SUDHIR ARORA,NEW DELHI vs. ITO, WARD- 58(1), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC-1’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) (Assessment Year : 2013-14) Sudhir Arora Vs. ITO A-57, Sector – 63 (Opposite Ward – 58(1) Birla Soft Office), Noida New Delhi Uttar Pradesh – 201 301 PAN : AEMPA 6754 P (APPELLANT) (RESPONDENT) Assessee by Shri K. Sampath, Advocate Revenue by Ms. Sangeeta Yadav, Sr. D.R. Date of hearing: 27.10.2021 Date of Pronouncement: 23.11.2021 ORDER PER ANIL CHATURVEDI, AM:

This appeal filed by the assessee is directed against the order dated 04.07.2017 of the Commissioner of Income-tax (Appeals)-19, New Delhi relating to Assessment Year 2013-14.

1. “That on the facts and in the circumstances of the case CIT(A)19 was not justified in holding that the sum of Rs.17,50,000/- received by the assessee on the sale of furniture and fixture of the property without consideration and the same falls squarely u/s 56(2)(vii)(a) of the Act and thereby sustaining and addition of the said amount made by the ITO, +63Ward -58(1).

2. That the appellant craves the right to add, alter or amend any ground of appeal.”

4. During the course of assessment proceedings and on perusal of the details filed by the assessee, AO noticed that assessee had sold a property, the sale consideration of which was Rs.77,50,000/-. AO on perusing the sale deed noticed that the said property was sold for Rs.60,00,000/- only and there was another deed between the assessee and Ms. Tusharika Nagpal and Divya Juneja (buyers) for sale of ‘fixtures and fittings’ amounting to Rs.17,50,000/-. AO noticed that assessee had claimed deduction of the entire amount including the sale of ‘fixtures and fittings’ u/s 54 of the Act. Assessee was asked to show-cause as to why the sale consideration of Rs.17,50,000/- on account of sale of ‘fixtures and fittings’ not be treated as “Income from Other Sources” as ‘fixtures and fittings’ do not cover under the definition of capital assets as defined in Section 2(14) of the Act and the deduction u/s 54 of the Act be denied on the same. Assessee made the detailed submissions and also relied on the decision of Hyderabad Tribunal in the case of Padmaja Gavini. The submissions of the assessee was not found acceptable to AO. AO accordingly restricted the claim of deduction u/s 54 of the Act to Rs.47,86,325/- and consideration of Rs.17,50,000/- received on sale of ‘fixtures and fittings’ was added as “Income from Other Sources”. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now in appeal.

5. Before me, Learned AR reiterated the submissions made before lower authorities and further submitted that the total consideration received of Rs.70,50,000/- was in respect to sale of flat along with ‘fixtures and fittings’ and the ‘fixtures and fittings’ were an integral and inseparable part of the residential flat and was thus in the nature of the capital asset. He thereafter submitted that even if it is assumed that the consideration of Rs.17,50,000/- which the assessee has received on sale of ‘fixtures and fittings’ is not in capital in asset then they become ‘personal asset’ of the assessee and the income there from cannot be treated as “Income from Other Sources” and cannot be brought to tax at all. He thereafter submitted that even if the consideration on sale of ‘fixtures and fittings’ is excluded from the computation of capital gain, then also since assessee has invested Rs.77,50,000/- and has claimed it as exempt u/s 54 of the Act and since the investment in new asset is more than the capital gains, no tax is payable under the head of “Capital Gain”. He further placed reliance on the decision of Hyderabad Benches of Tribunal in the case of Smt. Padmaja Gavini vs. Income Tax Officer in order dated 28.08.2015. He also placed on record copy of the aforesaid decision. He therefore submitted considering the facts of the case and relying on the aforesaid decision of Hyderabad Tribunal, no addition is called for in the present case.

6. Learned DR on the other hand pointing to the findings of CIT(A) supported the order of lower authorities.

7. I have heard the rival submissions and perused the materials available on record. The issue in present ground is about the taxability of Rs.17,50,000/- received on sale of ‘fixtures and fittings’ that has been considered by AO as “income from other sources”. AO has treated the consideration received of Rs,17,50,000/- on sale of ‘fixtures and fittings’ which are part of the flat sold by assessee as “income from other sources” whereas it is assessee’s contention that it is an integral part of the flat itself and therefore eligible for deduction and alternatively it being personal assets, is not liable to tax. Before me, Learned AR has also submitted that entire amount of Rs.70,50,000/- received on sale of flat along with furniture has been invested for the acquisition of new property and even if the amount received on sale of ‘fixtures and fittings’ is excluded while computing capital gains, then since the amount invested in acquisition of new asset is more than the capital gains, assessee is not liable to tax on capital gains. The aforesaid contention of the Learned AR of the amount invested in the acquisition of new assets being more than the capital gains earned has not been controverted by Revenue. I further find that the Co-ordinate Bench of Tribunal in the case of Smt. Padmaja Gavini (supra) has held that ‘fixtures and fittings’ cannot be treated as capital asset and they become personal asset of the assessee and therefore not taxable. Considering the totality of the aforesaid facts and relying on the aforesaid decision of Hyderabad Tribunal in the case of Smt. Padmaja Gavini (supra), I hold that AO was not justified in making addition of Rs.17,50,000/- as “Income from Other Sources”. I therefore direct its deletion. Thus the Ground of the assessee is allowed.

Order pronounced in the open court on 23.11.2021