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Income Tax Appellate Tribunal, PUNE BENCH “A” : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
PER SATBEER SINGH GODARA, J.M.
These assessee’s twin appeals, for assessment year 2015- 16, arise against the CIT(A)-6, Pune's separate orders, both dated 28.03.2019, passed in case no.PN/CIT(A)-6/DCIT Cir-8/10129/ 2018-19 and case no.PN/CIT(A)-6/DCIT Cir-8/10228/2017-18, in proceedings u/s.143(3) and sec.154 of the Income Tax Act, 1961 [in short “the Act”], respectively.
Heard both the parties. Case files perused.
We note that the assessee’s main appeal ITA.No.927/PUN./2019 raises the following substantive grounds :
2 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. “Ground 1 :
1.1. The learned CIT(A) erred in law in assessing that the
compensation received of Rs.1.8 Cr for withdrawal of suit as
income taxable under the head" Income from other sources"
instead of capital receipt not chargeable to tax.
1.2. The learned CIT(A) erred in law by-passing the fundamental
condition of demonstrating that the receipt is income as per
section 2(24) of the Act.
Ground 2 :
2.1. Without prejudice to the aforesaid ground, if it held that the
income is chargeable under the head Capital Gains, the
computation mechanism fails, hence cannot be held taxable.
2.2. Without prejudice to the aforesaid grounds, the learned
CIT(A) erred on facts by concluding that the due date for filing
of return in the case of the Appellant was 31 July 2014. The
appellant is subject to the provisions of section 44AB of the
Act, hence the due date for filing of the return was 30
November 2014. The CBDT The CBDT vide order under
section 119 of the Act dated 26 September 2014 extended
3 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. the due date for filing the return of income from 30 September
2014 to 30 November 2014 for AY 2014-15.
2.3. Without prejudice to the aforesaid grounds, the learned
CIT(A) erred in law applying the provisions of AY 15-16
whereby concluding that the capital gains were liable to be
taxed in FY 2013-14.
2.4. Without prejudice to the aforesaid grounds, the learned
CIT(A) erred in law even in provision of AY 15-16 are applied,
as the units were adjacent to each other and meant for use
as single dwelling unit the amended provisions are satisfied.
In view of the above grounds and in the facts and
circumstances of the case and in law, the Appellant prays
your Honours to set aside the order passed and grant relief
to the Appellant.
The Appellant craves leave to add, alter, vary, omit,
substitute or amend the above grounds of appeal, at any time
before or al, the time of hearing of the appeal, so as to enable
the Hon'ble Tribunal to decide this appeal according to law.”
4 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. 4. Both the Learned representatives next invited our attention to the CIT(A)'s detailed discussion dealing with all these issues as follows :
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Now comes the assessee’s first and foremost argument that both the learned lower authorities have erred in law and on facts in treating his capital receipt of Rs.1.8 crores as income from other sources. Mr. Hiran has quoted ACIT vs. Jackie Shroff ITA.No.2792/Mum./2016 and ITO vs. Vinay Karve 170 TTJ 222 [ITAT-Mum.] that such a receipt is indeed in the nature of capital field only than assessable under the residuary head of income from “other” sources.
15 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. 6. The Revenue has placed strong reliance on the CIT(A)'s foregoing discussion.
We have given our thoughtful consideration to the foregoing rival stands and find no merit in either party’s arguments in entirity. We wish to reiterate here that there is no dispute about the basic clinching facts as tabulated in the CIT(A)'s detailed discussion in para 4.1 inter alia, that the assessee’s father had purchased land/capital asset in issue on 04.07.1988 followed by his death on 18.12.1994. The assessee’s stand all along is that his brother Mr. Roshanlal Gupta forged his registered power of attorney dated 26.05.2006 and executed sale deed to Mrs. Neeta Jetia. And that this assessee thereafter sent his legal notice dated 30.05.2012 which followed various civil as well as criminal proceedings against Mr. Roshanlal Gupta. We wish to observe here that the assessee finally executed his agreement to sell on 25.03.2014 as a co-vendor with Mrs. Neeta Jetia [for his share in issue of Rs.1.8 crore] and the sale deed concerned finally saw line of the day on 08.10.2014 in the relevant previous year 2014-15 before us. All these facts clearly indicate that assessee has transferred his right and title over the asset, which admittedly is a capital asset u/s. 2(14) of the Act, on 08.10.2014 giving rise to long term capital gains than a capital receipt [as per his stand] and income from other sources [as per both learned lower authorities respective discussions], as the case may be. We thus conclude that both the lower authorities have erred in law and on facts in assessing the assessee’s long term
16 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. capital gains as income from “other” sources. The assessee’s various judicial precedents claiming such a receipt to be a capital receipt are not found to be relevant once the said taxpayers had not themselves transferred their respective assets, but, received compromise/compensation sums only. We thus direct the Assessing Officer for re-compute the assessee’s long term capital gains as per law so far as transfer of his capital asset fetching total sale consideration of Rs.1.8 crore, is concerned. The assessee’s substantive ground nos.1.1 to 2.1 are allowed for statistical purposes in very terms.
Learned counsel next invited our attention to assessee’s ground no.2.2 and submitted that the CBDT herein had very well extended the date of filing return up-to 30.11.2015. We are of the view that the instant issue requires the Assessing Officer’s factual verification in light of CBDT circular/order dated 26.09.2015 extending the date of filing return in specified circumstances. This assessee’s ground 2.2 is accepted for statistical purposes.
Learned counsel next came to the assessee’s ground of appeal no.2.3 that once impugned agreement to sale herein is dated 25.03.2014, both the lower authorities have erred in law and on facts in assessing the foregoing capital gains in assessment year 2015-16 than in assessment year 2014-15. He placed strong reliance on Sanjeev Lal vs. CIT [2014] 365 ITR 389 (SC) that even an agreement to sell also results in transfer of property u/s. 2(47) of
17 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. the Act since some rights or title always get extinguished in favour of the vendee. We find no merit in assessee’s instant substantive ground as their lordships had dealt with an instance wherein the concerned taxpayer had indeed executed his agreement to transfer dated 27.12.2002 which followed legal disputes resulting in delay in transfer as against the facts of the instant case. Their lordships make it clear in para 25 that the said case was decided in light of the peculiar facts only not forming a binding precedent that an agreement to sell always results in ‘transfer’ within the meaning of sec.2(47) of the Act. We thus decline the assessee’s instant substantive ground no.2.3 in very terms.
Lastly comes the issue of eligibility of the assessee’s sec.54F deduction claim. Learned DR vehemently argued in light of CIT(A)'s detailed discussion that the legislature has already amended sec.54F(1) of the Act vide Finance Act, 2014 w.e.f. assessment year 2015-16 that “a residential house”, stands substituted by “one residential house” only. We find in this factual backdrop that this tribunal’s coordinate bench’s order in Arunkumar Purushottamlal Khanna, Pune vs. PCIT (Central), Pune in ITA.No. 181/PUN/2021 dated 06.07.2022 has rejected the Revenue’s identical stand qua re-investment in residential properties made between 01.04.2014 to 31.03.2015 as follows :
“We keep it in mind the foregoing well defined parameters of the CIT/PCIT’s revision jurisdiction and revert to the fact of the instant
18 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. case. Learned CIT-DR vehemently argued that the legislature has amended the clinching statutory expression “a residential house” in section 54F(1) vide Finance Act, 2014 w.e.f. 1.4.2015 by substituting the same with “one residential house in India” only.
We find no merit in the Revenue’s foregoing arguments qua allowability of assessee’s section 54F deduction. We wish to repeat here that he had very well purchased the twin residential units in the year 2014 (supra) itself whereas the clinching amendment to section 54F(1) is applicable with prospective effect from 1.4.2015 only. Case law CIT vs. Smt. K.G. Rukmaniamma 331 ITR 291 (Kar.), CIT vs. Geeta Dugal 357 ITR 153 (Delhi), CIT vs. V.R. Karbagam 373 ITR 122 (Mad.) and CIT vs. Gumanmal Jain 394 ITR 666 (Mad.) have already rejected the Revenue’s identical stand thereby holding that “a residential house” for the purpose of section 54F(1) deduction can indeed cover multiple units in same or different towers or residential blocks; as the case may be. This is indeed coupled with the fact that the assessee’s corresponding sale agreements had also purchased the right of passage of lobby or carpet area(s) intervening the foregoing twin flats nos.3123 and 3124 (supra) as it is evident from perusal of the sole plea page 160 in his paper book. We take into account all these facts as well as various judicial precedents quoted
19 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune. hereinabove to hold that the learned PCIT has erred in treating the assessee’s reinvestment of capital gains in purchase of these two flats totalling to Rs.5,30,60,200/- as wrongly allowed u/s 54F in the Assessing Officer’s regular assessment (supra). The assessee succeeds in his first and foremost grievance in very terms therefore.
10.1. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee’s instant substantive ground in principle thereby treating him eligible for section 54F deduction in very terms.
No other ground or argument has been raised before us.
The assessee’s instant former appeal ITA.No.927/ Pun./2019 is partly allowed for statistical purposes in above terms.
The assessee’s latter appeal ITA.No.926/PUN./2019 also follows the suit being consequential in nature since involving Sec.154 proceedings.
These assessee’s twin appeals are partly allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 23.12.2022. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 23rd December, 2022 VBP/-
20 ITA.Nos.926 & 927/PUN./2019 Shri Nandlal Dulichand Gupta, Pune.
Copy to
The appellant 2. The respondent 3. The Ld. CIT(A) concerned. 4. The CIT concerned 5. D.R. ITAT, Pune “A” Bench, Pune 6. Guard File.
//By Order//
Assistant Registrar, ITAT, Pune Benches Pune.