE ORDER. IT WAS CANDIDLY SUBMITTED THAT THE 2 ND PROPERTY WAS NOT A RESIDENTIAL PROPERTY, AS ALLEGED BY THE AO , BUT A COMMERCIAL PROPERTY WHICH IS CLEAR FROM CERTIFICATE ISSUED FROM THE AGENCY, WHICH HAS BEEN APPOINT ED FOR THE MAINTENANCE OF THE SAID PROPERTY AND ALSO FROM THE PROPERTY TAX RETURN FILED BY THE ASSESSEE. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND IN RESPONSE TO WHICH THE AO VIDE REMAND REPORT DATED 16.03.2012, SUBMITTED THAT THE ASSESSE E HAD NOT MADE ANY PLEA ON DEDUCTION U/S 54F AND NOTHING HAS BEEN BROUGHT ON RECORD THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE BEFORE THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TO SUBSTANTIATE OR MADE A CLAIM U/S 54F . SUCH AN ADDITIONAL EV IDENCE CANNOT BE ADMITTED. IN REPLY TO THE REMAND REPORT, THE ASSESSEE SUBMITTED THAT IT HAD MADE A BONA FIDE CLAIM OF EXEMPTION U/S 54EC ON INVESTMENT IN THE BONDS, HOWEVER, SUCH A CLAIM OF EXEMPTION WAS AN INADVERTENT SMT. SHALINI ANAND MURTHY ITA NO. 535 /M/201 3 4 MISTAKE AND THEREFORE, THE CORRECT C LAIM U/S 54F WAS MADE BEC A U S E THE ASSESSEE HAD USED THE AMOUNT FOR THE PURCHASE OF A RESIDENTIAL HOUSE AND SUCH A CLAIM SHOULD NOT BE DENIED M ERE LY ON THE TECHNICAL GROUND. ASSESSEES DETAILED SUBMISSION IN THIS REGARD HAS BEEN INCORPORATED FR O M PAGES 8 TO 11 OF THE LD. CIT(A)S APPELLATE ORDER. 6. THE LD. CIT(A) AFTER NOTING DOWN THE ENTIRE FACTS, OBSERVED THAT SO FAR AS CLAIM OF 54EC IS CONCERNED, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION , AS THE ASSESSEE HA D NOT INVESTED IN SPECIFIED BONDS HENCE, THE AO HAS RIGHTLY DISALLOWED THE CLAIM U/S 54EC. REGARDING CLAIM OF SECTION 54F, HE OBSERVED THAT ASSESSEE DID NOT CLAIM SUCH AN EXEMPTION EARLIER BUT HA S MADE CLA IM SUBSEQUENTLY. HOWEVER, ON MERITS, HE HELD THAT EXEMPTION U/S 54F IS ALLOWABLE ONLY IF THE AS SESSEE DOES NOT OWN MORE THAN ONE RESIDENTIAL HOUSE AS A NEW ASS E T ON THE DATE OF TRANSFER OF THE ASSET. IN THE CASE OF THE ASSES S EE, THE ASSESSEE HAS TWO RESIDENTIAL HOUSES ON THE DATE OF THE TRANSFER AND INCOME FROM BOTH HAVE BEEN DECLARED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HERE, SO FAR AS ASSESSEES ARGUMENT THAT ONE PROPERTY WAS FOR COMMERCIAL PURPOSE CANNOT BE ACCEPTED , BECAUSE RESIDENTIAL HOUSE HA S NOT BEEN DE F I N ED IN THE ACT AND I N SUCH A CIRCUMSTANCE , IT HAS TO BE SEEN WHETHER THE PROPERT Y WAS OWNED BY THE ASSESSEE AS ON THE DATE OF TRANSFER AND INCOME DERIVED FROM IT IS DECLARED AS INCOME FROM HOUSE PROPERTY . THEREFORE, IT I S IR RELEVANT WHETHER THE PROPERTY WAS USED FOR COMMERCIAL PURPOSE OR FOR RESIDENTIAL PURPOSE . W HAT IS RELEVANT IS WHETHER THE ASSESSEE WAS THE OWNER OF THE PROPERTY AND WHETHER HE HAS DECLARED THE INCOME AS INCOME FROM HOUSE PROPERTY . ON THIS GROUND , HE DENIED THE CLAIM OF EXEMPTION U/S 54F ALSO. 7 . BEFORE US, THE LD. COUNSEL AFTER REITERATING THE ENTIRE FACTS, REL IED UPON THE DECISION OF ITAT HYDERABAD BENCH IN THE CASE OF SMT. UMADEVI VS CIT IN ITA NO. 886/HYD/2010 AND OTHER SMT. SHALINI ANAND MURTHY ITA NO. 535 /M/201 3 5 DECISIONS OF THE HIGH COURT, WHEREIN, IT HAS BEEN HELD THAT RESIDENTIAL HOUSE IS DIFFERENT FROM USED FOR COMMERCIAL PURPOSE. 9 . ON THE OTHER HAND, LD. DR HAS STRONGLY RELIED UPON THE ORDER OF THE CIT(A). 9 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE ONLY DISPUTE BEFORE US IS WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 54F OR NOT , AS THE LD. CIT(A) HAS FINALLY DECIDED THE CLAIM OF EXEMPTION U/S 54F ON MERITS. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS INVESTED AN AMOUNT OF RS. 3,50,00,000/ - WHICH WAS DEPOSITED IN THE STATE BANK OF INDIA CAPITAL GAIN A/C, WHICH WAS SUBSEQUENTLY UTILIZED FOR PURCHASE OF A RESIDENTIAL HOUSE. THE CLAIM OF THE ASSESSEE HAS BEEN DENIED BY THE CIT(A) ON THE GROUND THAT THE ASSES S EE OWN S TWO RESIDENTIAL HOUSES ON THE DATE OF TRANSFER AND THE INCOME FROM BOTH THE PROPERTIES WERE SHOWN AS INCOME FROM HO USE PROPERTY. THE ASSESSEES CASE HAS BEEN THAT THE PROPERTY AT ANSAL TOWER, NEHRU PLACE, NEW DELHI WAS PURELY A COMMERCIAL PROPERTY, THEREFORE, IT CANNOT BE HELD THAT IT WAS AN ORIGINAL HOUSE. THOUGH RESIDENTIAL HOUSE HA S NOT BEEN DE F I N ED IN THE ACT, BUT , IT IS CLEARLY EVIDENT THAT THE INTENTION OF THE LEGISLATURE IN SECTION 54F THE RESIDENTIAL HOUSE AS THE HOUSE FOR DWELLING OR FOR RESIDING PURPOSE. COMMERCIAL PROPERTY IS GENERALLY USED PURELY FOR COMMERCIAL PURPOSE AND THOUGH INCOME FROM SUCH PROPERTY MAY BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY BUT THAT ITSELF DOES NOT MEAN THAT SUCH A COMMERCIAL PROPERTY SHOULD BE TREATED AS A RESIDENTIAL HOUSE WITHIN THE MEANING OF SECTION 54F. INCOME FROM HOUSE PROPERTY IS NOT A CRITERIA TO DETERMINE TH E CHARACTER OF THE PR O P E RTY AND THAT IT SHOULD BE PURELY FOR RESIDENTIAL PURPOSE. IT HAS BEEN BROUGHT ON RECORD BEFORE THE CIT(A) AND IT I S ALSO NOT DISPUTED THAT THE PROPERTY AT NEW DELHI WAS PURELY A COMMERCIAL PROPERTY AND IT WAS NOT AND CANNOT BE US ED FOR THE RESIDENTIAL PURPOSE. THUS, WE HOLD THAT THE PROPERTY IN NEW DELHI WHICH IS COMMERCIAL PROPERTY IS DIFFERENT FROM A SMT. SHALINI ANAND MURTHY ITA NO. 535 /M/201 3 6 RESIDENTIAL HOUSE AND THEREFORE , IT CANNOT BE TREATED AS OR RECKONED AS RESIDENTIAL HOUSE. HENCE ON THIS GROUND THE CLAIM OF THE E XEMPTION U/S 54F CANNOT BE DENIED. ACCORDINGLY, THE AO IS DIRECTED TO EXAMINE THE CLAIM OF SECTION 54F IN RESPECT OF HOUSE PROPERTY PURCHASED FOR THE RESIDENTIAL PURPOSE AND HE SHOULD NOT INCLUDE THE PROPERTY AT ANSAL TOWER, NEHRU PLACE, NEW DELHI AS A RES IDENTIAL HOUSE AS THE SAME IS A COMMERCIAL PROPERTY. 9. WITH THIS DIRECTION, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JU LY , 2015. SD/ - SD/ - ( . . ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 8 TH JU LY , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 24 , MUMBAI 4 ) THE CIT 12 , MUMBAI . 5 ) , , / THE D.R. E BENCH , MUMBAI. 6 ) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS