DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-5(2), AIR INDIA BUILDING, NARIMAN POINT MUMBAI vs. ASHA VINESH MEHTA, GHATKOPER (E) MUMBAI

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ITA 4875/MUM/2023Status: DisposedITAT Mumbai22 May 2024AY 2017-185 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to the claim of exemption under Section 54 of the Income-tax Act, 1961. The undisputed facts established that the assessee's husband and son purchased flats 1101 and 1201, and the assessee purchased additional space in flats 1102 and 1202, along with terrace and car parkings. Together, these constituted a triplex flat with the assessee's share earmarked. The Tribunal reasoned that all purchase agreements must be read together. Since the assessee acquired a 25% share by paying the consideration, the transaction was genuine and legally documented, even if acquired from other family members. Therefore, the assessee was rightly allowed the exemption by the Ld. CIT(A), and no interference was called for. The appeal filed by the revenue was dismissed.

What were the facts?

The assessee, Asha Vinesh Mehta, filed her return for AY 2017-18 declaring an income of ₹1,40,160. The case was selected for scrutiny. The assessee reported Long Term Capital Gain (LTCG) of ₹4,25,35,500 from the sale of a jointly owned flat, claiming exemption under Section 54 of the Income-tax Act, 1961, by investing ₹4,25,35,000 in new flats. The Assessing Officer (AO) denied the exemption, noting that while the assessee's husband and son purchased flats 1101 and 1201, the assessee booked flats 1102 and 1202 in her name, paying ₹4,29,48,800. The AO's denial was based on the assessee's name not appearing in the purchase deed of the new property. The assessee appealed to the CIT(A).

What were the issues?

1. Whether the assessee is entitled to exemption under Section 54 of the Income-tax Act, 1961, for the purchase of new flats, when her name was not initially in the purchase deed, in light of subsequent documentation and investment made by her. Assessee's contentions (as inferred from AO's order and CIT(A)'s findings): The assessee contended that she invested ₹4,29,48,800 in booking flats 1102 and 1202 in her name, which, along with flats 1101 and 1201 purchased by her husband and son, formed a triplex flat. She argued that this constituted a valid purchase of a new residential property eligible for exemption under Section 54. Revenue's contentions (as represented by Ld. DR): The revenue, through the Ld. DR, supported the AO's findings. The AO's primary contention was that the assessee's name was not in the purchase deed of the new house/flat, thus invalidating the claim for exemption under Section 54.

Which sections of the Income-tax Act were involved?

Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE

For Respondent: Shri Mirza Azhar Beig

O R D E R PER NARENDRA KUMAR BILLAIYA (AM)

1.

This appeal by the revenue is preferred against order of the Learned Commissioner of Income-Tax (Appeals) – 53, Mumbai

(A.Y: 2017-18) ASHA VINESH MEHTA [hereinafter in short “Ld. CIT(A)”] dated 19.10.2023 pertaining to A.Y.2017-18.

2.

The solitary grievance of the revenue is that the Ld. CIT(A) erred in deleting the addition of ₹.4,25,35,000/- made by the Assessing Officer denying exemption under section 54 of Income-tax Act, 1961 (in short “Act”).

3.

Briefly stated the facts of the case are that the, assessee filed her return of income on 30.07.2017 declaring a total income of ₹.1,40,160/-. The return was selected for scrutiny through CASS and accordingly, statutory notices were issued and served upon the assessee.

4.

During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has shown Long Term Capital Gain from sale of Jointly owned flat with her husband. The said flat was purchased in the year 2004 and sold on 14.09.2016 and the Long Term Capital Gain has been worked out at ₹.8,50,71,000/-. Since the assessee was 50% owner showed her share of Long Term Capital Gain of ₹.4,25,35,500/-. The said Long Term Capital Gain was claimed as exemption as the assessee has purchased / constructed / invested ₹.4,25,35,000/- under section 54 of the Act. The assessee was asked to Page No. 2

(A.Y: 2017-18) ASHA VINESH MEHTA justify her claim of exemption. The assessee furnished necessary details with supporting evidences. On perusal of the same the Assessing Officer found that two flats bearing Nos. 1101 and 1201 were purchased by the husband of the assessee and her son. When the assessee was asked to explain, the assessee explained that initially in the year 2016 Flat Nos. 1101 and 1201 were purchased by her husband and her son. However, in the same year Flat Nos. 1102 and 1202 were also booked by the assessee in her name in which she paid ₹.4,29,48,800/-. The assessee claimed the exemption on this purchase. The contention of the assessee was dismissed by the Assessing Officer who was of the firm belief that the assessee had made wrong claim of exemption under section 54 of the Act on the ground that the name of the assessee is not in the purchase deed of the new house / flat.

5.

Assessee challenged the addition before Ld. CIT(A) and reiterated her claim of exemption. After considering the facts and the submissions, the Ld. CIT(A) was convinced that subsequent to supplemental agreement by which Flat Nos. 1102 and 1202 were acquired by the assessee along with terrace and car parking’s. This supplemental agreement was registered on 30.03.2018. The Ld. CIT(A) was also Page No. 3

(A.Y: 2017-18) ASHA VINESH MEHTA convinced that this was a purchase of new flat eligible for exemption under section 54 of the Act. The Ld. CIT(A) allowed the exemption.

6.

Before us, Ld. DR strongly supported the findings of the Assessing Officer and read the operative part. None appeared on behalf of the assessee, in spite of issue of notice. Therefore, we decided to proceed exparte.

7.

The appellant was heard at length. The case records carefully perused. The undisputed fact is that the assessee’s husband and son had purchased Flat Nos. 1101 and 1201. It is also an undisputed fact that the assessee purchased the additional space in the form of Flat Nos. 1102 and 1202 along with terrace and three car parking’s and together the entire purchase of the family become Triplex flat with assessee’s share earmarked. We are of the considered view that all the purchase agreement has to be read together and since the assessee has acquired 25% share, in our considered view by paying the consideration the assessee has acquired 25% share and even if the same has been acquired from other family members the transaction is genuine and the purchase has been legally documented. Therefore, the assessee is very

Page No. 4

(A.Y: 2017-18) ASHA VINESH MEHTA much entitled for the claim of exemption under section 54 of the Act and has been rightly allowed by the Ld. CIT(A). Accordingly, no interference is called for.

8.

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

Order pronounced in the open court on 22nd May, 2024.

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