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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI G. MANJUNATHA & SHRI. ANIKESH BANERJEE
आदेश /O R D E R
PER ANIKESH BANERJEE, JUDICIAL MEMBER:
The appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-7 / Chennai [in brevity Ld. CIT(A)] bearing order no ITA No. 37/CIT(A)-7/2019-20 dated 28.11.2019.
The assessee raised the following grounds which are as follows: “1. That the order of the learned Commissioner of Income Tax (Appeals) - 7, Chennai ("hereinafter referred to as Ld.CIT(A)") dated 28.11.2019 is without jurisdiction and is
:-2-: ITA. No: 211/Chny/2020 opposed to the principles of law, weight of evidence, probabilities, equity, natural justice, fair play and the facts and circumstances of the case of the appellant. 2. That the Ld.CIT(A) erred in confirming the action of the Assessing Officer in not considering the sum of Rs.50,00,000/- invested in new house property while computing the amount of exemption U/s.54F. 3. That the Ld.CIT(A) failed to appreciate that merely because borrowed funds were utilized for acquisition of new house property does not mean that exemption U/s.54F is to be denied. 4. That the Ld.CIT(A) erred in sustaining the disallowance of Rs,8,00,000/- made by the Assessing Officer in respect of cost incurred by the appellant towards improvement of new house property. 5. That the appellant craves for the permission of the Hon'ble Income Tax Appellate Tribunal to add, delete or amend the grounds of appeal hereinabove before or during the course of hearing of appeal. Additional Grounds of Appeal: Ground No. 5 That the Ld. CIT(A) is not justified in not directing the Assessing Officer to consider cost of stamp duty and registration charges amounting to Rs. 18,40,160/- incurred at the time of purchase of new house property, as amount invested while computing the amount of exemption u/s. 54F of the Act. Ground No. 6 That the Ld. CIT(A) ought to have appreciated that the total investment made by the appellant in the new house property was Rs. 2,56,40,160/- and consequently erred in directing the Assessing Officer to consider cost of investment for computing exemption u/s. 54F of the Act at Rs. 1,80,00,000/- as against Rs. 2,56,40,160/- The existing ground number 5 may be renumbered as ground number 7. “
The brief fact is that assessee sold a property amount of Rs. 2,60,00,000/-. Accordingly, assessee invested in new property amount of Rs. 2,30,00,000/- and claimed deduction u/s. 54F of the Income Tax Act, 1961 (in brevity “the Act”) against the income from capital gain. Out of investment of Rs. 2,30,00,000/-, Rs. 1,80,00,000/- from sale of property and Rs. 50,00,000/- from borrowed capital, loan from HDFC bank. Further, assessee claimed the cost of improvement for Rs. 8,00,000/- as additional benefit of the section 54F of the Act. The assessee filed additional grounds for
:-3-: ITA. No: 211/Chny/2020 further claimed Rs. 18,40,160/- as stamp duty and registration U/s 54F of the Act which was he incurred for purchase of new property.
The assessee filed an appeal before the Ld. CIT(A). The ld CIT(A) disallowed the following grounds of the assessee which were agitated by the assessee during appeal hearing. The grounds are as follows:- the investment in property through borrowed fund amount to Rs. 50,00,000/- and Rs. 8,00,000/- as cost of improvement. The only point cost of registration charges and stamp value amount to Rs. 18,40,160/- is agitated before us for first time. Accordingly, the assessee filed an appeal before us.
As per the order of the ld. CIT(A) in page7 which is as follows: “II. Now arises the issue of utilization of the impugned receipts towards the new capital asset for the purpose of claiming exemption u/s. 54F of the IT Act. The assessee sold immovable property for Rs. 2,60,00,000/- on 10.10.2012 and subsequently purchased a residential property on 30.11.2012 for Rs. 2,30,00,000/-. Before the AO, the sources were explained to be from followings: 1) Rs. 1,80,00,000 from sale of old property 2) Rs. 50,00,000 from HDFC Bank loan taken on 28.11.2012 The AO took a view however, that the entire sale consideration was not utilized by the assessee for the re-investment in the new house property. He also held that since the bank loan of Rs. 50,00,000/- taken from HDFC was repaid by the assessee’s wife, only a sum of Rs. 1,80,00,000/- could be held as having been invested for the new asset for the purpose of claiming sec 54F he proceeded to disallow the balance amount of Rs. 80,00,000 as exempt u/s. 54F. I find that the AO’s action cannot be faulted in this regard. The assessee will be entitled to claim the benefit to the extent of amount utilized by him out of the sales proceeds. In this case it its Rs. 1,80,00,000/-. Assessee has paid the balance amount towards the cost of the new property of an amount of Rs. 50,00,000/- out of borrowed funds. Hence AO was correct in restricting the claim u/s. 54F to Rs. 1,80,00,000/- only.”
:-4-: ITA. No: 211/Chny/2020 6. The Counsel of the assessee vehemently argued and submitted the paper book dated 20.12.2021 and the following details are submitted before the bench: “Sl.No Brief description of the document 1 Declaration from the authorised representative. 2 Computation statement of total income for the Assessment Year 2013-14. 3 Copy of sale deed dated 30.11.2012 in evidence of purchase of new house property. 4 Copy of bill dated 21.01.2013 submitted by M/s. Lokesh Constructions towards the cost of improvements carried out to the new house property. 5 Break up of payments made to M/s. Lokesh Constructions. 6 Copy of savings bank account pass book for the period from 30.05.2012 to 07.06.2013.” 7. The Ld. DR vehemently argued and relied upon the orders of the Ld. CIT(A) and the Ld. AO.
We heard both the parties. It is very clear that the Ld. AO disallowed Rs. 50,00,000/- related to investment in new property through borrowed fund. The ld CIT(A) in his order mentioned the assessee’s wife is repaying the loan which was borrowed for investment in property for getting the deduction U/s 54F of the Act. This issue was not adjudicated properly by any of the revenue authorities. The further verification is required in this issue. The matter is returned back to the ld. AO for further verification related to payment of borrowed fund amount to Rs 50,00,000/-.
8.1 Related to cost of improvement amount to Rs. 8,00,000/-, Ld. Counsel submitted details of payment related cost of improvement.
:-5-: ITA. No: 211/Chny/2020 The verification of payment is not possible in this stage. So, the matter is returned back to the Ld. AO for further verification.
The related payments of registration charges and stamp duty for amount to Rs. 18,40,160/- was agitated before the bench for first time through additional grounds. The assessee claimed benefit U/s 54F related payment of registration charges and stamp duty value. The proper verification is required for this assessee’s claim. The Ld AO is directed to allow benefit of the assessee U/s 54F of the Act after proper verification related those payments.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 11th March, 2022 at Chennai. Sd/- Sd/- (अ�नकेश बनज�) (जी. मंजुनाथ) (G. MANJUNATHA) (ANIKESH BANERJEE) लेखासद�य/Accountant Member �या�यकसद�य/Judicial Member चे�ई/Chennai, �दनांक/Dated, the 11th March, 2022 JPV आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF