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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order u/s 263 of the Income Tax Act 1961, (the ‘Act’) passed by the Commissioner of Income Tax(CIT)-17, Mumbai. 2. The 1st ground raised by the assessee in this appeal is that the CIT erred in applying the provisions of section 263 to the case of the assessee and treating the assessment order as erroneous. The 2nd ground raised in 2 3353/Mum/2014 this appeal is that the CIT erred in considering 17.10.2008 as the date of sale of property instead of 07.10.2008 and thereby denying the assessee deduction u/s 54 of the Act.
3. Briefly stated, the facts of the case are that the assessee filed her return of income for the AY 2009-10 on 30.09.2009 declaring total income of Rs.16,49,800/-. The Assessing Officer (AO) made the assessment u/s 143(3) on 09.12.2011 at a total income of Rs.17,15,760/-. The CIT, on examination of record found that the assessee had earned Long Term Capital Gains (LTCG) on sale of property which was claimed exempt u/s 54F to the tune of Rs.48,00,331/-. The CIT observed that the purchase deed was signed on 17.09.2007 whereas the sale of property took place on 17.10.2008. Thus the CIT held that exemption u/s 54F would be available if the flat was purchased after 17.10.2007 not before. Therefore, he set aside the order of the AO with a direction to him to complete the assessment afresh after disallowing claim of exemption u/s 54F.
4. Before us, the Ld. counsel of the assessee submits that during the relevant assessment year, there was a sale agreement for the flat at Runwal Towers for Rs.70,00,000/- which was entered into on 07.10.2008. This resulted in a LTCG of Rs.48,03,923/- against which the assessee claimed exemption u/s 54 to the tune of Rs.48,00,313/- by purchasing properties at Poornima Building. He filed a Paper Book (P/B) showing the relevant dates in respect of the above transactions.
3 3353/Mum/2014 Reference was also made by him to the following clauses of the agreement in respect of properties at Poornima Building: (i) clause 2 of the above agreement clearly states that unless the balance consideration of Rs.34,00,000/- was received by 21.11.2007, the agreement would stand cancelled even if it was registered with the Sub Registrar of Assurances. (ii) sub clause (g) of clause 3 of the agreement states that the transferee (assessee) would be put into quiet and peaceful possession of the said premises only after making full payment to the transferor. It is stated by him that on 01.10.2007, Bank of Baroda sanctioned the application for home loan of the assessee subject to the condition mentioned in point no. 20 that the sellers had to produce a letter confirming that the sale deed is valid and remains in force as the applicant has only paid a part of the sale amount. The Ld. counsel placed reliance on the judgment of the Hon’ble Bombay High Court in the case of CIT vs. Beena K Jain (1996) 217 ITR 363. Thus it is stated by him that where the parties had clearly intended that despite the execution and registration of sale deed, transfer by way of sale would become effective only on payment of the entire sale consideration, it had to be held that there was no transfer of land. Also it is stated by him that the CIT has wrongly considered 17.10.2008 to be the sale date of flat at Runwal Towers instead of the agreement dated 07.10.2008.
4 3353/Mum/2014 Further it is stated by him the detailed inquiry was made by the AO during the course of assessment proceedings. In view of the above, it is submitted that the assessee be allowed deduction u/s 54F of the Act.
Per contra the Ld. DR supports the order passed by the CIT and submits that action u/s 263 is valid where the assessment order is passed without application of mind by the AO and without conducting proper inquiry.
We have heard the rival submissions and perused the relevant materials on record. The reasons for our decision are given below. In respect of purchase of property at Poornima Building, the following facts emerge from the documents filed by the assessee in the P/B.
Particulars Date Amount Page of (Rs.) the P/B Agreement for sale 17.09.2007 6,00,000/- 31-50 Loan sanctioned by Bank 01.10.2007 22-25 of Baroda Bank of Baroda Cheque 08.10.2007 34,00,000/- 26 date Date of handing over 10.10.2007 27-28 possession We also find that the agreement for sale of the flat at Runwal Towers was entered on 07.10.2008 in place of 17.10.2008 mentioned by the CIT in the order u/s 263 dated 04.03.2014 passed by him. That the date is 07.10.2008 is evident on the face of ‘Agreement for Sale’.