MRS NIRMALABEN POPATLALL SHAH,MUMBAI vs. INCOME TAX OFFICER, 19(2)(4), MUMBAI
Facts
The assessee sold a residential flat, incurring long-term capital gains, and claimed a deduction under Section 54 for investing in a new residential property. The Assessing Officer (AO) and Commissioner of Income Tax (Appeals) (CIT(A)) restricted this deduction, partly due to an alleged arithmetical error in the investment amount and by disallowing Rs. 21 lakhs paid towards stamp duty and registration charges as part of the new property's cost.
Held
The Tribunal held that the assessee had fully invested the long-term capital gains of Rs. 3,29,26,831 in the new residential property by the extended due date of 31/12/2021. It further ruled that stamp duty and registration charges paid for the new property are an integral part of the cost of acquisition and thus eligible for deduction under Section 54 of the Income Tax Act.
Key Issues
Whether the assessee invested the entire long-term capital gains as claimed for Section 54 deduction, and whether stamp duty and registration charges form part of the cost of the new residential property for this deduction.
Sections Cited
Section 250, Section 54, Section 143(2), Section 142(1), Section 143(3), Section 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H (SMC
Before: SHRI. PRASHANT MAHARSHI & SHRI. SANDEEP SINGH KARHAIL
IN THE INCOME TAX APPELLATE TRIBUNAL “H (SMC)” BENCH, MUMBAI BEFORE SHRI. PRASHANT MAHARSHI, ACCOUNTANT MEMBER AND SHRI. SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.3649/Mum./2024 (Assessment Year : 2021-2022) Mrs. Nirmalaben Popatlal Shah 15, 2nd Floor, Mahavir Building, 17A, Ridge Road, Near Jain Temple, Mumbai – 400006. ……………. Appellant PAN-AAGPS6862E v/s ITO, 19(2)(4), Mumbai Piramal Chambers, Lalbaug, Mumbai – 400012. ……………. Respondent
Assessee by : Shri. K. A. Vaidyalingan, CA Revenue by : Shri. Akhatar Hussain Ansari, Sr. DR
Date of Hearing – 02/09/2024 Date of Order – 12/09/2024
O R D E R PER SANDEEP SINGH KARHAIL, J.M. 1. The present appeal has been filed by the assessee challenging the impugned order dated 28/05/2024 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2021-22.
In this appeal, the assessee has raised the following grounds: – 1. “The learned CIT (A) erred in not considering and adjudicating Ground No.1 of the appellant relating to the arithmetical error of Rs.27,00,000/- in the total amount utilized towards the purchase of a new residential house as 1
ITA No. 3649/Mum/2024 Mrs. Nirmalaben Popatlal Shah; A.Y.2021-22 the learned AO erroneously considered the aggregate amount utilized up to 31.12.2021 (being the extended due date for filing income tax return) to be Rs.3,15,93,280/- instead of correct and actual figure of Rs.3,42,93,280/-, thus restricting the exemption u/s. 54 of the Act to Rs.3,15,93,280/-. 2. The learned CIT(A) erred in upholding the action of the learned AO in not considering the amount of Rs.21,00,000/- paid on 17.3.2021 towards stamp duty and registration charges of the property purchased as forming part of the cost of the new residential property and as such denying exemption u/s. 54 of the Act in respect of the said amount.”
The only dispute raised by the assessee is against the partial denial of deduction claimed under section 54 of the Act.
The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and for the year under consideration filed her return of income on 16/09/2021 declaring a total income of Rs. 8,08,550. During the year, the assessee derived income from short-term capital gains, long-term capital gains and income from other sources. The return filed by the assessee was selected for scrutiny through CASS and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, the assessee was asked to furnish the details regarding the deduction claimed under section 54 of the Act. After considering the submissions of the assessee, the Assessing Officer (“AO”) vide order dated 15/12/2020 passed under section 143(3) read with section 144B of the Act held that the assessee earned long-term capital gains of Rs. 3,29,26,831 on sale of property, however, has not invested the whole of amount of long-term capital gains towards purchase of new house before the due date of filing the
ITA No. 3649/Mum/2024 Mrs. Nirmalaben Popatlal Shah; A.Y.2021-22 return of income. The AO held that the assessee has invested in the purchase of a new residential house amount of Rs. 3,15,93,280 up to 31/12/2021 (i.e. by the due date of filing the return of income being extended by the CBDT). However, did not furnish any reply/evidence to show that the unutilised portion of capital gains was deposited into the capital gain deposit account scheme by the due date of filing the return of income. Accordingly, the AO restricted the deduction allowable under section 54 of the Act only to an amount of Rs. 3,15,93,280 and made an addition of Rs. 13,33,551 to the total income of the assessee under the head “long-term capital gains”.
The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the addition made by the AO. Further, the learned CIT(A), held that the amount of Rs. 21 lakh paid by the assessee on account of stamp duty and registration charges at the time of registering the agreement does not form part of the cost of the new property. Being aggrieved, the assessee is in appeal before us.
We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee earned long- term capital gains of Rs. 3,29,26,831 on the sale of a residential flat on 16/02/2021. The assessee purchased a new residential house on 31/03/2021, i.e. within a period of 2 years from the date of sale of the original property, for a total consideration of Rs. 6,12,38,000. Since the investment in new residential property was more than the amount of capital gain earned, the assessee claimed a deduction under section 54 of the Act of the full amount 3
ITA No. 3649/Mum/2024 Mrs. Nirmalaben Popatlal Shah; A.Y.2021-22 of capital gain of Rs. 3,29,26,831 while filing her return of income. It is discernible from the record that there is no dispute regarding the fact that the assessee is entitled to claim deduction under section 54 of the Act. However, both the AO as well as the learned CIT(A) disagreed with the claim of the assessee that the entire amount of capital gain of Rs. 3,29,26,831 was invested in the sale of the residential house. The learned CIT(A) further disagreed with the assessee that the amount of Rs. 21 lakh shall form part of the cost of the new asset.
In support of its contention that the entire amount of long-term capital gains of Rs. 3,29,26,831 was invested in the purchase of the new residential property, the assessee has placed on record the copy of ledger account. Further, the assessee has also placed on record the copy of payment receipts issued by India Bulls Properties Private Ltd acknowledging the payment made by the assessee from 21/01/2021 till 18/11/2021. Further, the assessee has also placed on record the confirmation from India Bulls Properties Private Ltd acknowledging receipt of a total amount of Rs.3,18,93,280 till 18/11/2021. Further, from the Challan MTR Form No. 6 issued by the Office of Joint Sub- Registrar, Mumbai City-IV, Mumbai, we find that the assessee paid an amount of Rs. 21 lakh on 17/03/2021 for registration of the new residential property. As per the Act, the expenditure incurred wholly and exclusively in connection with the transfer of the property is considered part of the cost of acquisition for computing the capital gains. Therefore, we find no merits in the findings of the learned CIT(A) that the amount paid on stamp duty and registration
ITA No. 3649/Mum/2024 Mrs. Nirmalaben Popatlal Shah; A.Y.2021-22 charges at the time of registering the agreement is not to be considered for the purpose of section 54 of the Act. Thus, from the facts and circumstances of the present case as noted above, it is evident that by the due date of filing the return of income, i.e. 31/12/2021 in the present case, the assessee invested the entire amount of long-term capital gains of Rs. 3,29,26,831 on the purchase of the new residential property, and therefore rightly claimed the deduction of the same under section 54 of the Act while filing her return of income. Accordingly, we direct the AO to allow the claim of the assessee under section 54 of the Act. As a result, the impugned order is set aside and grounds raised by the assessee are allowed.
In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 12/09/2024
Sd/- Sd/- PRASHANT MAHARSHI SANDEEP SINGH KARHAIL ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12/09/2024 Karishma J. Pawar, (Stenographer) Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Co By Order
Assistant Registrar ITAT, Mumbai
