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Income Tax Appellate Tribunal, “SMC-1” BENCH, MUMBAI
आदेश / O R D E R
PER AMARJIT SINGH, AM:
The present appeal filed by the assessee is directed against the order passed by the CIT(A) NFAC, Delhi, from the order passed by the A.O. u/s 143(3) of the Income Tax Act, 1961 for A.Y. 2012-13. The assessee has assailed the impugned order on the following grounds before us:
Nicky Jaikumar Prithyani Vs. ITO, Ward 22(2)(4)
“1. The learned CIT(A) has erred in confirming addition of 50 % of Long Term Capital Gain arising on sale of shop situated at Radha Niwas Co-op HSG, 718/2 Bandra TPS-3, Knar Pali Road, KHar (West), Mumbai 400052.
Your appellant respectfully submits that on facts and in law the aforesaid addition of Long Term Capital Gain in my hand is not justified and should therefore be deleted.
2. The learned CIT (A) has erred in not directing the learned AO to grant exemption u/s. 54F of the IT Act as claimed by me during the course of assessment proceedings. Your appellant respectfully submits that on facts and in law I am eligible to claim exemption u/s. 54F in respect of investment in new residential house and the I should be granted the exemption u/s. 54F.
3. The learned CIT (A) has erred in stating in para 2 of his order that no submissions from the appellant was received against the hearing notice dated 31.12.2020. Your appellant respectfully submits that 1 have made the submission along with various annexures on 6.1.2021 through the e-filing portal.”
Fact in brief is that return of income declaring total income at Rs.5,79,800/- was filed on 31.03.2014. The case was subject to scrutiny assessment and notice u/s 143(2) issued on 22.09.2014. During the course of assessment the A.O noticed that a transaction relating to sale of immovable property was taken place in the name of the assessee during the year under consideration. The assessee has purchased a commercial property along with his mother Smt. Chandani Prithyani at Khar, West, Mumbai for a consideration of Rs.21 lac and the same was sold during the F.Y. relating to the year under consideration for Rs.40 lac. The capital gain on the sale of this commercial property was worked out at Rs.9,29,652/- after indexation. The A.O further noticed that benefit of deduction u/s 54 was claimed only in the ITR filed by the assessee’s mother Smt. Chandani Prithyani and amount chargeable to capital gain was shown as nil after showing that the proceeds of Rs.40 lac was invested in acquiring new properties worth Rs.1.24 crores. The Nicky Jaikumar Prithyani Vs. ITO, Ward 22(2)(4)
benefit of deduction u/s 54 on the aforesaid transactions was claimed only in the Income Tax return filed by the assessee’s mother Smt. Chandani Prithyani. The case of Smt. Chandani Prithyani was selected for scrutiny assessment and order u/s 143(3) was passed on 13.01.2015 after allowing the deduction u/s 54 claimed by her. However, during the course of assessment in the case of the assessee who is son of Smt. Chandani Prithyani, the AO observed that assessee has neither declared any gain on sale of the aforesaid property nor claimed any benefit u/s 54 against capital gain arising on this transaction. On query the assessee explained that the purchase and sale of shop was entirely reflected in the return of income of his mother Smt. Chandani Prithyani and exemption u/s 54 was claimed in her return of income for assessment year 2012-13 for entire capital gain arise on sale of shop. It was further submitted that since the entire sale consideration of shop was invested in the new residential flat, therefore, even if part of the capital gain is considered in the hands of the assessee even then the taxable proportion of the capital gain will be still nil since both the assessee and her mother fulfilled all the conditions laid down in Sec. 54F and there was direct nexus between amount received on sale of shop and investment made in the new residential flat. The A.O has not agreed with the submission of the assessee and taxed the 50% of amount of capital gain without providing any deduction u/s 54F in the hands of the assessee.
During the course of appellate proceedings before us the ld. Counsel filed paper book comprising copies of document and details of submission filed before the assessing officer and ld. CIT(A) during the course of assessment and appellate proceedings. The ld. Counsel referred page no. 70 of the paper book pertaining to assessment order u/s 143(3) of the Act dated 31.01.2015 passed in the case of Smt. Chandani
Nicky Jaikumar Prithyani Vs. ITO, Ward 22(2)(4)
Prithyani mother of the assessee wherein the A.O has allowed claim of deduction u/s 54 of the Act on the sale of impugned joint property. It is also submitted that the amount of capital gain of Rs.17,23,640/- was invested in the new property which was also purchased in the joint name of the assessee and his mother Smt. Chandani Prithyani. The ld. Counsel has also submitted that no deduction u/s 54F was claimed by the assessee separately in the return of income filed by him. The ld. Counsel also submitted the copies of purchase and sale deed showing the property purchase and sold standing in joint name.
On the other hand, ld. D.R supported the order of lower authorities.
Heard both the sides and perused the material on record. During the course of assessment the assessing officer noticed that a commercial property in Radha Niwas at Khar (W), Mumbai had been purchased jointly by the assessee and his mother Smt. Chandani Prithyani for Rs.21 lac in 2007 both assessee and his mother was having 50% ownership and this property was sold on 27.04.2011 for Rs.40 lac and the A.O noticed that capital gain on sale of this property was not shown in the taxable income of the assessee. Without reiterating the facts as elaborated in para 2 of this order, after perusal of the material on record it is noticed that Smt. Chandani Prithyani mother of the assessee had shown the entire capital gain in her return of income filed on 31.03.2014 and claimed deduction u/s 54F for investing the entire capital gain arising on the sale of the aforesaid property standing in the joint name of the assessee and his mother by investing the same in the new residential house jointly owned by the assessee and his mother. After perusal of the material on record it is noticed that the case of Smt. Chandani Prithyani
Nicky Jaikumar Prithyani Vs. ITO, Ward 22(2)(4) mother of the assessee was taken up for scrutiny on 03.09.2013 and her returned income was accepted by the Assessing Officer. We observe that A.O has not made any disallowance in respect of claim of deduction made u/s 54F in the case of Smt. Chandani Prithyani who was having 50% shares in the sold property and A.O has allowed the entire deduction in her hand without restricting the deduction at 50% of the capital gain. The A.O has also not controverted the detailed submission comprising page 1 to 137 of the paper book made by the assessee during the course of assessment proceedings. During the course of assessment proceedings the assessee has also brought all these material fact supported with relevant material before the A.O, however the A.O has not controverted these facts in his findings in the assessment order. In the light of the above facts and circumstances we consider that the ld. CIT(A) is not justified in rejecting the appeal of the assessee Therefore, appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.04.2022.