PANKAJ KHANDELWAL,MUMBAI vs. ITO 8(2)(1), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

1. That the learned CIT(A)17 erred on the facts, in the circumstances of the case and in law in not allowing claim of the appellant for deduction u/s.54 of the Income Tax Act.

2. That the learned CIT(A)17 failed to appreciate that on the facts of the case and in law the appellate “Purchased residential flat” within the period as prescribed in sec.54 of the Income Tax Act as the appellant executed agreement duly registered for purchase for the flat on 18.07.2008, which was then in construction stage, and obtained / received occupation of the said flat as habitable ‘residential flat” on 01.02.2010 making full payment on or before that date.

3. That the learned CIT(A)17, erred in not giving specific / proper opportunity to the appellate to make further submissions before dismissing the appeal even though the learned CIT(A)17 did not find any merit in the argument of learned A.O. which is mainly based on submission of the appellant.

4. The learned CIT(A)17 erred in disallowing the claim of the appellant without considering the direct decision of jurisdictional High Court, in the case of CIT V/s. Geetadevi Pasari (2009) 17 DTR 280 (Bom).”

3. The brief facts of the case are that the assessee filed his return of income on 22.02.2011 declaring total income to the tune of Rs.25,31,440/-. The return was processed u/s.143(1) of the Income Tax Act, 1961 ( in short “the Act”). Thereafter, the case was selected A.Y. 2010-11 for scrutiny and notices u/s.143(2) and 142(1) of the Act dated 25.08.2011 and 20.07.2012 were issued which were duly served upon the assessee. The Assessing Officer observed that assessee has claimed the Long Term Capital Gain as Nil on sale of residential premises after claiming exemption u/s.54 of the Act of Rs.29,03,041/-. The assessee purchased the residential flat at 702, Raheja Nest, Chandivili Farm Road, Chandivili, Andheri (W) by virtue of agreement dated 30.12.2003 for a sale consideration of Rs.22,19,160/- inclusive of allied incidental costs. The said flat was sold vide agreement dated 10.11.2009 for a total consideration of Rs.59,32,000/-. The assessee claimed to have re-invested the gain in purchase of another residential flat at 802, Nahar’s Amrut Shakti Complex, Chandivili, Mumbai – 400072 vide agreement dated 10.07.2008. The Assessing Officer was of the view that the assessee failed to fulfill the essential conditions for claiming the exemption u/s.54 of the Act either after 10.11.2009 or before 10.11.2011. Therefore, the claim of exemption u/s.54 of the Act was declined and an amount of Rs.29,03,041/- was added to the income of the assessee and taxed accordingly. Feeling aggrieved the assessee filed an appeal before the CIT(A) who uphold the decision of the Assessing Officer, therefore, the assessee has filed the present appeal before us. ISSUE NO.1 TO 4:-

ITA No.148/M/2015 A.Y. 2010-11 4. All these issues are interconnected, therefore are being taken up together for adjudication. Infact all the issues leads to question raised by the assessee to the fact that whether the assessee was entitled to the exemption u/s.54 of the Act or not. The assessee purchased the residential flat at 702, Raheja Nest, Chandivili Farm Road, Chandivili, Andheri (W) by virtue of agreement dated 30.12.2003 for a sale consideration of Rs.22,19,160/- inclusive of allied incidental costs. The said flat was sold vide agreement dated 10.11.2009 for a total consideration of Rs.59,32,000/-. The assessee claimed to have re- invested the gain in purchase of another residential flat at 802, Nahar’s Amrut Shakti Complex, Chandivili, Mumbai – 400072 vide agreement dated 10.07.2008. The assessee claimed the exemption u/s.54 of the Act but the Assessing Officer declined the said claim on the ground of that the assessee did not come within the ambit of the essential condition as laid down in the section 54 of the Act. The assessee did not invest the gain to purchase the new flat earlier to the one year of the sale dated 10.11.2009 and failed to get the sale deed executed in his favour within the three year of the sale of the flat. The Assessing Officer as well as the CIT(A) have denied the claim of the assessee u/s.54 of the Act on the ground of this fact that the assessee sold his original house on 10.11.2009. The limit for re- investing in new residential house for claiming u/s.54 of the Act is either 10.11.2008 or before 10.11.2011. The assessee purchased new house by virtue of agreement dated 10.07.2008. Thus the case of the 4 A.Y. 2010-11 assessee does not fall within the relevant period for getting the exemption u/s.54 of the Act. The relevant transactions are hereby mentioned below which are not in dispute:-

1. 1. Date of Agreement for purchase of Flat at Raheja Nest: 30.12.2003 2. Date of Agreement for sale of Flat at Raheja Nest : 10.11.2009 3. Date of Agreement for purchase of Flat at Amrut Shakti: 10.07.2008 4. Date of occupation on 01.02.2010.

5. The contention of the assessee is that the assessee entered into an agreement for purchase of residential house on 10.07.2008 he paid 20% being as earnest money between December 2007 to February 2008 i.e.Rs.21,39,840/- and the balance 80% paid on receipt of occupation certificate in January / February 2010 at Rs.85,59,360/- totaling of Rs.1,06,99,200/- and took the possession on 01.02.2010. It is also contended that for granting the exemption u/s.54 of the Act the date of possession i.e.01.02.2010, after the sale of house on 10.07.2008, is required to be considered and accordingly he is entitled for the exemption u/s.54 of the Act in view of the law settled in Commissioner of Income Tax Vs. Smt. Beena K. Jain [1996] 217 ITR 363 (Bombay High Court) and V.M.Dujodwala Vs. ITO (1991) 36 ITD 130 (Mumbai Tribunal) and Smt. Shail Moti Lal Vs. CIT [2013] 5