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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI SHAMIM YAHYA & SHRI PAWAN SINGHSmt. Kalpana Paresh Dadia
O R D E R
Per Pawan Singh, Judicial Member:
This appeal by assessee is directed against the order of CIT(A)-41, Mumbai dated 01-02-2016, which in turn, arises from assessment order passed u/s 143(3) on 12-01-2016. The assessee has raised the following grounds of appeal. “(1) The Ld. A.O. has erred in not allowing the deduction U/S.54F of Rs.82,13,803/- and the Ld. CIT(A)-41 has erred in confirming the same.”
2. The brief facts of the case are that the assessee is a partner in M/s Arham Industries, filed her return of income for AY 2013-14. The case was selected for scrutiny. During the assessment, from computation of income, the AO noted that assessee has claimed capital gain on sale of 2 ITA 2904/Mum/2017- Kalpana Paresh Dadia 50% share in a land and earned capital gain of Rs.82,13,803/-. The assessee also claimed deduction u/s 54F on purchase of flat in Ahuja Mapl View of M/s Adarsh Industrial Estate P Ltd. The assessee sold the capital asset / land on 22.11.2012 and purchased a new flat vide allotment letter dated 28-09-2013. The assessee made a payment of Rs.87 lakhs out of total value of new asset / flat of Rs.1,12,22,600/- and thus claimed that substantial part of payment was made before allotment letter dated 28-09-2013. The AO did not accept the contention of the assessee by taking view that conditions of section 54F were not fulfilled by the assessee. As the assessee neither received possession of new asset / flat nor the property was registered in the name of assessee within the stipulated period. The AO concluded that no legal document for purchase was produced by the assessee to prove that the assessee purchased or acquired the property after expiry of three years from the date of sale. Aggrieved by the order of AO, the assessee filed appeal before the CIT (A), where the action of AO was confirmed. Thus, further aggrieved by the order of CIT (A), the assessee has filed present appeal before us.
We have heard the submission of Ld. AR of the assessee and Ld. DR for the revenue and perused the material available on record. The ld. AR for the assessee submits that the grounds of appeal raised by the assessee is 3 ITA 2904/Mum/2017- Kalpana Paresh Dadia covered by the decision of Hon’ble Bombay High Court in PCIT Vs Vembu Vaidyanathan [2019] 101 taxmann.com 436 (Bom). The ld AR for the assessee submits that during the relevant period the assessee with her co-shares sold a plot of land on 22.11.2012 for a total consideration of Rs. 173,00,000/-. The assessee was owner of 50% share in the said plot. The plot was acquired on 24/05/1994. The assessee earned a capital gain of Rs. 82,13,803/-. The assessee invested the entire sum of the amount in purchasing the new residential flat on 28.09.2013. The assessee made a payment of Rs. 87 lakhs (out of total consideration of Rs. 1.15 crore) before the allotment of the flat. Thus, the assessee is entitled for the exemption under section 54F of the Act.
In support of his submissions the ld AR for the assessee relied on the decision of Bombay High Court in PCIT Vs Vembu Vaidyanathan [2019] 101 taxmann.co. 436(Bombay), decisions of Tribunal in Nisha Suman Jain Vs DCIT (ITA No. 42/Mum/2015 dated 25.04.2019, Umashankar Mishra Vs DCIT (ITA No. 5653/Mum/2016 dated 02.08.2017) and Anita D Kanjani Vs ACIT [2017] 79 taxmann.com 67 (Mum-Trib).
On the other hand the ld. DR for the revenue supported the order of the lower authorities. The ld. DR for the revenue further submits that mere issuance of allotment letter does not create right in respect of the asset in 4 ITA 2904/Mum/2017- Kalpana Paresh Dadia absence of registered agreement or sale deed for acquisition of the property. The assessee has not fulfilled the conditions prescribed under section 54 of the Act.
We have considered the rival submissions of the parties and have gone through the orders of the lower authorities and also deliberated on the various case law relied by the parties. On care full perusal we have noted that there is not dispute for earning of capital gain, the short controversy for our consideration is if the assessee is entitled for deduction under section 54F on investing the gain on acquisition of new asset / residential flat, which was allotted to the assessee vide allotment letter dated 28.09.2013. Admittedly, when the allotment letter was issued to the assessee, the assessee has paid a sum of Rs. 87 lakhs (not disputed by the lower authorities.)
The Hon’ble Bombay High Court in PCIT Vs Vembu Vaidyanathan (supra) while considering the question of law “whether on the facts and in the circumstances of the case and in law, the ITAT was justified in treating the gain arising from the sale of capital asset as Long Term Capital Gain without appreciating the fact that mere letter of allotment does not lead to creation of proper and effective right over the capital asset sought to be acquired, but only on execution of an agreement spelling out all the exact terms and conditions for acquisition” held that for computing capital gain
5 ITA 2904/Mum/2017- Kalpana Paresh Dadia tax, date of allotment of flat by DDA would be date on which purchaser of flat can be stated to have acquired property. 8. Further, coordinate bench of the Tribunal in Nisha Suman Jain Vs DCIT (supra) has taken view that for computing the period for Long Term Capital Gain (LTCG) has to be taken from date of allotment letter. In Umashankar Mishra Vs DCIT (supra) also allowed the computation of LTCG from the date of allotment letter. Further, in Anita D Kanjani Vs ACIT (supra) similar view was taken in order to determine the nature of asset in term of section 2(42A), holding period has to be computed from the date of issue of allotment letter and not from the date when agreement to sale was registered.
In view of the aforesaid discussions, we may further retreat that when the assessee was allotted a residential flat on 28.09.2013 the assessee has paid a sum of Rs. 87,00,000/-. The Assessing Officer has not disputed the payment made against the purchase of new residential flat. The objection of Assessing Officer was that the property is not registered in the name of assessee nor possession is obtained by her. In our view, once the assessee has invested substantial part of the capital gain in acquisition of residential house. The assessee is entitled to the exemption under section 54F of the Act. As the assessee has fulfilled the condition for seeking deduction under section 54F of the Act.
6 ITA 2904/Mum/2017- Kalpana Paresh Dadia 10. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 01-10-2019.