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Income Tax Appellate Tribunal, DIVISION BENCH’SMD’, CHANDIGARH
Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’SMD’, CHANDIGARH
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No.1366/Chd/2017 Assessment Year: 2009-10
Smt. Sukiana Parvez Ali Khan Vs. The ITO # 2030, Sector-71 Ward 6(3), Mohali Mohali
PAN No. AWKPK1411B
(Appellant) (Respondent)
Assessee By : Shri. Mohit Dhiman Revenue By : Shri. Manjit Singh Date of hearing : 23/05/2018 Date of Pronouncement : 12/06/2018
ORDER PER DR. B.R.R. KUMAR:
The present appeal has been filed by the Assessee against the order of the Ld. CIT(A)-2, Chandigarh dt. 02/06/2017.
In the present appeal Assessee has raised the following grounds:
That the order u/s 250(6) dated 02.06.2017 passed by the Id. CIT (A) is contrary to the law and facts of the case.
(a) That the Id. CIT(A) has erred in upholding the disallowance of Rs. 27,00,000 made u/s 54 as the appellant had duly invested the amount in purchase of residential flat within the prescribed time. (b) Without prejudice to the above, the Id. CIT(A) has erred in even disallowing the exemption u/s 54 to the appellant on capital gains arising on individual flat(s) against the corresponding investment made in flat(s) while treating each flat as a separate unit.
That the Id. CT (A) has erred in even disallowing the exemption u/s 54 to the tune of actual investment of Rs. 15,00,000/- made by the appellant in the adjacent flat purchased by her within the prescribed period. 4. That the Id. CIT(A) has erred in disallowing the exemption u/s 54 to the appellant without appreciating the fact that she was prevented by sufficient cause from not investing the entire amount of capital gains in the residential flat.
That the Id. CIT(A) has erred in disallowing the deduction u/s 24(b) of Rs. 99,239 (i.e. Rs. 273825 less relief allowed by CIT(A) of Rs. 1,74,586).
Brief facts on the issue are that during the relevant period, assessee has
declared long term capital gains amounting to Rs. 1,73,927/- on sale of House
Property No. 103 and 104 in Malad, Mumbai. This property was sold for a
consideration of Rs. 1,10,50,000/-. The assessee has claimed exemption of Rs.
54,00,000/- u/s 54 of the Act on the ground that she has purchased two flats for
Rs. 27,00,000/- each at Suncity, Baddi, Solan in Himachal Pradesh from M/s
Shakum Infrastructure Development Ltd.
The Assessing Officer noted that these two flats purchased by the
assessee are at different floors and do not constitute is single unit and therefore,
the benefit of exemption u/s 54 is available to the assessee in respect of one
residential housing. Assessing Officer further noted that for the one flat full
payment has been made however for the another flat No. B-2/402 only Rs.
15,00,000/- has been paid and therefore, assessing officer restricted the
exemption u/s 54 in respect of the flat for which full payment has been made
and the balance amount of Rs. 28,10,034/- was brought to tax as long term
capital gains following the decision of Mumbai Tribunal Special Bench in the
case of Sushila M Jhavri (2007) 107 ITD 327.
The Ld. AR made submissions as under:- (i) That the assessing Officer has allowed the claim to the appellant amounting to Rs. 27,00,000/- only against one unit of two adjoining flats purchased at Baddi. Section 54 entitles the assessee for a full deduction of Rs. 54,00,000/- against the two flat which were adjoining with each other as is evident from the flat numbers which are B-2/502 and B-2/402. (ii) Ld. AR placed reliance on the following decisions:- a. CIT v/s Gita Duggal {357 ITR153} (Delhi HC) b. CIT vs. K.G. Rukminiamma (2011) (196 Taxman 87) (Kar) c. CIT vs. Sh. Gumanmal Jain (TCA No. 33 of 2017) dated 03.03.2017 (Mad)
Assessing Officer has given a finding that the assessee purchased two flats
No. B-2/502 and B-2/402 which are at different floors in the building at Suncity,
Baddi which do not constitute a one single unit. Assessing Officer has also noted
that for the second flat, assessee had made payment only of Rs. 15,00,000/-
against the value of Rs. 27,00,000/-. Therefore, the full investment has not been
made during the stipulated period.
The Ld. DR relied on the order of ITAT, Mumbai special Bench has
considered the issue of exemption u/s 54 of the Act in the case of Ms. Sushila M
Jhavri (supra) and held that exemption u/s 54 and 54F of the Act would be
allowable in respect of one residential house only.
However, we find that in the same judgment it is mentioned that where
more than one unit purchased which are adjacent to each other and are
converted into one house for the purpose of residence by having common
passage, common kitchen etc., it would be a case of investment in one
residential house. In the instant case the appellant has purchased two flats at
different floors one above the other and made it one single residential duplex
unit. Therefore, the assessee is entitled to exemption in respect of investment in
both the houses.
Further before us, the assessee has argued that the payment of Rs. 15
Lacs has been paid for the second Flat within the due time and the remaining
part could not be paid due to litigation entered with the builder owing to non-
completion of the construction, before the District Consumer Disputes Redressal
Forum. The documents relevant to the litigation are also placed before us. It was
submitted that it is due to the ongoing litigation the remaining amount was not
paid. Since the amounts were not paid because of the reasons beyond control,
based on the rationale given by the Hon’ble Delhi Court in the case of CIT Vs.
R.L. Sood 108 Taxman 227 the assessee is eligible for exemption.
Hence, keeping in view that since the two flats make a single dwelling unit
and keeping in view the judgments quoted by the Ld. AR, the restricting the
benefit of exemption u/s 54 to the assessee to one unit only cannot be
accepted. The addition made by the A.O of Rs. 28,10,034/- to the long term
capital gain is therefore, deleted.
Regarding the Ground No. 5 of the appeal, the assessee has paid interest
of Rs. 1,13,838/- and Rs. 1,21,496/- towards the housing loan, the same may be
allowed after due verification of the certificate as per Section 24(b) of the
Income Tax Act,1961 in the hands of the assessee.
As a result, appeal of the assessee is allowed.
Order pronounced in the open Court.
Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 12/06/2018 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR