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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by assessee for Assessment Year [AY] 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-31 [CIT(A)], Mumbai, Appeal No.CIT(A)-31/IT-126/ITO-20(3)(1)/13-14 dated 15/09/2014 by raising following effective grounds of appeal:-
ITA.No.1601/Mum/2016 Ujawal Singh Rana Assessment Year- 2010-11 1. On the facts and circumstances the case the Learned Commissioner of Income Tax (Appeals)-31 ought to have considered and accepted payment made towards booking of new flat on 17/11/2011 to Manoj Gangadhar Burkule.
The Learned Commissioner of Income Tax (Appeals) 31 ought to have allowed exemption under section 54 of the income tax Act 1961.
3. The learned Commissioner of Income Tax (Appeals) 31 ought to have directed the learned income tax officer to issue summons under section 133(6) of the income tax Act 1961 in the interest of principle of natural justice.
4. The learned Commissioner of income Tax (Appeals) 31 ought to have considered date of investment in new flat was within the stipulated time limit for construction of house i.e. three years.
The assessment for impugned AY was framed by Ld. Income Tax Officers-20(3)(1) u/s 143(3) on 25/03/2013 wherein the income has been determined at Rs.41.23 Lacs as against returned income of Rs.5.62 Lacs e-filed by the assessee on 04/10/2010. In the quantum assessment, the assessee has been denied deduction u/s 54, which is the sole subject matter of this appeal. 2.1 The registry has noted that the appeal has been filed with a delay of 469 days, the condonation of which has been sought by the assessee vide application dated 18/01/2018 along with an affidavit and other supporting documents. The condonation has been opposed by Ld. Departmental Representative [DR], Shri Ram Tiwari, by submitting that no sufficient cause has been demonstrated by the assessee which justify condonation of delay. 2.2 Facts relating to the issue under dispute are that the assessee, in the impugned AY, earned Long Term Capital Gains from sale of flat situated at A-401, 4th Floor, A Wing, Sakaar Building, Aakar Saakar Niraakaar CHS Ltd., Kalyan Complex, Yari Road, Versova, Andheri West, Mumbai. The said flat was acquired by the assessee jointly with ITA.No.1601/Mum/2016 Ujawal Singh Rana Assessment Year- 2010-11 his wife on 26/11/2004 for Rs.15.50 Lacs and stated to be sold for Rs.57 Lacs on 05/11/2009. The assessee deposited an amount of Rs.32 Lacs in Long Term Capital Gain Account with PNB on 28/09/2010, which has been changed several times. Finally, a payment of Rs.34 Lacs has been made from the said account on 17/11/2011 in the name of Shri Manoj Gangadh. Accordingly, the assessee claimed deduction u/s 54 for Rs.32 Lacs which has been denied since the investment in the new property, in the opinion of Ld. AO, was beyond two years from the date of transfer i.e. 05/11/2009 as envisaged by Section 54(1). Another reason to disallow the deduction was the fact that the assessee failed to produce any documentary evidences to demonstrate investment in the new property. Finally, the aforesaid deduction was denied to the assessee and Long Term Capital Gain was computed as Rs.35.60 Lacs which was assessed in the hands of the assessee.
Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 15/09/2014 wherein the stand of Ld. AO was confirmed. Aggrieved the assessee is in further appeal before us.
The Ld. Authorized Representative for Assessee [AR], Shri Haresh P.Shah, by drawing our attention to the documents placed in the paper- book contested the stand taken by lower authorities which has been controverted by Ld. DR, Shri Ram Tiwari.
First, we take up the matter of condonation of delay. The assessee has pleaded for condonation of delay on adverse medical conditions being faced by assessee’s spouse. Although, the supporting documents, as placed before us are general in nature yet keeping in view the ITA.No.1601/Mum/2016 Ujawal Singh Rana Assessment Year- 2010-11 observations of Hon’ble Apex Court in Collector, Land Acquisition Vs. Mst. Katiji & Others [167 ITR 471] and keeping in view the fact that the assessee was an artist, we condone the same.
So far as the merits of the case is concerned, we find that the deduction u/s 54 has been denied on two accounts viz. investment beyond two years and non-furnishing of documentary evidences before lower authorities to support the investment. 7.1 Upon due consideration of factual matrix, we find that the assessee earned certain capital gains during impugned AY and deposited the same in Long Term Capital Gain Account with PNB on 28/09/2010 i.e. before due date of filing of return of income for impugned AY. The material on record reveal that the assessee’s accounts were subjected to Audit and the due date of filing of return of income in his case, as extended by CBDT vide Order No.402/92/2006-MC (42 of 2010) dated 28/09/2010 was 15/10/2010. In such a case, the amount so deposited by him, in terms of provisions of Section 54(2), is deemed to be the cost of new asset and accordingly the assessee was entitled for deduction of the same during impugned AY. For the sake of clarity, the relevant statutory provisions as contained in Section 54 are reproduced below:- Profit on sale of property used for residence. 54.(1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (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, then, instead of the capital gain being charged to income-tax as income of the previous year in ITA.No.1601/Mum/2016 Ujawal Singh Rana Assessment Year- 2010-11 which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :
7.2 Proceeding further, we find that the case of the revenue is that the assessee did not utilize the amount so deposited for making investment in new House property within the stipulated time period. However, upon perusal of proviso to Section 54, we find that if the amount so deposited is not utilized in the prescribed manner, the same shall be charged u/s 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires. The same in assessee’s case is 04/11/2012 (date of transfer being 05/11/2009) i.e. ITA.No.1601/Mum/2016 Ujawal Singh Rana Assessment Year- 2010-11 AY 2013-14. For the sake of convenience, the proviso is extracted below:- Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub- section (1), then,— (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.