Smt. Suchita Sunilkumar Shah, Ahmedabad V. The Income tax Officer,Ward-1(3), Ahmedabad

ITA 840/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73001 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 05-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2012
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Cost of acquisition
• Section: 54

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 840/AHD/2012 ASSESSMENT YEAR 2008-09 SMT. SUCHITA SUNILKUMAR SHAH A/52, TIRTHBHOOMI, NEAR LAW GARDEN, ELLISBRIDGE, AHMEDABAD. PAN: AKAPS1388P VS INCOME TAX OFFICER WARD-1(3) AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR. D.R. ASSESSEE(S) BY : SH. S.N. SOPARKAR WITH URVASHI SHODHAN, AR / // / DATE OF HEARING : 05/02/2014 !'# / DATE OF PRONOUNCEMENT : 03 /02/2014 $% $% $% $%/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), AHMEDABAD DATED 23.02.2012 BY TAKING FOLLOWING GROU NDS OF APPEAL: 1) LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG ACTION OF AO IN DISALLOWING EXEMPTION OF RS. 38,12,3607- CLAIMED BY THE APPELLANT U/S 54 OF THE ACT. BOTH THE LOWER AUTHORI TIES FAILED TO APPRECIATE THE FACT THAT THE APPELLANT FULFILLED AL L THE CONDITIONS LAID DOWN IN THE ACT FOR CLAIMING EXEMPTION BY PURC HASING NEW PROPERTY WITHIN ONE YEAR OF SALE THROUGH DULY REGIS TERED ITA NO.840/AHD/2012 SMT. SUCHITA S. SHAH, AHD VS. ITO, WD-1(3), AHD FOR A.Y. 2008-09 - 2 - CONVEYANCE DEED. LD. CIT(A) FURTHER ERRED IN HOLDIN G THAT THE NEW PROPERTY WAS PURCHASED ONE YEAR PRIOR TO DATE O F SALE AND THUS DENIED THE EXEMPTION U/S 54 OF THE ACT. LD. CI T(A) OUGHT TO HAVE QUASHED THE ORDER OF AO AND GRANTED EXEMPTION CLAIMED THE APPELLANT. 2) LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG ACTION OF AO IN REJECTING THE CLAIM OF THE APPELLANT TO BE 88% O WNER OF THE PROPERTY PURCHASED. BOTH THE LOWER AUTHORITIES ERRE D IN PRESUMING THAT IN ABSENCE OF ANY SPECIFIC SHARE MEN TIONED IN AGREEMENT, THE APPELLANT WOULD BE DEEMED TO HOLD ON LY 50% SHARE IN THE PROPERTY IGNORING THE EXPLANATION, SUB MISSIONS AND DOCUMENTARY EVIDENCE ON RECORD THAT THE APPELLANT I NVESTED 88% OF THE COST OF THE PROPERTY. 3) LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG ACTION OF AO IN DETERMINING COST OF PURCHASE AS PER THE AGREEMEN T IGNORING THE CONVEYANCE DEED CLEARLY SPECIFYING TOTAL COST SUBMI TTED ALONG WITH PROOF OF PAYMENT. LD. CIT(A) OUGHT TO HAVE ACC EPTED THE PURCHASE COST SUBMITTED BY THE APPELLANT BASED ON C ONVEYANCE DEED. 4) LEVY OF INTEREST U/S 234A/234B/234C & 234D OF TH E ACT IS NOT JUSTIFIED. 5) INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT I S NOT JUSTIFIED. 2. THE LD. AR OF THE ASSESSEE AT THE OUTSET SUBMITT ED THAT AS THE FACTS AND ISSUE INVOLVED IN GROUND NO. 1, 2 AND 3 ARE INTER-C ONNECTED, THEREFORE THEY ARE BEING ARGUED TOGETHER FOR THE SAKE OF CONV ENIENCE. SINCE THESE GROUNDS HAVE BEEN ARGUED TOGETHER, THEY ARE BEING D ISPOSED OF TOGETHER AS UNDER: ITA NO.840/AHD/2012 SMT. SUCHITA S. SHAH, AHD VS. ITO, WD-1(3), AHD FOR A.Y. 2008-09 - 3 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE EARNED LONG TIME CAPITAL GAIN OF RS 38,12,360/- BY SALE OF A RESIDENTIAL HOUSE ON 29 .12.07. THE ASSESSEE CLAIMED ENTIRE CAPITAL GAIN AS EXEMPT U/S 54 OF THE ACT ON ACCOUNT OF PURCHASE OF 88% SHARE OF INTEREST IN FLAT IN SERENE SUIT APARTMENT AT AHMEDABAD FOR 88% OF RS 64,60,605/-. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION U/S 54 OF THE ACT MAINLY ON THE GROUND THAT IN THE OPINION OF THE ASSESSING OFFICER , THE ASSESSEE PURCHASED THE SAID FLAT ON 20.07.2006 WHICH WAS PRI OR TO ONE YEAR FROM THE DATE ON WHICH CAPITAL GAIN AROSE TO THE ASSESSE E. THE ASSESSING OFFICER ALSO OBSERVED THAT THE TOTAL COST OF THE FL AT WAS RS 29,83,500/- AND ASSESSEES SHARE OF INTEREST IN THAT FLAT WAS 5 0% AND THEREFORE, THE ASSESSEE EVEN OTHERWISE WAS NOT ENTITLED FOR EXEMPT ION OF MORE THAN RS 14,91,750/- I.E. RS 29,83,500 / 2. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION O F ASSESSING OFFICER. 5. WE FIND THAT THE ASSESSING OFFICER CONCLUDED THA T THE ASSESSEE PURCHASED NEW FLAT ON 20.07.2006 ON THE GROUND THAT AGREEMENT TO PURCHASE THE FLAT WAS ENTERED ON THAT DATE AND THE LD. CIT(A) ALSO CONFIRMED THE SAME ON THE GROUND THAT SUBSTANTIAL P AYMENT FOR PURCHASE WAS MADE UP TO JULY 2006. 6. WE FIND FROM COPY OF SALE AGREEMENT DATED 20.07. 2006 WHICH IS PLACED AT PAGE NUMBERS 6 TO 21 OF THE PAPER BOOK FILED BY THE ASSESSEE THAT ON THAT DATE ONLY STRUCTURE OF BUILDING WAS ERECTED AN D ALL FINISHING WORK INCLUDING ELECTRICAL WORK ETC. WAS NOT DONE. THUS, IT IS OBSERVED THAT ON 20.07.2006, THE SAID NEW FLAT WAS INCOMPLETE. THER EFORE, IN OUR ITA NO.840/AHD/2012 SMT. SUCHITA S. SHAH, AHD VS. ITO, WD-1(3), AHD FOR A.Y. 2008-09 - 4 - CONSIDERED VIEW, LOWER AUTHORITIES WERE NOT JUSTIFI ED IN CONCLUDING THAT THE ASSESSEE PURCHASED NEW FLAT ON 20.07.2006. 7. WE FIND THAT THE REGISTERED SALE DEED OF THE NEW FLAT WAS EXECUTED ON 28.03.2008. NO MATERIAL COULD BE BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ASSESSEE RECEIVED POSSESSION OF THE N EW FLAT ON ANY DATE PRIOR TO 28.03.2008. 8. AS PER THE TRANSFER OF PROPERTY ACT IN RESPECT O F CONVEYANCE OF AN IMMOVABLE PROPERTY OF RS 100/- OR MORE, REGISTERED DEED IS MANDATORY. HOWEVER, UNDER THE PROVISIONS OF INCOME TAX ACT, A TRANSACTION IN THE NATURE SPECIFIED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT IS ALSO DEEMED AS TRANSFER AND THUS, WHEN A PART PAYMENT IS MADE UNDER A CONTRACT OF SALE AND ASSESSEE RECEIVES THE POSSESSI ON OF THE PROPERTY, THEN THE ASSESSEE IS DEEMED AS OWNER OF THE PROPERT Y. 9. THEREFORE, IN ABSENCE OF ANY MATERIAL TO SHOW TH AT THE ASSESSEE RECEIVED POSSESSION OF NEW FLAT AT ANY TIME BEFORE 28.03.200 8, IN OUR CONSIDERED VIEW THE ASSESSEE BECAME OWNER OF THE NEW FLAT ONLY ON 28.03.2008 I.E. DATE ON WHICH REGISTERED CONVEYANCE DEED WAS EXECUT ED AND WE FIND THAT THE ASSESSEE PURCHASED NEW FLAT ON 28.03.2008 WHICH WAS WITHIN THE QUALIFYING PERIOD PRESCRIBED U/S 54 OF THE ACT IN RESPECT OF LONG TERM CAPITAL GAIN WHICH AROSE ON 28.12.2007 AND THEREFOR E, COST OF NEW FLAT TO THE ASSESSEE QUALIFIES FOR EXEMPTION U/S 54 OF THE ACT. 10. NOW, COMING TO THE QUESTION OF THE COST OF NEW FLAT TO THE ASSESSEE, THE ASSESSEE CLAIMED SUCH COST AT 88% OF RS 64,60,605/- WHEREAS ACCORDING TO THE LOWER AUTHORITIES SUCH COST WAS RS 14,91,750 /- ONLY. THE LOWER AUTHORITIES CONCLUSION WAS BASED ON THE GROUND THA T AS PER THE AGREEMENT OF SALE, THE TOTAL COST COMES TO RS 29,83 ,500/- AND AS THE NEW ITA NO.840/AHD/2012 SMT. SUCHITA S. SHAH, AHD VS. ITO, WD-1(3), AHD FOR A.Y. 2008-09 - 5 - FLAT WAS PURCHASED IN THE JOINT NAME OF THE ASSESS EE AND HER HUSBAND NAMELY SMT. SUCHITA SUNILKUMAR SHAH AND SH. SUNIL J AYANTILAL SHAH AND AS SEPARATE SHARES OF BOTH THE PURCHASERS WERE SPECIFIED IN THE AGREEMENT, IT IS TO BE PRESUMED THAT BOTH HAD EQUAL SHARE IN THE FLAT. 11. THE ASSESSEE RELIED ON THE DECISION OF MUMBAI B ENCH OF THE TRIBUNAL IN THE CASE OF SH. VASUDEO PANDURANG GINDE VS. ITO IN ITA NOS. 4285/MUM/2009 AND 4540/MUM/2009 CONSOLIDATED ORDER DATED 06.06.2012 WHEREIN IT WAS HELD THAT IN ABSENCE OF S PECIFIC MENTION ABOUT THE INDIVIDUAL SHARE OF OWNERSHIP OF THE JOIN T PURCHASER IN THE AGREEMENT AS PER THE PROVISIONS OF SECTION 45 OF TH E TRANSFER OF PROPERTY ACT, THE INDIVIDUAL SHARE OF THE JOINT PUR CHASER WILL BE DETERMINED ON THE BASIS OF SHARE OF INVESTMENT MADE BY THE PURCHASERS. 12. THE LD. DR COULD NOT CONTROVERT ABOVE SUBMISSIO NS OF THE ASSESSEE AND COULD NOT CITE ANY OTHER CONTRADICTORY DECISION BEF ORE US. THEREFORE, WE HOLD THAT THE ASSESSEES OWNERSHIP IN THE NEW FLAT WILL BE ON THE BASIS OF HER SHARE OF INVESTMENT IN THE NEW FLAT AND LOWER A UTHORITIES WERE NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEE WAS OWNER OF ONLY 50% OF THE SHARE OF THE NEW FLAT. 13. THE LAST ISSUE IN THE PRESENT APPEAL RELATES TO THE COST OF THE NEW FLAT. THE LOWER AUTHORITIES HELD THAT THE COST OF THE NEW FLAT WAS RS 29,83,500/- AND THE SAME WAS BASED ON THE AGREEMENT OF SALE DATED 20.07.2006 AND IN THEIR OPINION, THE PURCHASE PRICE OF NEW FLAT WILL BE THE AMOUNT MENTIONED IN THE AGREEMENT AND NOT THE T OTAL COST. WE FIND THAT THE SECTION 54 PROVIDES FOR COST OF NEW ASSET AND NOWHERE HAS IT STATED THAT ONLY PRICE MENTIONED IN THE AGREEMENT W ILL BE TAKEN INTO CONSIDERATION AND NOT THE ENTIRE COST WHICH WAS INC URRED BY THE ASSESSEE FOR ACQUIRING THE NEW FLAT. THEREFORE, THE COST WI LL INCLUDE ENTIRE ACTUAL ITA NO.840/AHD/2012 SMT. SUCHITA S. SHAH, AHD VS. ITO, WD-1(3), AHD FOR A.Y. 2008-09 - 6 - COST WHICH WAS INCURRED BY THE ASSESSEE TO BECOME T HE OWNER OF THE NEW FLAT. 14. IN THE INSTANT CASE, THE ASSESSEE CONTENDED BEF ORE US THAT ADDITIONAL CIVIL WORK WAS UNDERTAKEN IN THE FLAT FOR WHICH RS 30,93, 530/- WAS PAID ADDITIONALLY TO THE BUILDER. THE ASSESSEE IN SUPPO RT OF HER ABOVE CONTENTION RELIED UPON AN UNAUDITED STATEMENT ON TH E LETTERHEAD OF SAVVY INFRASTRUCTURE COMPANY WHICH IS PLACED AT PAG E NUMBER 30 OF THE PAPER BOOK FILED BEFORE US AND WHICH IS CAPTIONED A S TOTAL COST OF THE FLAT AND ADDRESSED TO THE ASSESSEE NAMELY SH. SUNIL JAYANTILAL SHAH AND SMT. SUCHITA SUNILBHAI SHAH AND WHICH SHOWS THAT AP ART FROM RS 29,83,500/-, RS 30,93,530/- IS FOR EXTRA CIVIL WOR K. 15. WE FIND THAT APART FROM THIS LETTER, NO DOCUMEN T FOR EXTRA CIVIL WORK, IF ANY, WAS FILED BEFORE US. FURTHER, THE ASSESSEE CO ULD NOT EXPLAIN WHY THIS AMOUNT OF RS 30,93,530/- WHICH WAS CLAIMED AS INTEGRAL PART OF COST OF THE NEW FLAT WAS NOT MENTIONED IN THE REGISTERED CONVEYANCE DATED 28.03.2008. IT IS ALSO OBSERVED THAT THE ASSESSEE DID NOT FILE THE DETAILS OF THE PAYMENT MADE BY HER AND HER HUSBAND FOR PURC HASE OF NEW FLAT BEFORE THE ASSESSING OFFICER AND THEREFORE, ASSESSI NG OFFICER COULD NOT VERIFY THE SAME. 16. IN ABSENCE OF DETAILS OF INVESTMENT MADE BY THE ASSESSEE AND HER HUSBAND SEPARATELY, SHARE OF THEIR OWNERSHIP IN THE NEW FLAT ALSO COULD NOT BE VERIFIED BY THE ASSESSING OFFICER. 17. IN THE CIRCUMSTANCES, IN OUR CONSIDERED VIEW IT SHALL BE FAIR AND IN THE INTEREST OF JUSTICE TO RESTORE THIS PART OF GROUND OF APPEAL BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH AF TER PROPER VERIFICATION OF THE ACTUAL COST OF THE NEW FLAT AND THE SHARE OF ASSESSEES OWNERSHIP ITA NO.840/AHD/2012 SMT. SUCHITA S. SHAH, AHD VS. ITO, WD-1(3), AHD FOR A.Y. 2008-09 - 7 - IN THE NEW FLAT AND THEREAFTER ALLOW EXEMPTION U/S 54 OF THE ACT AS PER LAW. NEEDLESS TO MENTION THAT THE ASSESSING OFFICE R SHALL ALLOW REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH AND THE ASSESSEE IS A LSO DIRECTED TO PRODUCE ALL THE DETAILS OF PAYMENTS MADE FOR POSSESSION OF NEW FLAT AS AND WHEN CALLED UPON TO DO SO BY THE ASSESSING OFFICER. THE REFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 18. GROUND NO. 4 OF THE APPEAL OF ASSESSEE READS AS UNDER: LEVY OF INTEREST U/S 234A/234B/234C & 234D OF THE ACT IS NOT JUSTIFIED. 19. GROUND NO. 5 OF THE APPEAL OF ASSESSEE READS AS UNDER INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT JUSTIFIED. 20. AT THE TIME OF HEARING, THE LD. AR OF THE ASSES SEE DID NOT MAKE ANY SUBMISSIONS ON THE ABOVE GROUNDS OF APPEAL. THEREF ORE, THEY ARE DISMISSED FOR WANT OF PROSECUTION. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 21 ST OF FEBRUARY, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 21/02/2014 GHANSH GHANSH GHANSH GHANSHYAM MAURYA YAM MAURYA YAM MAURYA YAM MAURYA, SR. P , SR. P , SR. P , SR. P. .. .S SS S. .. .