SHALINI KULSHRESHTHA, MUMBAI V. ITO WD 30(3)(3), MUMBAI

ITA 7611/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0533 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: SUNIL R BHANDARI
• Keywords: Capital asset; Cost of acquisition
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.7611/M/2016 ASSESSMENT YEAR: 2012-13 SMT. SHALINI KULSHRESTHA, D51 & 52, DHIRAJ APARTMENT, PODDAR ROAD, MALAD (EAST), MUMBAI 400 097 PAN: ADVPK6996R VS. INCOME TAX OFFICER, WARD 30(3)(3), C-13, BKC, BANDRA, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SUNIL R. BHANDARI, A.R. REVENUE BY : SMT. N. HEMALATHA, D.R. DATE OF HEARING : 14.12.2017 DATE OF PRONOUNCEMENT : 30.01.2018 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 29.08.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2012-13. 2. THIS APPEAL IS TIME BARRED BY 31 DAYS. THE LD. A.R. SUBMITTED AN AFFIDAVIT WHEREIN THE ASSESSEE HAS EXPLAINED THE REASON FOR DELAY IN FILING THE APPEAL IS THAT THE ASSESSEE IS A NON- WORKING LADY AND HAS BEEN CURRENTLY HAVING REGULAR INCOME FROM INVESTMEN TS ONLY THOUGH DURING THE AY 2012-13 SHE EARNED LONG TERM CAPITAL GAINS FROM SALE OF ANCESTRAL PROPERTY. AS SUCH SHE DOES NOT H AVE MUCH KNOWLEDGE ABOUT TAX LAWS AND COMMERCIAL MATTERS. O N RECEIPT OF THE ITA NO.7611/M/2016 SMT. SHALINI KULSHRESTHA 2 ORDER PASSED BY CIT(A) FOR THE A.Y. 2012-13, THOUGH SHE WAS CONTEMPLATING FILING OF FURTHER APPEAL, IT TOOK HER TO CONSULT ANOTHER COUNSEL WHOM SHE APPROACHED THROUGH A FAMILY FRIEND AND IN THE PROCESS, FILING OF THE APPEAL PAPERS GOT DELAYED. 3. SINCE THE REASON FOR FILING THE APPEAL BY DELAY OF 31 DAYS HAS BEEN EXPLAINED BY THE ASSESSEE, I CONDONE THE DELAY AND PROCEED TO DECIDE THE APPEAL. 4. THE ONLY GROUND IN THIS APPEAL IS REGARDING CONF IRMING THE DENIAL OF DEDUCTION UNDER SECTION 54. THE SHORT FA CTS OF THE CASE ARE AS UNDER: THE ASSESSEE HAD SOLD AN ANCESTRAL PROPERTY AT KAN PUR WITH FIVE OTHER CO-OWNERS VIDE TRANSFER DEED DATED 07.09.2011 FOR A TOTAL CONSIDERATION OF RS.9,98,00,000/-. WHILE CALCULATIN G THE LONG TERM CAPITAL GAIN ON TRANSFER OF THE SAID PROPERTY, ASSE SSEE HAS SHOWN TOTAL SALE CONSIDERATION OF RS.1,76,00,000/- AS PER SHARE . FURTHER, SHE ALSO CLAIMED EXEMPTION U/S 54 OF THE ACT ON THIS ENTIRE CAPITAL GAIN FOR PURCHASE OF TWO RESIDENTIAL HOUSES. 5. MATTER TRAVELLED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS ALLOWED THE CLAIM ON ONE RESIDENTIAL HOUSE. 6. DURING THE COURSE OF HEARING, THE LD. A.R. HAS S UBMITTED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. DEVDAS NAIK (2014) 366 ITR 0012 (BOM). THE LD. A.R . HAS ALSO RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE ITA NO.7611/M/2016 SMT. SHALINI KULSHRESTHA 3 OF CIT VS. KHOOBCHAND M. MAKHIJA (2014) 223 TAXMAN 0189 (KAR) WHEREIN THE HONBLE KARNATAKA HIGH COURT CONSIDERIN G THE FACTS OF THE CASE HAS HELD THAT ASSESSEE HAS SOLD ONE HOUSE AND HE HAS PURCHASED 2 PROEPRTIES IN THE NAME OF HIS BOTH SONS AND THE HIGH COURT HAS HELD THAT THE LANGUAGE OF SECTION 54 OF T HE INCOME TAX ACT BEFORE AMENDMENT IN 2015 WAS THAT ASSESSEE SHOULD B E INVESTED CAPITAL GAIN IN RESIDENTIAL HOUSE. IT IS ONLY AFTE R THE AMENDMENT TO SECTION 54F OF THE INCOME TAX ACT BY FINANCE (NO.2) ACT, 2014 WHICH WAS REPLACED BY THE WORDS ONE RESIDENTIAL HO USE, THEREFORE, APPEAL MAY BE ALLOWED. 7. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDER OF REVENUE AUTHORITIES. 8. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. THE BASIC FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE SOLD AN ANCESTRAL PROPERTY AT KANPUR NAMELY NAWAL NIWAS UNDER AGREEMENT DATED 23 RD NOVEMBER 2011 FOR A CONSIDERATION OF RS.998 LAKHS AND SINCE SHARE OF AS SESSEE WAS 17.64%, SHE RECEIVED A SUM OF RS.176 LAKHS. ASSESS EE HAD INHERITED RIGHTS IN THE SAID PROPERTY THROUGH WILL. FOLLOWING IS THE CALCULATION OF LONG TERM CAPITAL G AINS AND THE EXEMPTION U/S 54 CLAIMED BY THE ASSESSEE:- COMPUTATION OF INCOME (SHOWING COMPUTATION OF CAPITAL GAINS) (AMOUNT IN RS.) CAPITAL GAINS SALE OF RESIDENTIAL PROPERTY LESS: EXPENSES INCURRED ON SALE LESS: INDEXED COST OF ACQUISITION 1,76,00,000 1,00,000 1,75,00,000 ITA NO.7611/M/2016 SMT. SHALINI KULSHRESTHA 4 GROSS LONG TERM CAPITAL GAIN LESS: EXEMPTION CLAIMED U/S 54 (ROLLOVER IN NEW PROPERTY) NET LONG TERM CAPITAL GAINS CHARGEABLE TO TAX 17,60,708 1,57,39,292 1,57,39,292 NIL II) IN RESPECT OF LTCG OF RS.157.39 LAKHS THAT ACCR UED TO ASSESSEE, ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION U/S 54. A CCORDINGLY ASSESSEE PLACED A DEPOSIT OF RS.157.39 LAKHS WITH O RIENTAL BANK OF COMMERCE UNDER CAPITAL GAINS ACCOUNTS SCHEME 1988, ON 15 TH MAY 2012 I.E. BEFORE DUE DATE OF FILING OF RETURN FOR A .Y. 2012-13 U/S 139(1). THEREAFTER, ASSESSEE UTILISED THE MONEY PL ACED IN DESIGNATED BANK ACCOUNT IN ACQUIRING 2 FLATS, 1 ST FLAT IN JUNE 2012 AND 2 ND FLAT IN AUGUST 2013. III) THE DETAILS OF THE RESIDENTIAL PROPERTIES INVE STED IN BY THE ASSESSEE ARE AS FOLLOWS:- SR. N DATE OF AGREEMENT COMPLETE ADDRESS OF THE PROPERTY TOTAL PURCHASE COS T INCLUDING STAMP DUTY/REGISTRATION & BROKERAGE (RS.) 1. 2. 14/06/2012 07/08/2013 FLAT NO.B-2202, 22 ND FLOOR, RUSHI HEIGHTS, RIDDHI GARDENS, FILMCITY ROAD, MALAD (E), MUMBAI 400 097 FLAT NO.503, 5 TH FLOOR, WIND FLOWER, MANTRI PARK, DINDOSHI FILMCITY ROAD, GOREGAON (E), MUMBAI-400 065 1,22,35,600 40,00,000 TOTAL PURCHASE COST OF BOTH THE PROPERTIES 1,62,35,600 9. I FIND THAT ASSESSEE IS ENTITLED FOR DEDUCTION O F TWO RESIDENTIAL PROPERTY HOUSES ON THE GROUND THAT THERE IS A DIREC T JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. KHOOBCHAND M. MAKHIJA (SUPRA) WHEREIN THE FACTS OF THE CASE AR E THAT IN A.Y. ITA NO.7611/M/2016 SMT. SHALINI KULSHRESTHA 5 1996-97 LTCG OF RS.284.60 LAKHS ACCRUED TO ASSESSEE AGAINST WHICH IT PURCHASED ONE RESIDENTIAL HOUSE BEING PROPERTY N O.623 FOR RS.76.92 LAKHS. ASSESSEE ALSO ENTERED INTO AGREEME NT FOR PURCHASE OF PROPERTY NO.739 FOR RS.75 LAKHS AND PAID RS.44 L AKHS AGAINST THE SAME AND HE ALSO DEPOSITED RS.170 LAKHS IN DESIGNAT ED BANK ACCOUNT BEFORE FILING THE RETURN AND PAID RS.31 LAKHS FOR T HE 2 ND PROPERTY. BALANCE UNUTILIZED IN DESIGNATED ACCOUNT WAS OFFERE D TO TAX IN A.Y. 1999-2000 AS PER SECTION 54(2). THE HONBLE HIGH C OURT HAS HELD THAT ONE RESIDENTIAL HOUSE IS SOLD OUT OF SALE CONS IDERATION, IT WAS OPEN TO THE ASSESSEE TO PURCHASE A BIG RESIDENTIAL HOUSE AS TO ACCOMMODATE BOTH HIS SONS, IN TERMS OF SECTION 54(1 ), HE WOULD HAVE BEEN ENTITLED TO THE BENEFIT OF THE SAID SECTION. HOWEVER, HE HAS PURCHASED TWO HOUSES IN ORDER TO ACCOMMODATE HIS BO TH THE SONS. THEREFORE, THE HONBLE KARNATAKA HIGH COURT HAS HEL D THAT ACQUISITION OF TWO RESIDENTIAL HOUSES BY ASSESSEE O UT OF CAPITAL GAIN FALLS WITHIN THE PURCHASE OF A RESIDENTIAL HOUSE AN D 54(1) WAS ALLOWED. I FIND THAT THE LANGUAGE OF SECTION 54F O F THE ACT WAS AMENDED IN 2015 AND ASSESSEE SHOULD INVEST CAPITAL GAIN IN RESIDENTIAL HOUSE. IT IS ONLY AFTER AMENDMENT BY F INANCE ACT, 2014 WHICH CAME INTO EFFECT THAT ONE RESIDENTIAL HOUSE S ITUATED IN INDIA. THUS, THE AMENDMENT IS PROSPECTIVE AND NOT RETROSPE CTIVE. THERE IS A DIRECT DECISION OF HONBLE GUJARAT HIGH COURT IN TH E CASE OF LEENA JUGALKISHOR SHAH VS. ACIT IN TAX APPEAL NO.483 OF 2 006 DECIDED ON 14.06.2016 WHEREIN THE HONBLE GUJARAT HIGH COURT H AS HELD AS UNDER: 'THERE WAS NO CONDITION IN SECTION 54F OF THE INCOM E-TAX ACT AT THE RELEVANT TIME ITA NO.7611/M/2016 SMT. SHALINI KULSHRESTHA 6 THAT THE CAPITAL GAIN ARISING OUT OF TRANSFER OF CA PITAL ASSET SHOULD BE INVESTED IN A RESIDENTIAL HOUSE SITUATED IN INDIA. THE LANGUAGE O F SECTION 54F OF THE INCOME-TAX ACT BEFORE ITS AMENDMENT WAS THAT THE ASSESSEE SHOU LD INVEST CAPITAL GAIN IN A RESIDENTIAL HOUSE. IT IS ONLY AFTER THE AMENDMENT T O SECTION 54F OF THE INCOME-TAX ACT BY THE FINANCE (NO. 2) ACT, 2014, WHICH CAME IN TO EFFECT WITH EFFECT FROM 1.4.2015 THAT THE ASSESSEE SHOULD INVEST THE SALE P ROCEEDS ARISING OUT OF SALE OF CAPITAL ASSET IN A RESIDENTIAL HOUSE SITUATED IN INDIA WITHIN THE STIPULATED PERIOD. THUS ON A PLAIN READING OF SECTION 54F OF T HE INCOME-TAX ACT BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT LEAVES NO ROOM FOR ANY DOUBT THAT THE ASSESSEE SHOULD RESTRICT HER INVESTMENT WITHIN INDI A OR OUTSIDE INDIA. THE ONLY CONDITION WAS THAT THE ASSESSEE SHOULD INVEST IN A RESIDENTIAL HOUSE. THE TRIBUNAL HAS WRONGLY INTERPRETED SECTION 54F OF THE INCOME-TAX A CT BY HOLDING THAT THE ASSESSEE SHOULD PURCHASE THE RESIDENTIAL HOUSE SITU ATED IN INDIA. PRIOR TO AMENDMENT TO SECTION 54F OF THE ACT, THE ONLY CONDI TION STIPULATED WAS INVESTMENT IN A RESIDENTIAL HOUSE. WHEN THE SECTION 54F OF THE INCOME-TAX ACT WAS CLEAR AND UNAMBIGUOUS, THERE IS NO SCOPE FOR IMPORTING INTO T HE STATUTE THE WORDS WHICH ARE NOT THERE. SUCH IMPORTATION WOULD BE NOT TO CONSTRU E BUT TO AMEND THE STATUTE. IF THERE IS ANY DEFECT IN THE ACT, IT CAN BE REMEDIED ONLY BY THE LEGISLATION AND NOT BY JUDICIAL INTERPRETATION. 10. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, I A LLOW THE CLAIM. 11. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2018. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 30.01.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.