Pradyumn Kumar Awasthi, New Delhi V. ITO, Ward- 66(3), New Delhi

ITA 6919/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3045 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 17-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Keywords: Salary income; Opportunity of being heard
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.6919/DEL/2017 ASSESSMENT YEAR : 2013-14 PRADYUMN KUMAR AWASTHI, 463, GANPATI APPT. PLOT 6, SECTOR 9, DWARKA, NEW DELHI. VS. ITO, WARD- 66(3), NEW DELHI. PAN : AAAPA3593L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAUTAM JAIN, CA SHRI LALIT MOHAN, CA DEPARTMENT BY : MS. RANU MUKHERJEE, SR.DR DATE OF HEARING : 17-01-2018 DATE OF PRONOUNCEMENT : 23-03-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 11.08.2017 OF CIT(A)- 21, NEW DELHI RELATING TO ASS ESSMENT YEAR 2013-14. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND DERIVES INCOME FROM SALARY FROM INDIAN AIR FORCE, I NCOME FROM HOUSE PROPERTY, INCOME FROM CAPITAL GAIN AND INCOME FROM OTHER SOUR CES (INTEREST INCOME). HE FILED HIS RETURN OF INCOME ON 30.07.2013 DECLARING TAXABLE INCOME OF RS11,17,080/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SOLD A RESID ENTIAL PROPERTY BEARING FLAT NO.B-106, PLOT NO.4, SECTOR-2, DWARKA, NEW DELHI ON WHICH CAPITAL GAIN OF 2 ITA NO.6919/DEL/2017 RS.66,08,430/- HAS ACCRUED. THE ASSESSEE CLAIMED D EDUCTION U/S 54 OF THE I.T. ACT ON THE FOLLOWING ITEMS :- (I) INVESTMENT IN APARTMENT NO.E-403, CAPITAL GATEW AY, SECTOR 111, GURGAON (BUILD BY TASHEE LAND DEVELOPER S PVT. LTD.) RS.24,05,817/- (II) INVESTMENT IN APARTMENT NO.MW TW-B05/0704, WOODSHINE TOWER, SECTOR 107, DWARKA EXPRESSWAY, GURGAON, HARYANA (BUILD BY M3M INDIA LTD.) RS.22,76,338/- (III) AMOUNT DEPOSITED IN CAPITAL GAIN ACCOUNT SCHE ME, BEFORE DUE DATE OF FILING OF RETURN OF INCOME, WHICH WAS - UTILIZED FOR INVESTMENT IN RESIDENTIAL PROPERTY OF TASHEE BUILDER 15,54,014/- - INVESTMENT IN RESIDENTIAL PROPERTY AT NOIDA 8,27,840/- RS.23,27,000/- 3. THE ASSESSING OFFICER ALLOWED THE CLAIM OF DEDUC TION OF RS.39,59,821/- BEING INVESTMENT IN TASHEE PROJECT (I.E. 24,05,817 + 15,54,014). HE, HOWEVER, REJECTED THE CLAIM OF DEDUCTION ON ACCOUNT OF INVES TMENT OF RS.22,76,328/- IN RESPECT OF PROPERTY AT WOODSHINE TOWER ON THE GROUN D THAT THE EXEMPTION U/S 54 OF THE I.T. ACT IS ALLOWABLE IN RESPECT OF ONE P ROPERTY ONLY AND THE ASSESSEE IS NOT ENTITLED FOR INVESTMENT IN THE SECOND PROPERTY FOR CLAIMING DEDUCTION U/S 54 OF THE I.T. ACT. SIMILARLY, THE AMOUNT OF RS.8,27, 840/- UTILIZED FROM THE CAPITAL GAIN ACCOUNT FOR MAKING PAYMENT IN RESPECT OF THIRD PROPERTY I.E. M/S MASCOT SOHO HOMES PVT. LTD. WAS ALSO NOT ALLOWED BY THE AS SESSING OFFICER. THE ASSESSING OFFICER ACCORDINGLY DETERMINED THE TAXABL E INCOME OF THE ASSESSEE AT RS.46,42,388/- AS AGAINST RETURNED INCOME OF RS.11, 17,080/-. 4. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF DEDUCTION/EXEMPTION U/S 54 IN RESPECT OF THE RESIDENTIAL 3 ITA NO.6919/DEL/2017 PROPERTY AT WOODSHINE TOWER, SECTOR 107, DWARKA EXP RESSWAY, GURGAON. HE ALSO SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER ON ACCOUNT OF INVESTMENT OF RS.8,27,840/- IN THE THIRD PROPERTY O UT OF WITHDRAWAL FROM THE CAPITAL GAIN. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- THERE ARE THREE ISSUES INVOLVED IN THE CASE WITH R ESPECT TO SECTION 54 OF THE IT ACT 1961 AS FOLLOWS:- (A) ISSUE I - THE CIT WAS NOT JUSTIFIED IN DISALLOWANCE OF THE INVESTMENT MADE IN TWO RESIDENTIAL PROPERTIES ON THE GROUND THAT BOTH ARE NOT SITUATED IN THE SAME BUILDING AND ARE AWAY FROM EACH OTHER. (B) ISSUE II - THE CIT WAS NOT JUSTIFIED IN DISALLOWANCE OF THE AMOUNT WITHDRAWN FROM CAPITAL GAIN ACCOUNT FOR PAYMENT FOR THE RESID ENTIAL PURPOSE TO MASCOT SOHO HOMES PVT LTD. (C) ISSUE III - NEW FACTS AND GROUND REALIZED NOW, WHICH AS IT I S QUALIFY FOR ADMITTING THE INVESTMENT ALREADY MADE IN EXCESS TO THE CAPITAL GAIN AMOUNT IN THE 'UNDER CONSTRUCTION' FIRST HOUSE ITSELF WITHIN THE STATUTORY PERIOD OF THREE YEARS FROM THE DATE OF SALE, IN TERMS OF SECTION 54 OF THE IT ACT 1961, ARE REQUESTED TO BE ADMITTED. (I) THE CALCULATED CAPITAL GAIN BY THE ITO AMOUNTS TO RS 66,08,430/- WHEREAS I HAVE ALREADY INVESTED HIGHER AMOUNT OF RS . 68,52,611/- UPTO DEC 2015 IN THE 'UNDER CONSTRUCTION FIRST HOUSE' (CAPIT AL GATEWAY SECTOR 111, GURGAON, BY TASHEE BUILDERS) (ANNEXURE-10), WITHIN THE STATUTORY PERIOD OF THREE YEARS FROM 06 DEE 2012 I.E. THE DATE OF SALE OF ORIGINAL ASSET IN TERMS OF SECTION 54 OF IT ACT 1961 AND THUS AS IT IS MEETS T HE CONDITION OF SECTION 54 TOWARDS INVESTMENT IN UNDER CONSTRUCTION HOUSE. SIN CE COMPLETE AMOUNT OF CAPITAL GAIN IS ALREADY INVESTED IN TERMS OF SECTIO N 54 IN UNDER CONSTRUCTION HOUSE WITHIN THE STATUTORY PERIOD OF THREE YEARS, N IL TAX LIABILITY IS GENERATED AND ADMISSIBLE. (II) THIS FACT HAS HOWEVER, COME TO THE NOTICE ONL Y RECENTLY ON REVIEW, AFTER RECEIVING THE ORDERS OF CIT(A), THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DID NOT BRING IT ON RECORD EITHER BEFORE T HE AO OR BEFORE CIT(A), THAT THE ASSESSEE HAD ALREADY MADE TOTAL INVESTMENT OF R S. 68,52,611/- UPTO 10 AUG 2015, WELL WITHIN THE STATUTORY PERIOD OF THREE YEA RS FROM THE DATE OF SALE OF MY EARLIER RESIDENTIAL PROPERTY ON WHICH EXEMPTION FROM CAPITAL GAIN WAS CLAIMED, AS AGAINST THE CAPITAL GAIN AMOUNT OF RS. 66,07,830/- WORKED OUT BY ITO. (III) IT IS REQUESTED THAT IN LIGHT OF THIS FACT RE ALIZED NOW, THE DETAILS OF THE 4 ITA NO.6919/DEL/2017 PAYMENTS OF RS. 68,52,611/- TOWARDS THE FIRST HOUSE BE PERMITTED FOR ADMISSION AND THE TAX LIABILITY ASKED BY THE ITO THEREFORE BE CANCELLED. 6. I HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH TH E SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST ISSUE THAT HAS TO BE DECIDED IN THE GROUND OF APPEAL IS REGARDING THE ALLOWABILITY OF DEDUCTIO N U/S 54 OF THE I.T. ACT IN RESPECT OF THE INVESTMENT IN THE SECOND PROPERTY. I FIND THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS INVESTED THE LONG TERM CAPITAL GAIN ON ACCOUNT OF PURCHASE OF TWO HOUSE PROPERTIES OUT OF WHICH THE A SSESSING OFFICER ALLOWED THE DEDUCTION U/S 54 OF THE I.T. ACT IN RESPECT OF PROPERTY AMOUNTING TO RS.24,05,817/- PLUS RS.15,54,014/- DRAWN OUT CAPITA L GAIN ACCOUNT SCHEME. HOWEVER, HE REJECTED THE CLAIM OF DEDUCTION U/S 54 IN RESPECT OF THE INVESTMENT IN M3M PROPERTY AT DWARKA EXPRESSWAY AMOUNTING TO R S.22,76,328/- AND THE WITHDRAWAL FROM CAPITAL GAINS SCHEME OF RS.8,27,840 /-. I FIND THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER FOR WHIC H THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. IT IS THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 54 OF TH E I.T. ACT VIDE FINANCE (NO.2) ACT, 2014 AND THE EXPLANATION TO THE AMENDME NT VIDE CBDT CIRCULAR NO.01/2015 DATED 21.01.20185 WHERE IT HAS BEEN EXPL AINED THAT THE AMENDMENT BY PARA 20.3 AND 20.4 THE WORD A RESIDENTIAL HOUS E AS MENTIONED IN SECTION 54 HAS BEEN REPLACED WITH ONE RESIDENTIAL HOUSE AND SUCH AMENDMENT IS PROSPECTIVE IN NATURE W.E.F. ASSESSMENT YEAR 2015-1 6. IT IS ALSO HIS SUBMISSION THAT THE EXPRESSION A RESIDENTIAL HOUSE SHOULD NO T BE UNDERSTOOD TO INDICATE A 5 ITA NO.6919/DEL/2017 SINGULAR NUMBER, THE ASSESSEE HAVING PURCHASED TWO RESIDENTIAL FLATS, EXEMPTION U/S 54 IS AVAILABLE FOR BOTH THE PROPERTIES. 7. I FIND MERIT IN THE ABOVE ARGUMENT ADVANCED BY T HE LD. COUNSEL FOR THE ASSESSEE. I FIND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR VS. D. ANANDA BASAPPA REPORTED IN 309 ITR 329 HAS HELD THAT EXPRESSION A RESIDENTIAL HOUSE SHOULD NOT BE UNDERSTOOD TO INDI CATE A SINGULAR NUMBER, ASSESSEE HAVING PURCHASED TWO RESIDENTIAL FLATS, EX EMPTION U/S 54 WAS AVAILABLE, MORE SO AS THESE FLATS ARE SITUATED SIDE BY SIDE AN D THE BUILDER HAS EFFECTED MODIFICATION OF THE FLATS TO MAKE IT AS ONE UNIT. 8. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. SMT. K.G. RUKMINIAMMA REPORTED IN 331 ITR 211 HAS HELD T HAT EXPRESSION A RESIDENTIAL HOUSE USED IN SECTION 54 SHOULD BE UND ERSTOOD IN A SENSE THAT THE BUILDING SHOULD BE OF RESIDENTIAL NATURE AND A SH OULD NOT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER, ASSESSEE WAS ENTITLED T O CLAIM EXEMPTION U/S 54 IN RESPECT OF FOUR RESIDENTIAL FLATS ACQUIRED BY HER. 9. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GITA DUGGAL REPORTED IN 357 ITR 153 HAS HELD THAT SECTION 54/54 F REQUIRES ASSESSEE TO ACQUIRE A RESIDENTIAL HOUSE AND SO LONG AS HE ACQ UIRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUC H A MANNER AS TO CONSIST OF SEVERAL UNITS WHICH CAN, IF NEED ARISES, BE CONVENI ENTLY AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, REQUIREMENT OF SECTION SHOULD BE TAKE TO HAVE BEEN SATISFIED. 6 ITA NO.6919/DEL/2017 10. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF PREM PRAKASH BHUTANI VS. ACIT REPORTED IN 110 TTJ 440 HAS HELD THAT ASSESSEE HAVING ACQUIRED THREE FLATS OUT OF CAPITAL GAINS AND USING THEM FOR RESIDENCE O F HIS FAMILY, WHICH INCLUDED HIS SON AND WIDOWED DAUGHTER, WAS ENTITLED TO EXEMP TION UNDER SECTION 54 IN RESPECT OF ALL THE THREE OF THEM. 11. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CI T VS. V.R. KARPAGAM REPORTED IN 373 ITR 127 HAS HELD THAT PRIOR TO AMEN DMENT OF SECTION 54F BY FINANCE (NO.2) ACT, 2014 W.E.F. FROM 01.04.2015, WI TH REGARD TO WORD A, A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESI DENTIAL UNITS, THUS WHERE UNDER THE DEVELOPMENT AGREEMENT ASSESSEE WAS ENTITL ED TO RECEIVE CERTAIN BUILT- UP AREA, WHICH GOT TRANSLATED INTO FIVE FLATS, EXEM PTION U/S 54F IN RESPECT OF ALL FIVE FLATS IN A MULTI-STOREY CONSTRUCTION WOULD BE AVAILABLE. 12. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CA SE OF CIT VS. SYED ALI ADIL REPORTED IN 352 ITR 418 HAS HELD THAT DEDUCTIO N U/S 54 IS ALLOWABLE WITH RESPECT TO RESIDENTIAL HOUSE CONSISTING A SEVERAL I NDEPENDENT UNITS. 13. IN VIEW OF THE VARIOUS DECISIONS RELIED ON BY T HE LD. COUNSEL FOR THE ASSESSEE, THE RATIO OF WHICH HAS ALREADY BEEN DISCU SSED ABOVE, THE ASSESSEE IN MY OPINION IS ENTITLED TO DEDUCTION U/S 54 FOR THE SECOND HOUSE BEING PRIOR TO ASSESSMENT YEAR 2015-16. 14. SO FAR AS THE SECOND ISSUE RELATING TO INVESTME NT OF RS.8,27,840/- BY THE ASSESSEE IN THE THIRD PROPERTY IS CONCERNED, THE FA CTS ARE NOT COMING OUT VERY CLEARLY FROM ORDER OF THE ASSESSING OFFICER AND LD. CIT(A). I, THEREFORE, RESTORE 7 ITA NO.6919/DEL/2017 THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO DECIDE THE ISSUE AFRESH AS PER FACT AND LAW AFTER GIVING DUE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 15. SO FAR AS THE THIRD ISSUE IS CONCERNED, THE FAC TS ARE ALSO NOT COMING OUT VERY CLEARLY FROM THE ORDER OF THE ASSESSING OFFICE R AS WELL AS THE LD. CIT(A). THEREFORE, THE SAME IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY AND ADJUDICATE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD MARCH, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 23-03-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI