VISWANATH S. DESHMUKH, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 7358/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3243 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 10-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A KUMBHAR
• Assessee Lawyers: S DEVENDRA
• Section: 143(3); 54F; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.7358(MUM ) 2014 (ASSESSMENT YEAR : 2010-11) SHRI VISHWANATH S DESHMUKH NO.5, DHYANKUNJ CHS LTD., NEAR JAIN MANDIR, IIT MARKET MUMBAI-400 076 PAN NO.AWEPD8290K APPELLANT VS THE INCOME-TAX OFFICER, WARD-21(3)(2), BKC, MUMBAI RESPONDENT ASSESSEE BY : SHRI S. DEVENDRA REVENUE BY : SHRI A. KUMBHAR DATE OF HEARING : 05-05-2016 DATE OF PRONOUNCEMENT : 2 7-05-2016 O R D E R PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSSSEE AG AINST THE ORDER OF CIT(A) DATE 30-09-2014 OF CIT(A)-32, MUMBAI IN CIT( A)-32/ITO.21(3)(2)/IT- 435/2013-14 FOR THE ASSESSMENT YEAR : 2010-11 ON TH E FOLLOWING GROUND; 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE L. CIT(A)-32 MUMBAI HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING EXE MPTION UNDER SECTION 54 AMOUNTING TO RS.44,92,601/- IN RES PECT OF INVESTMENT IN RESIDENTIAL PROPERTY AGAINST SALE OF RESIDENTIAL HOUSE. ITA NO.7358(MUM )/2014 2 2. ON PERUSAL OF THE APPEAL, WE NOTICED THAT THERE IS A DELAY OF ONE DAY IN FILING OF THIS APPEAL AND IN THIS RESPECT AN APPLICATION ALONGWITH AN AFFIDAVIT OF SHRI VISWANATH S DESHMUKH HAS BEEN FIL ED. WE HAVE CONSIDERED THE CONTENTS OF THE APPLICATION AND THE AFFIDAVIT WHICH SHOWS THAT THE ASSESSEE WAS SUFFERING FROM PARALYSIS AND IS A SENIOR CITIZEN AND ALSO CONSIDERING THE FACTS CONTAINED IN THE AFFIDAV IT, WE CONDONE THE DELAY OF ONE DAY IN FILING OF THIS APPEAL AND ADMIT THE A PPEAL FOR HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SOLD A FLAT NO.11/A, FIRST FLOOR, 8 TORANA APARTMENTS, ANDHERI(E), MUMBAI ON 12-10-2009 FOR A CONSIDERATION OF RS.48.00 LAKHS. AFTER INDEXATION, THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS.45,65,528/-. THE ASSESSEE CLAIMED TO HAV E INVESTED RS.56.00 LAKHS IN A NEW RESIDENTIAL FLAT AND CLAIMED DEDUCTI ON U/S 54 OF RS.44,92,601/- AND OFFERED RS.72,927/- AS CAPITAL G AIN FOR THIS ASSESSMENT YEAR. IN THE CASE OF ASSESSEE, THE INFORMATION WAS RECEIVED FROM ITO, WARD-21(3)(20, MUMBAI REGARDING THE SALE OF PROPERT Y BY THE ASSESSEE AS THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11, AS THE TOTAL TAXABLE INCOME WAS BELOW THE THRESHOLD LIMIT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS RE-OPENE D AFTER RECORDING THE REASON. ACCORDINGLY, NOTICE U/S 148 OF THE IT ACT, 1961 WAS ISSUED AND DULY SERVED ON THE ASSESSEE ON 28-03-2013. AFTER ISSUING THE STATUTORY NOTICES AND RECEIVING THE REPLY OF THE ASSESSEE THE ORDER OF ASSESSMENT U/S ITA NO.7358(MUM )/2014 3 143(3) OF THE IT ACT, R.W.S.147 OF THE IT ACT WAS P ASSED ON 11-02-2014 BY ITO 26(1)(2), MUMBAI, THEREBY DISALLOWING THE EXEMP TION CLAIMED BY THE ASSESSEE U/S 54 OF THE IT CT,1961. 4. AGGRIEVED BY THE ORDER OF THE ITO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF BOTH PARTIES DISMISSED THE APPEAL FILED BY THE ASSESSEE VIDE ORD ER DATED 11-02-2014. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE PREFERRED THE PRESENT APPEAL BEFORE US ON THE GROUND MENTIONED HE REIN ABOVE. THE SOLE GROUND TAKEN BY THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE EXEMPTION U/S 54 OF THE IT ACT, AMOUNTING TO RS.44,92,601/- IN RESPECT OF I NVESTMENTS IN RESIDENTIAL PROPERTY AGAINST SALE OF RESIDENTIAL HO USE. 6. WE HAVE HEARD THE COUNSEL FOR THE PARTIES AND H AVE ALSO PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 7. BEFORE WE COME ONTO THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY THE CIT(A) WHILE DEAL ING WITH THE SAID GROUND AND THE OPERATIVE PART OF THE CIT(A) IS REPRODUCED BELOW; 5. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE APPELLANT RELEVA NT CASE LAWS AND THE FACTS OF THE CASE. ADMITTEDLY, I N THIS CASE, THE NEW FLAT PURCHASED BEING FLAT NO.N/5, DHYANKUNJ CHS LTD., NEAR JAIN MANDIR, IIT MARKET, P OWAI, MUMBAI-400 76 IS NOT IN THE NAME F THE APPELLANT, B UT IS IN THE NAME OF HIS SON SHRI SHAILENDRA V DESHMUKH AND HIS ITA NO.7358(MUM )/2014 4 WIFE MRS SWATI S DESHMUKH. THE ASSESSING OFFICER HAS DENIED THE EXEMPTION CLAIMED BY THE APPELLANT ON TH E GROUND THAT THE NEW FLAT IS NOT PURCHASED IN THE NA ME OF THE APPELLANT. THEREFORE, THE MOOT ISSUE TO BE DEC IDED IS WHETHER THE APPELLANT IS ENTITLED FOR EXEMPTION U/S 54, EVEN IF THE NEW RESIDENTIAL HOUSE IS NOT PURCHASED IN HIS NAME. THE ASSESSING OFFICER IN THE ASSESSMENT ORD ER HAS RELIED UPON THE CASE OF PRAKASH VS ITO & OTHERS.(20 09) 312 ITR 40 OF BOMBAY HIGH COURT (NAGPUR BENCH) AND HAS STATED THAT THE APPELLANTS CASE IS SQUARELY COVERE D BY THIS DECISION WHICH IS AGAINST HIM. 5.1 I HAVE GONE THROUGH THE AFORESAID DECISION OF BOMBAY HIGH COURT N THE CASE OF PRAKASH VS ITO & OTHERS. THIS DECISION WHICH IS F JURISDICTIONAL HIG H COURT WHICH CLEARLY LAYS DOWN THAT FOR QUALIFYING FOR EXE MPTION U/S 54F IT IS NECESSARY TO HAVE THE INVESTMENT MADE IN RESIDENTIAL HOUSE IN THE NAME OF THE ASSESSEE ONLY, ASSESSEE HAVING PURCHASED THE NEW PROPERTY IN THE N AME OF SON, EXEMPTION WAS NOT AVAILABLE. FURTHER, IN TH IS CASE THE HON'BLE BOMBAY HIGH COURT EXAMINED THE DEFINITI ON OF THE TERM ASSESSEE CONTAINED IN SECTION 2(7) OF THE IT ACT 1961. IT IS OBSERVED BY THE HON'BLE HIGH COURT THA T THE ASSESSEE, WHO IS THE OWNER OF THE ORIGINAL ASSET NE EDS TO PURCHASE OR CONSTRUCT A RESIDENTIAL HOUSE WITHIN TH E SPECIFIED PERIOD. IT IS ALSO OBSERVED BY THE HON'B LE HIGH COURT THE CONCEPTS OF ASSESSEE OWN, OWNER, OWNERS HIP, CO-OWNER, OWNER OF THE HOUSE PROPERTY AND OWNERSHIP OF PROPERTY CONTAINED IN VARIOUS SECTIONS WERE VERY MU CH INTERLINKED AND CONNECTED FOR GRANTING BENEFITS UND ER THE INCOME-TAX ACT. THE BOMBAY HIGH COURT EXPRESSED TH E VIEW THAT RIGHT FROM THE SALE OF THE ORIGINAL ASSET TILL THE ITA NO.7358(MUM )/2014 5 PURCHASE AND /OR CONSTRUCTION OF THE NEW ASSET, THE OWNERSHIP AND DOMAIN OVER THE NEW ASSET WAS A MUST. ACCORDING TO THE HIGH COURT, THE NEW PROPERTY MUST BE OWNED BY THE ASSESSEE, OR HE SHOULD HAVE LEGAL TITL E OVER THE SAME, THOUGH OTHERS MIGHT USE AND OCCUPY THE PROPERTY ALONGWITH THE ASSESSEE. IN THIS CASE, THE BOMBAY HIGH COURT ALSO OBSERVED THAT BY CONSTRUCTING THE H OUSE IN THE NAME OF HIS SON THE ASSESSEE EFFECTIVELY TRANSF ERRED THE NEW PROPERTY TO HIS SON, WHO BECAME THE OWNER THEREOF, IN SPITE OF PROHIBITION ON TRANSFER OF THE NEW HOUSE FOR A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THE HON'BLE HIGH COURT OBSERVED TH AT IN THIS WAY THE ASSESSEE HAS NO DOMAIN AND/OR RIGHT ON THE PROPERTY, WHICH DISENTITLED HIM TO CLAIM THE EXEMPT ION. APART FROM THE AFORESAID DECISION OF PRAKASH VS IT O & ORS, THE ASSESSING OFFICER HAS ALSO RELIED UPON THE DECISION OF PUNJAB & HARYANA COURT IN THE CASE OF J AI NARAYAN VS ITO 306 ITR 335 AND KALYA VS CIT 251 CTR 1474 OF RAJASTHAN HIGH COURT. 5.2 RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COURT[S DECISION IN THE CASE OF PRAKASH VS ITO & O RS (SUPRA) AND OTHER DECISIONS CITED BY THE ASSESSING OFFICER I AM OF THE VIEW THAT THE APPELLANT S NOT ENTITLED FO R EXEMPTION U/S 54 OF THE ACT. THE ASSESSING OFFICER IS FULLY JUSTIFIED IN DENYING THE EXEMPTION U/S 54 OF THE AC T TO THE APPELLANT. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN DENYING THE EXEMPTION CLAIMED BY THE APPELLANT U/S 54 AMOUNTING TO RS.44,92,601/- IS UPHELD AND CONFIRMED . GROUNDS OF APPEAL AS RAISED IN GROUND NO.1 ARE ACCORDINGLY DISMISSED. ITA NO.7358(MUM )/2014 6 8. WE HAVE ANALYSED THE AFORE MENTIONED ORDERS PAS SED BY THE CIT(A) AND WE HAVE ALSO HEARD THE COUNSEL FOR BOTH PARTIES . 9. THE LEARNED AR APPEARING ON BEHALF OF THE ASSES SEE ARGUED THAT THE ASSESSEE IS AGED ABOUT 79 YEARS AND IS SUFFERIN G FROM PARALYSIS AND HE IS ALWAYS KEEPING BAD HEALTH AND BECAUSE OF THIS RE ASON THE AGREEMENT FOR PURCHASE OF NEW FLAT WAS MADE IN THE NAME OF HIS SO N SHRI SHAILENDRA V DESHMUKH AND HIS WIFES NAME WAS ADDED FOR THE SAKE OF CONVENIENCE. IT WAS FURTHER ARGUED BY THE LEARNED AR THAT THE ASSES SING OFFICER HAS WRONGLY APPLIED THE PRINCIPLES LAID DOWN BY THE HON 'BLEBLE BOMBAY HIGH COURT IN THE CASE OF PRAKASH VS ITO & ORS(2009) 312 ITR 40. IT WAS FURTHER ARGUED BY THE LEARNED AR THAT AS PER THE FA CTS OF THE AFORESAID CASE, EXEMPTION WAS SOUGHT U/S 54F OF THE IT ACT, 1961, B UT IN THE PRESENT CASE OF THE ASSESSEE THE EXEMPTION HAS BEEN SOUGHT BY TH E ASSESSEE U/S 54 OF THE IT ACT, 1961. IT WAS FURTHER ARGUED THAT THE A SSESSEE SOLD THE PROPERTY OWNED BY HIM AND PURCHASED THE NEW PROPERTY IN THE NAME OF HIS SON AND PAID THE CONSIDERATION OUT OF THE SALE PROCEEDS. HO WEVER, THERE IS NO INTENTION OF THE ASSESSEE TO TRANSFER THE PROPERTY TO HIS SON. IT WAS FURTHER ARGUED BY THE LEARNED AR OF THE ASSESSEE THAT THE A SSESSEE HAS COMPLETE AND FULL DOMAIN ON THE NEW PROPERTY AND THE ASSESSE E IS IN FACT STAYING AND HAVING POSSESSION OF THE SAID PROPERTY WITH FUL L AUTHORITY AND CONTROL OVER THE SAID PROPERTY. IT WAS ALSO ARGUED BY THE LEARNED AR THAT THE NAME OF THE SON WAS USED FOR CONVENIENCE PURPOSE AND NAM E SAKE ONLY. ITA NO.7358(MUM )/2014 7 HOWEVER, THE DE-JURE OWNERSHIP, RIGHT, TITLE AND IN TEREST EXISTING IN THE NEW FLAT SHALL BE WITH THE ASSESSEE. THE LEARNED RELIE D UPON THE JUDGMENT IN THE CASE OF DIT(INTL.TAXATION) VS JENNIFER BHIDE (2 012) 349 ITR 80(KAR.) RENDERED BY THE HON'BLE KARNATAKA HIGH COURT AND IN THE CASE OF CIT VS KAMAL WAHAL (2013) 351 ITR 4 (DEL.) RENDERED BY THE HON'BLE DELHI HIGH COURT. 10. THE LEARNED AR FURTHER ARGUED THAT THE DECISION OF THE HONBLE KARNATAKA HIGH COURT AS WELL AS THE HON'BLE DELHI H IGH COURT ARE LATER DECISIONS THEREFORE, THE PRINCIPLES LAID DOWN IN TH E AFORESAID JUDGMENTS SHOULD BE PREFERRED. THE LEARNED AR FURTHER ARGUED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VEGETABLE PRODU CTS LTD (1973) 88 ITR 192 HAS HELD THAT WHEN TWO VIEWS ARE POSSIBLE, THE N THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE ADOPTED. 11. ON THE OTHER HAND, LD. DR APPEARING ON BEHALF O F THE REVENUE RELIED UPON THE DETAILED ORDER PASSED BY THE AO AS WELL AS Y THE CIT(A). AFTER CONSIDERING THE ARGUMENTS OF BOTH PARTIES, WE ARE OF THE CONSIDERED VIEW THAT IT IS AN ADMITTED FACT THAT THE NEW FLAT BEARING NO.N/5, DHYANKUNJ, CHGS LTD, NEAR JAIN MANDIR, IIT MARKET, POWAI, MUMBAI IS NOT IN THE NAME OF ASSESSEE, BUT IN THE NAME OF HIS SON SHRI SHAILENDRA V DESHMUKH. ITA NO.7358(MUM )/2014 8 12. WE HAVE ALSO CONSIDERED THE JUDGMENTS CITED BY BOTH THE PARTIES AND AFTER GOING THROUGH THE FACTS OF THE PRESENT CA SE, WE ARE OF THE CONSIDERED VIEW THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN T HE CASE OF PRAKASH VS ITO & ORS (2009) 312 ITR 40. AS PER THE PRINCIPLES LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE AFOREMENTIONED CAS E, IT HAS CLEARLY LAID DOWN THAT FOR QUALIFYING FOR EXEMPTION U/S 54F, IT IS NECESSARY TO HAVE THE INVESTMENTS N THE RESIDENTIAL HOUSE IN THE NAME OF ASSESSEE ONLY, IF THE ASSESSEE HAVING PURCHASED THE NEW PROPERTY IN THE N AME OF HIS SON, THEN THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION AS PER T HE JUDGMENT OF HON'BLE HIGH COURT, THE DEFINITION OF TERM ASSESSEE CONTAIN ED IN SECTION (2)(7) OF THE IT ACT AND IT WAS OBSERVED BY THE HON'BLE BOMBAY HI GH COURT THAT THE ASSESSEE WHO IS THE OWNER OF THE ORIGINAL ASSET, NE EDS TO PURCHASE OR CONSTRUCT A RESIDENTIAL HOUSE WITHIN THE SPECIFIED PERIOD. IT IS ALSO OBSERVED BY THE HON'BLE HIGH COURT THAT THE ASSESSE E, WHO IS THE OWNER OF THE ORIGINAL ASSET NEEDS TO PURCHASE OR CONSTRUCT A RESIDENTIAL HOUSE WITHIN THE SPECIFIED PERIOD. IT IS ALSO OBSERVED BY THE H ON'BLE HIGH COURT THE CONCEPTS OF ASSESSEE OWN, OWNER, OWNERSHIP, CO-O WNER, OWNER OF THE HOUSE PROPERTY AND OWNERSHIP OF PROPERTY CONTAINED IN VARIOUS SECTIONS WERE VERY MUCH INTERLINKED AND CONNECTED FOR GRANTI NG BENEFITS UNDER THE INCOME-TAX ACT. THE HON'BLE BOMBAY HIGH COURT EXPR ESSED THE VIEW THAT RIGHT FROM THE SALE OF THE ORIGINAL ASSET TILL THE PURCHASE AND /OR CONSTRUCTION OF THE NEW ASSET, THE OWNERSHIP AND DOMAIN OVER THE NEW ITA NO.7358(MUM )/2014 9 ASSET WAS A MUST. ACCORDING TO THE HIGH COURT, THE NEW PROPERTY MUST BE OWNED BY THE ASSESSEE, OR HE SHOULD HAVE LEGAL TITL E OVER THE SAME, THOUGH OTHERS MIGHT USE AND OCCUPY THE PROPERTY ALONGWITH THE ASSESSEE. IN THIS CASE, THE BOMBAY HIGH COURT ALSO OBSERVED THAT BY C ONSTRUCTING THE HOUSE IN THE NAME OF HIS SON THE ASSESSEE EFFECTIVELY TRA NSFERRED THE NEW PROPERTY TO HIS SON, WHO BECAME THE OWNER THEREOF, IN SPITE OF PROHIBITION ON TRANSFER OF THE NEW HOUSE FOR A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THE HON'BLE HIGH COURT OBSE RVED THAT IN THIS WAY THE ASSESSEE HAS NO DOMAIN AND/OR RIGHT ON THE PROPERTY , WHICH DISENTITLED HIM TO CLAIM THE EXEMPTION. 13. APART FROM THE AFORESAID MENTIONED DETAILS/JUDG MENTS OF HON'BLE BOMBAY HIGH COURT OUR VIEW IS ALSO FORTIFIED BY THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAINARAYAN VS ITO. 14. AFTER CONSIDERING THE ENTIRE FACTS AS WELL AS T HE LEGAL PREPOSITION, AND AFTER CONSIDERING THE JUDICIAL PRONOUNCEMENTS C ITED BY BOTH PARTIES, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED A WEL L REASONED AND JUDICIOUS ORDER AND NO NEW MATERIAL OR EVIDENCES HAS BEEN BRO UGHT BEFORE US BY THE ASSESSEE IN ORDER TO CONTROVERT OR REBUT THE FINDIN GS SO RECORDED BY THE CIT(A). THEREFORE, WE FIND NO REASON TO INTERFERE O R DEVIATE FROM THE FINDINGS ITA NO.7358(MUM )/2014 10 RECORDED BY THE CIT(A). THEREFORE, WE DISMISS THIS GROUND RAISED BY THE ASSESSEE AND UPHOLD THE ORDER OF THE CIT(A). 15. IN THE NET RESULT, THE APPEAL FILED BY THE ASSE SSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 27 TH DAY OF MAY, 2016 SD/- SD/- (JASON P BOAZ) ACCOUNTANT MEMBER (SANDEEP GPOSAIN) JUDICIAL MEMBER MUMBAI: D A T E D : 27-05-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, MUMBAI 6 GUARD FILE BY ORDER, AR, ITAT, MUMBAI