DCIT Cen Vs Divya Sameer Gehlaut (ITAT Mumbai)
ITAT Mumbai held that assessee claimed benefit u/s 54 on a different document, whereas ultimately the transaction completed on altogether a different set of conditions and property, which is not permissible to claim benefit u/s. 54 of the Act. Accordingly, benefit u/s. 54 denied.
Facts- The case of the assessee was selected for scrutiny under the CASS and assessment was completed u/s. 143(3). During the course of assessment proceedings, claim of the assessee u/s. 54 was examined and the same was denied. Consequently, an addition of Rs. 13,84,87,515/- was added back to the income of the assessee. Assessee being aggrieved with this order of AO preferred an appeal before the Ld. CIT (A). Appeal of the assessee was allowed by the Ld. CIT (A). Now revenue being aggrieved with the appeal order preferred the present appeal before us.
Conclusion- Held that the allotment letter initially submitted by the assessee before the AO is no more in existence and acted upon. Rather assessee entered into in altogether in new transaction which is nowhere related with the claim of the assessee with reference to section 54 of the Act. It is a clear case where assessee claimed benefit u/s 54 on a different document, whereas ultimately the transaction completed on altogether a different set of conditions and property, which is not permissible to claim benefit u/s. 54 of the Act.
Held that throughout the actions and intentions of the assessee were not very clear. It is also observed that assessee was never in a position to confirm the conditions lay down in section 54, despite of the fact that a liberal view may be taken in this case. In the given situation, we do not agree with the view taken by the Ld. CIT (A); hence the impugned order is set aside and the addition made by AO is confirmed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by revenue is directed against the order of Ld. CIT (A)-54, Mumbai dated 03.03.2022 u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2013-14. The revenue has raised the following grounds of appeal:-
(1) “On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the deduction claimed u/s. 54 of the Income tax Act, 1961 of Rs. 13,84,87,515/- without appreciating the fact that the approval for construction of the property, which was bought by the assessee against which the said deduction was claimed, did not even receive the approval for construction by the competent authority, even two years after the sale of the original property.”
(2) “On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the deduction claimed u/s.54 of the Income tax Act, 1961 of Rs. 1 3,84,8 7,515/- without appreciating the fact that the vital condition of “one year before or two years after” of Section 54 of the Income tax Act, 1961, was not satisfied by the assessee as the flat at ‘Raheja Legend, Worli’ was sold on 04.02.2013 and the resulting long term capital gains was claimed as deduction u/s.54 the Income tax Act, 1964 for booking another flat at 52nd floor of ‘India bulls BLU, Worli’, which till 25.08.2015 did not even receive approval for commencement of work.”
(3)”On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the deduction claimed u/s.54 of the Income tax Act, 1961 of Rs.13,84,87,515/- without appreciating the fact that the Commencement Certificate till 47 of ‘C-Wing’ of the project ‘India bulls BLU, Worli’ was given by Municipal Corporation of Greater Mumbai only on 25.08.2015, thus even till that date the builder/developer did not even had the approval for commencement of work up to the 52nd floor.”
(4) “On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the deduction claimed u/s.54 of the Income tax Act, 1961 of Rs.13,84,87,515/- without appreciating that the builder/developer Le., India bulls Infraestate Limited, received NOC from the IDBI Trusteeship Services Limited on 11.01 .2018, for sale of the said flat, thus since the said flat was mortgaged with the IDBI Trusteeship Services Limited, it cannot be said to have been sold or allotted to the assessee before
FY 201 7-1 8.
(5) “On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in allowing the deduction claimed u/s. 54 of the Income tax Act, 1961 of Rs. 13, 84, 8 7,515/- without appreciating that a simple Allotment Letter, without a registration deed of the said property, does not fulfil the condition precedent for claiming deduction u/s. 54 of the Income tax Act, 1961.
(6) “Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the assessee’s claim of deduction u/s 54 of the Act (mentioned as u/s 54F in the order of the Ld CIT(A)) without waiting for the remand report called for from the assessing officer seeking further comments on additional evidences submitted during the appellate proceedings, which is not in accordance with the provisions of Rule 46A (3) of the IT. Rules, 1962.”
(7) “Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the assessee’s claim of deduction u/s 54 of the Act (mentioned as u/s 54F in the order of the Ld CIT(A)) based on CBDT Circular No 471 dated 15.10.1986 and Circular No 672 dated 16.12.1993, without appreciating the fact that, unlike purchasing a residential house to be constructed by Delhi Development Authority (D.D.A.), in the instant case, the has paid to book a house in the upcoming project in a family concern, thereby money so paid by the assessee has gone only from one hand to another in the Group and not parted to an independent builder ?”
(8) The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal, if need be
2. The revenue has also raised the additional grounds, which are as under:-
(i) “Whether on the facts and in circumstances of the case, the Ld CIT(A) erred in relying on the new evidence being sale agreement dated 23.01.201 8 which could not have been produced before the AO as the assessment order was passed on 28.03.201 6, which is in contravention of the Rule 46A of the I.T. Rules, 1962. “
(ii) “Whether on the facts and in circumstances of the case, the Ld CIT (A) erred in holding that the entire capital gain amount of Rs. 16, 68, 68,535/- was reinvested within the stipulated period whereas the clause (v) of the agreement for sale dated 23.01.2018 reflects part payment of Rs. 3, 20, 49,636/- only, thereby the assessee is not entitled for deduction u/s 54F.”
3. The brief facts of the case are that assessee filed a return of income on 31-07-2013, declaring total income at Rs. 26,64,690/-. The case of the assessee was selected for scrutiny under the CASS and assessment was completed u/s. 143(3). During the course of assessment proceedings, claim of the assessee u/s. 54 was examined and the same was denied. Consequently, an addition of Rs. 13, 84, 87,515/- was added back to the income of the assessee. Assessee being aggrieved with this order of AO preferred an appeal before the Ld. CIT (A) Mumbai. Appeal of the assessee was allowed by the Ld. CIT (A). Now revenue being aggrieved with the appeal order preferred the present appeal before us.
4. We have gone through the order of AO, order of the Ld.CIT (A) and submissions of the assessee. Assessee individual, deriving income mainly from salary and capital gains. During the year under consideration the assessee had earned long term capital gain amounting to Rs. 13, 84, 87,515/- on transfer of a residential property on which she claimed benefit u/s. 54 of the Act. The property sold by the assessee was long term in nature and this fact is not under challenge. Now to claim deduction u/s. 54, assessee has to acquire another residential house within a period of one year before or 2 years after or has to construct another house within a period of three years from the date of transfer of old house.
5. In this case it is observed that assessee submitted additional evidence in the form of commencement certificate before the Ld. CIT (A) confirming approval for commencement of the floor by the government on which the flat was allotted w.e.f. 25.08.2015. it is pertinent to mention that transaction took place during the F.Y. 2012-13 and assessee was supposed to comply with the requirements of sec. 54 within two years from the date of transfer of the old property i.e., maximum by 03-02-2015, as the assessee claiming benefit under the head purchase of property.
6. After going through the submissions of the assessee along with the orders of authorities below following are the important observations we made as under:
