ITO WD 19(3)(2), MUMBAI vs. LATE IRENE WINFRED THROUGH L./HS JOHN CURTIS, ALEN CURRTIS & MARK CURTIS, MUMBAI

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ITA 3748/MUM/2014Status: DisposedITAT Mumbai24 November 2015AY 2005-063 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the constructed area received by the assessee under a development agreement in lieu of surrendering their existing property is eligible for deduction under Section 54, following Supreme Court and co-ordinate bench decisions.

What were the facts?

The assessee entered into a development agreement for their residential property, receiving cash and constructed area. The assessee claimed deduction under Section 54 for the value of the constructed area received. The AO rejected this claim, but the CIT(A) allowed it.

What were the issues?

Whether the constructed area received by the assessee under a development agreement can be considered as 'purchase' for the purpose of claiming deduction under Section 54 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 54

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

For Respondent: Shri Vishwas Mehandale
Hearing: 24.11.2015Pronounced: 24.11.2015

आदेश / O R D E R

PER B.R. BASKARAN (AM)

1.

The appeal filed by the revenue is directed against the order dated 28-03-2014 passed by Ld CIT(A)-30, Mumbai and it relates to the assessment year 2005-06. The revenue is aggrieved by the decision of Ld CIT(A) in holding that the assessee is entitled for deduction u/s 54 of the Act.

2 We heard the parties and perused the record. The assessee was holding a residential property and gave the same to a builder under a development agreement dated 21.5.2003. Subsequently, a deed of confirmation was entered on 29.7.2004. As per the above said agreements, the assessee was to receive a sum of Rs.80.00 lakhs by way of cash and 1400 sq.ft. of constructed area. While computing the capital gain, the assessee deducted the value of 1400 Sq.ft. as deduction u/s 54 of the Act. The AO rejected the claim by holding that the assessee cannot be considered to have purchased the property in terms of the provisions of sec. 54 of the Act. The Ld CIT(A), however, allowed the claim and hence the revenue has filed this appeal before us.

3.

A perusal of the order passed by Ld CIT(A) would show that the first appellate authority has followed the decision rendered by the co-ordinate bench of Tribunal in the case of M/s Jawahar N Ghia and others (ITA No.4665/M/2012 dated 19.11.2013), wherein the co-ordinate bench has followed the decision rendered by the Hon’ble Supreme Court in the case of CIT Vs. V.T.N. Arvinda Reddy (120 ITR 46), wherein it was held that the term ‘purchase’ as buying for a price or equivalent of price by payment inkind or adjustment towards an old debt or for other monetary consideration. Accordingly, the co-ordinate bench had held that residential flats acquired by the assessee by virtue of development agreement in lieu of surrendering the existing property is eligible for deduction u/s 54/54F of the Act.

4.

At the time of hearing, the Ld D.R could not furnish any other contrary decision. Under these set of facts, we are of the view that the Ld CIT(A) was justified in deciding this issue in favour of the assessee.

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