NEELAM N. CHHABRIA,MUMBAI vs. ITO 24(2)(1), MUMBAI

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ITA 8732/MUM/2010Status: DisposedITAT Mumbai23 August 2016AY 2006-073 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer was not justified in restricting the deduction under Section 54. The CIT(A) was also not justified in restricting the deduction to Rs. 25,24,280/- instead of Rs. 42,26,650/- as claimed by the assessee.

What were the facts?

The assessee claimed exemption under Section 54 for capital gains on the sale of a residential house, reinvesting Rs. 52 lakhs. The Assessing Officer restricted the deduction, considering only Rs. 22.50 lakhs as invested from sale consideration, with the rest being a bank loan. The CIT(A) further restricted the deduction to Rs. 25,24,280.

What were the issues?

Whether the entire investment in a new residential house, including amounts financed by loans, should be considered for deduction under Section 54. The correct amount of deduction allowable under Section 54 for reinvestment in a new residential property.

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 “B” BENCH, MUMBAI

Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL & SHRI RAJESH KUMAR.

Hearing: 03.08.2016Pronounced: 23.08.2016

PAN: AADPC1242K अपीलाथ� की ओर से /By Appellant : Shri M. Subramanian, A.R. ��यथ� क� ओर से/By Respondent : Shri Shivaji B. Ghode, D.R. सुनवाई क� तार�ख/Date of Hearing : 03.08.2016 घोषणा क� तार�ख/Date of Pronouncement : 23.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M:

This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-34, Mumbai, dated 24.02.2010 for A.Y. 2009-10 on following ground:

A.Y. 06-07 [Neelam M. Chhabria vs. ITO] Page 2

“1. The learned CIT(Appeals) was not justified in confirming the action of the learned ITO in restricting the exemption u/s 54 to Rs.25,24,280/- in place of Rs.42,26,650/- claimed by the appellant. Accordingly, he has erred in bringing to tax an amount of Rs.17,02,370/- as long term capital gains.”

2.

Assessee has challenged the assessment of capital gain on sale of residential house at Rs.17,02,370/- as against nil return filed by assessee. The stand of assessee has been that Assessing Officer has not considered the reinvestment in house of Rs.52lacs, whereas capital gain on sale of house was Rs.42,26,650/-. According to assessee, Assessing Officer has erred in restricting the deduction u/s.54(2) of the Act to Rs.25,24,280/- instead of Rs.42,26,650/- claimed by assessee. Assessing Officer observed that out of Rs.52lacs investment in new house Rs.29,50,000/- was taken as loan from bank only Rs.22,50,000/- was invested out of sale consideration. Assessing Officer after considering the registration charges and stamp duty has restricted the deduction u/s.54(2) of the Act to the extent of Rs.25,24,280/-.

2.1 In appeal, stand of assessee has been that facts should be considered in totality and repayment of loan of Rs.19,50,000/- should also be considered for allowing deduction u/s.54(2) of the Act. CIT(A) held that in view of plain language of Section 54(2) of the Act that the amount not utilized for purchase of new asset shall be charged to income tax. Assessing Officer was not justified in considering the total investment in new residential house u/s.54(2) of the Act amounted to Rs.52lacs, whereby capital gain on sale of old residential house was only A.Y. 06-07 [Neelam M. Chhabria vs. ITO] Page 3 Rs.42,26,650/-. In view of this, Assessing Officer was not justified in restricting the deduction u/s.54(2) of the Act to Rs.25,24,280/- instead of Rs.42,26,650/- as claimed by assessee. Assessing Officer is directed accordingly.

3.

In the result, the appeal filed by assessee is allowed.

Pronounced in the open Court on this the 23rd day of August, 2016.

Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 23/08/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।

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