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Income Tax Appellate Tribunal, “SMC”, BENCH
O R D E R PER: R.C. SHARMA, A.M: This is an appeal filed by the assessee against the order of CIT(A)- 2, Mumbai in appeal No.CIT(A)-2/IT-190/2017-18 dated 18/07/2018 for A.Y.2014-15 in the matter of order passed u/s.143(3) of the Income Tax Act, 1961.
Nobody appeared on behalf of the assessee inspite of service of notices. This appeal was earlier fixed on 17/09/2019, on that date also nobody appeared on behalf of the assessee nor any adjournment was filed. On that date, case was adjourned on 04/11/2019. Even on 04/11/2019 neither anybody appeared nor any adjournment
Late Rameshwar Saran Mathur was filed, accordingly Bench decided to dispose off the appeal after considering the material placed on record and contention of ld. DR.
From the record, I found that AO has declined assessee’s claim of exemption u/s.54. During the Course of assessment proceedings, it was observed that assessee has claimed long term capital gain exemption u/s. 54 of Rs. 92,68,985/-. The assessee and his wife has sold a flat no. 12, 1st floor, Belle view, 85, Bhulabhai Desai Road, Mumbai- 400 036 at Rs. 1,95,00,000/-. In this flat the assessee's share of capital gain is Rs. 92,68,985/- . Further the assessee has purchased two flats no K-201 and K-202, 2nd floor, Palm court Co-op Hsg Sct Ltd, Palm Court complex, Link road, Malad (w), Mumbai- 400064 in the joint name with his wife and claimed the above said capital exemption u/s.54 in respect of Capital Gain on account of sale of Flat which has been claimed to be invested in purchase of a residential house. To find out the correct position, the AO called for inspector report. As per inspector report, the assessee has purchased two residential properties instead of one residential property. Accordingly, the AO declined assessee’s claim of exemption.
By the impugned order, CIT(A) confirmed the action of AO after having the following observation:-
4.3 From the above, it is clear that if the appellant invests in a single unit, out of the sale proceeds of the capital asset, then the appellant is allowed to claim the benefit of investment as tax exemption. In the instant case, the appellant and his wife sold a flat and the appellant had purchased two flats with Nos. K-201 & K-202, Palm Court Co-op Hsg Scty.,Palm Court Complex, in Malad (West), Mumbai. As seen from the assessment order, the appellant had claimed the exemption u/s.54 treating both these units as an investment in a residential house. The Assessing Officer has conducted detailed inquiries to ascertain the facts. Inspector from his office was also deputed to do necessary inquiries. The AO had further verified the facts
Late Rameshwar Saran Mathur such as documents of the properties purchased and examined the submissions of the assessee. Upon examining all the facts, the Assessing Officer had come to a conclusion that the appellant had purchased two residential properties and also claimed exemption u/s.54F for two properties. However, as per the statute such exemption u/s.54F is allowed for only one property. Accordingly, the Assessing Officer had disallowed exemption and added capital gains of a flat to the tune of Rs.28,43,985/-. 4.4 During the appellate proceedings, the appellant had emphasised that the property was only one large residential house but got it registered vide two agreements. Accordingly, the appellant pleaded that the exemption u/s.54F to be allowed fully. The facts emerged from the assessment order, the inquiries conducted by the Assessing Officer and the documents submitted by the appellant directly indicate that there are two different residential units were bought by the appellant. Since, these are two different residential units, therefore, the exemption shall not be allowed for two units. As discussed supra and also on perusal of the facts, I do not find any valid reason to interfere with the order of the AO and apparently the solitary ground of the appellant is treated as disposed off and dismissed.”
Against above order of CIT(A), assessee is in further appeal before us.
I have gone through the orders of the authorities below and found that after sale of residential house, assessee had reinvested the capital gains into a new residential house at Malad. Eventhough two flats K-201 and K-202 were purchased, but the same were stated to be combined flat forming one big residential house. Since these flats were purchased by the vendor by a separate purchase deed, therefore, sold by vendor by separate sale deed to the assessee. Both sale deed were executed on the very same day i.e.26/02/2014 and purchasers were assessee ie. Shri
Late Rameshwar Saran Mathur Rameshwar Saran Mathur and his wife. From the record, I also observed that the vendor Shri Sandeep Arora had bought and kept these two flats as Jodi flats and converted them into one unit for the purpose of his residence. The assessee had also bought this Jodi flat as one unit. All these flats have not been properly examined by the AO while declining assessee’s claim for investment in new residential house. Merely on the plea that two flats K-201 and K-202 were purchase by a separate purchase deed, the AO has declared assessee’s claim. In all fairness, I restore the matter back to the file of AO for deciding afresh keeping in view of our above observations.
In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 28/11/2019.