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Before: Shri Duvvuru RL Reddy & Shri G. Manjunatha
आयकर अपीलीय अिधकरण, ’सी’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI �ी धु�ु� आर.एल रे�ी, �ाियक सद� एवं �ी जी. मऺजुनाथा, लेखा सद� के सम� Before Shri Duvvuru RL Reddy, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T.A. No. 06/Chny/2020 िनधा�रण वष�/Assessment Years: 2017-18 & C.O. No. 12/Chny/2020 [In I.T.A. No. 06/Chny/2020] The Assistant Commissioner of Shri Biji Kurien, Income Tax, Non Corporate Circle 9(1), Vs. A 025, Commanders Court, Room No. 211, 2nd Floor, Wanaparthy Ethiraj Salai, Egmore, Block, 121, M.G. Road, Chennai 600 008. Chennai 600 006. [PAN:ADDPK6148H] (अपीलाथ�/Appellant) (��थ�/Respondent/Cross Objector) अपीलाथ� की ओर से / Appellant by : Shri G. Johnson, Addl. CIT ��थ� की ओर से/Respondent by : Shri K.V. Radhakrishna, C.A. सुनवाई की तारीख/ Date of hearing : 12.08.2021 घोषणा की तारीख /Date of Pronouncement : 31.08.2021 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:
The appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 10, Chennai, dated 22.10.2019 relevant to the assessment year 2017-18. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in allowing the exemption amounting to ₹.2,19,19,419/- under section 54 of the Income Tax Act, 1961 [“Act” in short].
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Brief facts of the case are that the assesse filed his return of income for the assessment year 2017-18 on 02.02.2017 declaring total income of ₹.36,84,980/-. The case of the assessee was selected for scrutiny. After considering the submissions and details furnished against statutory notices, the assessment under section 143(3) of the Act was completed by assessing total income of the assessee at ₹.2,55,88,837/- after rejecting the claim of deduction of ₹.2,19,19,419/- towards capital gains under section 54 of the Act. On appeal, by following the decision in the case of PCIT v. Vembu Vaidyanathan [2019] 108 taxmann.com 339 (SC), the ld. CIT(A) directed the Assessing Officer to give the benefit of section 54 of the Act.
Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the assessee has intentionally projected the date of agreement of purchase of new asset, being May 2016/August, 2016 instead of the actual date of signing of Memorandum of Understanding only for the purpose of claiming exemption under section 54 of the Act. It was further submission that the first appellate authority has not considered the section 2(47)(v) of the Act regarding transfer in relation to a capital asset includes “any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882”. It was further submission that once the assessee, having executed an
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agreement to sell a house property and sale deed could not be executed, it has to be understand that a valid transfer took place within the meaning of section 2(47) of the Act even by executing an agreement to purchase in view of the case law relied on by the Department and pleaded for reversing the appellate order.
Per contra, the ld. Counsel for the assessee has submitted that section 54 of the Transfer of Property Act, 1882 clear speaks that “In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Thus, it would be clear that the unregistered MoU cannot be received in evidence. Therefore, the actual date of conveyance deed executed by the builder to the assessee should be deemed date of purchase of the property. In support of the appellate order, the assessee has also preferred cross objection against the appeal of the Revenue. The ld. Counsel for the assessee has strongly supported the appellate order and prayed for dismissing the appeal of the Revenue.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below and also the paper
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book filed by the assessee. While computing the capital gain, the assessee has offered capital gains on the said property of ₹.2,19,10,773/-. Against this capital gain, the assessee has claimed exemption under section 54 of the Act of ₹.2,19,10,773/- by way of investment of ₹.3,31,62,965/- on purchase of Flat No. 5 (CCA025) Commanders Court, Chennai claiming the date of investment being 16.08.2016. On perusal of the documents, the Assessing Officer observed that in order to acquire the above property, the assessee had entered into a MOU on 18.12.2015 to purchase the flat claimed to be investment under section 54 of the Act. As per section 54(1) of the Act, the relief under section 54 of the Act in respect of the long term capital gain can be availed only if a residential house i.e., a new asset is purchased within one year before or within two years after the date on which the transfer of the residential house/original asset takes place. The Assessing Officer further noted that the residential house had been transferred by the assessee on 22.03.2017, whereas, he had signed the MOU on 18.12.2015 to purchase the new asset. Since the new asset was purchased more than one year prior to the date on which the transfer in respect of the residential house had been effect, the Assessing Officer disallowed the claim of exemption and the income from capital gains of ₹.2,19,19,419/- was brought to tax. On appeal, by following the decision in the case of PCIT v. Vembu Vaidyanathan (supra), the ld. CIT(A) has observed and held as under:
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“7. As a result the reference to the bare act, case of Vembu Vaidyanathan and the facts and circumstances of the case it is clear that assessee had got allotment letter and possession of the flat in August 2016. He had sold his Bangalore flat in March 2017 which was well within the permissible period of one year date of purchase of the flat in question. Tax authorities have to read the law to make it workable and not adopt hyper-technical interpretation which would injustice to the way any statute has to be read and implemented. Assessee senior citizen was very much prudent in disposing of his flat at Bangalore only when the deal for his flat at Chennai has been finalised. In view of above the appeal of assessee is allowed and AO is directed to give benefit of section 54 of the act.” 5.1 The above appellate order is very vague and cryptic. The ld. CIT(A) has not discussed anything to hold that the sale of Bangalore flat by the assessee in March, 2017 was well within the permissible period of one year from the date of purchase of the new flat in question. S. No. 4 in the table given in the assessment order in page 3 shows that the assessee has paid a sum of ₹.4,36,975/- on account payee cheque on 18.02.2016 to M/s. DLF Home Developers Ltd., whereas, the DLF has issued allotment letter dated 05.04.2016. However, the ld. CIT(A) has not discussed anything about the above variation. Subsequent to DLF allotment letter dated 05.04.2016, M/s. DLF Home Developers Ltd. executed registered conveyance deed only on 16.08.2016, but in his written submission dated 06.03.2019 filed before the Assessing Officer, the assessee has claimed that physical possession of the flat was given to him sometime in May, 2016. The ld. CIT(A) has not considered the above facts in his appellate order. Therefore, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) and
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the ld. CIT(A) should examine the nature of entire payments and decide exact date of valid sale transaction of the new flat by passing an elaborate speaking order in accordance with law. Accordingly, the ground raised by the Revenue is allowed for statistical purposes.
The assessee has filed the Cross Objection in support of the appellate order. Since we have set aside the order of the ld. CIT(A) with regard to the ground raised by the Revenue, the CO filed by the assessee is mere academic in nature and accordingly, the CO filed by the assessee is dismissed.
In the result, the appeal of the Revenue is allowed for statistical purposes and the CO filed by the assessee is dismissed.
Order pronounced on the 31st August, 2021 in Chennai.
Sd/- Sd/- (G. MANJUNATHA) (DUVVURU RL REDDY) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 31.08.2021 Vm/- 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.