ACIT CIR 1, THANE vs. HANMANT D. JAGDALE, THANE

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “H”, MUMBAI BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No.4356/Mum/2013 Assessment Year: 2008-09 ACIT Circle-1, Shri Hanmant D. Jagdale, Ashar I.T. Park, 6th Floor, Prop. M/s Rohit Enterprises, ‘B’ Wing, Room No. 22, Gr. Floor, Tamanna CHS, Road No. 16Z, Wagle Industrial Vs. Pada No. 2, Yashodhan Nagar, Estate, Thane (W),-400604. Lokmanya Nagar, Thane (W)-400606. PAN: ACNPJ7172P (Appellant) (Respondent)

Revenue by : Sh. Neil Philip (DR) Assessee by : Sh Subodh Ratnaparkhi (AR) Date of hearing : 22.07.2016 Date of Pronouncement : 14.10.2016 Order under section 254(1) of Income tax Act PER PAWAN SINGH, JM: 1. This present appeal under section 253of Income Tax Act (‘Act’) is directed by the Revenue against the order of CIT(A)-II, Thane dated 15.02.2013 for AY 2008-09. The Revenue has raised only one ground of appeal: 1. On the facts and circumstances of the case and in law, the Hon’ble CIT(A) erred in allowing the assessee’s claim of exemption u/s. 54F only on the basis of allotment letter although no sale agreement or conveyance agreement or payment has been made in respect of the flat no. 2102. The CIT (A) failed to appreciate that conditions laid down u/s. 54F are not fulfilled. 2. Brief facts of the case are that the assessee filed return of income for the relevant AY on 24.11.2009 declaring total income of Rs. 69,09,222/-. The return of income was selected for scrutiny. The AO while making the assessment besides other disallowance disallowed the exemption claimed u/s. 54F of the Act.

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Aggrieved by the order of AO, the assessee filed an appeal before the CIT(A). The assessee succeeded in appeal before the CIT(A). Aggrieved by the order of CIT (A) the Revenue has filed the present appeal before us. 3. We have the Departmental Representative (DR) for the Revenue and the ld AR for the assessee, the ld DR for the revenue argued that as per the detail furnished by the assessee the assessee received Rs. 59,76,000/- towards sale of 3600 shares of Happy Home Health Club Pvt. Ltd. and after indexation cost of acquisition the assessee declared Long Term Capital Gain (LTCG) of Rs. 59,36,089/-. The assessee further claimed to have purchased new flat during the year under consideration and claimed deduction of Rs. 55,62,600/- u/s. 54F in respect of new Flat No. 2102, Centre Point, Mulund (East), Mumbai and also paid advance for booking a flat with Shree Siddhivinayak Enterprises for Rs. 30,00,000/- and as such was not entitled for deduction u/s. 54F. The Ld. DR further argued that CIT(A) erred in allowing the deduction in respect of flat No.2102, Centre Point, Mulund(East), Mumbai.The case law cited by CIT(A) in its order are distinguishable to the facts of the present case. The Ld. DR for the revenue prayed that the finding of CIT(A) be reversed and that the finding of AO may be restored. On the other hand, the ld AR for the assessee argued that grounds of appeal raised in the present appeal that “no sale agreement or conveyance agreement or payment has made in respect of Flat No. 2102” is itself erroneous. The AR for assessee would argue that assessee sold 3600 share of Happy Home Health Club Pvt. Ltd. for Rs. 59,76,000/- on 11.08.2007 and after deducting index cost of acquisition the assessee declared LTCG at Rs. 59,36,089/-. Assessee purchased/constructed a new Flat at 21st Floor, Wing- 2102, Centre Point, Mulund (East), Mumbai for Rs.55,62,600/- and was entitled to claim deduction u/s. 54F of the Act. All these details when required by AO was furnished with documentary evidence which includes copy of allotment letter dated 21.01.2008 for Flat No.2102 in the building constructed by assessee himself being a proprietor of M/s Rohit Enterprises wherein the investment of Rs.56,00,000/- was made/claimed by the assessee. The AO raised objection that Flat No.2102 was already allotted to Mr. Rajan M. Chopra vide Allotment letter

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dated 26.06.2007 for a consideration of Rs. 50,00,000/-, hence, the same could not be allotted to assessee. The AO further objected that assessee had advanced Rs. 30,00,000/- to Shree Siddhivinayak Enterprises for booking of other flat. The assessee explained to the AO vide his reply dated 27.12.2010 (copy of which is available at page. 26 of PB), the assessee explained that the flat purchased by assessee from proprietary concern was duly recorded in the books of account of M/s Rohit Enterprises. Flat No. 2102 was not allotted to Mr. Rajan Chopra, in fact Flat No. 1502 and 1901 were allotted to Mr. & Mrs. Rajan Chopra. Rajan M. Chopra has already cancelled the booking of flats and his advances were treated as unsecured loan and assessee paid interest after deducting TDS and thus the amount paid by Mr. Rajan Chopra was purely in advance and there was no sale/purchase of flats to him in respect of booking of flats. In respect of advance of flat in Siddhivinayak Enterprises the assessee explained that the said flat had not been constructed and no agreement was executed. Only advance of Rs. 30,00,000/- was paid to the builder. The AO denied the exemption u/s. 54F in respect of flat at Centre Point, Mulund for the reasons that no agreement is available but in respect of advance to Siddhivinayak Enterprises, the AO considered only part advance without any valid agreement of flat purchased to deny exemption. In fact, the flat has not been constructed and the booking was cancelled and the assessee has received the amount of booking which is duly shown in the books of accounts. The Ld. AR for the assessee argued that the assessee was entitled for exemption u/s. 54F of the Act and the order of Ld CIT(A) does not suffer from any illegality or infirmity . 4. We have considered the rival contentions of the ld representatives of the parties and perused the material available on record. The assessee sold the share on 11.08.2007 giving rise to earn LTCG which was invested in a construction of flat no. 2102, Centre Point, Mulund and as per Architect Certificate dated 11.06.2010 the project was 100% complete, hence, the amount of capital gain was invested within three years from the date of sale of shares. This fact is duly reflected in the books of account of the assessee, otherwise AO has also not

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disputed the investment of Rs. 56,00,000/- on 31.03.2008, the language of section 54F of Statute made it clear that no capital gain to be charged in case the investment is made in a construction of residential house within a period of three years. Admittedly, in the present case the assessee has invested the LTCG for the purchase of new house before 31.03.2008. Thus, the assessee was qualified for claiming exemption u/s. 54F of the Act. So far as proviso to section 54F(1) is concerned the deduction can be denied, if assessee owned more than one residential house, other that the new assets on the date of transfer of original asset, the assessee only made advance of Rs. 30,00,000/- with M/s Siddhivinayak Enterprises on 11.03.2008 which has been cancelled subsequently and the assessee had received back the advance payment which has been shown in the books of account (per page No.37/38 of p/b). Thus, the assessee not owned more than one residential house on the date of transfer of original assets (shares). 5. In view of the above discussion, the assessee was entitled for deduction u/s. 54F of the Act, which has been correctly appreciated by ld. CIT(A) in the impugned order. Hence, we do not find any illegality or infirmity in the order passed by CIT(A). In the result, the appeal of the Revenue has no force and the same is dismissed. 6. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 14th day of Oct 2016. Sd/- Sd/- B.R. BASKARAN PAWAN SINGH (Accountant Member) (Judicial Member) Mumbai; Dated 14/10/2016 S.K.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai BY ORDER, 6. Guard file. (Asstt.Registrar) स�या�पत��त //True C ITAT, Mumbai