K D TYAGI HUF, NEW DELHI V. ITO, WARD- 60(2), NEW DELHI

ITA 6967/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3054 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 1 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: 21-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Assessee Lawyers: DR RAM SAMUJH
• 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.6967/DEL/2017 ASSESSMENT YEAR : 2013-14 K D TYAGI HUF, 26/802, EAST END APARTMENTS, MAYUR VIHAR, PHASE-I, NEW DELHI. VS. ITO, WARD 60(2), NEW DELHI. PAN : AAGHK8217D (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAM SAMUJH, ADV. 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 14.09.2017 OF CIT(A)- 19, NEW DELHI RELATING TO ASS ESSMENT YEAR 2013-14. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A HUF FILED ITS RETURN OF INCOME ON 15.09.2013 DECLARING TOTAL INCOME OF RS.7 3,400/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OB SERVED THAT THE ASSESSEE SOLD THE PROPERTY AT HOUSE NO.99, SECTOR- 10A, GURG AON FOR A CONSIDERATION OF RS.77,00,000/- WHICH RESULTED IN LONG TERM CAPITAL GAIN OF RS.57,94,043/-. ACCORDING TO THE ASSESSING OFFICER, THIS CAPITAL GA IN WAS TO BE INVESTED IN HOUSE PROPERTY OR DEPOSITED IN LONG TERM CAPITAL GAIN DEP OSIT ACCOUNT FOR CLAIMING EXEMPTION U/S 54 OF THE I.T. ACT, 1961. ON BEING Q UESTIONED BY THE ASSESSING 2 ITA NO.6967/DEL/2017 OFFICER, IT WAS SUBMITTED THAT THE ASSESSEE HAS INV ESTED IN A FLAT J-904 AT SECTOR 102/102A, GURGAON, WHICH WAS LATER SHIFTED TO E2002 AT GURGAON AND AN AMOUNT OF RS.35,00,000/- WAS INVESTED. ACCORDING T O THE ASSESSING OFFICER, BALANCE AMOUNT OF RS.22,94,043/- WAS NEITHER UTILIZ ED FOR PURCHASING HOUSE PROPERTY NOR DEPOSITED IN LONG TERM CAPITAL GAIN DE POSIT ACCOUNT AND THE SAME WAS LEFT IN THE SAVINGS BANK ACCOUNT OF THE ASSESSE E. ON BEING CONFRONTED BY THE ASSESSING OFFICER, THE ASSESSEE CAME FORWARD WI TH ANOTHER REPLY ACCORDING TO WHICH THE ASSESSEE-HUF PURCHASED ANOTHER PROPERT Y AT FLAT NO.203L, BLOCK F2A, POCKET 02, SECTOR 18B, DWARKA FROM MR. VAI BHAV TYAGI ON 31.05.2012 FOR RS.66,11,976/-. AS PER THE UNDERTAK ING, THE ASSESSEE HAS PAID RS.22,49,490/- TO FOUR DIFFERENT PERSONS (INCLUDING THE SELLER) ON BEHALF OF THE SELLER I.E. MR. VAIBHAV TYAGI. THE LAST INSTALLMEN T IS DUE FOR PAYMENT ON OR BEFORE 31/03/2016. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE ON ACCOUNT OF PUR CHASE OF SECOND PROPERTY IN ABSENCE OF SUFFICIENT DOCUMENTARY EVIDENCE. FURTHE R, HE HELD THAT SINCE THE ASSESSEE HAS ALREADY ONE PROPERTY THE ASSESSEE IS N OT ENTITLED TO CLAIM DEDUCTION U/S 54 AGAINST INVESTMENT IN SECOND RESIDENTIAL PRO PERTY. ACCORDING TO THE ASSESSING OFFICER, CLAIM OF DEDUCTION U/S 54 IN RES PECT OF INVESTMENT IN TWO RESIDENTIAL PROPERTIES AT TWO DIFFERENT PLACES IS N OT JUSTIFIED. HE ACCORDINGLY REJECTED THE CLAIM OF DEDUCTION U/S 54 OF THE I.T. ACT IN RESPECT OF THE SECOND HOUSE PROPERTY. 3 ITA NO.6967/DEL/2017 3. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER. 4. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S OF APPEAL :- 1. THAT LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS BY UPHOLDING THE ADDITION OF RS.22,94,043/- MADE U/S 54 OF THE INCOME TAX ACT , 1961. 2. THAT LD. AO AS WELL AS LD. CIT(A) FAILED APPRECI ATE THE LEGAL PROVISION IN PROPER PROSPECTIVE THAT THE AMENDMENT IN SECTION 54 REPLACING TERM A BY ONE HAS BEEN MADE EFFECTIVE FROM 01.04.2015 AND NOR FOR THE YEAR UNDER CONSIDERATION. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF GROUNDS OF THE APPEAL. 5. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THE ONLY ISSUE TO BE DECIDED IN THE INSTANT CASE IS REGARDING THE BENEFIT OF DEDUCTION U/S 54 IN RESPECT OF INVESTMENT IN SECOND HOUSE PROPERTY PRIOR TO THE AMENDMENT MAD E BY THE FINANCE (NO.2) ACT, 2014 AND THE EXPLANATION TO THE AMENDMENT IN C BDT CIRCULAR NO.01/2015 DATED 21.01.2015 WHERE IT HAS BEEN EXPLAINED THAT T HE AMENDMENT BY PARA 20.3 AND 20.4 THE WORD A RESIDENTIAL HOUSE AS MENTIONE D IN SECTION 54 HAS BEEN REPLACED WITH ONE RESIDENTIAL HOUSE AND SUCH AMEN DMENT IS PROSPECTIVE IN NATURE I.E. W.E.F. ASSESSMENT YEAR 2015-16. I FIND IN THE INSTANT CASE THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION U/S 54 IN RESPECT OF SECOND PROPERTY AMOUNTING TO RS.22,94,043/- ON TWO GROUNDS I.E. THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE REGARDING THE PAYMENT OF RS.22,94,043/- AND WITHOUT PREJUDICE TO THE ABOVE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 54 OF THE I.T. ACT IN RESPECT OF THE SECOND PROPERTY. I FIND THE ABOV E ACTION OF THE ASSESSING 4 ITA NO.6967/DEL/2017 OFFICER HAS BEEN UPHELD BY THE LD. CIT(A). A PERUS AL OF THE DOCUMENTS FILED BY THE ASSESSEE IN THE PAPER BOOK CONCLUSIVELY PROVED BEYOND DOUBT THE PAYMENT OF RS.23,49,490/- FOR PURCHASE OF SECOND FLAT AT DW ARKA. THEREFORE, THE FIRST GROUND ON WHICH THE ASSESSING OFFICER AND THE LD. C IT(A) HAVE REJECTED THE CLAIM OF DEDUCTION 54 OF THE I.T. ACT IS NOT PROPER . 6. NOW COMING TO THE SECOND ISSUE WHICH IS THE MAJO R ISSUE FOR WHICH THE ASSESSEE HAS BEEN DENIED BENEFIT OF DEDUCTION U/S 5 4 IS CONCERNED, I FIND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & A NR. VS. D. ANANDA BASAPPA REPORTED IN 309 ITR 329 HAS HELD THAT THE E XPRESSION A RESIDENTIAL HOUSE SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGU LAR NUMBER, ASSESSEE HAVING PURCHASED TWO RESIDENTIAL FLATS, EXEMPTION U/S 54 W AS AVAILABLE, MORE SO AS THESE FLATS ARE SITUATED SIDE BY SIDE AND THE BUILD ER HAS EFFECTED MODIFICATION OF THE FLATS TO MAKE IT AS ONE UNIT. 7. 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. 8. 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 5 ITA NO.6967/DEL/2017 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. 9. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF P REM 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. 10. 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. 11. 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. 6 ITA NO.6967/DEL/2017 12. IN VIEW OF THE ABOVE DECISIONS, THE ASSESSEE IN THE INSTANT CASE IN MY OPINION IS ENTITLED TO DEDUCTION U/S 54 OF THE I.T. ACT FOR IMPUGNED ASSESSMENT YEAR FOR BOTH FLATS. AS MENTIONED EARLIER THE AMEN DMENT U/S 54 RESTRICTED THE DEDUCTION IN RESPECT OF ONLY ONE HOUSE HAS BEEN MAD E EFFECTIVE FROM 01.04.2015 AND, THEREFORE, THE SAID AMENDMENT HAS N O APPLICATION TO THE INSTANT CASE BEING PROSPECTIVE IN NATURE. IN THIS VIEW OF THE MATTER, I SET-ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S 54 OF THE I.T. ACT IN RESPECT OF THE SECOND PROPERTY AMOUNTING TO RS.22,94,043/-. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 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