Ravi Shankar Vs Asstt. CIT (ITAT Mumbai)
Amendment made to section 54 was effective from 1-4-2015, which thus made it clear that prior to the said amendment the assessee was entitled the claim deduction in respect of investments made in more than one residential house.
As Prior to assessment year 2015-16 no restriction was placed by the legislature in respect of investments in the residential houses that an assessee could make for claiming deduction under section 54 of the Act. We thus are of the view that the claim of deduction raised by the assessee under section 54 in respect of investment made towards purchase of residential house at Mumbai and Pune was well in order.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
The present appeal is directed against the order passed by the Commissioner (Appeals)-7, Mumbai dated 25-2-2016, which in itself arises from the order passed by the assessing officer under section 143(3) of the Income Tax Act, 1961 (for short ‘Act’), dated 23-2-2015. The assessee had assailed the order passed by the Commissioner (Appeals) on the following grounds :–
“This appeal is against the order dated 25-2-2016 of the Commissioner (Appeals)-7, Mumbai, (hereinafter referred to as the “Commissioner (Appeals)’) in appeal against order dated 23-2-2015 under section 143(3) of the Income Tax Act, 1961, passed by the Assistant Commissioner of Income Tax-16(3), Mumbai (hereinafter referred to as ‘the A.O.’) and relates to the assessment year 2012-13. The under mentioned grounds of appeal are without prejudice to one another :–
1. The Commissioner (Appeals) erred in upholding the disallowance made by the assessing officer in respect of the appellant claims for exemption/deduction under section 54 of the Income Tax Act, 1961.
2. The Commissioner (Appeals) and the assessing officer failed to correctly interpret the amendment made by the Finance Act, 2014, wherein the words “a residential house” appearing in section 54 of the Act were changed to “one residential house”, thereby making a prospective amendment in the Act, that implied that, prior to the amendment the word “a” in a residential house was a grammatical reference and not a numeric reference, meaning one residential house.
3. The Commissioner (Appeals) failed to appreciate this amendment and wrongly upheld the assessing officer’s action of denying the benefits of the provisions of section 54 of the Income Tax Act, 1961 to the appellant.
4. The appellant craves leave to add, alter and/or amend all/any foregoing Grounds of Appeal.”
2. Briefly stated, the facts of the case are that the assessee who is an architect by profession had filed his return of income for assessment year 2012-13 on 26-9-2012, declaring total income of Rs. 59,07,550. The return of income was processed as such under section 143(1) of the Act. The case of the assessee was selected for scrutiny assessment under section 143(2).
3. During the course of the assessment proceedings the assessing officer observed that the assessee had during the year under consideration sold his residential property, viz. Flat No. 501, Kisna, 18th Road, Khar (W), Mumbai, for a consideration of Rs. 5,30,00,000. It was observed by the assessing officer that the long term capital gain (for short ‘LTCG’) shown by the assessee on the sale of the aforesaid property at Rs. 2,63,81,538, was claimed as exempt under section 54 of the Act by the assessee, as under :–
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