JITENDRA SHARMA, ACIT, CIRCLE-19(1), MUMBAI vs. MANJU RAMESH AGARWAL, MUMBAI
IN THE INCOME-TAX APPELLATE TRIBUNAL “D” BENCH,
MUMBAI
BEFORE SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER
&
SMT. RENU JAUHRI, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No. 4536/MUM/2024
(निर्धारण वर्ा / Assessment Year :2016-17)
ACIT, Circle-19(1)
506, 5th Floor, Piramal
Chamber, Lalbaug,
Maharashtra-400012
v/s.
बिधम
Manju Ramesh Agarwal
9A, Residences Building,
9th Floor, Bomanji Petit
Marg, Cumballa Hill,
Maharashtra-400026
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAADPA6671L
Appellant/अपीलधर्थी
..
Respondent/प्रनिवधदी
निर्ााररती की ओर से /Assessee by:
Mr. Ashutosh
रधजस्व की ओर से /Revenue by:
Shri R. r. Makwana
सुिवधई की िधरीख / Date of Hearing
12.03.2025
घोर्णध की िधरीख/Date of Pronouncement
28.03.2025
आदेश / O R D E R
PER RENU JAUHRI [A.M.] :-
This appeal is filed by the revenue against the order of the Learned
Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal
Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 05.07.2024 passed u/s.
250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2016-17. 2. The revenue has raised the following grounds of appeal:
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Manju Ramesh Agarwal
“1. "Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is right in admitting additional evidences such as purchase agreement without providing due opportunity to the AO of examining the same и/г 46A?"
2." Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is right in allowing the deduction u/s 54 without properly evidencing in the order that all the essential ingredients of the Section have been fulfilled?"
3. Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is right in allowing the deduction u/s 54 without specifically mentioning in the order that assessee has purchased and/or constructed new residential house within the time limit allowed under this section?"
4." Whether on the facts and circumstances of the case and in law, Ld.CIT(A) is right in accepting the date of handing-over certificate as the date of purchase/construction without providing reasoning for the same as this is a crucial aspect for determination of eligibility u/s 54 of the IT. Act?"
5. "The appellant craves leave to amend or alter any grounds or add a new ground which may necessary”
At the outset, it is noted that the appeal is delayed by 1 day. As the delay in filing of the appeal is negligible, the same is hereby condoned. Brief facts of the case are that the assessee had filed return declaring nil income on 25.09.2016. The case was selected for scrutiny and it was noticed that the assessee had claimed a deduction u/s 54 of the Act. In the absence of complete details regarding the purchase and sale of the property and copy of registered purchase agreement to substantiate the claim regarding the deduction of Rs. 6,42,30,615/- u/s 54 in respect of capital gains, Ld. AO disallowed the same and completed the assessment at an income of Rs. 4,47,84,940/- on 30.12.2018. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). In view of the submissions made by the assessee, Ld. CIT(A) observed that the assessee had sold her residential property at Cuffe Parade, Mumbai for a sum of Rs. 8,24,00,000/- on 12.01.2016 resulting in long capital gains of Rs. 6,42,30,615/-. The assessee had entered an agreement to purchase
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Manju Ramesh Agarwal one residential property at Breach Candy, Mumbai for a sum of Rs.
38,63,66,138/- during FY 2014-15. A loan of Rs. 26,05,00,000/-was also taken from the Union Bank of India for the purchase of this property and the entire sale consideration of Rs. 81,24,00,000/- received on the sale of the property at Cuffe Parade, Mumbai was paid against the said outstanding loan. The assessee claimed deduction for this amount u/s 54 on the ground that the repayment towards the outstanding housing loan to acquire a new house is actually the sum spent to acquire the new property, the possession of which was handed over to the assessee on 29.02.2016. After verification of the documentary evidence in this regard, Ld. CIT(A) has held that the assessee is entitled to deduction u/s 54
of the Act for the amount of Rs. 6,42,30,615/-.
5. Aggrieved with the order of Ld. CIT(A), the revenue is in appeal before us. Since the sole substantive issue involved in all the grounds of appeal is the claim of deduction u/s 54 of the Act, these are being taken together.
6. Ld. AR has argued that the assessee furnished documents supporting the purchase and sale transactions along with index cost, in response to the notice dated 07.12.2018 issued by Ld. AO, seeking documents with respect to the sale and purchase of the property. However, a copy of the registered agreement for the purchase of the new property was not furnished, in the absence of which Ld.
AO proceeded to reject the claim of deduction u/s 54 of the Act vide the order dated 30.12.2018. P a g e | 4
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Manju Ramesh Agarwal
Before Ld. CIT(A), the assessee explained that it had uploaded all the requisite documents in response to the AO’s notice dated 07.12.2018 but he could not submit the copy of the purchase agreement of the new property since the same was lying with the Union Bank of India which financed the said house property. Accordingly, Ld. CIT(A) after receiving the copy of the purchase agreement, rightly allowed the deduction u/s 54 to the assessee. Ld. AR has further placed reliance on several decisions wherein it has been held that where the assessee entered into an agreement with a builder to purchase a new property and the possession was granted, subsequently, the relevant date for the grant of deduction u/s 54 would be the date of possession. In this case, on the date of possession (29.02.2016) is within two years from the date of the sale of the original asset (12.01.2016), the assessee’s claim of deduction u/s 54 has to be allowed. 8. Ld. DR, on the other hand, has argued that no opportunity was given by Ld. CIT(A) to the AO before admitting the additional evidence. He has further submitted that from the order of Ld. CIT(A), it is not clear as to whether the assessee has purchased or constructed a new resident house within the time limit under the law and has also argued that the date of hand over the possession is not the date of purchase/construction while determining the eligibility u/s 54 of the Act.
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We have heard the rival submissions and we find that the only reason for disallowing the claim of deduction was the non-submission of the purchase agreement by the assessee which was subsequently submitted before Ld. CIT(A). Ld. CIT(A) has rightly allowed the claim of the assessee by holding that possession of the property being purchased was handed over to the assessee on 29.02.2016 while the original asset had been sold on 12.01.2016. Accordingly, the assessee was entitled to deduction u/s 54 on the long-term capital gain of Rs. 6,42,30,615/- as the entire sale consideration of Rs. 8,24,00,000/- had been utilized for repayment of the outstanding housing loan for the purpose of purchase of the new property. In this regard, we find that the issue is squarely covered by the several decisions of the co-ordinate benches. In the case of Pratik Rajendra Kapadia v/s CIT 224 taxmann.com 762 on similar facts it has been held as under: 6. We have heard both the parties, and after carefully consideration of facts of this case, following conclusion can be arrived at: a. It is an admitted fact that the agreement to purchase the new asset was made on 21-6-2014 i.e. more than 1 year before the date of agreement to sell the original asset ie. 22-7-2015. It is on this ground that the AO has denied the deduction u/s 54 to the assessee as the date of agreement to purchase is beyond the prescribed time period of 'one year prior and 2 years after the sale of original asset'. It is the contention of the assessee that even though the new asset had been booked and the agreement to purchase was entered on 21-7-2014, the said asset was under construction and the occupancy certificate was received by the developer/builder only on 16-9-2015. The possession was given to the assessee on 16-11-2015 and both these dates fall within the prescribed period as above. b. Hon'ble Bombay High Court in the case of CIT v. Smt. Beena K. Jain [1994] 75 Taxman 145/[1996] 217 ITR 363 has dealt with this issue. The facts of the case of Smt. Beena Jain are similar to the assessee's case and the Hon'ble Bombay High Court case has upheld the ITAT's order by holding that the relevant date of purchase for computation of deduction u/s 54 was the date when the assessee obtained possession of the flat.
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Manju Ramesh Agarwal c. Looking at the totality of the transaction, it is clear that on the date of agreement to purchase i.e. 21-6-2014, there was no asset in existence which could be called a residential house. As the occupancy certificate was received by the Developer on 16-
9-2015 and subsequently the possession was given to the assessee on 15-11-2015, the date of possession of the property should be regarded as date of actual purchase for the purpose of claiming exemption u/s 54F of the Act. On this specific issue, the Ld.
AR has also relied on the decision of the co ordinate Bench of Pune Tribunal in the case of Ayushi Patni v. Dy. CIT in [IT Appeal No. 1424 (Pun.) of 2016, dated 17-1-
2019]. In this case it has been observed as under:
"It is an un-rebutted fact that at the time of execution of agreement, the residential property was not in existence. Therefore, taking into consideration facts of the case, the date of possession of flat is the date of actual purchase for the purpose of claiming exemption u/s 54F of the Act."
d. Considering the totality of the facts and circumstances of the case and in the light of the decision of the Juri ictional High Court as well as of the co-ordinate Bench discussed hereinbefore, it is held that the relevant date for grant of deduction u/s 54
in this case would be the date of possession ie. 16-11-2015, which is well within the period of two years from the date of agreement to sell the original asset i.e. 22-7-2015. As such, the claim of the assessee for exemption u/s 54 of the Act is allowed.
e. In the result, the appeal filed by the assessee is allowed.”
As the facts in the present case are similar to the above case, respectfully following the decision of the co-ordinate bench, we hold that the assessee is entitled to claim deduction u/s 54 in respect of the capital gains of Rs. 6,42,30,615/- as all the requisite conditions as satisfied. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 28.03.2025. RAHUL CHAUDHARY RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER
Place: म ुंबई/Mumbai
दिन ुंक /Date 28.03.2025
अननकेत स ुंह र जपूत/ स्टेनो
आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to :
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अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यानित प्रनत ////
आदेशािुसार/ BY ORDER,
सहायक िंजीकार (Asstt.