Income Tax Appellate Tribunal - Indore
Smt. Nirmala Porwal, Indore vs The Ito Ward 2(2), Indore on 20 December, 2018
[ITA 285/IND/2017]
[Smt. Nirmala Porwal, Indore]
आयकर अपील
य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.285/Ind/2017
Assessment Year: 2013-14
Smt. Nirmala Porwal ITO Ward-
71, Bhakth Prahlada Nagar बनाम/ 2(2)
Indore (M.P.) Indore
Vs.
(Appellant) (Revenue )
P.A. No.ADHPP4905F
Appellant by Shri P.D. Nagar, A.R.
Respondent by Shri Rajiv Jain, D.R.
Date of Hearing: 29.11.2018
Date of Pronouncement: 20.12.2018
आदे श / O R D E R
PER KUL BHARAT, J.M:
This appeal by the assessee is directed against order of the CIT(A)-I, Indore dated 23.2.2017 pertaining to the [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] assessment year 2013-14. The assessee has raised following grounds of appeal:-
1. "That the learned Commissioner of Income Tax (A) erred in law in confirming the rejection of deduction claimed u/s 54F of the Act on the ground that the appellant had purchased a residential house other than the "new asset" within a period of one year after the original asset. He ought to have considered that proviso to section 54F also permits ownership of one residential house, other than the new asset on the date of transfer of original asset. The appellant was having only one residential house (1/2 portion) on 12.9.2012 i.e. the date on which plot was sold hence the appellant was eligible for exemption u/s 54F of the Act to the extent of investment made for purchase of atleast one of the "new asset". Rejection of exemption claimed u/s 54F of the Act is wholly unjustified, improper, bad in law and deserves to be quashed.
2. The appellant further craves leave to add, alter, and/or to amend the aforesaid grounds of appeal as when necessary."
2. The facts giving rise to the present appeal are that case of the assessee was selected for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was framed vide order dated 14.3.2016. The A.O. observed that on perusal of income tax return submitted by the assessee, it was noticed that the assessee had sold both part of plots situated at 328, Usha Nagar Extension for a consideration of Rs.82,52,000/-. It was also noticed that the assessee 2 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] had purchased one part of this plot on 28.7.2001 for a consideration of Rs.4,61,102/- and got the second part of the above plot through exchange deed from Smt. Santosh Porwal. The cost of the second part of the plot was Rs.4,65,000/- to the original owner. It was further noticed that the assessee on the date of transfer of the plot was the owner of one half of the residential house situated at Bhakta Prahalad Nagar, Indore. A part of this house was let out by the assessee and was residing in the balance part. The assessee had invested the said consideration of the plot situated at 328, Usha Nagar Extension, Indore in purchase of residential house No.35, Scheme No.71, Sector-D, Indore on 12.7.2013 for a consideration of Rs.1,10,00,000/- and claimed exemption u/s 54B/54D/54G, etc. The assessee had also purchased one more residential house on 22.11.2012 situated at 102, Kagdipura, Chhatribaugh, Indore for a consideration of 3 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] Rs.20,00,000/- and registration cost of Rs.1,56,170/- totaling to Rs.21,56,170/-. During the course of proceedings, the assessee was show caused as to why the exemption claimed u/s 54F of the Act should not be denied as the assessee is the owner of one more residential house situated at Bhakta Prahlada Nagar, Indore. The A.O. therefore not accepting the explanation of the assessee declined to allow claim of deduction u/s 54F of the Act in respect of the house purchased at Rs.1.10 crores.
3. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions dismissed the appeal. Now the assessee is in further appeal. The only effective ground in this appeal is against rejecting the claim of deduction made in respect of house purchased at a consideration of Rs.1.10 crores in scheme No.17, Sector-D, Indore. Ld. Counsel for the assessee vehemently argued that the authorities below 4 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] were not justified in disallowing the claim of the assessee. He submitted that the authorities have wrongly appreciated the facts and the action is contrary to the judicial pronouncements. Ld. Counsel reiterated the submissions as made in the written synopsis. He contended that the long term capital gain earned by the appellant of Rs.52,84,183/- on the sale of two plots of land on 12.9.2012 exemption u/s 54F of the Act was disallowed by the A.O. on the ground that the assessee was having more than one residential house. Ld. Counsel submitted that after sale of residential asset, the assessee had purchased a residential house on 22.11.2012 for a sum of Rs.21,56,000/- and another house in scheme No.71, Sector-D, Indore on 12.7.2013 for a sum of Rs.1.10 crores. Both the houses were purchased before the due date on filing of return. He submitted that the A.O. considered that at the time of purchase of residential house in scheme 5 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] No.71, Sector-D, Indore, the assessee was having two residential houses. Therefore, deduction u/s 54F of the Act would not be available. He submitted that the authorities below failed to appreciate the facts and consider judicial pronouncements.
4. On the contrary, Ld. D.R. opposed the submissions of the assessee and supported the orders of the authorities below. He submitted that under the facts of the present case the deduction u/s 54F of the Act would not be applicable as on the date of claim of deduction. The assessee had two residential houses excluding the residential house on the purchase of which deduction is claimed by the assessee.
5. We have heard the rival submissions, perused the material available on records and gone through the orders of the authorities below. The only question is to be adjudicated in this appeal is whether the assessee is 6 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] eligible for deduction u/s 54F of the Act. The relevant provision of section 54F of the Act speaks as under:
"[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date [constructed, one residential house in India](hereafter in this section referred to as the new asset), the capital gain shall be dealt within accordance with the following provisions of this section, that is to say,--
a. If the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45;
b. If the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45;
[Provided that nothing contained in this sub-section shall apply where--
a. The assessee,--
i. Owns more than one residential house, other than new asset, on the date of transfer of the original asset; or ii. Purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or iii. Constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and b. The income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "income from house property"]"7
[ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore]
6. From the aforesaid it is clear that application of section 54F(1) of the Act is barred in the following situations:
a. The assessee,--
iv. Owns more than one residential house, other than new asset, on the date of transfer of the original asset; or v. Purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or vi. Constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and b. The income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "income from house property"]"
7. In the case in hand assessing officer declined benefit of section 54F(1) of the Act on the basis that assessee owns more than one residential house. However, the Ld. CIT(A) declined benefit on the ground that the benefit would not be available in view of the first proviso (a)(ii) of the Act. Ld. CIT(A) has noted the fact that the assessee had sold two plots on 16.7.2012 and 12.9.2012 respectively and purchased new asset number (1) on 22.11.2012 and a new asset number (2) a residential house on 12.7.2013. It is 8 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] not in dispute that the assessee had sold two capital assets on 16.7.2012 and 12.9.2012 and purchased two new assets on two different dates. Undisputedly, both the authorities below have rejected the claim of the assessee on two different grounds. Undisputedly house No.328A was sold on 16.7.2012 for a sum of Rs.25,88,000/-. The assessee purchased new asset i.e. residential house at Kagdipura, Chhatribagh, Indore on 22.11.2012. Another plot i.e. plot No.328B was sold on 12.9.2012 at a sale consideration of Rs.56,64,000/- and purchased another house in scheme No.71, Sector-D, Indore on 22.7.2013 at a cost of Rs.1.10 crores. These facts are not disputed by any of the party. The A.O. declined benefit of deduction on the basis that the assessee was having more than one residential house. But we find that on the date of transfer of the original asset i.e. on 16.7.2012 and 12.9.2012, the assessee was only owner of half portion of the house, which 9 [ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore] was in joint ownership. Therefore, the A.O. was not correct to decline benefit of section 54F(1) of the Act on this basis. However, Ld. CIT(A declined benefit of section 54F(1) of the Act on the basis that subsequent to transfer of original assets, the assessee had purchased two new assets. It is clearly contrary to the proviso (a)(ii) to section 54(F)(1) of the Act. Since the Ld. CIT(A) rejected the claim on the ground other than the ground taken by the A.O., he ought to have given a specific notice to the assessee in this regard. Therefore, considering the totality of the facts and case laws relied by the assessee, we set aside the orders of the authorities below and restore the issue to the file of the assessing officer to decide it afresh after considering the facts on record and the case laws relied by the assessee. Grounds raised in the appeal are allowed for statistical purposes.
10
[ITA 285/IND/2017] [Smt. Nirmala Porwal, Indore]
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order was pronounced in the open court on 20 .12.2018.
Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER Indore; दनांक Dated : 20/12/2018 VG/SPS
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Assistant Registrar, Indore 11