Kishore Anand Shetty Vs ACIT (ITAT Mumbai)
The assessee challenged (i) addition u/s 50C based on higher stamp duty value and (ii) denial of exemption u/s 54F on reinvestment in a residential flat. The Tribunal noted that the original stamp valuation was wrongly inflated due to inclusion of an approach road area and was later rectified through a supplementary deed, reducing valuation below declared sale consideration. Hence, invocation of sec.50C failed and addition of ₹13.47 lakh was deleted.
Regarding sec.54F, the AO denied exemption since the agreement for purchase of the new flat was dated earlier than one year before sale of the original asset and alleged that assessee owned more than one residential house. ITAT held that where a flat is under construction, date of possession/completion is crucial, not merely agreement date. Since possession was received within the prescribed period, exemption of ₹1.12 crore was allowable. The Tribunal also clarified that while counting number of houses, the “new asset” itself cannot be considered for the restrictive proviso to sec.54F.
As the quantum additions were deleted, the penalty levied u/s 271(1)(c) was also cancelled.
Key Takeaways
- Corrected/revised stamp valuation nullifies sec.50C addition if declared consideration exceeds revised value.
- For under-construction properties, possession & completion date governs sec.54F eligibility – agreement date alone is not decisive.
- New asset is excluded while applying “more than one residential house” condition under sec.54F proviso.
- Once quantum additions fail, penalty u/s 271(1)(c) cannot survive.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
