VISWANATH S. DESHMUKH,MUMBAI vs. ITO 21(3)(2), MUMBAI

On perusal of the appeal, we noticed that there is a delay of one day in filing of this appeal and in this respect an application alongwith an affidavit of Shri Viswanath S Deshmukh has been filed. We have considered the contents of the application and the affidavit which shows that the assessee was suffering from paralysis and is a senior citizen and also considering the facts contained in the affidavit, we condone the delay of one day in filing of this appeal and admit the appeal for hearing.

The brief facts of the case are that during the year under consideration the assessee has sold a flat no.11/A, first floor, 8 Torana Apartments, Andheri(E), Mumbai on 12-10-2009 for a consideration of Rs.48.00 lakhs. After indexation, the assessee has shown long term capital gain of Rs.45,65,528/-. The assessee claimed to have invested Rs.56.00 lakhs in a new residential flat and claimed deduction u/s 54 of Rs.44,92,601/- and offered Rs.72,927/- as capital gain for this assessment year. In the case of assessee, the information was received from ITO, Ward-21(3)(20, Mumbai regarding the sale of property by the assessee as the assessee has not filed the return of income for the assessment year 2010-11, as the total taxable income was below the threshold limit.

Aggrieved by the order of the ITO, the assessee preferred appeal before the CIT(A) and the CIT(A) after considering the case of both parties dismissed the appeal filed by the assessee vide order dated 11-02-2014.

Aggrieved by the order of the CIT(A), the assessee preferred the present appeal before us on the ground mentioned herein above. The sole ground taken by the assessee is that the CIT(A) has erred in upholding the action of the Assessing Officer in not allowing the exemption u/s 54 of the IT Act, amounting to Rs.44,92,601/- in respect of investments in residential property against sale of residential house.

We have heard the counsel for the parties and have also perused the material on record as well as the orders passed by the revenue authorities.

Before we come onto the merits of the case, it is necessary to evaluate the orders passed by the CIT(A) while dealing with the said ground and the operative part of the CIT(A) is reproduced below;

We have analysed the afore mentioned orders passed by the CIT(A)

The learned AR appearing on behalf of the assessee argued that the assessee is aged about 79 years and is suffering from paralysis and he is always keeping bad health and because of this reason the agreement for purchase of new flat was made in the name of his son Shri Shailendra V Deshmukh and his wife’s name was added for the sake of convenience. It was further argued by the learned AR that the Assessing Officer has wrongly applied the principles laid down by the Hon'ble’ble Bombay High Court in the case of Prakash Vs ITO & Ors(2009) 312 ITR 40. It was further argued by the learned AR that as per the facts of the aforesaid case, exemption was sought u/s 54F of the IT Act, 1961, but in the present case of the assessee the exemption has been sought by the assessee u/s 54 of the IT Act, 1961. It was further argued that the assessee sold the property owned by him and purchased the new property in the name of his son and paid the consideration out of the sale proceeds. However, there is no intention of the assessee to transfer the property to his son. It was further argued by the learned AR of the assessee that the assessee has complete and full domain on the new property and the assessee is in fact staying and having possession of the said property with full authority and control over the said property. It was also argued by the learned AR that the name of the son was used for convenience purpose and name sake only.

The learned AR further argued that the decision of the Hon’ble Karnataka High Court as well as the Hon'ble Delhi High Court are later decisions therefore, the principles laid down in the aforesaid judgments should be preferred. The learned AR further argued that the Hon’ble Supreme Court in the case of CIT Vs Vegetable Products Ltd (1973) 88 ITR 192 has held that when two views are possible, then the view in favour of the assessee should be adopted.

On the other hand, ld. DR appearing on behalf of the revenue relied upon the detailed order passed by the AO as well as y the CIT(A).

We have also considered the judgments cited by both the parties and after going through the facts of the present case, we are of the considered view that the facts of the present case are squarely covered by the decision of the jurisdictional High Court in the case of Prakash Vs ITO & Ors (2009) 312 ITR 40. As per the principles laid down by the jurisdictional High Court in the aforementioned case, it has clearly laid down that for qualifying for exemption u/s 54F, it is necessary to have the investments n the residential house in the name of assessee only, if the assessee having purchased the new property in the name of his son, then the assessee is not entitled for exemption as per the judgment of Hon'ble High Court, the definition of term assessee contained in section (2)(7) of the IT Act and it was observed by the Hon'ble Bombay High Court that the assessee who is the owner of the original asset, needs to purchase or construct a residential house within the specified period. It is also observed by the Hon'ble High Court that the assessee, who is the owner of the original asset needs to purchase or construct a residential house within the specified period. It is also observed by the Hon'ble High Court the concepts of assessee own’, owner”, ownership”, co-owner, owner of the house property and ownership of property contained in various sections were very much interlinked and connected for granting benefits under the Income-tax Act. The Hon'ble Bombay High Court expressed the view that right from the sale of the original asset till the purchase and /or construction of the new asset, the ownership and domain over the new

Apart from the aforesaid mentioned details/judgments of Hon'ble Bombay High Court our view is also fortified by the decision of the Punjab & Haryana High Court in the case of Jainarayan Vs ITO.

After considering the entire facts as well as the legal preposition, and after considering the judicial pronouncements cited by both parties, we are of the view that the CIT(A) has passed a well reasoned and judicious order and no new material or evidences has been brought before us by the assessee in order to controvert or rebut the findings so recorded by the CIT(A). Therefore, we find no reason to interfere or deviate from the findings recorded by the CIT(A). Therefore, we dismiss this ground raised by the assessee and uphold the order of the CIT(A).

In the net result, the appeal filed by the assessee is dismissed.