MEHRUNNISA REHAMAN MUJAVAR,MUMBAI vs. INCOME TAX OFFICER, WARD NO.21(3)(3), MUMBAI

We heard the parties and perused the record. During the year under consideration, the assessee sold a residential property and jewellery. She declared long term capital gain thereon. The assessee purchased another residential property and accordingly claimed deduction u/s. 54 & 54F of the Act in respect of the capital gains declared on sale of house property and jewellery respectively.

The first issue relates to addition made u/s. 50C of the Act. The Assessing Officer noticed that the assessee has declared sale value of the property at Rs. 53.00 lakhs in the sale agreement. The Assessing Officer noticed that the value determined by stamp valuation authority was Rs.54,79,812/- and hence the Assessing Officer added difference amount of Rs.1,79,812/- by invoking provisions of section 50C of the Act. The learned CIT(A) also confirmed the same.

Learned AR submitted that the difference between the value determined by stamp valuation authority and value declared in the sale agreement is less than 5%. He submitted that the Pune Bench of the Tribunal has held in the case of Rahul Construction Vs. DCIT (38 DTR 19) that the difference of 5% may be ignored for the purpose of section 50C of the Act. However, we noticed that the decision so rendered by Pune Bench was in respect of value determined by DVO and not by stamp authority. Accordingly, we are of the view that the assessee cannot take support of the above said decision. Since the impugned addition has been made by the Assessing Officer as per deeming provisions of section 50C, we are of the view that the learned CIT(A) was justified in upholding the addition of Rs. 1,79,812/-

Next two issues go together. The assessee had claimed u/s. 54 of the Act in respect of long term capital gains arising on sale of property and u/s. 54F of the Act in respect of capital gains arising on sale of jewellery. The Assessing Officer noticed that the assessee has utilized long term capital gains to the extent of Rs. 13,57,960/- only till the due date for filing of return of income u/s 139(1) of the Act. As per provisions of section 54(2) and 54F(4), the assessee should have deposited unutilized amount in the Capital gains Account Scheme before the due date of filing of return of income. The AO noticed that the assessee did not deposit the capital gains arising on sale of house property to the extent of Rs. 33,42,642/- and also did not deposit long term capital gains of Rs.1,77,253/- arising on sale of jewellery in the Capital gains Account Scheme before due date for filing the return of income u/s. 3 Mrs. Mehrunnisa Rehaman Mujavar 139(1) of the Act. Accordingly, the Assessing Officer rejected the claim for deduction u/s. 54 of the Act to the extent of Rs. 33,42,642/- and rejected the claim for deduction u/s. 54F of the Act to the extent of Rs. 1,77,253/-. The learned CIT(A) confirmed the same by following the decision rendered by Hon'ble Bombay High Court in the case of Humayun Suleman Merchant Vs. CCIT (ITA No. 545 of 2002 dated 18.8.2016).

We heard the parties on this issue. Since the learned CIT(A) has followed the binding decision rendered by Hon'ble Bombay High Court, we do not find any reason to interfere with the order passed by the learned CIT(A).

In the result, appeal filed by the assessee is dismissed.