MANISH SINHA,MUMBAI vs. INCOME TAX OFFICER-23(3)(3) (ERSTWHILE INCOME TAX OFFICER-19(3)(3), MUMBAI

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ITA 602/MUM/2018Status: DisposedITAT Mumbai02 August 2019AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 54 of the Income Tax Act does not mandate the use of the exact sale consideration for reinvestment in a new property. The crucial requirement is the purchase of a new property within the stipulated time, which the assessee had complied with.

What were the facts?

The assessee sold an old property and purchased a new property within the prescribed time. However, the assessee used a loan of Rs. 40 lakhs for the new property purchase instead of the sale consideration received from the old property.

What were the issues?

Whether the exemption under Section 54 is available when the new property is purchased using a loan, and not directly from the sale proceeds of the old property.

Which sections of the Income-tax Act were involved?

Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D”, BENCH

Before: SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH, JM Shri Manish Sinha

For Appellant: Shri R.C.Modi & Ms.Ketki Rajshirke
For Respondent: Shri H.N.Singh
Hearing: 30/07/2019Pronounced: 02/08/2019

आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2010-11 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-33, Mumbai in appeal No.CIT(A)-33/Rg.23/71/2013-14 dated 09/06/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.144 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 12/03/2013 by the ld. Income Tax Officer, 19(3)(3), Mumbai (hereinafter referred to as ld. AO).

2.

The only issue to be decided in this appeal is as to whether the assessee is eligible for exemption u/s.54 of the Act in respect of purchase of new property out of loan availed from HDFC bank as against the sale consideration received from sale of old property.

3.

We have heard rival submissions and perused the material available on record. It is not in dispute that assessee had sold the old property on 03/03/2010. It is not in dispute that assessee had purchased the new property on 27/04/2010. The return of income for the A.Y.2010-11 was filed on 15/10/2010 wherein the sale consideration of old property of Rs.55 lakhs was disclosed together with the cost of acquisition of the said property and the claim of deduction u/s.54 in respect of reinvestment in new property was restricted to the extent of long term capital gains in the said return of income filed. These facts are available in page 16 of the paper book containing entire set of return of income. The assessee even though received sale consideration of Rs.55 lakhs from old property had not used the same for re-investment in new property and had instead availed loan from HDFC bank to the tune of Rs.40 lakhs and used the same for purchasing a new property. We find that there is no mandate in the provisions of Section 54 that the very same sum of sale consideration should be utilised for investment in new property. The only requirement of Section 54 is that the assessee would be eligible for exemption u/s.54 of the Act if he had purchased/constructed the new property within the prescribed time. This condition has been duly complied with by the assessee in the instant case. We find that reliance placed by the ld. AR wherein our understanding of the provisions of section 54 of the Act has been duly endorsed by various co-ordinate bench decisions of the Tribunal as under:-

1.

Sr.No. Name Date of Order 1 1136/Mum/2018 Yatin Prakash Telang vs 04/07/2018 Income Tax Officer, Ward No.21(3)(5) 2 607/Mum/2018 Hansa Shah vs. Income Tax 05/10/2018 Officer, Ward-21(1)(4) 3 526/Mum/2016 Deepak A Shah vs. Income Tax 11/04/2018 Officer 18(1)(3) 4 6808/Mum/2003 ACIT 26(1) vs. Dr. 11/01/2008 P.S.Pasricha 3.1. In view of the aforesaid observation and respectfully following the aforesaid decisions, the grounds raised by the assessee are allowed.

4.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on this 02/08/2019

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