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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI INTURI RAMA RAO & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
This appeal by the assessee against the order dated 31-05-2017 passed by the Commissioner of Income Tax (Appeals)-8, Pune [‘CIT(A)’] for assessment year 2013-14.
The assessee raised four grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) is justified in confirming the addition of Rs.80,31,796/- u/s. 54F of the Act in the facts and circumstances of the case.
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Heard both the parties and perused the material available on record. We note that the assessee’s father and his 2 uncles purchased total area of 182 R of land at Survey No. 87/A, Village Saidapur, Satara out of sale of gold of their respective wife’s. Ownership of 182 R was undivided at the time of purchase. After the demise of assessee’s father, land ownership S. No. 87/A/10 was devolved on assessee and assessee’s brother i.e. Suhas Manjarkar. Mr. Balkrishna Manjarkar (paternal relative of assessee) and others filed appeal against assessee challenging PHALANI (division) of S. No. 87A on 19-07-2011. The assessee and his brother i.e. Suhas Manjarkar entered into a development agreement for land at S. No. 87/A/10 with M/s. Adarsh Vastu Nirmity Pvt. Ltd. (developer) on 23-04- 2012. The developer filed application for NA order and building plan sanction before the competent authorities for proposed development work at S. No. 87/A/10 and 87/A/11 on 11-06-2012. The competent authorities issued NA order and commencement certificate for the proposed development work (First Sanction) on 14-04-2013. The assessee filed return u/s. 139(1) of the Act declaring income from business and capital gains on 30-09-2013. The Land record officer, Satara dismissed stay request of Mr. Balkrishna Manjarkar for the development work to be commenced at S. No. 87/A/10+11+12 on 21-11-2013. There were change of FSI rules. The Land record officer, Satara dismissed appeal filed by Mr. Balkrishna Manjarkar and others based on merits on 21-02-2015. Mr. Balkrishna Manjarkar (parental relative of assessee) and others filed appeal against “assessee” before the Collector, Satara. During the course of scrutiny assessment proceedings of the assessee, the AO issued letter dated 16-09-2015 to the developer u/s. 133(6) of the Act asking to submit current status of the project. The developer replied on 28-09-2015 to the notice u/s. 133(6) of the Act and stated various reasons for delay in
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construction and also stated that construction work has not commenced till that date. In the letter, the developer also mentioned about the case filed by the paternal relatives of the assessee before the Collector, Satara. The AO passed assessment order dated 23-12-2015 of A.Y. 2013-14 by disallowing assessee’s claim of deduction u/s. 54F on the ground of non- completion of construction of house in the housing project at S. No. 87/A/10. The developer received NA order for S. No. 87/A/12 on 12-01- 2016. The developer filed application before the competent authorities for merger of all the three plots i.e. S. No. 87/A/10+87/A/11+87/A/12 and also submitted revised building plan (Second Sanction) for sanction purpose on 26-07-2016. The Collector, Satara dismissed the appeal filed by Mr. Balkrishna Manjarkar and other based on merits on 22-11-2016. During enquiries by CIT(A) with the developer, the developer mentioned during 08-12-2016 commencement of the construction work. The CIT(A) passed appellate order by confirming disallowance of deduction u/s. 54F of the Act on the same ground of non-completion of the construction of house and alternatively questioning the amalgamation of multiple units for self- occupied house of the assessee on 31-05-2017. The competent authorities approved assessee’s application dated 26-07-2016 and the revised building plan was sanctioned (Third Sanction) on 28-06-2018.
The ld. AR placed on record the decision of Hon’ble High Court of Bombay in the case of Girish L. Ragha reported in 69 taxmann.com 95 (Bombay) which is at Page No. 107 of the paper book and drew our attention to Para No. 3 of the said order and argued that the assessee invested sale consideration and claimed deduction u/s. 54F of the Act. He submits that the building construction is nearing completion and the assessee has no control on the completion of building project as there were litigation from 19-07-2011 to 22-11-2016. Therefore, the assessee is
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entitled to claim deduction u/s. 54F of the Act. For better understanding the relevant portion of the said decision of the Hon’ble High Court of Bombay at Para No. 3 reads as under : “3. We are in respectful agreement with the view taken by the Delhi High Court to come to the conclusion that the purchase would be computed when the consideration is duly paid by the assessee for the purpose of purchasing the premises and the construction had already commenced by the builder which remained to be completed on account of the litigation. In the present case, the learned Tribunal has noted that the assessee has sold the property on 01.12.2009 and the assessee has made the payment on 16.03.2010. The assessee was required to get the house and occupancy certificate on or before 01.12.2011. But however, the assessee got the occupancy certificate of the property on 17.01.2014. The learned Tribunal further noted that the assessee submitted the documentary evidence to show that after purchasing the property there was a civil suit filed by the other parties and the assessee could not complete the construction and the licence for constructing the house was accordingly delayed. The learned Tribunal further noted that CIT (A) in his order relied upon the decision of the Madras High Court in the case of CIT V/s Sadarmal Kothani, 302 ITR 286 (Chennai) wherein, it is held that in order to get the benefit under Section 54 of the Income Tax, the assessee need not complete the construction of the house and occupy the same. It is further noted that the assessee has invested the money and the occupancy certificate is delayed which is beyond the control of the assessee then the assessee is entitled for deduction under Section 54 of the Act. The learned Tribunal as such found that the assessee was entitled for deduction under Section 54 of the Act and consequently, dismissed the appeal of the Revenue. Considering the said facts and the ratio of the judgment referred to herein above, we find that there is no substantial question of law which arises for consideration in the present appeal under Section 260A of the Income Tax Act, 1961. Hence, no case is made out by the appellant for interference in the order passed by the Income Tax Appellate Tribunal. The appeal stands accordingly rejected.”
In the light of the above, we note that the Hon’ble High Court of Bombay dismissed the substantial question of law raised by the Revenue and upheld the order of Tribunal in allowing benefit u/s. 54 of the Act. We note that in order to come to such conclusion, the Hon’ble High Court of Bombay referred to the decision of Hon’ble High Court of Madras in the case of Sardarmal Kothari reported in 302 ITR 286 (Madras). The Hon’ble High Court of Bombay reiterated the ratio of Hon’ble High Court of Madras in the case of Sardarmal Kothari (supra) wherein, it is held that in order to get the benefit u/s. 54 of the Act, the assessee need not complete the construction of the house and occupy the same. In the present case,
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though the competent authority issued NA order for commencement of proposed development work on 14-04-2013, the said developer could not complete the building construction due to litigation pending with the Revenue authorities by the paternal relative of the assessee. We note that the District Collector dismissed the appeal of paternal relative of assessee on 22-11-2016 and the developer got its final sanction on 28-06-2018. Admittedly, as placed on record by the ld. AR that the construction is nearing completion and the assessee has no control over the construction. Therefore, respectfully following the finding of Hon’ble High Court of Bombay in the case of Girish L. Ragha (supra), we hold that the assessee is entitled to get the deduction u/s. 54F of the Act. Thus, grounds raised by the assessee are allowed.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 15th June, 2022.
Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ददिांक / Dated : 15th June, 2022. रधव आदेश की प्रधतधलधप अग्रेधर्त / Copy of the Order forwarded to : अपीलार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The CIT(A)-8, Pune 4. The Pr. CIT-3, Pune धवभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण, “बी” बेंच, 5. पुणे / DR, ITAT, “B” Bench, Pune. गार्ा फ़ाइल / Guard File. 6. //सत्याधपत प्रधत// True Copy// आदेशािुसार / BY ORDER, //True copy// वररष्ठ धिजी सधचव / Sr. Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune