ACIT 16(1), MUMBAI V. VISHWANATH ACHARYA, MUMBAI

ITA 7232/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2066 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH
• Keywords: Capital asset
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 6872/MUM/2014 (ASSESSMENT YEAR: 2010-11) SHRI VISHWANATH ACHARYA VS. A C I T 11(1) 1701 - A WING, BROOK HILL TOWERS, NEAR LOKHANDWALA COMPLEX, ANDHERI (W) MUMBAI 400058 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN AAGPA0144D APPELLANT RESPONDENT ITA NO. 7232/MUM/2014 (ASSESSMENT YEAR: 2010-11) A C I T 16(1) VS. SHRI VISHWANATH ACHARYA ROOM NO. 439 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 1701 - A WING, BROOK HILL TOWERS, NEAR LOKHANDWALA COMPLEX, ANDHERI (W) MUMBAI 400058 PAN AAGPA0144D APPELLANT RESPONDENT ASSESSEE BY: SHRI AJAY R. SINGH REVENUE BY: SHRI RAVINDER SINDHU DATE OF HEARING: 27.10.2016 DATE OF PRONOUNCEMENT: 04.11.2016 O R D E R PER JASON P. BOAZ, A.M. THESE ARE CROSS APPEALS, ONE BY THE ASSESSEE AND TH E OTHER BY REVENUE, DIRECTED AGAINST THE ORDER OF THE CIT(A)-3 , MUMBAI DATED 22.09.2014 FOR A.Y. 2010-11. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE FILED THE RETURN OF INCOME FOR A.Y . 2010-11 ON 09.10.2010 DECLARING TOTAL INCOME OF ` 60,80,920/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T, 1961 (IN SHORT 'THE ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 2 ACT') AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SC RUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 11.03.2013, WHEREIN THE ASSESSEES INCOME WAS DETER MINED AT ` 2,41,41,920/- IN VIEW OF THE FOLLOWING ADDITIONS/DI SALLOWANCES: - (I) DISALLOWANCE OF 20% OF PROFESSIONAL EXPENSES ` 3,86,890/ - (II) DISALLOWANCE OUT OF INTEREST EXPENDITURE ` 5,77,205/ - (III) DISALLOWANCE OF 20% OF FILM PRODUCTION EXPENSES ` 8,62,000/ - (IV) ADDITION ON ACCOUNT OF UNRECONCILED INCOME ` 1,69,318/ - (V) DISALLOWANCE OF EXEMPTION UNDER SECTION 54 ` 1,60,65,590/ - 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 11.0 3.2013 FOR A.Y. 2010-11, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E CIT(A)-3, MUMBAI. THE LEARNED CIT(A) DISPOSED OFF THE APPEAL VIDE THE IMPUGNED ORDER DATED 22.09.2014 ALLOWING THE ASSESSEE PARTIAL RELIEF. IN DOING SO, THE LEARNED CIT(A) ALLOWED THE ASSESSEES CLAIM FOR EXEMPTION U NDER SECTION 54 OF THE ACT, DELETED THE DISALLOWANCE OF 20% OF PROFESSIONA L EXPENSES AND ALLOWED THE ASSESSEE PARTIAL RELIEF ON THE DISALLOWANCES MA DE BY THE ASSESSING OFFICER (AO) ON ACCOUNT OF INTEREST EXPENSES AND FI LM PRODUCTION EXPENSES. 3. BOTH REVENUE AND THE ASSESSEE ARE AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A)-3, MUMBAI DATED 22.09.2014 FOR A.Y. 2 010-11AND HAVE PREFERRED APPEALS ON ISSUES THAT HAVE BEEN HELD AGA INST THEM. THESE CROSS APPEALS WILL BE DISPOSED OFF HEREUNDER IN SERIATUM. 4. REVENUES APPEAL IN ITA NO. 7232/MUM/2014 FOR A.Y. 2010-11 4.1 IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-3 WAS JUSTIFIED IN ALLOWING THE DEDU CTION U/S. 54 OF THE INCOME TAX ACT WHEN THE PROPERTY SOLD WAS IN THE SOLE NAME OF THE ASSESSEE AND THE PROPERTY PURCHASED WAS IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTO RED. ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 3 4.2 IN THESE GROUNDS REVENUE CONTENDS THAT THE LEAR NED CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE ASSESSEE EXEMPTION UNDER SECTION 54 OF THE ACT WHEN THE PROPERTY SOLD WAS IN THE SOLE NAME OF THE ASSESSEE AND THE PROPERTY PURCHASED SUBSEQUENTLY WAS IN THE JOINT NA ME OF THE ASSESSEE AND HIS WIFE. THE LEARNED D.R. WAS HEARD ON THE SOL E ISSUE RAISED IN THESE GROUNDS (SUPRA); IN RESPECT OF THE ELIGIBILITY OF T HE ASSESSEE FOR BEING ALLOWED EXEMPTION UNDER SECTION 54 OF THE ACT. STRO NG RELIANCE WAS PLACED BY THE LEARNED D.R. ON THE DECISION OF THE AO IN HO LDING THAT THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. 4.3 PER CONTRA, THE LEARNED A.R. OF THE ASSESSEE SU PPORTED THE DECISION OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER HOLDING TH E ASSESSEE ELIGIBLE TO CLAIM AND BE ALLOWED EXEMPTION UNDER SECTION 54 OF THE ACT. ACCORDING TO THE LEARNED A.R., THE ASSESSEE HAD PURCHASED FLAT N O. 1303 AND 1304 IN OSHIWARA YASHODEEP CHS LTD. FOR ` 42,73,360/- ON 12.07.2004 AND SOLD THE SAME ON 25.11.2009 FOR ` 2,16,08,967/- RESULTING IN CAPITAL GAINS OF ` 1,60,65,590/-. THE ASSESSEE HAS PURCHASED TWO FLATS NO. 3205 AND 3206 IN OBEROI SPRINGS ON 05.08.2009 FOR ` 3,26,47,674/-, BUT CLAIMED EXEMPTION OF ` 1,63,25,027/- UNDER SECTION 54 OF THE ACT IN RESPEC T OF ONE FLAT I.E. NO. 3205, OBEROI SPRINGS. THE ABOVE FLAT WAS PURCHASED IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE, INTER ALIA, WIT H THE LOAN OF ` 1.25 CRORES TAKEN FROM KOTAK MAHINDRA BANK (DETAILS AT PG. 138 AND 139 OF PAPER BOOK) AND CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT. IT IS SUBMITTED THAT THE AO DENIED THE ASSESSEE THE EXEMPTION CLAIM ED UNDER SECTION 54 OF THE ACT FOR THE REASONS THAT THE SAID FLAT IS NOT S OLELY IN THE NAME OF THE ASSESSEE I.E. IT WAS PURCHASED IN JOINT NAMES OF TH E ASSESSEE AND WIFE AND SINCE THE INVESTMENT IN THE NEW PROPERTY HAS NOT BE EN MADE FROM OUT OF THE SALE CONSIDERATION OF THE ORIGINAL ASSET AT OSH IWARA. THE LEARNED A.R. OF THE ASSESSEE REITERATED SUBMISSIONS PUT FOR BEFO RE THE LEARNED CIT(A) THAT THE PROVISIONS OF SECTION 54 OF THE ACT DO NOT PROHIBIT THE ASSESSEE FROM PURCHASING NEW ASSET IN JOINT NAMES OR FROM OU T OF BORROWED FUNDS. IT IS CONTENDED THAT ON BOTH THESE ISSUES, THE LEAR NED CIT(A) AGREED WITH THE ASSESSEES CONTENTIONS AND DIRECTED THE AO TO A LLOW THE ASSESSEE EXEMPTION UNDER SECTION 54 OF THE ACT ON FACTS AND ALSO BY FOLLOWING THE ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 4 DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIT(IT) VS. JENNIFER BHIDE (2012) 349 ITR 80 (KAR). 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. THE FACTS OF THE MATTER AS EMANATE FROM THE RECORD ARE THAT THE ASSESSEE HAD PURCHASED FLATS AT OSHIWARA, MUMBAI ON 12.07.2004 FOR TOTAL CONSIDERATION OF ` 42,73,300/- WHICH HE SOLD ON 25.11.2009 FOR ` 2,16,08,967/-. THE ASSESSEE HAD PURCHASED TWO FLATS NO. 3205 & 3206 AT OBEROI SPRINGS ON 05.08.2009 FOR ` 3,26,47,674/- IN JOINT NAMES WITH HIS WIFE. EXEMPTION OF ` 1,60,65,590/- WAS CLAIMED UNDER SECTION 54 OF THE A CT WITH REGARD TO ONE FLAT NO. 3205 AT OBERIO SPRINGS HAVING A PURCHASE CONSIDERATION OF ` 1,63,25,037/-. IN ASSESSMENT PROCEEDINGS, THE AO DENIED THE ASSESSEES CLAIM FOR EXEMPTION UNDER SEC TION 54 OF THE ACT ON THE GROUND THAT THE NEW ASSET WAS PURCHASED IN JOIN T NAMES AND SINCE THE INVESTMENT IN THE PURCHASE OF THE NEW ASSET WAS NOT FROM OUT OF THE SALE CONSIDERATION FOR THE ORIGINAL ASSET. ON APPEAL THE LEARNED CIT(A) AGREED WITH THE ASSESSEES CONTENTIONS DIRECTED THE AO TO ALLOW THE ASSESSEE EXEMPTION UNDER SECTION 54 OF THE ACT; HOLDING AS U NDER AT PARAS 1.2 TO 1.5: - 1.2 I HAVE PERUSED THE FACTS OF THE MATTER, SUBMIS SIONS OF THE APPELLANT AND THE PROVISIONS OF LAW, AS ALSO THE OR DER OF THE ASSESSING OFFICER. THE BRIEF FACTS OF THE MATTER ARE THAT THE APPELLANT HAD SOLD PROPERTY LOCATED AT 1303/1304 AT OSHIWARA, MUMBAI O N 25-11-2009 AND SHOWN A LONG TERM CAPITAL GAIN OF ` 1,60,65,590/-. AGAINST THE SAID LTCG THE APPELLANT HAD CLAIMED DEDUCTION U/S. 54 FO R THE ENTIRE CAPITAL GAINS ON THE PURCHASE OF FLAT NO., 3205 OF OBEROI SPRINGS., ANDHERI, ON 05-082009, TIN THE JOINT NAME OF SELF AND HIS WIFRE VIDHI KRISHNA ACHARYA. THE ASSESSING OFFICER DENIED THE D EDUCTION U/S. 54 ON THE FOLLOWING TWO GROUNDS. I. THE NEW PROPERTY IN OBEROI SPRINGS IS NOT SOLELY IN THE NAME OF THE ASSESSEE. II. THE INVESTMENT HAS NOT BEEN MADE IN THE NEW PRO PERTY FROM THE SALE CONSIDERATION OF THE ORIGINAL ASSET. 1.3 IT IS THE APPELLANT'S CONTENTION THAT THE PROV ISIONS OF SECTION 54 DO NOT PROHIBIT THE ASSESSEE FROM PURCHASING THE NE W ASSET IN A JOINT NAME OR FROM PURCHASING THE NEW ASSET FROM BORROWED FUNDS. I AM IN AGREEMENT WITH THE APPELLANT THAT THE PROVISIONS OF SECTION 54 LAY ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 5 DOWN NO SUCH EMBARGO, AS MADE OUT BY THE AO. FOR TH E SAKE OF CLARITY THE PROVISIONS ARE REPRODUCED HEREUNDER: ' 54. [(1)] SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR HINDU UNDIVIDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET O F***], BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' (HEREAF TER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS WITHIN A PERIOD OF [ONE YEAR BEFORE OR TWO YEARS AF TER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESID ENTIAL HOUSE, THEN], INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWIN G PROVISIONS OF THIS SECTION, THAT IS TO SAY, (I) IF THE AMOUNT OF THE CAPITAL GAIN [IS GREATER T HAN THE COST OF [THE RESIDENTIAL HOUSE] SO PURCHASED OR CONSTRUCTED (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW A SSET)], THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN A ND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTIO N 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOS E OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL G AIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, AS THE CASE MAY BE, THE C OST SHALL BE NIL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT B E CHARGED UNDER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING F ROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURC HASE OR CONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAPITAL GAIN' 1.4 THE ABOVE CITED PROVISIONS NOWHERE SPECIFY THAT THE NEW ASSET SHOULD HAVE BEEN PURCHASED FROM THE SALE CONSIDERAT ION OF ME ORIGINAL ASSET. IN FACT THE NEW ASSET CAN BE PURCHASED EVEN ONE YEAR PRIOR TO THE TRANSFER OF THE ORIGINAL ASSET. THIS CONDITION ITSELF WOULD MEAN THAT THE NEW ASSET CAN BE PURCHASED FROM FUNDS OTHER THA N THE SALE CONSIDERATION OF THE ORIGINAL ASSET. I FIND THAT SI MILAR ISSUE CAME UP BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DR. P.S . PASRICHA, CITED SUPRA. IN THAT CASE THE FACTS WERE THAT THE ASSESSE E ACQUIRED A RESIDENTIAL FLAT/PROPERTY AT COST OF APPROXIMATELY RS. 3 LAKHS. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2001- 02, THE ASSESSEE HAD SOLD THE SAID PROPERTY FOR RS. 1.40 CRORES. AFT ER THE SALE OF THE SAID PROPERTY, THE ASSESSEE PURCHASED A COMMERCIAL PROPE RTY FOR A TOTAL CONSIDERATION OF RS. 125.28 LAKHS. THEREAFTER, WITH IN THE PERIOD SPECIFIED UNDER SECTION 54(1), THE ASSESSEE PURCHAS ED TWO ADJOINING ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 6 RESIDENTIAL FLATS IN ONE BUILDING FOR A TOTAL CONSI DERATION OF RS. 104.78 LAKHS AND GAVE THEM ON RENT TO TWO DIFFERENT TENANT S. THE ASSESSEE WORKED OUT THE CAPITAL GAIN ARISING ON SALE OF THE AFORESAID FLAT APPROXIMATELY AT RS. 1.24 CRORES. THE ASSESSEE FURT HER CLAIMED DEDUCTION OF RS. 104.78 LAKHS UNDER SECTION 54(1) A ND, THUS, RETURNED THE TAXABLE CAPITAL GAIN AT RS. 19.23 LAKHS. THE AS SESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 54 ON THE GROUND S THAT THE SALE PROCEEDS FROM THE ORIGINAL FLAT WERE NOT DEPLOYED F ULLY IN THE NEW FLATS, AND THAT THE ASSESSEE HAD NOT PURCHASED ONE SINGLE PROPERTY, BUT TWO UNITS. ON APPEAL, THE COMMISSIONER (APPEALS) HELD T HAT THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 54 (1) EVEN WHEN THE CAPITAL GAIN WAS INVESTED IN MORE THAN ONE FLAT AND THAT TH E ENTIRE SALE PROCEEDS WERE UTILIZED FOR PURCHASE OF BOTH THE FLA TS IN QUESTION. THE COMMISSIONER (APPEALS), THEREFORE, ALLOWED THE DEDU CTION UNDER SECTION 54(1) AS CLAIMED BY THE ASSESSEE. ON SECOND APPEAL, THE REVENUE CONTENDED THAT THE SALE PROCEEDS WERE UTILI ZED BY THE ASSESSEE FOR PURCHASE OF A COMMERCIAL PROPERTY AND RESIDENTIAL HOUSE WAS PURCHASED OUT OF THE FUNDS OBTAINED FROM DIFFER ENT SOURCES AND, AS SUCH, THE IDENTITY OF FUNDS HAD BEEN CHANGED. TH E JURISDICTIONAL HIGH COURT HELD: 'THE REQUIREMENT OF SECTION 54 IS THAT THE ASSESSEE SHOULD ACQUIRE A RESIDENTIAL HOUSE WITHIN THE PERIOD OF ON E YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE. NOWHERE, IT HAS BEEN MENTIONED THAT THE SAME FUNDS MUST BE UTILIZED FOR THE PURCHASE OF THE ANOTHER RESIDENTIA L HOUSE. THE REQUIREMENT OF THE LAW IS THAT THE ASSESSEE SHOULD PURCHASE A RESIDENTIAL HOUSE WITHIN THE SPECIFIED PERIOD AND S OURCE OF FUNDS IS QUITE IRRELEVANT. [PARA 9]' 1.4 WITH REGARD TO THE ISSUE OF PURCHASE OF NEW AS SET IN JOINT NAME, THE PROVISIONS OF SECTION 54 DO NOT PROHIBIT THE SA ME. THIS ISSUE CAME UP BEFORE THE KARNATAKA HIGH COURT IN THE MATTER DI T VS. MRS. JENNIFER BHIDE, (115 TAXMAN.COM 82) (KAR.), IN THAT CASE THE FACTS WERE THAT THE ASSESSEE SOLD HER RESIDENTIAL PROPERTY AND INVESTED PART OF SALE PROCEED ON PURCHASE OF RESIDENTIAL PROPERTY AND BON DS. SHE CLAIMED EXEMPTION UNDER SECTIONS 54 AND 54EC IN RESPECT OF SAID INVESTMENT. ON VERIFICATION, THE ASSESSING OFFICER OBSERVED THA T AFORESAID PROPERTY AND BONDS WERE NOT PURCHASED IN THE NAME OF THE ASS ESSEE ALONE BUT WERE ALSO IN THE NAME OF HER HUSBAND. HE THEREFORE, HELD THAT IF THE OWNERSHIP OF THE PROPERTY IS SHARED WITH SOMEONE EL SE, THEN THE PROPERTY CANNOT BE SAID TO BE PURCHASED BY THE ASSE SSEE ALONE AND, THEREFORE, ONLY 50 PER CENT OF THE INVESTMENT WAS T O BE ALLOWED AS EXEMPT IN THE HANDS OF THE ASSESSEE. ON APPEAL, THE COMMISSIONER (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFI CER. ON SECOND APPEAL, THE TRIBUNAL HELD THAT NEITHER SECTION 54 N OR SECTION 54EC MANDATES THAT THE PURCHASE OF THE PROPERTY OR INVES TMENT IN BONDS SHOULD BE EXCLUSIVELY IN THE NAME OF THE ASSESSEE. THOUGH THE NAME OF THE ASSESSEE'S HUSBAND WAS SHOWN IN THE SALE DEED A S WELL AS IN THE BONDS, AS THE ENTIRE CONSIDERATION FOR ACQUISITION OF THE SAME WAS ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 7 FLOWN FROM THE ASSESSEE, IN LAW THE ASSESSEE'S HUSB AND HAD NO RIGHT. IN THAT VIEW OF THE MATTER, THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO BENEFIT OF DEDUCTIONS. THE COURT HELD: 'A CAREFUL READING OF SECTION 54 AS WELL AS SECTION 54EC MAKES IT CLEAR THAT WHEN CAPITAL GAINS ARISE FROM THE TRANSF ER OF LONG TERM CAPITAL ASSET TO AN ASSESSEE AND THE ASSESSEE HAS, WITHIN THE PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE ON WHICH THE TRANSFER TOOK PLACE PURCHASE OR HAS, WITHIN THE PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER, CONSTRUCT R ESIDENTIAL HOUSE, THEN INSTEAD OF CAPITAL GAIN BEING CHARGED TO INCOM E-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIO NS MADE UNDER THE SECTION WHICH GRANTS EXEMPTION FROM PAYME NT OF CAPITAL GAINS AS SET OUT THEREUNDER. THEREFORE, IN THE ENTIRE SECTION 54, THE PURCHASE TO BE MADE OR THE CONSTRUC TION TO BE PUT UP BY THE ASSESSEE SHOULD BE THERE IN THE NAME OF T HE ASSESSEE, IS NOT EXPRESSLY STATED. SIMILARLY, EVEN IN RESPECT OF SECTION 54EC, THE ASSESSEE HAS AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER INVESTED THE WHOLE OR ANY PART OF THE CAPITAL GAINS IN THE LONG TERM SPECIFIE D ASSET THEN SHE WOULD BE ENTITLED TO THE BENEFIT MENTIONED IN THE S AID SECTION. THERE ALSO, IT IS NOT EXPRESSLY STATED THAT THE INV ESTMENT SHOULD BE IN THE NAME OF THE ASSESSEE. THEREFORE, TO ATTRA CT SECTION 54 AND SECTION 54EC WHAT IS MATERIAL IS THE INVESTMENT OF THE SALE CONSIDERATION IN ACQUIRING THE RESIDENTIAL PREMISES OR CONSTRUCTING A RESIDENTIAL PREMISES OR INVEST THE A MOUNTS IN BONDS SET OUT IN SECTION 54EC. ONCE THE SALE CONSID ERATION IS INVESTED IN ANY OF THESE MANNER, THE ASSESSEE WOULD BE ENTITLED TO THE BENEFIT CONFERRED UNDER THIS PROVISION. IN T HE ABSENCE OF AN EXPRESS PROVISION CONTAINED IN THESE SECTION THAT T HE INVESTMENT SHOULD BE IN THE NAME OF THE ASSESSEE ONLY, ANY SUC H INTERPRETATION WOULD AMOUNT TO COURT INTRODUCING TH E SAID WORD IN THE PROVISION WHICH IS NOT THERE. IT AMOUNTS THE COURTS LEGISLATING WHEN THE PARLIAMENT HAS DELIBERATELY NO T USED THOSE WORDS IN THE SAID SECTION. [PARA 7] IN THE INSTANT CASE, THE ASSESSEE HAS PURCHASED THE PROPERTY JOINTLY WITH HER HUSBAND. SHE HAS INVESTED THE MONE Y IN RURAL BONDS JOINTLY WITH HER HUSBAND, IT IS NOBODY'S CASE THAT HER HUSBAND CONTRIBUTED ANY PORTION OF THE CONSIDERATIO N FOR ACQUISITION OF THE PROPERTY AS WELL AS BONDS. THE S OURCE FOR ACQUISITION OF THE PROPERTY AND THE BONDS IS THE SA LE CONSIDERATION. IT IS NOT IN DISPUTE. ONCE THE SALE CONSIDERATION IS UTILIZED FOR THE PURPOSE MENTIONED UNDER SECTIONS 5 4 AND 54EC, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF THOSE PR OVISION. AS THE ENTIRE CONSIDERATION HAS FLOWN FROM THE ASSESSEE AN D NO CONSIDERATION HAS FLOWN FROM HER HUSBAND, MERELY BE CAUSE EITHER IN THE SALE DEED OR IN THE BOND HER HUSBAND S NAME IS ALSO MENTIONED, IN LAW HE WOULD NOT HAVE ANY RIGHT. IN T HAT VIEW OF - ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 8 THE MATTER, THE ASSESSEE CANNOT BE DENIED THE BENEF IT OF DEDUCTION OF THE AFORESAID AMOUNT. THE TRIBUNAL, ON PROPER APPRECIATION OF THE MATERIAL ON RECORD, HAS RIGHTLY ALLOWED THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ASSESS ING AUTHORITY AS WELL AS THE APPELLATE COMMISSIONER. [P ARA 8]' 1.5 IN THE INSTANT CASE ALSO THERE IS NO DISPUTE T HAT THE ENTIRE PURCHASE CONSIDERATION FOR THE NEW ASSET HAS COME FROM THE F UNDS OF THE APPELLANT. EVEN THE LOAN FROM KOTAK MAHINDRA BANK H AS BEEN TAKEN IN THE NAME THE APPELLANT. THE PROPERTY IS ALSO REFLEC TED IN THE BALANCE- SHEET OF THE APPELLANT. IN THE CIRCUMSTANCES THE RE BATE OF SECTION 54 CANNOT BE DENIED ON THE GROUNDS THAT THE NEW ASSET HAS BEEN PURCHASED IN A JOINT NAME. GIVEN THE ABOVE FACTS OF THE MATTER AND THE RATIO OF THE DECISIONS CITED SUPRA, THE AO IS DIREC TED TO ALLOW THE DEDUCTION U/S.54. THIS GROUND OF APPEAL IS THEREFO RE ALLOWED. 4.4.2 ON A CAREFUL PERUSAL OF THE ORDERS OF THE AUT HORITIES BELOW AND THE JUDICIAL PRONOUNCEMENTS CITED (SUPRA). IN RESPECT O F THE ISSUE OF PURCHASE OF THE NEW ASSET (FLAT NO. 3205 & 3206 AT OBEROI SP RINGS) IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE, WE FIND THAT TH E PROVISIONS OF SECTION 54 OF THE ACT DO NOT PROHIBIT THE SAME OR MANDATE T HAT THE PURCHASE OF THE PROPERTY SHOULD BE SHOWN ENTIRELY IN THE ASSESSEES NAME. IN THE CASE ON HAND EVEN THOUGH THE WIFE IS SHOWN AS JOINT OWNER I N THE SALE DEED, THE AO HAS NOT DOUBTED THAT THE CONSIDERATION FOR ACQUISIT ION OF THE NEW ASSET HAS FLOWN FROM THE ASSESSEE; INCLUDING THE LOAN TAKEN F ROM KOTAK MAHINDRA BANK. IN FACT, THE PROPERTY IS ADMITTEDLY REFLECTED IN THE ASSESSEES BALANCE SHEET. IN THIS FACTUAL MATRIX OF THE CASE, IN OUR C ONSIDERED VIEW, THE ASSESSEE CANNOT BE DENIED EXEMPTION UNDER SECTION 5 4 OF THE ACT. THIS VIEW WAS UPHELD, ON SIMILAR FACTS, BY THE HON'BLE K ARNATAKA HIGH COURT IN THE CASE OF DIT (IT) VS. MRS JENNIFER BHIDE (2012) 349 ITR 80 (KAR). IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE, DRAWING SUPPO RT FROM THE RATIO OF THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MRS. JENNIFER BHIDE (SUPRA), WE UPHOLD THE DECISION OF THE LEARNE D CIT(A) IN DIRECTING THE AO TO ALLOW THE ASSESSEE EXEMPTION UNDER SECTION 54 OF THE ACT. CONSEQUENTLY, REVENUES GROUNDS OF APPEAL, BEING BE REFT OF MERIT, ARE DISMISSED. 5. IN THE RESULT, REVENUES APPEAL FOR A.Y. 2010-11 IS DISMISSED. ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 9 6. ASSESSEES APPEAL IN ITA NO. 6872/MUM/2014 FOR A.Y. 2010-11 6.1 IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING DISALLOWANCE OF INTEREST TO THE EXTENT OF RS.248,32 5/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING DISALLOWANCE OF 1/20 TH OF THE FOLLOWING EXPENSES OF FILM PRODUCTION HOUSE (PUSHPA KRISHNA CREATIONS) EXCEPT WHERE PAYME NTS HAVE BEEN MADE BY CHEQUES: - DRESS & COSTUMES RS. 16,27,046/- DANCERS WAGES RS.1,38,08,200/- SALARY RS. 16,32,000/- TECHNICAL REMUNERATION RS. 1,72,827/- 3. THAT THE ORDER OF THE LD AO IS BAD IN LAW AND ON FACTS. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE F OREGOING GROUNDS OF APPEAL. 5. TAT THE ORDERS OF LD CIT(A) AND THE LD AO ARE BA D IN LAW AND ON FACTS. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE F OREGOING GROUNDS OF APPEAL. 7. AT THE OUTSET OF THE HEARING, THE LEARNED A.R. OF T HE ASSESSEE HAS SUBMITTED THAT ALL THE GROUNDS RAISED FROM SR. NO. 1 TO 6 (SUPRA) ARE NOT BEING PRESSED BY THE ASSESSEE. IN THAT VIEW OF THE MATTER, ALL THE GROUNDS RAISED BY THE ASSESSEE 8. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2010- 11 IS DISMISSED. 9. TO SUM UP, THE CROSS APPEALS OF BOTH REVENUE AND TH E ASSESSEE FOR A.Y. 2010-11 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 4 TH NOVEMBER, 2016 ITA NOS. 6872 & 7232/MUM/2014 SHRI VISHWANATH ACHARYA 10 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -3, MUMBAI 4. THE CIT - 11, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.