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Income Tax Appellate Tribunal, “A”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
आयकर अपीलीय अिधकरण “ए” "ायपीठ पुणेम"। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.1764/PUN/2019 िनधा"रणवष" /Assessment Year: 2013-14 Dilip B. Mundada, The Dy.CIT, Circle-6, 129, nana Peth, Near Ram Vs Pune. Mandir, Pune – 411002. PAN: AAWPM 9135 E Appellant/ Assessee Respondent/ Revenue Assessee by Shri Pramod S Shingte – AR Revenue by Shri Arvind Desai – DR Date of hearing 21/06/2022 Date of pronouncement 15/07/2022 आदेश/ ORDER PER DR.DIPAK P.RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income-tax(Appeals)-8, Pune’s, order dated 24.09.2019 for the Assessment Year 2013-14. The appellant Assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law the Lower Authorities has erred not granting the exemption u/s 54F under Income Tax Act, 1961 for Rs.24,69,227/- without appreciating the fact that your appellant has purchased two adjacent flats which were used as a single unit and therefore appellant is entitled for exemption as claimed. We pray accordingly. The appellant craves for to leave, add, alter, modify, delete above ground of appeal before or at the time hearing, in the interest of natural justice.”
ITA No.1764/PUN/2019 for A.Y.2013-14 Dilip B. Mundada Vs. Dy.CIT, Circle-6, Pune (A)
Brief facts of the case are that during the year under consideration the assessee Dilip B.Mundada sold a property on 30.03.2013 for Rs.1,51,00,000/-. The assessee claimed to have purchased two flats as under : Name of Person in Flat Purchase Amount whose name property No. Agreement date purchased Mrs. UMA Dilip 401 11/08/2011 46,22,890/- Mundada 401 27/07/2012 Supplementary deed for 401 Dilip B.Mumdada 402 26/06/2012 70,57,701/- 3. The assessee had claimed deduction u/s 54F in the computation of Long Term capital gain. The Assessing Officer allowed the claim of the assessee only for Flat No.402. 3.1 Aggrieved by the order of the AO, the assessee filed the appeal before the Ld.Commissioner of Income Tax(Appeal). The Ld.CIT(A) has discussed the said issue in para 6.7 of the order which is reproduced here as under : “6.7 The appellant contention has been considered in light of the above judgements and facts of the case. However, not only on many aspects the appellant case distinguish from the above cases, but also fails on merit too.Looking at the facts of the appellant’s case, Agreement for purchasing Flat no. 401 was executed on 11-08- 2011 in the name of Mrs. Uma Mundada, wife of the appellant. As the original asset was sold on 28.03.2013, it is a fact that flat no. 401 was purchased 17 month prior to sale. The appellant’s wife Mrs. Uma Mundada has acquired a loan for purchase of the said flat form ICICI Bank. Mrs. Uma Mundada is also one of the directors in the firm and earn income, which was used to purchase the said flat no. 401. Mrs..UmaMundada files separate ROI not jointly with her husband. Her income proceeds was contributed to purchase the said flat no. 401. Apart from these facts it can be seen also that the sale proceeds was not source to purchase the said flat
ITA No.1764/PUN/2019 for A.Y.2013-14 Dilip B. Mundada Vs. Dy.CIT, Circle-6, Pune (A)
no. 401, as the same was already bought before the sale proceeds approx. 17 months prior to sale. Thus, the appellant’s case does not have same facts as the case cited by him. The appellant’s contention that the two flats are adjacent and have one kitchen, also cannot be accepted in light to eligibility for exemption u/s 54F of the Act. The appellant bought another flat no. 402 in his name after 10 month of buying flat no. 1, and then claimed to have join to make one residential unit. Since, the flat no. 401 was purchased prior to one year instead of what envisaged in section 54F of the act; it is out of purview of the provisions. The said flat 401 and 402 cannot be considered a single residential unit as held in CIT vs Devdas Naik (2014) by Hon’ble Bombay High court for the instant case, because flat no. 401, was purchased prior to one year of sale of original asset. Accordingly, in light of above discussion, Ground No. 1 is DISMISSED.” 4. Aggrieved by the order of the ld.CIT(A) the assessee filed appeal before the Tribunal.
The Learned Authorized Representative(ld.AR) for the assessee submitted that the assessee had purchased the Flat No.401 in his wife’s name for the security of his wife. Though, the Flat No.401 was purchased by registered agreement dated 11/08/2011 in the name of Mrs. Uma D Mundada but then there was a supplementary agreement on 27/07/2012 vide which the carpet area of the flat was increased from 777 sq.ft to 841 sq.ft by the builder due to revision in the building plan. The assessee had not paid any extra consideration for the said increase in the area. All the terms of the agreement remained same as per original agreement. The Ld.AR submitted that the Assessee purchased the Flat No.402 vide purchase agreement dated 26/06/2012. The assessee converted the said two flats into one
ITA No.1764/PUN/2019 for A.Y.2013-14 Dilip B. Mundada Vs. Dy.CIT, Circle-6, Pune (A)
flat. Therefore the AR pleaded that the assessee is entitled for deduction u/s 54F.
Ld.Departmental representative (DR) relied on the orders of the lower authorities. Ld. DR specifically invited our attention to the fact that the Flat No.401 which was purchased in the name of Mrs.Uma Mundada on 11/08/2011, means more than one years before the sale of the impugned property at Hadapsar Pune. Hence anyway the assessee will not be eligible. The Ld.DR submitted that the two flats were purchased separately, by separate agreements. As per the building plan the Flat No’s.401 and 402 are separate flats, hence assessee cannot make them one flat. If assessee has removed one wall between the two flats then it is an illegal act. The payments for Flat No.401 were made by Mrs. Mundata who is an independent assessee having her own PAN and source of income.
Heard both the parties, perused the records. It is a fact that the assessee had sold a property on 30.3.2013 for Rs.1,51,00,000/- and there was capital gain on said transaction. The assessee claimed 54F benefit.
7.1 The Section 54F as applicable for the relevant Assessment Year is reproduced here as under : [Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.
ITA No.1764/PUN/2019 for A.Y.2013-14 Dilip B. Mundada Vs. Dy.CIT, Circle-6, Pune (A)
54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be char under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where— (a) the assessee,— (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] 8. The Flat No.401 was admittedly purchased vide registered Purchase Agreement dated 11/08/2011 for total consideration of Rs.40,00,000/-. The stamp duty and registration charges had been paid by Mrs.UmaMundada on the total value of Rs.40,00,000/-. Thus the Flat No.401 has been registered in the records of