RIKANT PITTIE,DELHI V. ACIT, DELHI

ITA 2058/DEL/2024

AI Insights

The case involves appeals by both the assessee, Rikant Pittie, and the Revenue against the order of the ld. Commissioner of Income-tax (Appeals), Delhi-3, concerning the Assessment Year 2021-22. The primary issue was the deduction claimed under section 54F of the Income Tax Act, 1961, which pertains to the exemption on long-term capital gains if the proceeds are invested in a residential property. The assessee had claimed a deduction of Rs. 45,81,48,145, which was partially allowed by the Assessing Officer and later contested. The CIT (A) allowed a higher deduction based on additional evidence and the extended compliance dates provided by CBDT Circulars. The Revenue appealed against this decision, arguing that the Assessing Officer was not given a proper opportunity to verify the additional evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31510 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2021-2022
• Other Referred Cases: M/s. Nannusamy Mohan (HUF) vs. ACIT in T.C.A. No.372 of 2020 decided on 16.10.2020 by Hon'ble Madras High Court
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D.S. SIDHU
• Assessee Lawyers: ANOOP MEHTA
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Capital Gains
• Section: 54; 251; 139(1); 54F

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.2058/DEL/2024 (Assessment Year: 2021-22) Rikant Pittie, vs. ACIT, C – 179, Block Phase 1, Delhi. Vivek Vihar, New Delhi – 110 095. (PAN : AYGPP2578N) ITA No.2064/DEL/2024 (Assessment Year: 2021-22) ACIT, vs. Rikant Pittie, Delhi. C – 179, Block Phase 1, Vivek Vihar, New Delhi – 110 095. (PAN : AYGPP2578N) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Anoop Mehta, CA Shri Nirbhay Mehta, Advocate Ms. Vanshika Mehta, Advocate REVENUE BY : Shri D.S. Sidhu, CIT DR Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing : 12.02.2025 Date of Order : 25.02.2025 O R D E R PER S.RIFAUR RAHMAN,AM: 2 ITA Nos.2058 &2064/DEL/2024 1. The assessee as well as Revenue has filed the appeals against the order of ld. Commissioner of Income-tax (Appeals), Delhi-3 [for short ‘ld. CIT (A)], dated 28.02.2024 for the Assessment Year 2021-22. 2. First we take assessee’s appeal being ITA No.2058/Del/2024. The assessee through its Authorised Representative has filed an application dated 11.02.2025 for withdrawal of present appeal as the assessee has opted for Vivad Se Vishwas Scheme, 2024 (in short ‘VSVS’). The assessee has filed copy of VSVS application vide Acknowledgement No.852540200300125 dated 30.01.2025. In view of the aforesaid application, appeal of the assessee is dismissed as withdrawn. 3. Liberty is granted to the assessee to revive appeal in the event application filed by the assessee under VSVS fails to mature. It is further made clear that if the assessee seeks to restore the appeal in the event assessee’s declaration made under VSVS is not accepted, the Registry shall not insist for filing of application for condonation of delay, if the Miscellaneous Application for recalling the order is filed beyond time on account of delay in communication of outcome under VSVS. [Revenue. M/s. Nannusamy Mohan (HUF) vs. ACIT in T.C.A. No.372 of 2020 decided on 16.10.2020 by Hon’ble Madras High Court.] 4. In the result, appeal of the assessee is dismissed in the aforesaid terms. 5. Coming to the Department’s appeal being ITA No.2064/Del/2024, the Revenue has taken the following grounds of appeal :- 3 ITA Nos.2058 &2064/DEL/2024 “1. The Ld. CIT (A) has erred in allowing the deduction u/s 54F of the Income-tax Act, 1961 amounting to Rs.36,07,51,900/- instead of Rs.28,54,59,401/- made by Assessing Officer in assessment order. 2. The Ld. CIT (A) has erred in allowing the deduction u/s 54F to the tune of Rs.36,07,51,900/- without appreciating the fact that bills and vouchers of payment made by the assessee during the extended time period of making investment i.e. 01.04.2023 to 31.03.2023 (as per CBDT’s Circular No.1 of 2023 dated 06.01.2023) has not been verified the Assessing Officer. 3. The Ld. CIT (A) has erred in allowing the deduction u/s 54F to the tune of Rs.36,07,51,900/- without appreciating the fact that in order to verify the bills and vouchers of payment made by the assessee, Ld. CIT(A) could have asked for remand report form Assessing Officer but Ld. CIT (A) did not ask for the same during the appellant proceedings.” 6. The above grounds raised by the Revenue relating to deduction under section 54F of the Income-tax Act, 1961 (for short ‘the Act’) and ld. CIT(A) has given the relief to the assessee. Against the above said order, Revenue is in appeal before us. 7. Brief facts of the case are, during assessment proceedings, the Assessing Officer observed from the ITR filed by the assessee that assessee has claimed deduction u/s 54F of the Act to the extent of Rs.45,81,48,145/-. In order to verify the same, assessee was asked to submit relevant documents and whether assessee is eligible for deduction u/s 54F of the Act. In response, assessee submitted as under :- 4 ITA Nos.2058 &2064/DEL/2024 “Against the Long term capital gain earned during the year assessee has claimed the deduction amounting to Rs45,81,48,145/- under section 54 of Income Tax Act Regarding the said deduction, it Is submitted that as per provision of section 54F of Income Tax Act if an individual earned the long capital gain term capital gain on account of transfer of capital assets other than residential property and purchased a residential property within 2 years from the date of transfer then the individual is eligible to claim deduction u/s 54F of Income Tax Act provided condition prescribed under first proviso of said section has been complied, Relevant extract of the section is produced below for your reference: It is submitted that In the present case assessee has sold shares of Easy My Trip Planners Ltd as on 19.03.2021 and earned the Long Term Capital Gain of Rs 2,29,35,18,366/-. Thereafter in order to claim the deduction u/s 54F of Income Tax Act assessee has purchased a residential house property within year i.e as on 26.07,2021. as per the provision of section if the purchase value of new residential property is less than the net consideration then deduction -u/s 51 is allowable to the extent to same proportion as the capital gain bears to the net consideration! Regarding this It is submitted that out of sale proceed assessee has purchased one residential property situated at CM617A, Camellias, DLF-5, Sector 42, Gurgaon, Haryana for a consideration of Rs 42,88,55,000/-. On the said property assessee has incurred renovation expenses of Rs 3,65,80,580/- after the purchase of property till the date of sale. Copy of sale deed in substantiation of same is enclosed at Page No___ to ___. That calculation of amount of deduction allowable u/s 54F of Income Tax Act is as under: = Amount of capital gain*Cost of New Residential Property Net sale consideration =2,29,35,18,366/- * 46,54,35,580/- 2,32,99,99,881/- = 45,81,48,145/-” 5 ITA Nos.2058 &2064/DEL/2024 8. After considering the submissions of the assessee, Assessing Officer observed that the assessee has only furnished an Agreement to Sell and no other documentary evidences in support of his claim filed. Further assessee was asked to submit the relevant documentary evidences of renovation expenses to the extent of Rs.3,65,80,850/-. In response, assessee has submitted as under :- “In this regard It Is submitted that the assessee has finalised the vendor for doing the renovation work in the apartment at Rs 3,65,90,850/-. The assessee had got the possession of the property to carry out the renovation work. The renovation was needed since as per the agreement the flat given to the assessee was with unplaster /unpained walls, bare concrete floor with no flooring, no internal Doors & Door shutters, no cabinets in kitchen and wardrobe in bedrooms and no water proofing. Copy of basis specification of the apartment of Camellias as per Annexure V is enclosed at Page No 3 to 4. However due to Omicron variant of Corona Virus the renovation work in the apartment could not start in November 2021 as there was restrictions. Therefore, no payment could be made by the assessee before due date of filing of income tax return.” 9. Not convinced with the various documents submitted by the assessee, Assessing Officer rejected the plea of the assessee for the claim of exemption u/s 54F of the Act and he observed that assessee has not utilised the sale consideration of Rs.42,88,55,000/- entirely for the purpose of new property to the extent of Rs.17,54,35,580/- was not utilised before the file of return of income u/s 139(1) of the Act and also 6 ITA Nos.2058 &2064/DEL/2024 not deposited the abovesaid amount in the capital gain scheme account. Accordingly, he calculated the long term capital gains as under :- Particulars Amount (in Rs.) Sale value 254,99,99,881 IPO Expenses 22,00,00,000 Net Sale Consideration 232,99,99,881 Indexed Cost of Acquisition 3,64,81,361 Long Term Capital Gains 229,35,18,520 Deduction u/s. 54F of the Act. [229,35,18,520*(29,00,000/232,99,99,881] 28,54,59,401 Long Term Capital Gains 200,80,59,119 10. Accordingly, the deduction of Rs.45,81,48,145/- is restricted to Rs.28,54,59,401/- and the difference of Rs.17,26,88,744/- was disallowed. 11. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and ld. CIT (A) considered the detailed submissions of the assessee and filed additional evidences before the ld. CIT (A). After considering the detailed submissions of the assessee and additional evidences submitted before him, ld. CIT (A) by relying on the CBDT Circular No.12/2021 dated 25.06.2021, in which the date of compliance extended to 30.09.2021 and further he observed that CBDT has further extended the compliance date to 31.03.2023 vide Circular No.1/2023 dated 06.01.2023 and by relying on the above circulars, he allowed the claim of the assessee by observing as under :- 7 ITA Nos.2058 &2064/DEL/2024 “26. As per the circular the compliances to be made by the tax payer such as investment, deposit, payment, acquisition, purchase, construction or such action by whatever name called for the purpose of claiming by exemption under the provisions contained in section 54 to 54GB of the Act, for which the last date of such compliance falls between 01st April, 2021 to 28th February, 2022 (both days inclusive) may be completed on or before 31st March, 2023. 27. The facts of the present case are to be examined considering this circular. The appellant had incurred Long Term Capital Gains during the Assessment Year 2021-22. The extended last date of filing of Income Tax Return for assessment year 2021-22 in the case of the appellant was 31.12.2021. The appellant had filed his return of income on 30.12.2021. The appellant had time till 31.12.2021 to deposit the unspent amount into capital gains account for the purpose of claiming deduction under section 54F. As per the CBDT Circular the compliances in respect of investment, deposits, payments, acquisitions, purchases, construction, or other actions necessary for claiming exemptions under section 54 to 54GB of the Income Tax Act, 1961, for which the last date of such compliance falls between 01.04.2021 to 28.02.2022 was extended to on or before 31.03.2023. 28. In the case of the appellant the compliance for claiming deduction under section 54F was to be made before 31.12.2021. Thus, the date of compliance falls between 01.04.2021 till 28.02.2022 as mentioned in the CBDT circular. Therefore, in view of the CBDT circular the appellant has extended time till 31.3.2023 to spend the money for purpose of claiming deduction under section 54F. 29. On perusal of the bills and payments made by the appellant it is seen that the appellant has made the following payments against bills for the house. 8 ITA Nos.2058 &2064/DEL/2024 30. The appellant could not furnish bills in respect of climate HVAC. Therefore, the purpose for making payment is not available. From the website of M/s Climate HVAC, it is seen that the company is engaged in the business of providing and installing air conditioning system. The AC system is not an integral part of the house. Therefore, the claim to the extent of Rs. 37,73,356/- cannot be considered for giving deduction u/s. 54F of the Act. 9 ITA Nos.2058 &2064/DEL/2024 31. The claim of the appellant in respect of purchase of furniture like dining table, dining chair, cabinet, bar cabinet etc. is not allowed as these are in the nature of furniture and fixture which is not an integral part of the house. Therefore, the claim for deduction in respect of payment made to Nivasa and Partners of Rs. 6,00,000/- is not allowed. 32. Therefore, the amount actually spent for the house till 31.3.2023 is Rs. 36,64,90,148/- (Rs. 29,00,00,000/- + Rs. 88,50,000/- + Rs. 6,76,40,148/-). 33. In view of the above discussion, the appellant is eligible to claim deduction u/s. 54F on the amount of Rs. 366490148/- only. 34. The calculation of deduction under section 54F is as under:- Deduction allowable u/s. 54F Amount of Capital Gains X Cost of New Residential property Net Sales Consideration. 2,29,35,18,366 X 36,64,90,148 2,32,99,99,881 Deduction u/s.54F = 36,07,51,900/- 35. The assessing officer is directed to allow deduction under section 54F of Rs. 36,07,51,900/- against deduction of Rs. 28,54,59,401/- allowed in the assessment order.” 12. Aggrieved with the above order, Revenue is in appeal before us. 13. At the time of hearing, ld. DR of the Revenue submitted that ld. CIT (A) has allowed the claim of the assessee on the basis of additional evidences which were not filed before the Assessing Officer and submitted that Assessing Officer was not given proper opportunity. Further he submitted that it is not clear whether the assessee has more than one house to claim the benefit u/s 54F of the Act. Ld. CIT (A) has not discussed anything on the eligibility u/s 54F of the Act. 10 ITA Nos.2058 &2064/DEL/2024 14. On the other hand, ld. AR of the assessee submitted that assessee has submitted the relevant details before ld. CIT (A) and the material available with the assessee and which was not submitted before Assessing Officer and it is also fact on record that CBDT has extended the date of compliance and submitted that the subsequent compliance was alone submitted before the ld. CIT (A) and it is factual issue submitted before the ld. CIT (A) who has appreciated the same and allowed the claim of the assessee. Further he submitted that with regard to submissions of the ld. DR whether assessee has more than one residential house property, he submitted that the exemption u/s 54F is available on two house properties and in this regard, he brought to our notice page 7 of the paper book in which assessee has only one residential house at the time of investment and a shop which is a commercial property. Therefore, technically assessee is eligible to claim exemption u/s 54F of the Act. 15. Considered the rival submissions and material placed on record. We observed that the ld. CIT (A) has allowed the claim of the assessee u/s 54F of the Act to the extent of Rs.36,07,51,900/- based on the eligibility to the claim u/s 54F as per law and it is fact on record that CBDT has extended the claim vide CBDT Circular No.12/2021 and 1/2023. Based on the extended period, assessee has uilized the fund within the extended period of time. Therefore, he found that the claim of the assessee is 11 ITA Nos.2058 &2064/DEL/2024 proper. At the time of hearing, ld. DR of the Revenue vehemently objected that the ld. CIT (A) has not given proper opportunity to the Assessing Officer. In our considered view, assessee has submitted the relevant utilisation of funds in the residential property within the extended period of time allowed by the CBDT and it is only details of utilisation of funds which is appreciated by the ld. CIT (A) and ld. CIT(A) has co-terminus powers to adjudicate the issue as per the power granted u/s 251 of the Act. Therefore, we are inclined to allow the claim of the assessee and dismiss the grounds raised by the Revenue. 16. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 25th day of February, 2025. Sd/- sd/- (MADHUMITA ROY) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25.02.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A), Delhi-3. 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "