RENU AGRAWAL,CHENNAI V. ACIT, NCC-10(1), CHENNAI

ITA 2673/CHNY/2024

AI Insights

The case revolves around the deduction claimed under Section 54F of the Income Tax Act, 1961, by Smt. Renu Agrawal following the sale of her property at Nallur, which resulted in a Long Term Capital Gain. The assessee claimed a deduction for the purchase of a new flat in Ozone Projects, which was partially denied by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], on the grounds that the property was jointly owned with her daughter, thus restricting the deduction to 50%. The Tribunal, however, found that the entire financial burden of the property purchase was borne by the assessee and her husband, and not by her daughter, leading to the decision to allow the full deduction as claimed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107216 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Other Referred Cases: CIT vs. Natarajan
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: J. PRABHAKAR
• Keywords: Reassessment proceedings; Capital Gains; TDS
• Section: 54; 54F

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ \u000eा यपीठ, चे\u0013ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0016ी एबी टी. वक\u001b, \u000eा ियक सद\u001d एवं \u0016ी जगदीश, लेखा सद\u001d क े सम$ BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2673/Chny/2024 िनधा &रण वष&/Assessment Year: 2014-15 Smt. Renu Agrawal, 17, Rajarathinam Street, Kilpauk, Chennai – 600 010. [PAN: AACPA 7597C] Vs. The Assistant Commissioner of Income Tax, Non-Corporate Circle 10(1), Chennai. (अपीला थ\u001b/Appellant) ()*थ\u001b/Respondent) अपीला थ\u001b की ओर से/ Appellant by : Shri J. Prabhakar, FCA )*थ\u001b की ओर से /Respondent by : Ms. R. Anita, Addl.CIT सुनवा ईकीता रीख/Date of Hearing : 15.01.2025 घोषणा कीता रीख /Date of Pronouncement : 31.01.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee, against the order of the Ld. Commissioner of Income Tax (Appeals) / NFAC (hereinafter in short “CIT(A)\") dated 31.08.2024 for assessment year 2014-15 (hereinafter in short “AY\"). 2. The only grievance of the assessee is against the action of Ld.CIT(A) confirming the action of the AO restricting the deduction claimed u/s.54F of the Income Tax Act, 1961 (hereinafter in short “Act”) to the tune ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 2 :: of Rs.61,68,647/- in place of claim made by the assessee to the tune of Rs.85,10,946/-. 3. Brief facts are that the assessee had filed her return of income for AY 2014-15 on 30.09.2014 which was revised on 31.08.2016 declaring income to the tune of Rs.6,45,33,017/-, which underwent scrutiny and the AO accepted the return by an order u/s.143(3) of the Act on 30.12.2016. Later on, the Ld.PCIT vide order dated 22.03.2019 passed revision order u/s.263 of the Act setting aside the assessment order dated 30.12.2016 and directed the AO to consider two issues, out of which, the issue which is relevant for our consideration is in respect of deduction claimed u/s.54F of the Act. 4. The AO during the reassessment proceedings on this issue noted that the assessee had sold her property at NALLUR, had declared Long Term Capital Gain to the tune of Rs.85,10,946/- and claimed exemption u/s.54F of the Act for purchasing a flat at Ozone projects; and noted from the purchase deed that the assessee along with her daughter Mrs. Navita Bihani had purchased the said property/flat. According to the AO, both (assessee and her daughter) were joint owners of the flat and therefore, he asked the assessee as to why the deduction u/s.54F of the Act should not be restricted to 50% of the amount claimed by the assessee. Pursuant to ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 3 :: which, the assessee replied that the entire cost of purchase was borne by her and also stated that since she is a senior citizen, the name of her daughter has been added along with her name as an abundant caution since age was catching up. The AO verified from the copies of the bank statement of the assessee and noted that the assessee had made two payments to the vendor i.e., Rs.37 lakhs and Rs.32 lakhs totaling Rs.69 lakhs from her bank account and that the balance payment was made through the bank account of M/s. Indian Aluminium Trading Co., i.e., Rs.40,02,573/- (Rs.1,09,29,657/- minus Rs.69,00,000/-) & (Rs.27,084/- paid by way of TDS remittance in favour of the builder). Considering the aforesaid facts, the AO gave pro-rata deduction u/s.54F of the Act of Rs.61,68,647/- in place of claim of Rs.85,10,946/- as under:- Exempt Capital Gains = 8510946 x 6900000 = Rs.61,68,647/- 9520000 Hence the difference of Rs.8510946 – Rs.6168647 = Rs.23,42,299/- is brought to tax. Addition : Rs.23,42,299/- 5. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who was pleased to confirm the same citing few decisions of the Tribunal. ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 4 :: 6. Aggrieved, the assessee is before us. The Ld.AR assailing the action of the Ld.CIT(A) pointed out that the Ld.CIT(A) has not appreciated the facts in its entirety. According to him, the assessee had sold her property at Nallur in the year under consideration and offered Long Term Capital Gain of Rs.85,10,946/- which has been accepted. But the assessee’s claim made u/s.54F of the Act to the tune of Rs.85,10,946/-, has been partially denied (and allowed only Rs.61,68,647/-) on the ground that the flat purchased at Ozone Project in the year 2017 for claiming deduction u/s.54F of the Act because it was in the joint name of the assessee’s daughter also. The Ld.AR pointed out that the entire consideration for purchase of flat was borne by the assessee (Renu Agrawal) along with her husband. But, the AO having noted that the payment of Rs.40,02,573/- was from the account of M/s. Indian Aluminium Trading Co., didn’t appreciate that M/s. Indian Aluminium Trading Co., is the proprietary concern of the assessee’s husband Shri Gopalji Agrawal and to support such an assertion invited our attention to pages 5 to 10 of the Paper-book wherein bank statement of HSBC in the name of Proprietary concern of Shri Gopalji Agrawal [assessee’s husband] is found placed and pointed out that the payment of Rs.40,02,573/- have been made to the vendor of flat at Ozone Project from the proprietary concern of assessee’s husband. Thereafter, the Ld.AR also pointed out that the name ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 5 :: of the daughter has been added only because the assessee is a senior citizen and since she is getting aged as an abundant caution daugther’s name has been added. Moreover, it was pointed out that the assessee is earning rental income from the said flat to the tune of Rs.12 lakhs per annum which has been offered to tax in the hands of the assessee. In the light of the overall relevant facts, according to Ld.AR, the question of assessee not owning the flat in question does not arise and cited the decision of Hon’ble High Court of Madras in the case of CIT vs. Natarajan reported in 287 ITR 271, wherein the facts was that Shri Natarajan had sold his property at Bangalore and claimed deduction u/s.54 of the Act by purchasing a property at Madras in the name of his wife, which was denied by the AO but allowed by the First Appellate Authority and the Tribunal, which action has been upheld by the Hon’ble Madras High Court by observing as under:- 4.3 It is admitted by the assessee that he sold a house property at Bangalore. Therefore, it is clear that the assessee owned a house property and sold the same. He also admits that he purchased a property at Madras in the name of his wife Smt. Meera out of the money obtained by him by the sale of the property at Bangalore. 4.4 Section 54 of the Act clearly says that if the assessee is the owner of the property, he is entitled for exemption. 4.5 In the instant case, the assessee purchased a house at Anna Nagar in the name of his wife Smt. Meera after selling the property at Bangalore. But the same was assessed in the hands of the assessee. Hence, as correctly ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 6 :: held by the CIT(A) as well as by the Tribunal that the assessee is entitled for exemption under Section 54 of the Act. 7. In the light of the facts discussed and the case law cited, the Ld AR submitted that assessee’s case stands on much better pedestal and pointed out that the assessee is a co-owner of the property in question and has made payment of more than Rs.60 lakhs, and Rs.40 lakhs has been given by her husband to buy the property in question; and that, assessee was the owner of the property/flat has shown rental income from the said flat to the tune of Rs 12 Lakhs. Therefore, the Ld.AR asserted that section 54F deduction to the tune of Rs.85,10,946/- needs to have been granted in full. 8. Per contra, the Ld.DR supporting the order of the Ld.CIT(A) as well as the AO submitted that the admitted position is that assessee has purchased the property in the joint name of assessee and her daughter and therefore, the benefit of Section 54F cannot be extended and the AO has fairly allowed pro-rata exemption which should not be disturbed. 9. We have heard both the parties and perused the records. The core issue is only regarding the deduction claimed u/s.54F of the Act in respect of the flat property purchased by the assessee after having shown Long ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 7 :: Term Capital Gain of Rs.85,10,946/- on sale of land at Nallur in the relevant year under consideration. The assessee being a senior citizen has purchased the flat in question within three years from transfer of the capital asset at Nallur at a cost of Rs.1,09,29,657/- of which, assessee paid Rs.69,00,000/- and the balance given by her husband of Rs.40,02,573/- (from the account of his proprietary concern M/s. Indian Aluminium Trading Co). Since, the assessee was a senior citizen has included the name of her daughter as co-owner and has made the payment from the consideration received from the sale of property at Nallur and took some money from her husband. The flat in question has been given on rent and the rental income of Rs.12 lakhs has been offered for tax in the hands of the assessee. Considering the overall facts of the present case, we are of the view that the Ld.CIT(A) erred in denying the deduction u/s.54F of the Act by citing case laws which are not applicable to the case. Instead, the case law cited by the Ld.AR of CIT vs. Natarajan, supra of Hon’ble Jurisdictional High Court comes to the aid of assessee, wherein the facts of the case was that assessee (Shri Natarajan) had sold his property at Bangalore and purchased property at Madras in the name of his wife Smt. Meera out of the money obtained by him by sale of the property at Bangalore and claimed exemption/deduction u/s 54F which, was denied by the AO, but granted by the Ld.CIT(A) as well as the Tribunal, which ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 8 :: decision has been upheld by the Hon’ble High Court. In the present case, as noted, the assessee has sold her property at Nallur and offered Long Term Capital Gain to the tune of Rs.85,10,946/- and claimed the same amount as exempt u/s.54F of the Act, since the assessee purchased flat at Ozone project in her name as well as in her daughter’s name; and paid consideration of Rs.1,09,29,657/- out of which, assessee paid Rs.69,00,000/- and the balance amount of Rs.40,02,573/- was paid by her husband (the proprietor of Indian Aluminium Trading Co). And the rental income of Rs.12 lakhs from the said flat at Ozone project has been offered by the assessee as her income from house property. Considering the entirety of the facts and circumstances of the case, we do not countenance the action of the Ld.CIT(A) confirming the action of the AO allowing only pro-rata exemption u/s.54F of the Act and direct the AO to grant the entire 54F deduction of Rs.85,10,946/-. 10. In the result, the appeal of the assessee is allowed. Order pronounced on 31st January, 2025 at Chennai. Sd/- (जगदीश) (JAGADISH) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक\r) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 31st January, 2025. Vm/- RSR ITA No.2673/Chny/2024 (AY 2014-15) Renu Agrawal :: 9 :: आदेश की )ितिलिप अ0ेिषत/Copy to: 1. अपीला थ\u001b/Appellant, 2.)*थ\u001b/ Respondent, 3. आयकर आयु1/CIT, Chennai 4. िवभा गीय )ितिनिध/DR & 5. गा ड& फा ईल/GF. "