HEM CHANDRA R GAVANKAR, MUMBAI V. INCOME TAX OFFICER-21(1)(2), MUMBAI

ITA 7451/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1112 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 29-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Value adopted by valuation officer; Cost of acquisition; Valuation report
• Section: 54F; 147; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 7451/MUM/2017 (ASSESSMENT YEAR: 2006-07) SHRI HEM CHANDRA R. GAVANKAR B-305 ATHASHRI BANER OFF. P.K. SHRODD ROAD BANER, PUNE 411045 VS. INCOME TAX OFFICER - 21(1)(2) 2ND FLOOR, PIRAMAL CHAMBER PAREL, MUMBAI 400012 PAN ACLPG6019L APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI S.K. BEPARI DATE OF HEARING: 27.09.2018 DATE OF PRONOUNCEMENT: 30.11.2018 O R D E R PER SAKTIJIT DEY, JM THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-33, MUMBAI DAT ED 18.07.2017 AND IT RELATES TO A.Y. 2006-07. 2. THERE IS A DELAY OF 80 DAYS IN FILING THE PRESENT A PPEAL. AFTER CONSIDERING THE REASONS FOR DELAY AS EXPLAINED BY T HE ASSESSEE IN THE DELAY CONDONATION PETITION AND THE AFFIDAVIT ACCOMPANYING IT, I AM SATISFIED THAT THE DELAY IN FILING OF THE APPEAL IS DUE TO SUFFICI ENT CAUSE. ACCORDINGLY, I CONDONE THE DELAY AND HEAR THE APPEAL FOR ADJUDICAT ION ON MERIT. 3. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO D ENIAL OF DEDUCTION CLAIMED UNDER SECTION 54 OF THE INCOME TAX ACT, 196 1 (HEREINAFTER 'THE ACT'). 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN I NDIVIDUAL, INITIALLY DID NOT FILE HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR WITHIN THE DUE DATE AS PRESCRIBED UNDER SECTION 139(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE H AS SOLD AN IMMOVABLE ITA NO. 7451/MUM/2017 SHRI HEM CHANDRA R. GAVANKAR 2 PROPERTY DURING THE RELEVANT PREVIOUS YEAR BUT HAS NOT OFFERED ANY CAPITAL GAIN, THE ASSESSING OFFICER (AO) REOPENED THE ASSES SMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS T HE AO ON THE BASIS OF INFORMATION AVAILABLE ON RECORD AND SUBMISSION MADE BY THE ASSESSEE HAVING FOUND THAT THE ASSESSEE IN THE RELEVANT PREV IOUS YEAR HAS SOLD A FLAT FOR A CONSIDERATION OF ` 38,40,480/- PROCEEDED TO COMPUTE THE LONG TERM CAPITAL GAIN. AFTER ALLOWING THE BENEFIT TOWARDS PU RCHASE COST OF THE PROPERTY AND INDEXATION THE AO QUANTIFIED THE NET L ONG TERM CAPITAL GAIN AT ` 35,07,490/-. THE ASSESSEE BEING 50% OWNER OF THE PR OPERTY SOLD, THE AO ADDED AN AMOUNT OF ` 17,53,750/- AT THE HANDS OF THE ASSESSEE BEING 50% OF THE NET LONG TERM CAPITAL GAIN. BEING AGGRIEVED BY THE AFORESAID DECISION OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A). IN THE COURSE OF HEARING OF THE APPEAL BEFORE THE FIRST AP PELLATE AUTHORITY THE ASSESSEE MADE TWO FOLD SUBMISSIONS. FIRSTLY, IT WAS SUBMITTED THAT THE AO HAS WRONGLY ALLOWED BENEFIT OF COST OF ACQUISITION AT ` 67,000/- BY RELYING UPON THE DVO REPORT WHEREAS THE COST OF ACQUISITION AS PER THE VALUATION REPORT OF THE REGISTERED VALUER SHOULD BE ALLOWED A T ` 3,85,000/-. THE SECOND SUBMISSION MADE BY THE ASSESSEE WAS THAT SIN CE THE CAPITAL GAIN DERIVED BY THE ASSESSEE WAS INVESTED IN PURCHASE OF NEW FLAT/RESIDENTIAL HOUSE THE BENEFIT UNDER SECTION 54 OF THE ACT SHOUL D BE ALLOWED. AS REGARDS THE FIRST CONTENTION OF THE ASSESSEE, THE L EARNED CIT(A), AFTER EXAMINING THE CLAIM OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, ACCEPTED THAT THE COST OF ACQUISITION OF TH E ORIGINAL ASSET SHOULD BE ADOPTED AT ` 3,85,000/- AS PER THE VALUATION REPORT OF THE REGIS TERED VALUER. AS REGARDS THE CLAIM OF DEDUCTION UNDER SEC TION 54 OF THE ACT, THE LEARNED CIT(A) AFTER REFERRING TO THE PROVISIONS OF SECTION 54 OF THE ACT WAS OF THE VIEW THAT FOR CLAIMING BENEFIT UNDER THE SAI D PROVISION THE ASSESSEE MUST INVEST THE CAPITAL GAIN/SALE CONSIDERATION IN PURCHASE OF HOUSE PROPERTY IN ITS OWN NAME. IN OTHER WORDS, FOR AVAIL ING BENEFIT UNDER THE AFORESAID PROVISION THE ASSESSEE MUST BE THE OWNER OF THE PROPERTY AND/ OR MUST BE HAVING LEGAL TITLE OVER THE OF THE NEW LE GAL OWNER OF THE NEW HOUSE PROPERTY. FOR COMING TO SUCH CONCLUSION THE L EARNED CIT(A) PRIMARILY RELIED UPON THE DECISION OF THE HON'BLE B OMBAY HIGH COURT IN THE CASE OF PRAKSH VS. ITO (2008) 312 ITR 40. SINCE, TH E NEW HOUSE PROPERTY/ ITA NO. 7451/MUM/2017 SHRI HEM CHANDRA R. GAVANKAR 3 FLAT IN RESPECT OF WHICH THE ASSESSEE CLAIMED DEDUC TION UNDER SECTION 54 OF THE ACT WAS PURCHASED IN THE NAME OF ASSESSEES WIF E AND ADULT DAUGHTER, THE LEARNED CIT(A) DENIED ASSESSEES CLAIM OF DEDUC TION UNDER SECTION 54 OF THE ACT. WHILE DOING SO, THE LEARNED CIT(A) OBSERVE D THAT THE ASSESSEE HAD NOT CLAIMED DEDUCTION UNDER SECTION 54 EITHER IN TH E RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR OR IN THE COURSE O F ASSESSMENT PROCEEDINGS. BEING AGGRIEVED BY THE AFORESAID DECIS ION OF THE LEARNED CIT(A) THE ASSESSEE IS BEFORE THE TRIBUNAL. 5. PERTINENTLY, INSTEAD OF ENGAGING A COUNSEL OR APPEA RING IN PERSON FOR REPRESENTING HIS CASE, THE ASSESSEE HAS CHOSEN TO F ILE A WRITTEN SUBMISSION BY LETTER DATED 10.04.2018 AND HAS REQUESTED DISPOS AL OF HIS APPEAL ON THE BASIS OF THE WRITTEN SUBMISSIONS. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE (D.R.) RELY ING UPON THE OBSERVATIONS OF THE LEARNED CIT(A) AS WELL AS THE D ECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PRAKASH (SUPRA) SU BMITTED, THE ASSESSEE HAVING INVESTED THE CAPITAL GAIN IN A HOUSE PROPER TY PURCHASED IN THE NAME OF HIS WIFE AND ADULT DAUGHTER, IS NOT ELIGIBL E FOR DEDUCTION UNDER SECTION 54 OF THE ACT. 7. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CORE ISSUE ARISING FOR CONSIDERATION BE FORE ME IS, WHETHER THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTI ON 54 OF THE ACT IN RESPECT OF INVESTMENT MADE IN A HOUSE PROPERTY/FLAT PURCHASED IN THE NAME OF WIFE AND ADULT DAUGHTER? A READING OF SECTI ON 54 SUB-SECTION (1) OF THE ACT MAKES IT CLEAR THAT THE CAPITAL GAIN DER IVED BY THE ASSESSEE FROM SALE OF THE ORIGINAL ASSET IF INVESTED BY HIM IN PU RCHASE OF A NEW ASSET WITHIN THE STIPULATED PERIOD WOULD BE ELIGIBLE FOR DEDUCTION UNDER THE SAID PROVISION. IN THE PRESENT CASE THERE IS NO DISPUTE WITH REGARD TO THE SOURCE OF INVESTMENT IN THE NEW HOUSE PROPERTY. IT IS ALSO A FACT ON RECORD THAT THE ORIGINAL ASSET SOLD BY THE ASSESSEE GIVING RISE TO THE CAPITAL GAIN WAS OWNED BY HIM WITH HIS WIFE. THE AO HAS ALSO TAK EN NOTE OF THE AFORESAID FACT AND ASSESSED 50% OF THE LONG TERM CA PITAL GAIN AT THE HANDS OF THE ASSESSEE. INSOFAR AS THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ITA NO. 7451/MUM/2017 SHRI HEM CHANDRA R. GAVANKAR 4 ACT IS CONCERNED, THE ASSESSEE, THOUGH, HAS ADMITTE D THAT THE PROPERTY WAS PURCHASED IN THE NAME OF HIS WIFE AND DAUGHTER, HOW EVER, HE HAS SUBMITTED THAT THE PROVISIONS CONTAINED UNDER SECTI ON 54 BEING A BENEFICIAL PROVISION IT SHOULD BE CONSTRUED LIBERAL LY AND BENEFIT UNDER THE SECTION SHOULD BE ALLOWED TO THE ASSESSEE. FURTHER, THE ASSESSEE SUBMITTED, INTERPRETATION OF SECTION 54 AND 54F NO WAY SUGGEST THAT THE NEW HOUSE PROPERTY, WHEREIN, THE ASSESSEE INVESTED THE CAPITAL GAIN HAS TO BE PURCHASED IN THE NAME OF THE ASSESSEE. HE SUBMIT TED, THE PROVISION ONLY REQUIRES THE ASSESSEE TO INVEST THE CAPITAL GA IN IN PURCHASE OF A NEW HOUSE PROPERTY. THUS, HE HAS SUBMITTED, IF THE ASSE SSEE CAN DEMONSTRATE THAT THE INVESTMENT IN PURCHASE OF A NEW PROPERTY, EVEN THOUGH IN THE NAME OF WIFE, WAS MADE BY THE ASSESSEE FROM THE CAP ITAL GAIN, CONDITIONS OF SECTION 54 WILL BE FULFILLED. IN SUPPORT OF HIS CONTENTION THOUGH THE ASSESSEE HAS RELIED UPON CERTAIN JUDICIAL PRECEDENT S, HOWEVER, RELEVANT CITATIONS HAVE NOT BEEN PROVIDED IN THE WRITTEN SUB MISSION. BE THAT AS IT MAY, WHILE CONSIDERING MORE OR LESS IDENTICAL ISSUE RELATING TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PRAKASH (SUPRA), HAD AN OCCASION TO INT ERPRET THE PROVISIONS OF SECTION 54/54F OF THE ACT. THE HONBLE HIGH COURT H ELD THAT FOR CLAIMING DEDUCTION UNDER THE AFORESAID PROVISIONS THE NEW HO USE PROPERTY MUST BE OWNED BY THE ASSESSEE AND/OR HAVING LEGAL TITLE OVE R THE SAME. THEREFORE, AS PER THE RATIO LAID DOWN IN THE AFORESAID DECISIO N OF THE HON'BLE JURISDICTIONAL HIGH COURT IF THE NEW HOUSE PROPERTY IN RESPECT OF WHICH THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54/54F OF THE ACT IS NOT PURCHASED IN THE NAME OF THE ASSESSEE, NO DEDUCTION UNDER THE SAID PROVISIONS CAN BE CLAIMED. THOUGH, I MUST OBSERVE, THERE ARE JUDICIAL PRECEDENTS HOLDING CONTRARY VIEW INCLUDING THE DECI SION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ITO VS. KAMAL WAHA 351 ITR 4. HOWEVER, SINCE I AM BOUND BY THE DECISION OF THE HON'BLE JUR ISDICTIONAL HIGH COURT RENDERED IN THE CASE OF PRAKSH (SUPRA), FOLLOWING T HE RATIO LAID DOWN THEREIN I HOLD THAT SINCE THE PURCHASE OF NEW PROPE RTY/FLAT IS IN THE NAME OF ASSESSEES WIFE AND ADULT DAUGHTER AND NOT IN AS SESSEES OWN NAME, THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER S ECTION 54 OF THE ACT. ITA NO. 7451/MUM/2017 SHRI HEM CHANDRA R. GAVANKAR 5 ACCORDINGLY, I UPHOLD THE DECISION OF THE LEARNED C IT(A) ON THIS ISSUE BY DISMISSING THE GROUND RAISED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2018. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI, DATED: 30 TH NOVEMBER, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -33, MUMBAI 4. THE PR.CIT - 21, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.