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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
ORDER Per Shri A.T.Varkey, JM
This appeal of the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals) -11, Kolkata for AY 2012-13 dated 13.04.2017.
The assessee has raised the following revised grounds of appeal: “
1. For that on the facts of the case the order passed by the Ld. CIT(A) was completely arbitrary and illegal.
2. For that on the facts of the case the Ld. CIT(A) was wrong in allowing deduction u/s. 54F in place of u/s. 54 of the I. T. Act, 1961 which is completely arbitrary, unjustified and illegal.
3. For that on the facts of the case the Ld. CIT(A) was wrong in not allowing deduction U/s. 54 of the I. T. Act, 1961 for the second property purchased in Delhi amounting to Rs.7.00 lakhs, which is completely arbitrary, unjustified and illegal.”
3. Ground no. 1 is general in nature does not require any adjudication and, hence, the same is dismissed.
Subrata Das, AY 2012-13 4. Brief facts of the case are that the assessee had sold the property, not being a residential house at Digha on 01.11.2011 for Rs.2,77,12,544/- and computed long term capital gain of Rs.1,14,63,000/-. Out of this capital gain the assessee invested Rs. 20,00,000/- in Rural Electrification Bond on 31.03.2012. The assessee further paid Rs.7,01,750/- by demand draft to one Smt. Gita Gayal of New Delhi and obtained a General Power of Attorney in respect of a flat at 3rd floor (measuring about 105 sq. yd) at 351`, Mohendra Enclave, G. T. Karnal Road, Delhi-110 033. The assessee claimed deduction u/s. 54EC of the Act for purchase of Rural Electrification Bond and u/s. 54F for purchase of both immovable properties. However, the AO did not allow the deduction for the new residential house at Kolkata. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who vide para 4.9 of his order has given partial relief to assessee by observing as under: “4.9. Placing reliance on the decision of the Hon’ble supreme Court, it is decided that the assessee in the instant case had made purchase of only one residential house property and accordingly he is entitled to the benefit of Sec.54F while computing its income in the head “Capital Gain” the ground of the appeal followed by the assessee to this extent is allowed. The assessee hereunder shall be entitled to take benefit of Rs.45,67,510/- he has investment to purchase a residential house at Kolkata. He will not get the benefit of Rs.4,50,000/- he claims to have invested for repair and renovation of this house for which has failed to show any evidence for such expenditure.”
Aggrieved assessee is before us.
We have heard rival submissions and gone through the facts and circumstances of the case. This appeal is against the partial relief not granted to assessee. The Ld. CIT(A) has accepted the claim of assessee in respect to only the property purchased at Kolkata with the aforesaid rider. The Ld. CIT(A) has not accepted the claim of assessee on the residential flat purchased by the assessee on General Power of Attorney. Thus, we note that the only issue in this case is regarding the claim of the assessee in regard to house purchased in Delhi on the strength of General Power of Attorney which according to Ld. CIT(A) is not legally recognized accepted mode of transfer, therefore, he did not allow the deduction u/s. 54F of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for the purchase of the said property. However, we note that while passing the assessment order, the AO accepted the claim of the assessee in respect to the residential property purchased at Delhi on the strength of General Power of Attorney. However, the AO did not allow the deduction for the Subrata Das, AY 2012-13 property purchased at Kolkata. On appeal, the Ld. CIT(A) allowed the deduction u/s. 54F of the Act for the property at Kolkata but denied the deduction for property purchased on the strength of General power of Attorney in Delhi. We do not countenance the action of the Ld. CIT(A) for the reason that the Hon’ble Delhi High Court in the case of Space Developers & Promoters Pvt. Ltd. Vs. Govt. of NCT reported in (2013) 33 taxman.com 99 (Del.) after referring to sec. 2(47) of the Act has held that conveyance of immovable property by a General Power of Attorney constituted transfer of capital asset and also the Hon’ble High Court held that the circular directing Registrars not to register the conveyance of immovable property by General Power of Attorney was contrary to the observation of the Hon’ble Apex Court and set aside the circular. This order of the Hon’ble High court has been taken note by the coordinate bench of this Tribunal at Delhi in Shri Surinder Singh Vs. ITO, dated 11.10.2018. Therefore, in the light of the ratio of the decision of Hon’ble Delhi High Court as well as taking note of the AO’s action in allowing the deduction u/s. 54F of the Act in the assessment proceedings, we are of the opinion that the assessee should have been given the deduction u/s. 54F of the Act and, moreover even if the title is imperfect, it’s legal consequences if any in-respect to flat is the look out of assessee and any defect if any in the mode of transfer of property cannot defeat the claim of assessee in this assessment year, because it is not the case of ld CIT(A) that it is a bogus claim, when the fact of possession of flat by assessee and sale consideration passed to the vendor and genuineness of the transaction having been accepted by AO and this fact not even been questioned by ld CIT(A), the claim ought not to have been disallowed by ld CIT(A), therefore, we allow the claim of the assessee for the purchase of flat in Delhi u/s. 54F of the Act.
In the result, the appeal of assessee is partly allowed.
Order is pronounced in the open court on 12/02/2019