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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Mehul Shah Department by: Ms. Pooja Swaroop Date of Hearing: 07.11.2017 Date of Pronouncement: 05.02.2018 O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the above mentioned appeals against the order dated 19.12.2011and 08.04.2014 passed by the Commissioner of Income Tax (Appeals)-32, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2008-09.
The assessee has filed the present appeal against the order dated 19.12.2011 passed by the Commissioner of Income Tax (Appeals)-32, ITA Nos. 4020/Mum/2012 4218/Mum/2014 A.Y. 2008-09 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment years 2008-09.
The assessee has raised the following grounds: - “
Being aggrieved by the orders of the learned Commissioner of Income-tax (Appeal) - 32 and Assessing Officer, 21 (1) - 3, Mumbai, this appeal petition is filed on the following amongst other grounds of appeal, which it is prayed may be considered without prejudice to one another 1 On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in refusing to allow exemption u/s. 54F and treating Long Term Capital Gain of RS. 8,909,665 Without appreciating that, the Appellant had complied with his part of performance of making investment in a residential house as well as by resorting to appropriate legal remedies against the developer, and fault for non-completion of construction was attributable to the factors beyond his control in so much so that, the lower authorities were expecting him to do something impossible.
2. On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in disallowing cost of improvement amounting to RS. 770,310 without appreciating that, though your Appellant could not furnish the supporting documents for cost of improvement, your Appellant was not benefiting by artificially jacking up the cost of plot, as the entire consideration was any ways invested into residential house for which exemption under section 54F was claimed. 3 On the facts and circumstances of the case and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in adding a sum of RS. 563,633 on the basis of summary of bank statement filed during the course of assessment proceedings without considering other supporting documents of accumulation of income over years. A.Y. 2008-09
Your Appellant craves leave to add to, amend, alter, modify, and / or delete any of the above grounds of appeal
at or before final disposal of appeal.”
4. The brief facts of the case are that the assessee filed his return of income on 31.03.2010 declaring total income to the tune of Rs.15,125/-. The case was selected for scrutiny under CASS. Notice u/s 143(2) of the Act was issued and served upon the assessee on 23.08.2010. Notice u/s 142(1) of the act was issued on 09.09.2010 and served upon the assessee. The assessee is an individual. The assessee has shown the total income to the tune of Rs.15,125/-. The assessee earned long term capital gain of Rs.74,09,100/- and claimed exemption u/s 54F of the Act. On verification, it was found that the assessee invested an amount of Rs.90,00,000/- in a Flat at CBD Belapur in the building built by M/s. Welvan Securities Pvt. Ltd. at 86A, Sector II, CBD, Belapur, Navi Mumbai and deduction for long term capital gain was claimed u/s 54F of the Act. It was also found that the said company did not construct the house, therefore, the assessee failed to fulfil the conditions as required u/s 54F of the Act. Therefore, the claimed of exemption was declined and the sale consideration to the tune of Rs.89,09,665/- was added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.96,11,518/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the claim of the assessee, therefore, the assessee has filed the present appeal before us. A.Y. 2008-09 ISSUE NO. 1:- 5. Under this issue the assessee has challenged the disallowance of claim of LTCG of Rs.8,909,665/- u/s 54F of the Act. It is undisputed facts that the assessee sold a land at Murud, District Raigad for total consideration of Rs.1.8 Crores. The assessee along with his brother was owner in possession of the said land to the extent of 50% shares each. The assessee received the sale consideration of Rs.90,00,000/- i.e., 50% of sale consideration of the said land. It is also undisputed facts that the assessee booked a flat in October, 2007 with the Welvan Securities P. Ltd. who confirmed the transaction of Rs.90,00,000/- received by them by virtue of cheque no.337130 dated 31.10.2007 of HSBC Bank and in view of allotment letter dated 31.10.2007. In this regard the confirmation lies at page no. 15 of the paper book. The assessee had already produced the receipt before the Assessing Officer. The company did not start the construction till 2011. Even the controversy of the assessee along with others with the builders is pending before the Hon’ble High Court of Bombayby virtue of suit no. 275 of 2011 and copy of which lies at page no. 18 to 45 of the paper book. It is not in dispute that the assessee sold the property in the relevant assessment year and invested an amount of Rs.90,00,000/- on 31.10.2010 by virtue of cheque no.337130 dated 31.10.2007 of HSBC Bank with the Welvan Securities Pvt. Ltd. for the allotment of flat. Investment is not in dispute. The claim of the A.Y. 2008-09 assessee was declined on the basis of the non-construction of the flat. Now it is to be seen whether in the said circumstances the assessee is entitled to get the exemption u/s 54F of the Act or not. In this regard the matter of controversy has been adjudicated by Hon’ble High Court of Madras in the case of titled as Smt. Shashi Varma Vs. CIT 224 ITR 107 MP in which it is specifically held that if the construction was not completed within the 2 years then in the said circumstances, the assessee was also entitled to exemption u/s 54F of the Act. The Hon’ble ITAT Madras in the case of Mrs. Seetha Subramanian. Vs. ACIT (59 ITD 94) has also held that if the construction was not completed within the period of 2 years then in the said circumstances also the claim of the assessee cannot be declined if the assessee made the investment in the specified period. The Hon’ble High Court of Karnataka has also held that in Income tax appeal no. 175 of 2012 in the case of DCIT Vs. Shri Sambandam Uday Kumar that if the capital gain earned by the assessee has been invested in a residential house well in time and the building has not been completed within the period of 3 years then in the said circumstances also the benefit u/s 54F of the Act cannot be denied. The facts and circumstances of these cases are quite similar to the facts and circumstances of the present case because the assessee made the investment for the purchase of the flat within the stipulated period but builder failed to complete construction of the plot and to hand over the possession within the specified period even till today to which the assessee is not at fault.. A.Y. 2008-09 The provision contained in Section 54F of the Act is a beneficial provision for promoting construction of residential houses therefore, in the said provision has to be construed library for achieving the purpose for which it was in cooperated statute. The intention of the legislature was to encourage the investment in the acquisition of the residential house and completion of construction or occupation is not the requirement of the law Therefore, in the said circumstances, the claim of the assessee u/s 54 F of the Act is not liable to be declined. Accordingly, we are of the view that the finding of the CIT(A) is wrong against law and facts and is not liable to be sustainable in the eyes of law. Therefore, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee u/s 54F of the Act. ISSUE NO. 2:- 6. Under this issue the assessee has claimed the expenses to the tune of Rs.770,310/- for the improvement of the land in the different years. Since the claim of the assessee u/s 54F of the Act has already been allowed by us above while deciding issue no. 1 therefore, this issue became infructuous. In result, appeal filed by the assessee is hereby ordered to be allowed. A.Y. 2008-09
7. The assessee has filed the present appeal against the order dated 19.12.2011 passed by the Commissioner of Income Tax (Appeals)-32, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year2008-09 in which the penalty levied by the AO has been ordered to be confirmed.
The assessee has raised the following grounds: - “
Being aggrieved by the orders of the learned Commissioner of Income-tax (Appeal) - 32 and Assessing Officer, 21 (1) - 3, Mumbai, this appeal petition is filed on the following amongst other grounds of appeal, which it is prayed may be considered without prejudice to one another.
1. On the facts, and in circumstances of the case, and in law, learned Commissioner of income-tax (Appeal) erred in upholding order of the Assessing Officer in levying penalty under section 271 (1) (c) of the Income-tax Act 1961 on entire long term capital gains without appreciating that. The Appellant had complied with his part of performance of making investment in a residential house as well as by resorting to appropriate legal remedies against the developer, and fault for non-completion of construction was attributable to the factors beyond his control in so much so that, the lower authorities were expecting him to do something impossible.
2. On the facts, and in circumstances of the case, and in law, learned Commissioner of income-lax (Appeal) erred in upholding order of the Assessing Officer in levying penalty under section 271 (1) (c) of the Income-tax Act 1961 on the cost of improvement without appreciating that, though your Appellant could not furnish the supporting documents for cost of improvement, your Appellant was not benefiting by artificially jacking up the cost of plot, as the entire consideration was any ways invested into residential house for which exemption under section 54F was claimed
3. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding order of the Assessing Officer in levying penalty under section 271 (1) (c) of the Income-tax Act 1961 on RS. 563,633 on the basis of A.Y. 2008-09