Income Tax Appellate Tribunal - Mumbai
Rohit Y Chopra, Mumbai vs Assessee on 11 March, 2013
आयकर अपीलीय अिधकरण,
अिधकरण मुंबई
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "D" MUMBAI
सव[ौी ǒवजयपाल राव, Ûया.स.
/एवं
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER /AND
ौी राजेÛि, ले.स.
SHRI RAJENDRA, ACCOUNTANT MEMBER
आयकर अपील सं. / ITA No. 7877/Mum/2011
िनधा[रण वष[ /Assessment Year 2006-07
Shri Rohit Y. Chopra, I.T.O. Ward-19(3)(2),
Mehta Kothari & Co., Piramal Chambers,
Chartered Accountants, Third Floor,
A/2, Hira Anand, Vs. MUMBAI.
17, Swastik Society Road
No.2, JVPD Scheme,
Vile Parle (West),
MUMBAI - 400 056.
PAN: AACPC 3191 L
(अपीलाथȸ /Appellant) (ू×यथȸ / Respondent)
अपीलाथȸ ओर से / Appellant by : Shri B.V. Jhaveri
ू×यथȸ कȧ ओर से/Respondent by : Shri Abhinay Kumbhar
सुनवाई कȧ तारȣख / Date of Hearing : 11-03-2013
घोषणा कȧ तारȣख / Date of Pronouncement : 20-03-2013
आदे श / O R D E R
PER RAJENDRA, A.M.
The present appeal is filed by the assessee against the order dt. 10-08-2011 of CIT(A)-30, Mumbai. The following are the Grounds of Appeal:
"1. The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the disallowance of exemption of capital gain u/s 54 of the Income Tax Act,1961 in respect of the Flat purchased by the appellant at 602, Sunrise Building, Waterfiled Road, Bandra (West), Mumbai-400 050, in his own case.2 I.T.A. No. 7877/Mum/2011
2. The learned Commissioner of Income Tax (Appeals) has also erred in law and on facts in interpreting that the appellant and his mother Smt. Anuradha Chopra are the one and only assessee and are entitled for investment in one residential house out of the capital gain instead of the correct interpretation of law that the appellant and his mother are two different assesses and entitled to claim exemption u/s 54 of the Income Tax Act, 1961 for investment in residential house by each of them.
3. The appellant and his mother are both separately assessed to tax and each one deriving 50% capital gain from the residential unit sold which was acquired by Capitan Y. K. Chopra father of the appellant and have right to claim exemption by each of them u/s 54 of the Income Tax Act,1961.
Your appellant craves, leave to add, alter and / or amend the above grounds of appeal."
2. Assessee, an individual filed his return of income on 14-02-2007 declaring his total income at (-) 13,368/-. Initially, the return was processed u/s. 143(1) of the Income Tax Act, 1961 (Act). Later on, the case was selected for scrutiny and assessment was finalised u/s. 143(3) of the Act by the Assessing Officer (AO) on 31-03-2006 determining total income at Rs. 17.70 Lakhs.
This appeal is delayed by one day and vide his application dt. 27-02-2012, assessee had requested for condoning the delay in filing appeal. Application for condonation is accompanied by an affidavit of the assessee.It is submitted by the assessee that he is a non-resident working as a Crew Member on a Ship, that most of the time he was on voyage, that when his CA received the appeal order he was on ship, that his CA had prepared appeal brief and sent him for signature,that the appeal brief along with Form No. 36 duly signed sent by him through currier reached India late by one day from the last date of filing of appeal, that there was sufficient cause preventing him to submit the appeal in time. We have considered the affidavit and the application filed by the assessee for condonation of delay and we are of the opinion that assessee was prevented by a reasonable cause hence delay on one day in filing the appeal is hereby condoned.
3. While going through the return of income filed by the assessee, AO found that assessee had made a claim of exemption u/s. 54 of the Act. He found that assessee along with his mother, Smt. Anuradha Chopra, had made investment in two flats namely Flat No. 602, 'Sunrise', Bandra (West), Mumbai and Flat No.401,'Laxmi Palace', Khar, Mumbai. He further found that assessee had claimed exemption u/s. 54 of the Act for making investment in the flats. After discussing provisions of Section 54(1) of the Act, he held that assessee and his mother had invested sale proceeds on a residential units in two flats in two different buildings situated at two different places, that as per the provisions of Section 54 of the Act exemption was allowable only towards purchase/construction of a single flat/dwelling unit, that exemption under said Section was not available towards investment made in more than one house property. Vide his notice u/s. 142(1) dt. 30-07-2008, he asked the assessee to explain as to why claim exemption u/s. 54 should not be restricted to the investment made in respect of any of the two flats. After considering the submissions of the assessee, AO held that exemption u/s. 54 was allowable only to the extent of purchase/construction of a single residential property. Relying upon the order of 3 I.T.A. No. 7877/Mum/2011 Sushila M. Jhaveri delivered by the Special Bench [292 ITR (AT) 1 (Mum) (SB)], he held that assessee was having 50% share in each of the two newly purchased flats, that exemption u/s. 54 was allowable to the extent of investment in one house of his choice.
4. Assessee preferred an appeal before the First Appellate Authority (FAA). After considering the submissions of the assessee and the assessment order, FAA held that exemption u/s. 54 was claimed for two houses, the facts of the case of Sushila M. Jhaveri (supra), were quite similar to the case of the appellant, that AO was quite justified in restricting the exemption to one house only, that the two houses were located differently, that they did not constitute one dwelling unit. Thus, upholding the order of the AO, he dismissed the appeal filed by the assessee.
5. Before us, Authorised Representative (AR) submitted that appellant and his mother were holding equal share in property at A/1,Nar-Narayan Co-operative Housing Society Ltd., Turner Road, Bandra (West), Mumbai, that capital gain arising on sale of the said property was equally shared by the appellant and his mother, that against the capital gain exemption u/s. 54 of the Act was claimed by the assessee and his mother by acquisition of two properties - Flat No. 602, 'Sunrise', Waterfield Road, Bandra (West), Mumbai and Flat No. 401, 'Laxmi Palace', Khar, Mumbai, that a property could be owned by more than one owner, that the appellant had invested his share of capital gain for purchase of Flat No. 602, Sunrise, costing Rs. 63.14 Lakhs, that he had taken housing loan of Rs. 30 Lakhs, that the balance investment of Rs. 33 Lakhs was made out of his share in capital gain from the sale of Flat at Nar Narayan Co-operative Housing Society Ltd., that mother of the assessee had invested her share of capital gain on purchase of flat for her residence, that both the co-owners had acquired separate flats for their own residence, that the joint name kept in agreement was only because of convenience sake, that declaration made by mother of the assessee on 16-03-2009 and copy of her Will dt. 28-03-2007 clearly indicated that assessee did not have any right in the flat purchased by his mother. He relied upon the cases of Mrs. Jennifer Bhide (349 ITR 80) , V. Natarajan (287 ITR 271), Ravindra Kumar Arora (342 ITR 38) delivered by Hon'ble High Courts of Karnataka, Madras and Delhi respectively. He also relied upon the order of Smt. Armeda K. Bhaya (95 ITD 313) delivered by 'F' Bench ITAT, Mumbai. He referred to Pg. Nos. 47, 52 & 72 of the Paper Book. As per the directions of the Bench, assessee also filed the details of Bank A/c. of his mother. Departmental Representative (DR) submitted that mother and son both were joint owners of the both the flats, that money had come from the A/c of the mother, that AO had allowed exemption u/s. 54 to the mother of the assessee, that assessee was trying to claim an exemption which he was not entitled to.He relied upon the decision of Sushila M. Jhaveri (supra).
6. We have heard the rival submissions and perused the material put before us. The facts emerging from the record are that father of the assessee owned a flat at Nar Narayan Co-operative Housing Society Ltd., and on 21-03-2005 mother of the assessee Smt. Anuradha Chopra sold the flat to Jitendra R. Jain for a consideration of Rs. 85 Lakhs. As per the Deed of Transfer (Pg. Nos. 2 to 7 of the Paper Book) mother of the assessee was a Member and registered shareholder of Narayan Co- operative Housing Society Ltd., and was holding 40 fully shares of Rs. 50/- issued by the said society. Vide agreement dt. 03-05-2005 entered in to with M/s. Laxmi Developers and Construction Company assessee and his mother purchased Flat No. 4 I.T.A. No. 7877/Mum/2011 401, 'Laxmi Palace' for Rs. 28,11,000/-. On 12-05-2005, an agreement was entered between M/s. Harsh Developers and Mr. Rohit Y. Chopra and Mrs. Anuradha Chopra for purchasing a Flat No. 602, 'Sunrise' for consideration of Rs. 60 Lakhs (Pg. 52 to 71 of the Paper Book). Assessee and his mother claimed exemption u/s. 54 of the Act for purchase of above referred two flats. As per the Purchase Deed, both the flats have been purchased jointly by the mother and the son. From the Bank A/c of Smt. Anuradha Chopra, it is found that money was paid to Harsh Developers as well as to Laxmi Developers from her Bank A/c.
6.1. Provisions of Section 54 of the Act provides exemption from capital gains, arising out of sale of property, if certain conditions are fulfilled. Said exemption is available for one residential unit only and not for more than one units. By putting a condition that not more than one unit is entitled for exemption, legislature has made it clear that exemption cannot be claimed for many a units. In the case under consideration, two separate units have been purchased by the Copra family. Agreements of both the flats clearly prove that they are jointly held by the mother and the son. Sale Deed of Nar Narayan Society was executed by the mother of the assessee. Therefore, she was the only person entitled to claim exemption u/s. 54(1) of the act. AO has already allowed exemption for the bigger residential unit and rejected the claim made by the assessee for the other flat. In our opinion, order of the AO, which was confirmed by the FAA does not suffer from any legal infirmity. Assessee had not sold Nar Narayan Society Flat and hence is not entitled to claim deduction u/s. 54 of the Act. Investment in both the flats, as stated earlier, has been made by the mother of the assessee and these flats are totally independent and separate units.
In these circumstances, Grounds of Appeal No.1-3 are decided against the assessee.
6.2.1. Now, we would like to discuss the cases relied upon by the assessee. In the case of Jennifer Bhide (supra), assessee had sold her residential property and sale proceeds of that property were invested in purchasing a residential property and specified bonds. New property as well as the bonds were purchased in joint names of herself and her husband. AO held that if the ownership of the property was shared with someone else, then the property could not be said to be purchased by the assessee alone and therefore only 50% of the investment was allowed as exempt in the hands of the assessee. Similar dis-allowance was made with regard to the investment made in Rural Electrification Corporation Bonds.FAA confirmed the additions made by the AO u/s. 54 and 54EC of the Act.
Assessee preferred an appeal before the Tribunal. After considering the submissions of the assessee, Tribunal decided both the issues in favour of the assessee. While deciding the appeal filed by the Revenue, Hon'ble High Court of Karnataka held that it was nobody's case that assessee's husband had contributed any portion of the consideration for acquisition of the property or the bonds, that source for acquisition of the property and the bonds was the sale consideration, that once the sale consideration was utilised for the purpose mentioned u/s. 54 and 54EC of the Act the assessee was entitled to benefit of those provisions, that entire consideration had flown from the assessee, that the assessee could not be denied the benefit of deduction. Facts of the case under consideration are clearly distinguishable from the case of Jennifer Bhide (supra). In the present case, assessee had not sold the Nar 5 I.T.A. No. 7877/Mum/2011 Narayan Society Flat and has claimed an exemption, whereas in the case of Jennifer Bhide (supra) property was sold by her and exemption u/s. 54 and 54EC was claimed by her. In the present case, AO has already allowed exemption u/s. 54 for one of the residential units purchased by mother of the assessee as per the provisions of Section 54 of the Act. In these circumstances, matter of Jennifer Bhide (supra) is of no help.
6.2.2. In the case of V. Natarajan (supra), assessee had sold his house property at Bangalore and had purchased a new property at Chennai in the name of his wife out of the money obtained by him from the sale consideration of the Bangalore property. Income from the said House Property was assessed in the hands of the assessee. Assessee claimed exemption u/s. 54 of the Act which was denied by the AO. In the appellate proceedings, FAA and ITAT held that assessee was entitled to exemption u/s. 54, because investment was made by the assessee and Income from the House Property was assessed in his hands - though the property was purchased in the name of his wife. In our opinion, facts of the present case cannot be compared with the facts of the matter of V. Natarajan (supra). In that case investment was made by him and the income from the newly purchased property was also assessed in the hands, whereas in the case under consideration investment has made by the mother of the assessee in both the properties. In second property, assessee had also invested some money. But that does not entitle him to claim exemption u/s. 54 of the Act.
6.2.3. In the case of Ravindra Kumar Arora (supra), assessee had sold plot of land and claimed exemption of capital gains u/s. 54F of the Act on account of purchase of a new house property. AO rejected the claim of the assessee because the house had been purchased in the joint names of the assessee and his wife. In the appellate proceedings, Tribunal found that it was the assessee who had invested in the purchase of new residential house though not in his own name but along with name of his wife. Dismissing the appeal filed by the Revenue, Hon'ble High Court of Delhi held that condition stipulated in Section 54F stood fulfilled, that it would be treated as property purchased by the assessee in his name, that merely because he had included the name of his wife and the property purchased in the joint names would not make any difference. We find that in this case also, exemption u/s. 54F was allowed to the real investor who had sold an asset and purchased a residential unit. As stated earlier, mother of the assessee had already been allowed deduction u/s. 54 for purchase of one of the residential units, therefore, assessee cannot claim deduction.
6.2.4. In the last care relied upon by the AR i.e., Smt. Armeda K. Bhaya (supra), assessee had sold a property against which she had purchased a flat. During the assessment proceedings, AO found that flat was purchased in the name of the assessee and her parents so he restricted the benefit of Section 54 to 1/3. In the appellate proceedings, FAA reversed the order of the AO and held that assessee was entitled to the benefits of exemption u/s. 54. Deciding the appeal filed by the AO, Tribunal held that the assessee was the purchaser of the flat, that the entire amounts were spent by her, that investment made by her was to be considered towards the purchase of the new property. In our opinion, the case of Smt. Armeda K. Bhaya (supra), is also of no help. Because facts of the present appeal are totally different from the facts of the Smt. Armeda K. Bhaya (supra). In all the cases referred to by the AR of the assessee, investment in the new property was made by the person who had sold property owned by it. They have included the names of their spouses/parents while purchasing new properties. Hon'ble High Courts were of the opinion that once investor had purchased 6 I.T.A. No. 7877/Mum/2011 a new property out of the sale proceeds of the old properties, they were entitled to exemption u/s. 54/54F of the Act. In the case under consideration, mother of the assessee has already been allowed the benefit of exemption u/s. 54 for one residential unit. So, assessee is not entitled for the same.
As a result, appeal filed by the assessee stands dismissed.
पǐरणामःवǾप िनधा[ǐरती Ʈारा दाǔख़ल कȧ गई अपील नामंज़ूर कȧ जाती है .
Order pronounced in the open court on 20th March, 2013.
आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांकः 20th March, 2013 को कȧ गई ।
Sd/- Sd/-
(ǒवजयपाल राव / VIJAY PAL RAO ) (राजेÛि / RAJENDRA)
Ûयाियक सदःय/JUDICIAL MEMBER लेखा सदःय/ACCOUNTANT MEMBER
मुंबई/Mumbai,
Ǒदनांक/Date: 20th March, 2013
TNMM
आदे श कȧ ूितिलǒप अमेǒषत/
षत Copy of the Order forwarded to :
1. Appellant
2. Respondent
3. The concerned CIT (A)
4. The concerned CIT
5. DR "D" Bench, ITAT, Mumbai
6. Guard File
स×याǒपत ूित //True Copy//
आदे शानु / BY ORDER,
ानुसार
उप सहायक पंजीकार Dy./Asst.
उप/सहायक Registrar
आयकर अपीलीय अिधकरण,
अिधकरण मुंबई / ITAT, Mumbai