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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: HON’BLE SHRI MAHAVIR SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-28, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-28/IT-249/ACIT-17(2)/2015-16 dated 10/11/2016 on following grounds of appeal: -
Smt. Munisha D. Ahuja Assessment Year :2012-13 “On the facts and under the circumstances of the case and in law, the Learned CIT(A) erred in confirming the action of AO that Section 54 of the Income Tax Act, 1961 provides for deduction for re-investment in only one residential property and restricted exemption u/s 54 to Rs. 56,00,000/- only to the extent of cost of one flat instead of Rs.2,24,00,000/- total consolidated cost of four adjoining flats on the same floor in the same building which one house. On the facts and under the circumstances of the case and in law, the Learned CIT(A) erred in confirming the action of AO in disallowing expenses of Rs.21,00,000/- and Rs. 12,00,000/- being transfer expenses paid to society incurred by the appellant being expenditure "incurred wholly and exclusively in connection with sale / transfer u/s 48(i).” 2.1 The assessment for impugned AY was framed by Ld. Ld. Assistant Commissioner of Income Tax-17(2), Mumbai [AO] u/s. 143(3) on 30/03/2015 wherein the income of the assessee was determined at Rs.538.78 Lacs as against returned income of Rs.366.18 Lacs filed by the assessee on 30/11/2012. The assessee being resident individual derived income from House Property, Capital Gains & Income from Other Sources. 2.2 During assessment proceedings, it transpired that the assessee sold one Flat situated at Cuffe Parade, Mumbai during the impugned AY and worked out Long Term Capital Gains [LTCG] against the same for Rs.238.08 Lacs which was offered to tax. While arriving at the computations, the assessee claimed aggregate expenditure of Rs.33 Lacs, being transfer charges paid to the Society / BMC Property Tax. Further, the assessee claimed deduction u/s 54 on account of investment in new flats which happens to be 4 flats i.e. Flat Nos. 702- 705, A-Wing, Project Hillside Site No.95, Final Plot No. 104, TPS-II, Ramtekdi, Hadapsar, Pune. These two issues are the subject matter of present appeal before us. 2.3 The receipts for expenses paid to society reveal that the expense of Rs.21 Lacs was in the nature of Voluntary Donation towards Capital Smt. Munisha D. Ahuja Assessment Year :2012-13 Contribution Fund whereas the balance amount of Rs.12 Lacs represented municipal property tax. The deduction of the same has been denied to the assessee for want of requisite explanation. 2.4 The Ld. AO opined that deduction u/s 54 would be restricted to investment made in one flat only as against 4 flats as claimed by the assessee. The assessee, vide reply dated 30/10/2014, inter-alia, submitted that the 4 flats were adjoining flats and the amendment made in Section 54(1) was applicable only from AY 2015-16 and therefore, the full deduction was allowable. The attention was drawn to the fact that all the flats were purchased vide single application and allotment letter and single combined payment was made to the builders and therefore. The intention was to use all the flats as single residential house / unit. Reliance was placed on certain judicial pronouncements to support the same. However, not convinced, Ld. AO restricted the deduction u/s 54 to Rs.56 Lacs, being investment made in one flat. Finally, the LTCG were re-worked at Rs.439.08 Lacs and the differential amount i.e. Rs.172.67 Lacs was added to the income of the assessee. The stand of Ld. AO, upon confirmation by first appellate authority, is under appeal before us.
The Ld. Authorized Representative for Assessee, drawing our attention to the application form, allotment letter, receipts & other purchase documents, submitted that the intention was always to use the 4 flats as single residential unit and therefore, full deduction was allowable to assessee in terms of following binding judicial precedents: - (i) CIT Vs Devdas Naik, Hon’ble Bombay High Court [49 Taxmann.com 39] (ii) CIT Vs Raman Kumar Suri, Hon’ble Bombay High Court [29 Taxmann.com 231] (iii) ITO Vs Kavita Gupta, Mumbai Tribunal [ITA No. 6884/Mum/2014 dated 11/04/2018]
Smt. Munisha D. Ahuja Assessment Year :2012-13 Regarding payment made to the Society, reliance has been placed on the decision of this Tribunal rendered in Damodar G Nagalia Vs ACIT [12 SOT 599 Mum]. Per Contra, Ld. DR supported the working made by Ld. AO. 4.1 We have carefully heard the rival submissions and perused relevant material on record including judicial pronouncements as cited before us. The perusal of documents on record reveal that the assessee has purchased all the four flats vide single allotment letter dated 20/10/2011. Against the same, single cheque of Rs.224 Lacs has been issued as evident from Receipt No. 00105 dated 20/10/2011 issued by Saimar Realty Private Limited. The construction layout plan reveals that all the four flats were adjoining flats and were to be combined as a single unit. The revenue is unable to controvert all these documentary evidences. 4.2 So far as the statutory provisions are concerned, we find that in terms of Section 54 as applicable to impugned AY, deduction was allowable to the assessee against purchase / construction of 'a' residential house. The amendment to Section 54 substituting the word ‘a’ with ‘one’ has been brought in the statute only with effect from 01/04/2015 and therefore, the amendment was not applicable for the impugned AY. 4.3 In various decisions given by Hon'ble High Court and Hon'ble Tribunal, interpretation of the word "a" preceding the expression "residential house" has been given wherein it has been observed that "a residential house" should not be understood to indicate a singular number. In the cited case of CIT vs. Devdas Naik [366 ITR 12], Hon’ble
Smt. Munisha D. Ahuja Assessment Year :2012-13 Bombay High Court observed that deduction u/s 54 would be available if the flats were used a single unit and used as one house for purpose of residence even if acquisition of flats were done independently. 4.4 From the above factual matrix coupled with binding judicial precedents, it is clear that deduction u/s 54 would be available to the assessee on account of investment in multiple flats it the same were being used as a single unit. In the present case, we find that this condition has been fulfilled by the assessee. Therefore, in our considered opinion, the assessee was eligible to claim deduction on account of investment made in multiple adjoining flats. We order so. This ground stand allowed. 5.1 So far as the deduction of BMC Property Tax for Rs.12 Lacs is concerned, the same could not be said to have been incurred wholly and exclusively in connection with the transfer of the property in terms of Section 48 and the deduction of the same has rightly been denied to the assessee. This ground stands dismissed to that extent. 5.2 The amount of Rs.21 Lacs stated to be paid by the assessee has been denied for want of requisite explanation before Ld. AO. The assessee, in support of the same, has placed on record the relevant receipts. Therefore, the issue of deduction of Rs.21 Lacs stands remitted back to the file of Ld. AO for re-adjudication after appreciating the nature of the payment keeping in view the judicial pronouncement as cited by the assessee before us. The assessee, in turn, is directed to substantiate his claim, in this regard with supporting documents. This ground stand partly allowed for statistical purposes.
Smt. Munisha D. Ahuja Assessment Year :2012-13 6. Resultantly, the appeal stands partly allowed in terms of our above order. Order pronounced in the open court on 18th March, 2019 Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 18/03/2019 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.