RANJANA RAMCHANDRA DESHMUKH, THANE V. ITO WARD - 3(2), THANE, THANE

ITA 697/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2657 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: MOTI B TOTLANI
• Keywords: Capital asset
• Section: 143(3); 54F; 54

Judgement Text

P A G E | 1 ITA NO. 697/MUM/2017 A.Y. 2013-14 SMT. RANJANA R. DESHMUKH VS. ITO, ASHAR I.T PARK IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 697/MUM/2017 (ASSESSMENT YEAR: 2013-14) SMT. RANJANA R. DESHMUKH A-801, FAIRFIELD, LODHA LUXURIA, NEAR MAJIWADE FLYOVER, THANE 400601 VS. INCOME TAX OFFICE, ASHAR I.T. PARK, AMBILA NAGAR, WAGALE ESTATE, THANE-400 604, PAN AGJPD9607R APPELLANT RESPONDENT APPELLANT BY: SHRI MOTI B. TOTLANI, A.R RESPONDENT BY: SHRI CHAITANYA ANJARIA, D.R DATE OF HEARING: 31.10.2018 DATE OF PRONOUNCEMENT: 09.11.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT(A)-2, MUMBAI, DATED 07.12.2016, W HICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 30.11.2015. THE ASSES SEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING EFFEC TIVE GROUNDS OF APPEAL: (1) AS REGARDS ASSESSMENT BEING NULL AND VOID THAT THE LEARNED A.O. ERRED IN PASSING AN ASSESSMEN T ORDER U/S.143(3) WITHOUT ASSUMING PROPER JURISDICTION BY HAVING FAILED TO ISSUE STATUTORY NOTICE U/S. 143(2) OF THE I.T. ACT BEFORE PROCEEDING WITH ASSESSMENT. 2) AS REGARDS DENIAL OF DEDUCTION U/S.54 OF THE I. T. ACT A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DENYING THE DEDUCTION U/S. 54 OF THE ACT WHEN THE APPELLANT HAD COMPLIED WITH ALL THE REQUIR EMENTS OF THE SAID SECTION. P A G E | 2 ITA NO. 697/MUM/2017 A.Y. 2013-14 SMT. RANJANA R. DESHMUKH VS. ITO, ASHAR I.T PARK B) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE APPELLANT HAD PURCHASED NEW ASSET (RESIDENTIAL PROPERTY) WITHIN T HE TIME LINE SPECIFIED BY THE SECTION 54 OF THE I.T. ACT. C) THAT THE LEARNED CIT (A) FAILED TO REALIZE THAT THE APPELLANT HAD ENTERED INTO IN AN AGREEMENT ON 29-01-2009 BY VIRTU E OF WHICH, SHE ACQUIRED 'VESTED RIGHTS TO PURCHASE RESIDENTIAL PROPERTY' IN THE PROPOSED CONSTRUCTION AND NOT JUST 'NEW PROP ERTY' AS ALLEGED BY THE LEARNED CIT (A) WHEN IN FACT ON 29.0 1.2009 'THE NEW PROPERTY' WAS NOT IN EXISTENCE. D) THAT THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THE APPELLANT GOT POSSESSION OF NEW RESIDENTIAL PROPERTY ON 18-05-201 2 WHICH IS WITHIN THE PERIOD OF ONE YEAR PRIOR TO THE DATE OF TRANSFER (28-03-2013) OF THE OLD RESIDENTIAL PROPERTY. ( 3) AS REGARDS NON OBSERVANCE OF PRINCIPLES OF NATU RAL JUSTICE A) THAT THE LEARNED CIT (A) DISMISSED THE APPEAL OF TH E APPELLANT RELYING ON A PRECEDENT OF APEX COURT WHICH IS DISTINGUISHABLE NO T ONLY ON FACTS BUT ALSO IN LAW AND HAS NO BEARING IN THE CASE OF THE APPELL ANT AS THE FACTS ARE TOTALLY DIFFERENT. B) THAT THE LEARNED CIT (A) FAILED TO GIVE AN OPPORTUN ITY TO THE APPELLANT TO DISTINGUISH THE PRECEDENT AND UNILATERALLY RELIED O N THE SAME AND DISMISSED THE APPEAL TO THE DETRIMENT OF THE APPELL ANT RESULTING IN MISCARRIAGE OF JUSTICE. (4) CONSEQUENTIAL RELIEFS THE APPELLANT PRAYS THAT INTEREST LEVIED U/S.234A/ 234B/ 234C AS CHARGED BY A.O., MAY BE ORDERED TO BE DELETED AS CONSEQUENT IAL RELIEF. 2. BRIEFLY STATED, THE ASSESSEE HAD E-FILED HER RET URN OF INCOME FOR A.Y. 2013-14 ON 01.08.2013, DECLARING INCOME OF RS.4,65, 538/-. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC.143(2) OF THE ACT. 3. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IT W AS OBSERVED BY THE A.O THAT THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERT Y FOR A CONSIDERATION OF RS.74 LAC ON 28.03.2013. THE LONG TERM CAPITAL GAI N (FOR SHORT LTCG) OF RS.49,89,213/- ON THE SALE OF THE SAID PROPERTY WAS CLAIMED BY THE ASSESSEE AS EXEMPT UNDER SEC.54 ON THE GROUND THAT SHE HAD P URCHASED A NEW RESIDENTIAL PROPERTY FOR A CONSIDERATION OF RS.78,4 3,392/-. ON THE BASIS OF THE AFORESAID CLAIM, THE ASSESSEE HAD REFLECTED THE INCOME UNDER THE HEAD CAPITAL GAIN AT RS.NIL. IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO PURCHASE THE NEW RES IDENTIAL PROPERTY VIZ. A- 801, LODHA LUXURIA ON 29.01.2009. ON THE BASIS OF T HE AFORESAID FACTS, THE P A G E | 3 ITA NO. 697/MUM/2017 A.Y. 2013-14 SMT. RANJANA R. DESHMUKH VS. ITO, ASHAR I.T PARK A.O WAS OF THE VIEW THAT AS THE NEW RESIDENTIAL PRO PERTY WAS PURCHASED BY THE ASSESSEE BEYOND THE STIPULATED PERIOD OF ONE YE AR BEFORE THE TRANSFER OF THE PROPERTY UNDER CONSIDERATION, THUS THE SAID INV ESTMENT MADE BY HER WAS NOT ELIGIBLE FOR CLAIM OF EXEMPTION UNDER SEC.54. I N THE BACKDROP OF HIS AFORESAID DELIBERATIONS THE A.O DISALLOWED THE CLAI M OF EXEMPTION UNDER SEC.54 OF RS.49,89,213/- AND ASSESSED HER INCOME AT RS.54,71,760/-. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). THE CIT(A) NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTIONS ADVANCED BY THE ASSESSEE DISMISSED THE APPEAL. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF T HE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) TAKING US THROUGH THE FACTS OF THE CASE SUBM ITTED THAT THE ASSESSEE HAD ON 29.01.2009 ENTERED INTO AN AGREEMENT WITH TH E BUILDER VIZ. M/S SHREEE SAINATH ENTERPRISES FOR PURCHASE OF A NEW RE SIDENTIAL PROPERTY VIZ. A- 801, LODHA LUXURIA. IT WAS SUBMITTED BY THE LD. A.R THAT THE POSSESSION OF THE NEW RESIDENTIAL PROPERTY VIZ. A-801, LODHA LUXU RIA WAS DELIVERED TO THE ASSESSEE ONLY AS ON 18.05.2012. ON THE BASIS OF THE AFORESAID FACTS, THE LD. A.R AVERRED THAT AS ON THE DATE ON WHICH THE PURCHA SE AGREEMENT WAS EXECUTED THE IMMOVABLE PROPERTY WAS NOT IN EXISTENC E, THUS, ON THE BASIS OF INSTALMENTS PAID AND DOCUMENTS EXECUTED BY THE ASSE SSEE ONLY A RIGHT AS REGARDS THE SAME GOT VESTED WITH THE ASSESSEE. IT W AS THE CONTENTION OF THE LD. A.R, THAT AS THE POSSESSION OF THE NEW RESIDENT IAL PROPERTY WAS DELIVERED TO THE ASSESSEE WITHIN THE STIPULATED PERIOD OF ONE YEAR BEFORE THE DATE OF TRANSFER OF THE PROPERTY UNDER CONSIDERATION, HENCE , HER CLAIM FOR EXEMPTION UNDER SEC.54 WAS IN ORDER. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE NEW RESIDENTIAL PROPERTY WAS NOT IN EXISTENCE ON THE DA TE ON WHICH THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR PURCHASE OF THE N EW RESIDENTIAL PROPERTY, THUS IT WAS INCORRECT ON THE PART OF THE A.O TO HAV E HELD THE SAME AS THE DATE OF PURCHASE BY THE ASSESSEE. THE LD. A.R SUBMI TTED THAT PURCHASE OF NEW RESIDENTIAL PROPERTY WOULD BE SUBSTANTIALLY EFF ECTED ON THE DATE WHEN THE POSSESSION OF SAME IS DELIVERED, AND NOT ON THE DATE ON WHICH THE SALE AGREEMENT OR THE REGISTRATION IS DONE. IN ORDER TO BUTTRESS HIS AFORESAID P A G E | 4 ITA NO. 697/MUM/2017 A.Y. 2013-14 SMT. RANJANA R. DESHMUKH VS. ITO, ASHAR I.T PARK CONTENTION THE LD. A.R RELIED ON THE JUDGMENT OF TH E HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. SMT. BEENA K. JAIN (1 994) 75 TAXMAN 145 (BOM). PER CONTRA, THE LD. DEPARTMENTAL REPRESENTAT IVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE ISSUE INVOLVED IN THE PRESENT APPEAL LI ES IN A NARROW COMPASS. THE ASSESSEE HAD SOLD HER RESIDENTIAL PROPERTY ON 2 8.03.2013 FOR A CONSIDERATION OF RS.74 LAC. THE LTCG OF RS.49,89,21 3/- ARISING ON THE SALE OF THE SAID PROPERTY WAS CLAIMED BY THE ASSESSEE AS EXEMPT UNDER SEC.54 OF THE ACT. HOWEVER, THE SAID CLAIM OF DEDUCTION WAS D ECLINED BY THE A.O, FOR THE REASON THAT THE AGREEMENT TO PURCHASE THE NEW RESIDENTIAL PROPERTY VIZ. A-801, LODHA LUXURIA ENTERED INTO BY THE ASSESSEE O N 29.01.2009 FELL BEYOND THE PERIOD OF ONE YEAR PRIOR TO THE DATE ON WHICH THE PROPERTY UNDER CONSIDERATION HAD BEEN TRANSFERRED. THE CONTENTION ADVANCED BY THE ASSESSEE THAT AS THE POSSESSION OF THE NEW RESIDENT IAL PROPERTY VIZ. A-801, LODHA LUXURIA WAS DELIVERED ON 18.05.2012, I.E WITH IN A PERIOD OF ONE YEAR PRIOR TO THE DATE OF TRANSFER OF THE PROPERTY UNDER CONSIDERATION, THUS SHE WAS ENTITLED TOWARDS CLAIM OF DEDUCTION UNDER SEC.5 4, DID NOT FIND FAVOUR WITH THE A.O. 7. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND FIND SUBSTANTIAL FORCE IN THE CONTENTIONS ADVANCED BY THE LD. A.R BEFORE US. ADMITTEDLY, THOUGH THE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO PURCHASE THE NEW PROPERTY VIZ. A-801, LODHA LUXURIA ON 29.01 .2009, BUT THEN THE POSSESSION OF THE SAME WAS DELIVERED TO HER ONLY AS ON 18.05.2012. WE ARE PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE LD. A.R THAT THE PURCHASE OF NEW RESIDENTIAL PROPERTY WOULD BE SUBSTANTIALLY EFFECTE D ON THE DATE WHEN THE ASSESSEE HAD PAID THE FULL CONSIDERATION ON THE FLA T BECOMING READY FOR OCCUPATION AND HAD OBTAINED POSSESSION OF THE SAME. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VI EW THAT AS THE POSSESSION OF THE NEW RESIDENTIAL PROPERTY WAS DELIVERED TO TH E ASSESSEE ON 18.05.2012 I.E. WITHIN A PERIOD OF ONE YEAR PRIOR TO THE TRANS FER OF THE PROPERTY UNDER P A G E | 5 ITA NO. 697/MUM/2017 A.Y. 2013-14 SMT. RANJANA R. DESHMUKH VS. ITO, ASHAR I.T PARK CONSIDERATION, THUS THE PURCHASE OF THE SAME COULD SAFELY BE HELD TO HAVE BEEN SUBSTANTIALLY EFFECTED ON THE SAID DATE. OUR A FORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BEENA K. JAIN (1994) 75 TAXMAN 145 (BOM), WHEREIN T HE HONBLE HIGH COURT HAS HELD AS UNDER: 2. UNDER SECTION 54F IN THE CASE OF AN ASSESSEE IF ANY CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BE ING A RESIDENTIAL HOUSE AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF WHICH THE TRANSFER TOOK PLACE PURCHASED A RESIDENTI AL HOUSE, THE CAPITAL GAIN SHALL BE DEALT WITH AS PROVIDED IN THAT SECTION. AS PER THE SECTION CERTAIN EXEMPTION HAS TO BE ALLOWED IN RESPECT OF THE CAPITAL GAINS TO BE CALCU LATED AS SET OUT THEREIN. THE DEPARTMENT CONTENDS THAT THE ASSESSEE DID NOT PURCH ASE THE RESIDENTIAL HOUSE EITHER ONE YEAR PRIOR TO OR TWO YEARS AFTER THE SAL E OF THE CAPITAL ASSET WHICH RESULTED IN LONG-TERM CAPITAL GAINS. ACCORDING TO T HE DEPARTMENT, THE AGREEMENT FOR PURCHASE OF THE NEW FLAT WAS ENTERED INTO MORE THAN ONE YEAR PRIOR TO THE SALE. HENCE THE PETITIONER IS NOT ENTITLED TO THE BENEFIT UNDER SECTION 54F. IN OUR VIEW THE TRIBUNAL HAS RIGHTLY NEGATIVED THIS CONTENTION AND HAS HELD THAT THE NEW RESIDENTIAL HOUSE HAD BEEN PURCHASED BY THE ASSESSE E WITHIN TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WHICH RESULTED IN LONG-TE RM CAPITAL GAINS. THE TRIBUNAL HAS HELD THAT THE RELEVANT DATE IN THIS CONNECTION IS 2 9-7-1988 WHEN THE PETITIONER PAID THE FULL CONSIDERATION AMOUNT ON THE FLAT BECOMING READY FOR OCCUPATION AND OBTAINED POSSESSION OF THE FLAT. THIS HAS BEEN TAKE N BY THE TRIBUNAL AS THE DATE OF PURCHASE. THE TRIBUNAL HAS LOOKED AT THE SUBSTANCE OF THE TRANSACTION AND CAME TO THE CONCLUSION THAT PURCHASE WAS SUBSTANTIALLY EFFE CTED WHEN THE AGREEMENT OF PURCHASE WAS CARRIED OUT OR COMPLETED BY PAYMENT OF FULL CONSIDERATION ON 29-7- 1988 AND HANDING OVER OF POSSESSION OF THE FLAT ON THE NEXT DAY. WE THUS RESPECTFULLY FOLLOW THE AFORESAID JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, AND HOLD THAT THE DATE O F FINAL OCCUPATION OF THE NEW RESIDENTIAL PROPERTY UNDER CONSIDERATION I.E 18 .05.2012 SHALL BE TAKEN AS THE DATE OF ACQUISITION OF THE SAME BY THE ASSES SEE FOR THE PURPOSE OF DETERMINING HER ELIGIBILITY TOWARDS CLAIM OF DEDUCT ION UNDER SEC. 54 OF THE ACT. 8. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS O F OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 09.11.2018 SD/- SD/- ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI; 09 .11 .2018 PS. ROHIT P A G E | 6 ITA NO. 697/MUM/2017 A.Y. 2013-14 SMT. RANJANA R. DESHMUKH VS. ITO, ASHAR I.T PARK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !' / GUARD FILE. $ //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI