SHASHI G. NOTANI,MUMBAI vs. ITO WD 19(1)(4), MUMBAI

We heard the parties and perused the record. During the year under consideration, the assessee sold two flats, viz., Flat No. 1502 & 1503 located at Oberoi Park. The assessee entered into an agreement for purchasing two flats namely 1201 & 1202 in the apartment named Living Essence. The assessee also entered into an agreement to purchase a flat jointly with his mother at Imperial Heights. The assessee claimed exemption u/s. 54 of the Act on the value of the flats proposed to be purchased. The Assessing Officer noticed that the assessee has paid a sum of ` 21,60,597/- only in respect of flat No. 1201 & 1202 in Living Essence before the due date of filing the return of income. Further, the assessee did not furnish copy of purchase agreement in respect of 2 Shashi G. Notani flats purchased along with her mother at Imperial Heights. Hence, the Assessing Officer did not recognize the payment made towards Imperial Heights flats and accordingly restricted the deduction u/s. 54 of the Act to ` 21,60,597/-, being the amount paid in respect of Living Essence flats before the due date of filing the return of income. The appeal filed by the assessee challenging the assessment order was dismissed by the learned CIT(A) and hence the assessee has filed this appeal before us.

We have heard the parties and perused the record. At the time of hearing learned AR submitted that the Assessing Officer has clubbed the sale value of both the flats namely Flat No. 1502 & 1503 Oberoi Park and computed long term capital gains by allowing deduction u/s. 54 of the Act in respect of both the flats. Learned AR submitted that the flats purchased in Living Essence may be considered for allowing deduction u/s. 54 of the Act against sale of flat No. 1502 in Oberoi Park. Accordingly he submitted that the flat purchased at Imperial Heights may be considered for allowing deduction u/s. 54 against sale of flat No. 1503, Oberoi Park. Learned AR also submitted that the assessee has furnished copy of sale agreement pertaining to Imperial Heights at page No. 105 to 241 of the paper book. Accordingly, he submitted that the matter may be restored to the Assessing Officer for computing capital gains as well as deduction u/s. 54 of the Act afresh. The Ld A.R also placed reliance on several case laws to contend that both the flats purchased at Living Essence should be considered as a residential house for the purpose of computing deduction u/s 54 of the Act.

We have heard learned Departmental Representative and perused the record. Having regard to the submissions made by the assessee, we find merit in the submissions so made. Accordingly, we set aside the order passed by the learned CIT(A) and restore the issues to the file of the Assessing Officer. As submitted by Ld A.R the long term capital gain on sale of two flats should be computed separately and the deduction u/s. 54 of the Act may be considered against the new flats as per submissions made by learned AR (supra). After

In the result appeal filed by the assessee is allowed for statistical purposes.