DEVEN G. GANDHI, MUMBAI V. CIT (A ) 35, MUMBAI

ITA 7322/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5190 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 26-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAYAK THOSAR
• Section: 143(3); 54

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI .., !' !' !' !' .!. #$%, &' & ( BEFORE SHRI B.R. MITTAL, J.M. AND SHRI P.M. JAGTAP, AM ./ I.T.A. NO. 6433 /MUM/2011 ( * + ',+ * + ',+ * + ',+ * + ',+ / / / / ASSESSMENT YEAR : 2007-08 ASSTT. COMMISSIONER OF INCOME TAX 19(2), 3 RD FLOOR, ROOM NO. 315, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012. * * * * / VS. MR. RAJEEV KAMLESH GENERIWALA, 9, SHREE BUILDING, S.V. ROAD, SANTACRUZ (W), MUMBAI 400 054. - &' ./ PAN : AAEPG0951C ( -. / // / APPELLANT ) .. ( /0-. / RESPONDENT ) APPELLANT BY SHRI SANJEEV JAIN RESPONDENT BY : SHRI MAYAK THOSAR *' 1 %' / // / DATE OF HEARING : 11-11-2013 23, 1 %' / DATE OF PRONOUNCEMENT : 11-11-2013 [ &4 / O R D E R PER P.M. JAGTAP, A.M . : .!. #$%, &' THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) 35, MUMBAI DATED 04-07-2011 AND IN THE SOL ITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF T HE LD. CIT(A) IN ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54 OF THE INCOME TAX ACT, 1961 IN RESPECT OF EXPENDITURE OF RS. 14,69,000/- INCURRED TOWARDS IMPROVEMENT OF THE NEW RESIDENTIAL HOUSE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDU AL WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28-11-20 07 DECLARING TOTAL ITA 6433/M/11 2 INCOME OF RS. 1,31,13,194/- COMPRISING, INTER ALIA, THE LONG TERM CAPITAL GAIN ARISING FROM SALE OF HOUSE PROPERTY. WHILE COMPUTI NG THE LONG TERM CAPITAL GAIN, DEDUCTION U/S 54 OF THE ACT WAS CLAIMED BY TH E ASSESSEE IN RESPECT OF INVESTMENT OF RS. 68,11,000/- MADE IN ACQUISITION O F NEW RESIDENTIAL HOUSE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE A.O. THAT THE AMOUNT SO INVESTED BY THE ASSESSEE IN ACQUISITI ON OF NEW RESIDENTIAL HOUSE WAS INCLUSIVE OF EXPENDITURE OF RS.14,69,000/ - INCURRED BY THE ASSESSEE ON MAKING IMPROVEMENT IN THE NEW RESIDENTI AL HOUSE. ACCORDING TO HIM, THE SAID EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT ON ACCOUNT OF PURCHASE OF NEW HOUSE OR FOR MAKING THE SAID HOUSE HABITABLE AND THE ASSESSEE, THEREFORE, WAS NOT ENTITLED FOR DEDUCTION U/S 54 OF THE ACT TO THE EXTENT OF RS. 14,69,000/-. ACCORDINGLY, HE DISALLOW ED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 54 TO THE EXTENT OF RS. 14,69,000/- IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 24-12-2009. 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THRE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) DIRECTED THE A.O. TO ALLO W THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54 OF THE ACT IN RESPECT OF EXPEND ITURE OF RS. 14,69,000/- INCURRED ON IMPROVEMENT OF NEW RESIDENTIAL HOUSE FO R THE FOLLOWING REASONS GIVEN IN PARA NO. 3.3 OF HIS IMPUGNED ORDER:- 3.3 1 HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND THE STAND TAKEN BY THE A.O. ADMITTEDLY, THE A.O. DID NO T DISPUTE THE FACT THAT THE APPELLANT INCURRED ADDITIONAL EXPENSES OF RS.14,69,000/- FOR IMPROVEMENTS IN THE FLOORING, FIXING TILES, PROVIDI NG ADDITIONAL KITCHEN PLATFORM AND IMPROVED ELECTRICAL WIRING AND PROVIDI NG LUSTER PAINT. THE ONLY OBJECTION OF THE A.O. IS THAT THE EXPENDITURE WAS INCURRED TO MAKE THE FLAT MORE COMFORTABLE AND NOT FOR THE PURPOSE O F MAKING THE HOUSE HABITABLE. HE WAS OF THE OPINION THAT FLAT PROVIDED BY THE BUILDER WAS THEREFORE, IT WAS NOT NECESSARY FOR THE APPELLANT T O PROVIDE IMPROVEMENT TO THE FLAT. THE ABOVE REASONING GIVEN BY THE A.O. IS UNTENABLE. IT IS FOR THE ASSESSEE TO DECIDE WHAT TYPE OF BUILDING IS TO BE PURCHASED AND THERE IS NO RESTRICTION IN SECTION 54 TO HOLD THAT ONLY THE EXPENDITURE ITA 6433/M/11 3 INCURRED FOR THE PURPOSE OF MAKING THE FLAT HABITAB LE SHALL BE CONSIDERED AS EXEMPT U/S.54. AS PER SECTION 54, THE A.O. HAS TO ALLOW DEDUCTION U/S. 54 THE COST OF NEW RESIDENTIAL HOUSE AND IT IS FOR THE ASSESSEE TO SELECT THE QUALITY OF THE HOUSE. WHEN T HE A.O. HAS NOT DISPUTED THE GENUINENESS OF EXPENDITURE INCURRED BY THE APPELLANT TOWARDS PROVIDING ADDITIONAL AMENITIES, THERE IS NO CASE FOR RESTRICTING THE DEDUCTION U/S.54. THE ABOVE VIEW IS SUPPORTED B Y THE DECISION OF THE HONBLE MUMBAI TRIBUNAL IN THE CASE OF SALEEM F AZELBHOY (106 ITO 167). IN THE CIRCUMSTANCES, THE A.O. IS DIRECTED TO ALLOW A FURTHER SUM OF RS. 14,69,000/- TOWARDS DEDUCTION UI S.54. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH TH E LD. D.R. HAS STRONGLY RELIED ON THE ORDER OF THE A.O. IN SUPPORT OF REVEN UES CASE ON THE ISSUE UNDER CONSIDERATION, IT IS OBSERVED THAT A SIMILAR ISSUE HAS ALREADY BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE CASE OF SALEEM FAZELBHOY VS. DY. CIT REPORTED IN 106 ITD 167 RELIED ON BY THE LD . CIT(A) IN HIS IMPUGNED ORDER WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF C LAIMING DEDUCTION/EXEMPTION IN RESPECT OF INVESTMENT MADE I N RESIDENTIAL HOUSE, SUCH INVESTMENT WOULD NOT ONLY INCLUDE THE COST OF PURCHASE OF HOUSE BUT ALSO THE COST INCURRED IN MAKING THE SAID HOUSE HAB ITABLE. IT WAS HELD THAT THE EXPENDITURE INCURRED IN MAKING THE HOUSE HABITA BLE, THEREFORE, SHOULD BE CONSIDERED AS INVESTMENT IN PURCHASE OF HOUSE FOR T HE PURPOSE OF ALLOWING DEDUCTION/EXEMPTION. AS RIGHTLY OBSERVED BY THE LD . CIT(A) IN THIS CONTEXT, IT IS FOR THE ASSESSEE TO SELECT THE QUALITY OF HOUSE AND THE EXPENDITURE TO BE INCURRED ON MAKING THE HOUSE HABITABLE NEEDS TO BE ASCERTAINED KEEPING IN VIEW SUCH QUALITY AND THE REASONABLENESS THEREOF. K EEPING IN VIEW THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SALEEM FAZELBHOY (SUPRA) AND HAVING REGARD TO THE FACTS OF THE PRESENT CASE AS APPRECIATED BY THE LD. CIT(A), WE ARE OF THE VIEW T HAT THE EXPENDITURE IN QUESTION OF RS. 14,69,000/- HAVING BEEN INCURRED BY THE ASSESSEE FOR THE ITA 6433/M/11 4 PURPOSE OF MAKING THE NEW RESIDENTIAL HOUSE HABITAB LE WAS ELIGIBLE FOR DEDUCTION U/S 54 OF THE ACT. IN THAT VIEW OF THE M ATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWING THE DEDUC TION U/S 54 OF THE ACT IN RESPECT OF EXPENDITURE INCURRED ON IMPROVEMENT OF N EW RESIDENTIAL HOUSE FOR MAKING THE SAME HABITABLE AND DISMISS THE APPEAL FI LED BY THE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOVEMBER, 2013. . &4 1 23, '& 5*6 11-11-2013 3 1 $ SD/- SD/- (B.R. MITTAL) (P.M. JAGTAP ) JUDICIAL MEMBER &' / ACCOUNTANT MEMBER MUMBAI ; 5* DATED 11-11-2013 '.*../ RK , SR. PS &4 1 /%7 8&7,% &4 1 /%7 8&7,% &4 1 /%7 8&7,% &4 1 /%7 8&7,%/ COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 9 () / THE CIT(A)33, MUMBAI. 4. 9 / CIT 19, MUMBAI 5. 7'<$ /%* , , / DR, ITAT, MUMBAI D BENCH 6. $=+ > / GUARD FILE. &4* &4* &4* &4* / BY ORDER, 07% /% //TRUE COPY// ? ? ? ?/ // /@ # @ # @ # @ # ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI