SAPNA MUKESH THAPAR, MUMBAI V. INCOME TAX OFFICER 31(3)(3), MUMBAI

ITA 7062/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8568 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 12-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIAN LD
• Keywords: Capital asset; Principle of natural justice; Question of law; Condonation of delay
• Section: 54

Judgement Text

1 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.7062/MUM/2017 ( / ASSESSMENT YEAR: 2013-14) SAPNA MUKESH THAPAR A-103, 1 ST FLOOR, SHIV SHIVAM TWR OSHIWARA ADARSH CHS LTD., ADARSH NAGAR, NEW LINK ROAD, JOGESHWARI(W), MUMBAI-400 102. / VS. INCOME TAX OFFICER - 31(3)(3) ROOM NO.408, 4 TH FLOOR C-13, PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA EAST, MUMBAI-400 051. ./ ./PAN/GIR NO. AFQPT-8926-H ( /APPELLANT ) : ( ! / RESPONDENT ) ASSESSEE BY : SHRI M. SUBRAMANIAN, ADVOCATE-LD.AR REVENUE BY : CHAUDHURY ARUN KUMAR SINGH-LD.DR ' #$% / DATE OF HEARING : 04/07/2019 &#$% / DATE OF PRONOUNCEMENT : 15/07/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1.1 AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEA R [IN SHORT REFERRED TO AS AY] 2013-14 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME-TAX 2 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 (APPEALS)-42, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO. CIT(A)- 42/IT-498/15-16 DATED 09/09/2016 ON CERTAIN GROUNDS OF APPEAL. 1.2 A PRELIMINARY ISSUE OF CONDONATION OF DELAY ARI SES IN THE APPEAL SINCE THE REGISTRY HAS NOTED THAT THE APPEAL HAS BEEN FIL ED WITH A DELAY OF 326 DAYS. THE CONDONATION OF THE SAME HAS BEEN SOUGHT B Y THE ASSESSEE ON THE STRENGTH OF CONDONATION PETITION DATED 05/02/20 19 WHICH IS ACCOMPANIED BY ASSESSEES AFFIDAVIT OF SAME DATE AN D AFFIDAVIT OF ASSESSEES CHARTERED ACCOUNTANT SHRI SAMIR R.SANGHV I. IT HAS BEEN AFFIRMED THAT THE APPELLATE ORDER WAS FORWARDED BY THE ASSESSEE TO THE OFFICE OF THE CHARTERED ACCOUNTANT M/S MANISH MODI & ASSOCIATES FOR ONWARD FILING OF THE APPEAL. HOWEVER, THE CONCERNED CHARTERED ACCOUNTANT CA SNEHA SHAH WHO WAS HANDLING ASSESSEES MATTER, L EFT THE ORGANIZATION WITHOUT HANDING OVER THE PAPERS WHICH RESULTED INTO DELAYED FILING OF THE APPEAL. THE LD. DR SUBMITTED THAT THE ASSESSEE REMA INED NEGLIGENT IN PREFERRING APPEAL WITHIN PRESCRIBED TIME. UPON CARE FUL CONSIDERATION, KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE AN D RATIO OF DECISION OF HONBLE APEX COURT IN 167 ITR 471 (SC) COLLECTOR, LAND ACQUISITION VS. KATIJI , THE BENCH FORMED AN OPINION THAT THE DELAY DESERVE TO BE CONDONED. ACCORDINGLY, WE PROCEED TO DISPOSE-OFF THE APPEAL O N MERITS. 2.1 SECTION 54 OF THE INCOME TAX ACT, 1961 [IN SHOR T ACT], AS IT STOOD DURING AY 2013-14, PROVIDES FOR A DEDUCTION AGAINST CERTAIN LONG-TERM CAPITAL GAINS EARNED BY AN INDIVIDUAL ASSESSEE ON A CCOUNT OF INVESTMENT MADE BY WAY OF PURCHASE / CONSTRUCTION OF A RESIDE NTIAL HOUSE PROPERTY WITHIN SPECIFIED TIME PERIOD. THE FINANCE ACT, 2014 SUBSTITUTED THE 3 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 EXPRESSION A RESIDENTIAL HOUSE PROPERTY WITH THE WORDS ONE RESIDENTIAL HOUSE WITH EFFECT FROM 01/04/2015. THE RATIONALE O F THE AMENDMENT, AS EXPLAINED IN CLAUSE 20.3 OF THE EXPLANATORY NOTES T O THE FINANCE BILL WAS AS FOLLOWS: - 20.3. CERTAIN COURTS HAD INTERPRETED THAT THE EXEMP TION IS ALSO AVAILABLE IF INVESTMENT IS MADE IN MORE THAN ONE RESIDENTIAL HOU SE. THE BENEFIT WAS INTENDED FOR INVESTMENT IN ONE RESIDENTIAL HOUSE WITHIN INDI A. ACCORDINGLY, SUB-SECTION (1) OF SECTION 54 OF THE INCOME-TAX ACT HAS BEEN AMENDED T O PROVIDE THAT THE ROLLOVER RELIEF UNDER THE SAID SECTION IS AVAILABLE IF THE I NVESTMENT IS MADE IN ONE RESIDENTIAL HOUSE SITUATED IN INDIA. THE FINANCE ACT, 2019 HAS FURTHER AMENDED THE SAID PROVISION WITH EFFECT FROM 01/04/2020 TO PROVIDE THAT IN CASE OF CAPITAL GAIN NOT EXCEEDING RS.2 CRORES, DEDUCTION SHALL BE AVAILABLE EVEN AGAINST I NVESTMENT IN TWO RESIDENTIAL HOUSES IN INDIA. 2.2 INTERPRETING THE PROVISIONS OF SECTION 54, HON BLE MADRAS HIGH COURT IN RECENT DECISION TITLED AS TILOKCHAND & SONS V/S ITO [105 TAXMANN.COM 151 14/03/2019], APPLYING THE DECISIONS OF HONBLE KARNATAKA HIGH COURT IN CIT V/S D. ANANDA BASAPPA [309 ITR 329] & CIT V/S KHOOBCHAND M. MAKHIJA [43 TAXMANN.COM 143 18/12 /2013] HELD THAT IF THE WORD 'A' AS EMPLOYED UNDER SECTION 54 P RIOR TO ITS AMENDMENT AND SUBSTITUTION BY THE WORDS 'ONE' WITH EFFECT FRO M 01/04/2015 COULD NOT INCLUDE PLURAL UNITS OF RESIDENTIAL HOUSES THEN THE RE WAS NO NEED TO AMEND THE SAID PROVISIONS BY FINANCE ACT NO.2 OF 2014 WHI CH THE LEGISLATURE SPECIFICALLY MADE IT CLEAR TO OPERATE ONLY PROSPECT IVELY FROM AY 2015-16. ONCE IT IS HELD THAT THE WORD 'A' EMPLOYED CAN INCL UDE PLURAL RESIDENTIAL HOUSES ALSO WITHIN THE MEANING OF SECTION 54 PRIOR TO ITS AMENDMENT, THEN 4 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 SUCH INTERPRETATION WILL NOT CHANGE MERELY BECAUSE THE PURCHASE OF NEW ASSETS IN THE FORM OF RESIDENTIAL HOUSES IS AT DIFF ERENT ADDRESSES. SO LONG AS THE SAME ASSESSEE PURCHASED ONE OR MORE RESIDENTIAL HOUSES OUT OF THE SALE CONSIDERATION FOR WHICH THE CAPITAL GAIN TAX L IABILITY IS IN QUESTION, IN ITS OWN NAME, THE SAME ASSESSEE SHOULD BE HELD ENTITLED TO THE BENEFIT OF DEDUCTION U/S 54 OF THE ACT, SUBJECT TO THE PURCHAS E OR CONSTRUCTION BEING WITHIN THE STIPULATED TIME LIMIT IN RESPECT OF THE PLURAL NUMBER OF RESIDENTIAL HOUSES ALSO. IT WAS ALSO HELD THAT THE AMENDMENT MA DE BY THE FINANCE ACT, 2014 WAS INTENDED TO BE SPECIFICALLY APPLIED O NLY PROSPECTIVELY WITH EFFECT FROM AY 2015-16 SINCE IT TOOK NOTE OF THE JU DICIAL PRECEDENTS FOR PERIOD PRIOR TO 01/04/2015. AT THE SAME TIME THE DE CISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN PAWAN ARYA V/S CIT [11 TAXMANN.COM 312] WAS DISTINGUISHED SINCE NO OPINION, IN DETAIL, WAS EXPR ESSED IN THE JUDGMENT. 2.3 THE HONBLE KARNATAKA HIGH COURT IN KHOOBCHAND M. MAKHIJA [43 TAXMANN.COM 143] CONSIDERING THE DECISION OF SAME COURT IN CIT V/S SMT. K.G.RUKMINIAMMA [331 ITR 211] INTERPRETED THE TERM A IN THE CONTEXT OF SECTION 13 OF THE GENERAL CLAUSES ACT, 1897 IN THE FOLLOWING MANNER: - 9. THE WORD 'A' IS NOT DEFINED IN THE ACT. WHEN A WOR D IS NOT DEFINED IN THE ACT ITSELF, IT IS PERMISSIBLE TO REFER TO DICTIONARIES TO FIND OUT TH E GENERAL SENSE IN WHICH THAT WORD IS UNDERSTOOD IN COMMON PARLANCE. HOWEVER, IN SELECTIN G ONE OUT OF THE VARIOUS MEANINGS OF A WORD, REGARD MUST ALWAYS BE HAD TO THE CONTEXT AS IT IS A FUNDAMENTAL RULE THAT THE MEANINGS OF WORDS AND EXPRESSIONS USED IN AN ACT MU ST TAKE THEIR COLOUR FROM THE CONTEXT IN WHICH THEY APPEAR. THEREFORE, WHEN THE C ONTEXT MAKES THE MEANING OF A WORD QUITE CLEAR, IT BECOMES UNNECESSARY TO SEARCH FOR AND SELECT A PARTICULAR MEANING OUT OF THE DIVERSE MEANINGS A WORD IS CAPABLE OF, A CCORDING TO LEXICOGRAPHERS. DICTIONARIES ARE NOT DICTATORS OF STATUTORY CONSTRU CTION WHERE THE BENIGNANT MOOD OF A LAW, AND MORE EMPHATICALLY, THE DEFINITION CLAUSE F URNISHES A DIFFERENT DENOTATION. A STATUTE CANNOT ALWAYS BE CONSTRUED WITH THE DICTION ARY IN ONE HAND AND THE STATUTE IN 5 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 THE OTHER. REGARD MUST ALSO BE HAD TO THE SCHEME, C ONTEXT AND TO THE LEGISLATIVE HISTORY. WORDS AND EXPRESSIONS AT TIMES HAVE A 'TECHNICAL' O R A 'LEGAL MEANING' AND IN THAT CASE THEY ARE UNDERSTOOD IN THAT SENSE. JUDICIAL DECISIO NS EXPOUNDING THE MEANING OF WORDS IN CONSTRUING STATUTES IN PARI MATERIA WILL HAVE MO RE WEIGHT THAN THE MEANING FURNISHED BY DICTIONARIES. (PRINCIPLES OF STATUTORY INTERPRET ATION BY JUSTICE G.P.SINGH PAGES 279 AND 280). IT IS IN THIS BACKGROUND, IT IS NECESSARY TO UNDERSTAND THE MEANING OF THE WORD 'A' IN THE CONTEXT IN WHICH IT IS USED IN THE SAID SECTION. 10. THE WORDS 'A' OR 'AN' AND 'THE' ARE CALLED ARTICLE S. THEY COME BEFORE NOUNS. THERE ARE TWO ARTICLES A (OR AN) AND THE 'A' OR 'AN' IS CALLED THE INDEFINITE ARTICLE, BECAUSE IT USUALLY LEAVES INDEFINITE THE PERSON OR THING SPOKE N OF. 'THE' IS CALLED THE DEFINITE ARTICLE, BECAUSE IT NORMALLY POINTS OUT SOME PARTIC ULAR PERSON OR THING. THE INDEFINITE ARTICLE IS USED BEFORE SINGULAR COUNTABLE NOUNS. TH E DEFINITE ARTICLE IS USED BEFORE SINGULAR COUNTABLE NOUNS, PLURAL COUNTABLE NOUNS AN D UNCOUNTABLE NOUNS. THE INDEFINITE ARTICLE IS USED IN TWO CONTEXTS, FIRSTLY, IN ITS OR IGINAL NUMERICAL SENSE OF ONE. SECONDLY, IN THE VAGUE SENSE OF A CERTAIN. IT IS ALSO USED IN TH E SENSE OF ANY, TO SINGLE OUT AN INDIVIDUAL AS THE REPRESENTATIVE OF A CLASS. IT IS ALSO USED TO MAKE A COMMON NOUN OF A PROPER NOUN. 11. IN THE STROUDS JUDICIAL DICTIONARY OF WORDS AND PH RASES DEALING WITH THIS LETTER 'A', IT IS SAID 'A' IS SOMETIMES READ AS 'THE' 'A' MAY SOME TIMES BE READ AS 'SOME'. BUT, MORE FREQUENTLY 'A' IS THE EQUIVALENT OF 'ANY'. HOWEVER, IT IS DIFFICULT TO READ 'A' AS 'ALL'. 12. IN THE CONCISE OXFORD DICTIONARY OF CURRENT ENGLIS H, DEALING WITH THE LETTER 'A' IS STATED THAT, 'A' SOMETIMES CALLED INDEFINITE ARTICL E, USED WITH APPARENT PLURALS OF NUMBER. 13. SECTION 13 OF THE GENERAL CLAUSES ACT, 1897 DEALS WITH GENDER AND NUMBER. IT READS AS UNDER: - '13. GENDER AND NUMBER . IN ALL CENTRAL ACTS AND REGULATIONS, UNLESS THE RE IS ANYTHING REPUGNANT IN THE SUBJECT OR CONTEXT. (I) WORDS IMPORTING THE MASCULINE GENDER SHALL BE T AKEN TO INCLUDE FEMALES; AND (II) WORDS IN THE SINGULAR SHALL INCLUDE THE PLURAL , AND VICE VERSA.' 14. THIS COURT IN THE CASE OF CIT V. SMT. K.G. RUKMINIAMMA [2011] 331 ITR 211/196 TAXMAN 87/[2010] 8 TAXMANN.COM 121 (KAR.), HAD AN O CCASION TO CONSIDER SECTION 54 OF THE ACT AND HAD HELD AS UNDER: 'FOR A PROPER APPRECIATION OF THE AFORESAID CONTENT ION, IT IS NECESSARY TO HAVE A CAREFUL LOOK AT SECTION 54 OF THE INCOME TAX ACT, WHICH REA DS AS UNDER: '54. PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE (1) SUBJECT TO THE PROVISIONS OF SUB- SECTION (2), WHERE, IN THE CASE OF AN ASSESSES BEIN G AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER O F A LONG-TERM CAPITAL ASSET, BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WINCH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOU SE PROPERTY' (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSES HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TH E TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME -TAX AS INCOME OF THE PREVIOUS YEAR 6 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, - .. . ' 9. A READING OF THE AFORESAID PROVISION MAKES IT VE RY CLEAR THAT THE PROPERTY SOLD IS REFERRED TO AS ORIGINAL ASSET IN THE SECTION. THAT ORIGINAL ASSET IS DESCRIBED AS BUILDINGS OR LANDS APPURTENANT THERETO AND BEING A RESIDENTIA L HOUSE. THEREFORE, IT IS NOT MERE 'A RESIDENTIAL HOUSE'. THE RESIDENTIAL HOUSE MAY INCLU DE BUILDINGS OR LANDS APPURTENANT THERE TO. THE STRESS IS ON THE USE TO WHICH THE PRO PERTY IS PUT TO. ONLY WHEN THAT ASSET WAS USED AS A RESIDENTIAL HOUSE, WHICH MAY CONSIST OF BUILDINGS OR LANDS APPURTENANT THERETO, THE INCOME DERIVED FROM THE SALE OF SUCH A RESIDENTIAL HOUSE IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY.' IF THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHIC H THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DA TE CONSTRUCTED A RESIDENTIAL HOUSE, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE AFORESAID PROVISIONS. IN THIS PART OF THE SECTION A LSO, THE WORDS 'A RESIDENTIAL HOUSE' IS AGAIN USED. THE SAID RESIDENTIAL HOUSE NECESSARILY HAS TO INCLUDE BUILDINGS OR LANDS APPURTENANT THERETO. IT CANNOT BE CONSTRUED AS ONE RESIDENTIAL HOUSE. IN THIS CONTEXT, IT IS USEFUL TO REFER- TO SECTION 13 OF THE GENERAL CL AUSES ACT, 1897, WHICH READS AS UNDER: '13. GENDER AND NUMBER. - IN ALL CENTRAL ACTS AND REGULATIONS, UNLESS THER E IS ANYTHING REPUGNANT IN THE SUBJECT OR CONTEXT (I) WORDS IMPORTING THE MASCULINE GENDER SHALL BE T AKEN TO INCLUDE FEMALES; AND (II) WORDS IN THE SINGULAR SHALL INCLUDE THE PLURAL , AND VICE VERSA.' THE CONTEXT IN WHICH THE EXPRESSION 'A RESIDENTIAL HOUSE' IS USED IN SECTION 54 MAKES IT CLEAR THAT, IT WAS NOT THE INTENTION OF THE LEGISLA TION TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESIDENTIAL HOUSE. IF THAT WAS THE INTE NTION, THEY WOULD HAVE USED THE WORD 'ONE.' AS IN THE EARLIER PART, THE WORDS USED ARE B UILDINGS OR LANDS WHICH ARE PLURAL IN NUMBER AND THAT IS REFERRED TO AS A RESIDENTIAL HOU SE', THE ORIGINAL ASSET. AN ASSET NEWLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE 'A RESIDENTIAL HOUSE. ' THEREFORE THE LETTER 'A' IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANI NG 'SINGULAR.' BUT, BEING AN INDEFINITE ARTICLE, THE SAID EXPRESSION SHOULD BE R EAD IN CONSONANCE WITH THE OTHER WORDS 'BUILDINGS AND LANDS' AND, THEREFORE, THE SINGULAR 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VIRTUE OF SECTION 13(2) OF THE GENERAL CLAUSES ACT. THIS IS THE VIEW WHICH IS TAKEN BY THIS COURT IN THE AFORESAID ANAND BASAPPA' S CASE IN I.T.A.NO. 113/2004, DISPOSED OF ON SEPTEMBER 20, 2008 CIT V. D. ANANDA BASAPPA [2009] 309 ITR 329 (KAR.)].' 2.4 SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE MADR AS HIGH COURT IN ITS EARLIER DECISION TITLED AS CIT V/S GUNAMAL JAIN [160 DTR 221 03/03/2017] AFTER APPLYING THE DECISIONS OF SAME COURT IN CIT V/S V.R. KARPAGAM [373 7 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 ITR 127] AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CIT V/S SMT. K.G.RUKMINIAMMA [331 ITR 211]. THE HONBLE DELHI HIGH COURT RELYING UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT I N CIT V/S D. ANANDA BASAPPA [309 ITR 329] TOOK SIMILAR VIEW AND DISMISSED REVENUES APPEAL BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW AROS E. THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN PAWAN ARYA V/S CIT [11 TAXMANN.COM 312] WAS DISTINGUISHED IN THIS CASE ALSO BY NOTICING THA T IN THAT CASE THE ASSESSEE WAS CLAIMING EXEMPTION BY PU RCHASING TWO INDEPENDENT RESIDENTIAL HOUSES SITUATED AT DIFFEREN T LOCATIONS I.E. ONE IN DELHI AND OTHER IN FARIDABAD. 3.1 KEEPING IN MIND THE AFORESAID LEGAL POSITION, T HE ASSESSEE BEFORE US IS A RESIDENT INDIVIDUAL WHO EARNED LONG-TERM CAPIT AL GAIN OF RS.297.16 LACS ON SALE OF CERTAIN INHERITED RESIDENTIAL PROPE RTY. THE ASSESSEES SHARE IN THE PROPERTY WAS TO THE EXTENT OF 18.78%. THE AS SESSEE CLAIMED DEDUCTION U/S 54 ON ACCOUNT OF INVESTMENT MADE IN F OLLOWING 4 PROPERTIES BY ASSERTING THAT THE CONDITIONS TO CLAIM THE DEDUC TION WERE DULY FULFILLED BY HER: - NO. PARTIC ULARS AMOUNT (RS.) 1. FLAT NO.A103, OSHIWARA JOGESHWARI SCHEME DEPOSIT 1,78,71,080 11,50,000 2. FLAT NO.101 VAKRATUNGA APARTMENT NERUL, NAVI MUM BAI 37,06,080 3. FLAT NO.104 VAKRATUNGA APARTMENT NERUL, NAVI MUM BAI 37,06,080 4. FLAT NO.1001 VAKRATUNGA APARTMENT NERUL, NAVI MU MBAI 31,81,080 TOTAL 2,96,14,320/ - THE FLAT NOS. 2 TO 3 ARE STATED TO BE SITUATED ON F IRST FLOOR WHEREAS FLAT NO.4 IS STATED TO BE SITUATED AT 10 TH FLOOR. HOWEVER, ALL THE 3 FLATS ARE ADMITTEDLY 8 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 WITHIN ONE BOUNDARY WALL OF A SOCIETY. THE FIRST FL AT IS STATED TO BE SITUATED AT ALTOGETHER DIFFERENT LOCATION. 3.2 THE ASSESSEE, IN DEFENCE, SUBMITTED THAT THE AS SESSEE BEING SINGLE PARENT AND HAVING TWO KIDS, MADE INVESTMENT IN DIFF ERENT PROPERTIES, KEEPING IN VIEW THE LOCATION CONVENIENCE FROM POINT OF VIEW OF THE COLLEGE / EDUCATIONAL INSTITUTION OF THE TWO KIDS. IT WAS FUR THER SUBMITTED THAT THE ASSESSEE TRIED TO BUY 3 DIFFERENT ADJACENT FLATS IN NAVI MUMBAI. HOWEVER, DUE TO NON-AVAILABILITY OF ADJACENT FLATS, SHE SETT LED FOR 2 DIFFERENT FLOORS. NEVERTHELESS, THE INVESTMENT WAS STRUCTURED IN SUCH A WAY SO AS TO GIVE FINANCIAL SECURITY TO TWO KIDS IN THEIR FUTURE AND TO AVOID PROBABLE DIFFERENCES / DISPUTES AMONGST THEM. IT WAS ALSO PLEADED THAT A LL THE FLATS WERE IN SELF- OCCUPATION AND USED FOR NO OTHER PURPOSE. THE FLATS WERE BOUGHT AT DIFFERENT LOCATIONS TO SIMPLIFY THE FAMILY REQUIREM ENT WITHIN BUDGET AND BOUGHT WITH AN INTENTION TO USE THEM AS A SINGLE RE SIDENTIAL HOUSE. HOWEVER, DISREGARDING THE SAME AND PLACING RELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN PAWAN ARYA V/S CIT [11 TAXMANN.COM 312], LD. AO DENIED DEDUCTION TO THE EXTENT OF INVESTMENT IN THREE FLATS SITUATED AT NAVI MUMBAI, WHICH AGGRE GATED TO RS105.93 LACS. 4. AGGRIEVED THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE LD. FIRST APPELLATE AUTHORITY WHEREIN LD. CIT(A), AT PARA 5.2 , CONSIDERED THE DECISION OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN ITO V/S SUSHILA M.JHAVERI [107 ITD 327] TO ARRIVE AT CONCLUSION THAT THE WORD A WAS INTE NDED FOR INVESTMENT IN ONE RESIDENTIAL HOUSE PROPERTY ONLY. THE SAID DECISION, IN THE OPINION OF LD. CIT(A), WAS APPROVED BY HONBLE BOMB AY HIGH COURT IN CIT 9 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 V/S RAMAN KUMAR SURI [212 TAXMAN 411] . FURTHER RELIANCE WAS PLACED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S DEVDAS NAIK [49 TAXMANN.COM 30] AND THE DECISION OF MUMBAI TRIBUNAL IN NEVILLE J.PEREIRA V/S ITO [8 TAXMANN.COM 68] TO CONFIRM THE STAND OF LD. AO. 5. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEF ORE US. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS 7 GROUNDS OF APPEAL, HOWEVER, LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE, SHRI M. SUB RAMANIAN, SUBMITTED THAT THE ASSESSEE IS PRESSING ONLY FOR ADJUDICATION OF GROUND NOS. 4 & 5, WHICH READ AS UNDER: - 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED C.I.T(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DETERMINING THE CAPITAL GAINS INCOME AT RS. L,07,95,556/-AS AGAINST THE RETURNED CAPITAL GAINS INCOME OF RS.1,02,316/-. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED C.I.T(A)ERRED IN DISMISSING THE APPEAL AND THEREBY DENYING THE FULL BENEFITS OF THE PROVISIONS OF SECTION 54 OF THE ACT. BOTH THE REPRESENTATIVES HAVE ADVANCED ARGUMENTS IN SUPPORT OF THE SUBMISSIONS, WHICH WE HAVE CONSIDERED AND DELIBERAT ED ON THE JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. OUR ADJUDICATION IS GIVEN IN SUCCEEDING PARAGRAPHS. 6.1 WE HAVE CAREFULLY CONSIDERED THE FACTUAL MATRIX AS ENUMERATED BY US THE IN PRECEDING PARAGRAPHS. WE ARE OF THE CONSIDER ED OPINION THAT KEEPING IN VIEW THE RULES OF JUDICIAL PRECEDENTS, THE VIEW OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN ITO V/S SUSHILA M.JHAVERI [SUPRA] AS WELL AS MUMBAI TRIBUNAL IN NEVILLE J.PEREIRA V/S ITO [SUPRA] STAND OVERRULED BY THE DECISION OF HONBLE HIGH COURTS OF KARNATAKA AS WEL L AS OF HIGH COURT OF 10 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 MADRAS. 6.2 THE FACTS IN THE CASE OF CIT V/S RAMAN KUMAR SURI [212 TAXMAN 411] ARE DIFFERENT. THE PERUSAL OF THE SAID DECISION WOU LD REVEAL THAT TWO FLATS WERE JOINED TOGETHER BEFORE THE ASSE SSEE BECAME THE OWNER OF THE TWO FLATS AND THE TRIBUNAL, FOLLOWING THE DE CISION OF SPECIAL BENCH IN ITO V/S SUSHILA M.JHAVERI [SUPRA], HELD THAT SINCE THE ASSESSEE ACQUIRED ONE RESIDENTIAL HOUSE CONSISTING OF TWO FLATS, IT C OULD NOT BE SAID THAT THE ASSESSEE HAD PURCHASED TWO FLATS AND THEREFORE, FUL L DEDUCTION WAS ALLOWABLE TO THE ASSESSEE. THE REVENUE PREFERRED FU RTHER APPEAL BEFORE HONBLE BOMBAY HIGH COURT WHEREIN THE HONBLE COURT DISMISSED THE REVENUES APPEAL BY HOLDING THAT NO SUBSTANTIAL QUE STION OF LAW AROSE. IN THAT DECISION, THE HONBLE COURT, IN OUR OPINION, W AS CLINCHED WITH LIMITED QUESTION TO DETERMINE TO CORRECTNESS OF THE TRIBUNA L DECISION ON A CERTAIN FACTUAL MATRIX. THE SAID DECISION COULD NOT BE USED IN THE REVERSE MANNER TO DRAW AN ANALOGY THAT IF THE ASSESSEE HAD PURCHASED MORE THAN ONE RESIDENTIAL HOUSE, THE DEDUCTION OF THE SAME WOULD NOT BE ALLOWABLE TO THE ASSESSEE. THE EFFECT OF THE AMENDMENT MADE BY THE F INANCE ACT, 2014 IN SECTION 54 WAS NOWHERE IN THE CONSIDERATION OF HON BLE COURT, IN THAT DECISION. 6.3 SIMILAR WAS THE FACTUAL MATRIX IN THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S DEVDAS NAIK [SUPRA] WHEREIN IT WAS ADMITTED POSITION THAT THOUGH THE FLATS WERE ACQUIRED UNDER DIFFERENT AGRE EMENT, HOWEVER GENERAL / INTERNAL LAYOUT PLAN INDICATED THAT THERE WAS ONL Y ONE COMMON KITCHEN FOR BOTH FLATS AND BOTH FLATS WERE USED AS A SINGLE UNI T AND THE FLATS WERE CONSTRUCTED IN SUCH A WAY THAT ADJACENT UNITS OR FL ATS COULD BE COMBINED 11 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 INTO ONE. IN THAT DECISION, THE HONBLE COURT, IN S IMILAR MANNER, DISMISSED REVENUES APPEAL FINDING THAT NO SUBSTANTIAL QUESTI ON OF LAW AROSE. 6.4 PROCEEDING FURTHER, WE FIND THAT THE RECENT DEC ISION OF HONBLE MADRAS HIGH COURT IN TILOKCHAND & SONS V/S ITO [SUPRA] SQUARELY APPLIES TO THE FACT OF THE CASE. WHILE ARRIVING THE DECISION, THE HONBLE COURT HAS FOLLOWED THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CIT V/S D. ANANDA BASAPPA [SUPRA] & CIT V/S KHOOBCHAND M. MAKHIJA [SU PRA]. SIMILAR IS THE INTERPRETATION OF WORD A BY HONBLE KARNATAKA HIGH COURT IN CIT V/S SMT. K.G.RUKMINIAMMA [SUPRA] AND THE DECISION OF HONBLE MADRAS HIGH COURT IN ITS EARLIER DECISION TITLED AS CIT V/S GUNAMAL JAIN [SUPRA] AFTER APPLYING THE DECISION OF SAME COURT IN CIT V/S V.R. KARPAGAM [SUPRA]. THE HONBLE DELHI HIGH COURT RELYING UPON THE DECIS ION OF HONBLE KARNATAKA HIGH COURT IN CIT V/S D. ANANDA BASAPPA [309 ITR 329] TOOK SIMILAR VIEW. IN FACT, SIMILAR IS THE VIEW OF HONB LE ANDHRA PARDESH HIGH COURT IN CIT V/S SYED ALI ADIL [33 TAXMANN.COM 212]. NO DIRECT DECISION OF HONBLE BOMBAY HIGH COURT, ON THIS POINT, HAS BE EN PLACED ON RECORD BY ANY OF THE REPRESENTATIVE. 6.5 THE DECISION OF HONBLE PUNJAB & HARYANA HIGH C OURT IN PAWAN ARYA V/S CIT [SUPRA] HAS ALREADY BEEN DISTINGUISHED IN MANY OF THE ABOVE CITED CASES. EVEN OTHERWISE THE RATIO OF DECISION OF HON BLE APEX COURT RENDERED IN CIT VS. VEGETABLE PRODUCTS LTD. [88 ITR 192] WOULD APPLY WHEREIN HONBLE COURT HAS HELD THAT IF TWO REASONABLE CONS TRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FA VORS THE TAX PAYER MUST 12 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 BE ADOPTED. THEREFORE, THE DECISIONS CITED IN PAR A 6.4 WOULD TAKE PRECEDENT OVER THIS DECISION. 6.6 KEEPING IN VIEW THE ABOVE POSITION, ACCEPTING T HE INTERPRETATION OF WORD A AS OCCURRING IN SECTION 54 AS MADE BY HON BLE MADRAS HIGH COURT IN TILOKCHAND & SONS V/S ITO [SUPRA], WE HOLD THAT ON THE FACTS AND CIRCUMSTANCES, THE ASSESSEE WOULD BE ELIGIBLE TO CL AIM DEDUCTION U/S 54 ON ALL THE FOUR RESIDENTIAL HOUSES AS TABULATED BY US IN PARA 3.1. THE LD. AO IS DIRECTED TO RECOMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF OUR ABOVE ORDER. BOTH THE GROUNDS STAND ALLOWED. 7. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2019. SD/- SD/- (SANDEEP GOSAIN) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 15/07/2019 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 13 ITA NO.7062/MUM/2017 SAPNA MUKESH THAPPAR ASSESSMENT YEAR-2013-14 3. # ( ) / THE CIT(A) 4. # / CIT CONCERNED 5. $%!& ' , ' , / DR, ITAT, MUMBAI 6. %)*+ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.