Income Tax Appellate Tribunal - Mumbai
Dcit 9(3)(2), Mumbai vs Sarita Shashikant Garwre, Mumbai on 18 January, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI "D" BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER. ITA. No. 2737/Mum/2015 (Assessment Year:2011- 12) The DCIT 9(3)(2), Mumbai Appellant Vs. Mrs, Sarita Shashikant Garware 01-05, Eden Hall, Dr. Annie Besant Road PAN Worli, Mumbai-400018 Respondent AAMPG2663H amterelf at sik a /By Appellant :Shri Purushottam Kumar, Sr.A.R Tere at six a/ By Respondent :Shri Vijay Mehta Wag ST ANNA Date of Hearing : 03.01.2017 arson ot aka Date of Pronouncement :18.01.2017 ORDER PER RAVISH SOOD, J.M:
order from The present appeal filed by the revenue is directed against the passed by the CIT(A)-16, dated 09.01.2015, which in itself arises the order passed by the A.O under Sec. 143(3) of the Income Tax Act 1961 (for short 'Act}, dated 10.02.2014, therein raising the following grounds of appeal before us:-
"1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in admitting additional evidence but no opportunity in this regard was given to the Assessing Officer as required under rule 46A of the LT. Act, 1962 after admitting additional evidence.
2. Whether on the facts and in the circumstances of the case, 'the Ld. CIT{A) erred in allowing deduction u/s 54 on the sale of 2 flats bearing No. 1501 and 1502 at Kowli Rameshwaram Apt whereas deduction u/s 54 of the Act is available only to the extent of sale of 1 residential flat as held by the Hon'ble ITAT in the judgement ITO vs. Sushila M. Jhaveri following the Judgement of jurisdictional High Court in the case of. K.C. Kaushik V/ s ITO.
| 3. Whether on the facts and in the circumstances of the case, the | Ld. CIT(A) erred in holding that the entire capital gain which accrued to the assessee and was invested in 4 units was q single unit though no evidence was brought on record by the assessee establishing that there is a common passage, common kitchen etc. so that the claim of 4 residential units being a single unit be allowed.
4. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. .
9. The appellant Prays that the order of the Id. CIT{(A)-16, Mumbai on the above grounds be set aside and that of the assessing officer be restored."
2. The brief facts of the Case are that the assessee had e-filed her return of income on 29.09.2011, declaring total income at Rs.2,33,30,718/ -. The assessee revised her return of income on 03.03.2012, declaring revised income at Rs. 2,33,30,718/-, along with 3 'Long Term Capital Gain' (for short 'LTCG) on sale of her residential flats No.1501 and 1502, at Kowli Rameshwaram Apartment, Phalkewadi, Kashinath Dhuru Road, Off. Veer Savarkar Marg, Prabhadevi, Mumbai 400 028, which after claim of deduction by the assessee u/s 54 of the 'Act' in her revised return of income stood reduced to Rs. Nil.
3. The case of the assessée was taken up for scrutiny proceedings u/s 143(2) of the 'Act'. That during the course of the assessment proceedings, the A.O while deliberating on the claim of deduction u /s 4 of the 'Act', as was raised by the assessee in her revised return of income, therein observed that the assessee in her revised computation of Ra Ve Rs income had disclosed sale of Flats No.1501 and 1502 at Kowli meshwaram Apartment, Phalkewadi, Kashinath Dhuru Road, Off, er Savarkar Marg, Prabha Devi, Mumbai, for a consideration of 15,25,00,000/-, against which it had claimed deduction u/s 54 in respect of four new flats, i.e Flat No(s). 901, 902, 1001 and 1002, at Raheja Empress, Veer Savarkar Marg, Prabha Devi, Mumbai-400028, which were purchased by her for a_ total consideration of Rs 16,90,12,559/-, vide purchase deeds dated: 07.01,2011. The A.O being of the view that as the entitlement of the assessee towards claim of deduction u/s 54, as per the mandate of law, was liable to be restricted only as regards the investment made by the assessee in one residential property, thus in the backdrop of his aforesaid view called upon the assessee to explain as to why the said claim u/s 54 so raised in her 'return of income', may not be restricted only with respect to the investment made by her in one flat. The assessee submitted before the A.Q that the Flats No. 901 and 902 which were on the 9th floor, and the other two Flats No. 1001 and 1002 which were on the 10% floor, wefe interconnected by a capsule lift, to make all the four flats as one 2 4 i i composite residential house. Thus the assessee in the backdrop of the al oresaid facts, therein submitted that as she had invested towards | } j Plurchase of four flats at Raheja Empress, Prabha Devi, Mumbai, on 07.01.2011, which were joined and being used by her alongwith her mily, as a single residential unit, wherein the flats No. 901 and 902 ere being used as bedrooms, while for the flats No. 1001 and 1002 pre used as kitchen and drawing room, and as such had made vestment towards purchase of one residential house, her claim for deduction u /8 54 so raised in the return of income, was well in order.
That during the course of the assessment proceedings, the A.O called upon the assessee to furnish documentary evidence to substantiate the legality of installation of the 'Capsule lift' joining the $pective flats on 9th and 10th floor. The assessee filed with the A.0 a copy of certificate issued by one Shri A.D. Savardekar, Consulting engineer, giving his opinion that the lifts can safely be installed without endangering the structural stability and safety of the building any way. The assessee further on being called upon by the A.O to Place on record the documentary evidence as regards the approval of the BMC with regard to the installation of the capsule lift to connect the four flats from inside, though expressed her inability to produce any, such document, as no such approval was sought by her, but ho Ce owever placed on record of the A.O a copy of a 'No Objection rtificate' (for short 'NOC}, dated 27.04.2011, which was obtained by her from Raheja Empress Apartment Owners Association, Mumbai.
at the A.O however on the basis of certain hyper technical reasons, rejected the certificate of the consulting engineer, as well as the 'NOC', | that was placed on record by the assessee. The A.O thus holding a Ong conviction that the investment made by the assessee towards Purchase of four flats, i.e on the 9% floor and 10th floor at Raheja 5 E press, Prabha Devi, Mumbai, could not be construed as an investment made towards purchase of one 'residential property', sp¢cifically in light of the fact that each of the four flats were having Separate two kitchens, coupled with the fact that the assessee had al failed to substantiate that she was legally authorized to make the structural changes in the aforesaid flats, and thus convert them into a single residential unit, thus rejected the claim of the assessee that the aforesaid four flats were being exploited as a single residential unit.
The AO further fortified his view by observing that though the assessee had purchased the aforesaid four flats in January, 2011, however the letter issued by M/s Bluestar Elevator (India) Ltd.,dated. 15.10.2011, therein revealed that the two home lifts were handed over to the ass th Cc pos essee much subsequent to the purchase of the aforesaid flats, and Is it could be safely concluded that at the time of taking physical session, the aforesaid four flats were not connected from inside, and as such were totally separate units. Thus. on the basis of his aforesaid observations, the A.O being of the view that the new four flats purchased by the assessee in Raheja Empress, Prabha Devi, Mu ent) res] flat mbai, were independent residential units, thus restricted the itlement of the assessee towards claim of deduction u/s 54 in bect of the 'LTCG' of Rs. 11,09,43,276/- arising on the sale of two S at Rameshwaram Apartment, Prabha Devi, Mumbai, only to the extent of the investment of Rs.4,87,24,255/- made by the assessee towards purchase of one flat (out of the 4 flats), and thus recasted the clai m of deduction under Sec. 54 in the hands of the assessee.
The assessee assailing the assessment order, therein carried the matter in appeal before the CIT(A). That during the course of the proceedings before the said first appellate authority, the assessee in order to further fortify her claim that the four flats purchased by her
ii) lg be ae ny --~ Copy of Maintenance bill / Property Tax for Flats No. 901-902 and 1001-1002.
- No Objection certificate of Tanna Builders Ltd for installation of capsule lift.
li). Certificate of consulting engineer certifying that the capsule lift can be installed safely.
v). NOC from Raheja Empress Apartment Owners Association to install the lift.
observed that it was an undisputed fact, well within the knowledge of the A.O, that the Flats No(s). 901 and 902 on the 9t floor and Flats
(s).1001 and 1002 on the 10% floor, in Raheja Empress(supra), were interconnected by a capsule lift. The CIT(A) further observed that the A.O instead of verifying the claim of the assessee that the aforesaid four flats in Raheja Empress (supra) were interconnected by a capsule lf, and as such were being used as a single residential house, which he could have easily done by deputing his inspector to carry out a spot inspection, had however declined to accept the claim of the assessee, by rejecting the documents which were placed on his record by the assessee during the course of the assessment proceedings, on the basis of certain hyper technical reasons. Thus, in the backdrop of the aforesaid observations, it was concluded by the first appellate authority, that sufficient evidence had already been placed on record by the assessee before the A.O, to support her contention that the four flats purchased by her at Raheja Empres (supra), were interconnected by a capsule lift, and were used by her as a single residential property. The CIT(A) further referring to the documents which were furnished by the, assessee during the course of the appellate proceedings, therein categorically observing that though technically the same were in the nature of 'additional evidence', but as the same simply proved a fact, which already emerged from the documents furnished by the assessee during the course of the assessment proceedings, therefore dispensed with the forwarding of the same to the A. O, for his comments. The crm(a) thus going by the material already available on the assessment record, therein concluded that the four flats purchased by the ass¢ssee at Raheja Empress, Prabha Devi, Mumbai, were being used by the assessee and her family members as a composite residential house. The CIT(A) in the backdrop of his aforesaid factual observations, relying on the order of the 'Special Bench' of the | | | iF | | | 1 | |.
8ibunal in the case of: ITO vs. Mrs. Sushila M. Jhaveri (2007) 107 poear (Mum) (SB), wherein it was held as under-
or | i . - .
"However where more than one unit are purchased which are Purpose of residence by having common passage, common kitchen, etc., the, it would be a case of investment in one residential house and consequently, the assessee would be entitled to exemption", | 7, _ The department being agerieved with the order of the CIT(A), had therein Carried the matter in appeal before us. That the Ld. D.R at the very outset of the hearing of the appeal, assailed the admission of the 'additional evidence' by the CIT(A) under Rule 46A, without affording ahy opportunity to the A.O. It was averred by the learned D.R, that as per Rule 46A(3), it is mandatory on the Part of the CIT(A) to allow a rdadonabl Opportunity to the A.O, before admitting any 'additional 9 course of the appellate proceedings, before him, were only supportive of the facts, which were already borne from the assessment records, and for the said reason had dispensed with the forwarding of the said documents to the A.O, for his comments. Alternatively, it was submitted by the Ld A.R, that though it was a fact that the. CIT(A) while concluding that the four flats of the assessee at Raheja Empress (supra) were interconnected by a capsule lift, and used as a composite residential house by the assessee and her family members, had though not taken into account the fresh documents which - were furnished by the assessee by way of 'additional evidence' before him, for arriving at the aforesaid conclusion, but as averred hereinabove, had gone by the documents which were furnished by the assessee during the course of the assessment proceedings with the A.O, however, even if the version of the revenue was accepted, then keeping in view the very fact that the documents which were furnished by the assessee before the CIT(A) were in the nature of clinching evidence, which did not lead to revelation of any new fact, but only fortified a fact which was borne from the assessment record, and as such did not leave room for any doubt or controversy, and thus put the matter to rest, therefore, no useful purpose would had been served on the performing the ritual of forwarding the evidence/material to the A.O and obtain his report. The Ld. A.R in support of his aforesaid contention had relied on the order of ITAT, Hyderabad Bench 'A', i the case of : DCIT, Circle 16(1), Hyderabad Vs. NE Technologies India (P) Ltd. (2014) 47 taxmann.com 405 (Hyderabad - Trib).
8. 'We have heard the Ld. Representative of both the parties, perused the orders of the lower authorities, as well as the records before us. We are of the considered view, that though it is a matter of fact that certain documents were furnished by the assessee by way of 10 'additional evidence' during the course of the appellate proceedings, before the CITA), however, we find that the said first appellate eithoriy had categorically observed, that the said documents only did
-g@ to further fortify the fact that the four flats purchased by the assessee at Raheja Empress (supra), were interconnected by a capsule lift, and were used by the assessee alongwith her family members as one Single residential house, a fact which was borne from the assessment record. We are of the considered view, that the fact which the assessee had tried to fortify by placing on record fresh documents before the CIT(A), was already borne from the documents which were furnished by the assessee during the course of the assessment proceedings. We find that though a reference of the fresh documents w. ich were furnished by the assessee during the course of the appellate Proceedings, do find a mention in the body of the appellate order, but then a careful perusal of the order of the CIT(A) reveals, that the said first appellate authority had not: taken into account the aforesaid documents for concluding that the four residential flats purchased by the assessee at Raheja Empress, Prabha Devi, Mumbai, opportunity to the A.O, to examine or rebut such additional evidence, route arise only when the CIT(A) had decided to take into account any such documentary evidence, which is produced before him by the 11 assessee under sub Rule(1) of Rule 46A. Thus in the backdrop of the facts i in the case of the present assessee, we are of the considered view that now when the CIT(A) in the 'present case, though had referred about the documents which were furnished by the assessee before him by way of 'additional evidence' U /Rule 46A, and also had elucidated the | nature of the said documents, in the body of his appellate order, but it is a matter of fact that the CIT(A) had not taken into account the sante for concluding that the four flats purchased by the assessee at Raheja Empress (supra) were interconnected by a capsule lift, and used as a composite resident by the assessee alongwith her family. We are. thus in the backdrop of our aforesaid observations, of the considered view, that now when the additional evidence had not been taken into account by the CIT(A), who as observed by us hereinabove, had clearly gone by the facts borne from the assessment records, therefore the order passed by the CIT(A) could not be held to be erroneous. We further find force in the alternative contention of the Ld. A. R, that even if the version of the revenue that the CIT(A) had erred in admitting the 'additional evidence' , is accepted, still in the backdrop of the fact that the said fresh documents were in the nature of clinching evidence, which even if acted upon by the CIT(A), would not lead to revelation of any new fact, but would only fortify the claim of the assessee that the four flats at Raheja Empress (supra) were interconnected by a capsule lift, and were used as a single residential unit, which was a fact that could fairly be gathered from the documentary evidence which were furnished by the assessee with the A.O,. and as such was not a new fact, therefore no useful purpose would had been served on performing the ritual of forwarding the evidence /material to the A.O, for his comments. We find strong reasoning in the aforesaid contention of the Ld. A. R, that now when the very existence of the aforesaid fact borne from the assessment 12 record, would not be effected, and would continue to remain as such, even if the fresh documents in the nature of additional evidence were t acted 'upon by the appellate authority, therefore not forwarding of the said 'additional evidence', which only goes to further fortify a fact existing on record, and not a revelation of a new fact, would have no material bearing on the conclusion arrived at by the CIT(A). We find ourselves to be in agreement with the view adopted by the coordinate bench of the Tribunal, in the case of: NE Technologies India (P) (supra). Thus in light of our aforesaid observations, the 'Ground of appeal no.1' raised by the revenue is dismissed.
n
--_-O
9. | - We now take up 'Ground of appeal No. 2' so raised by the revue before us. We find that the 'Ground of appeal No. 2' so raised by the revenue before us, therein assailing the order of the CIT(A) on the ground that the latter had erred in allowing the deduction u/s 54 on the Sale of 2 flats bearing No. 1501 and 1502 at Kowli Rameshwaram Apt, whereas deduction u/s 54 is available only to the | extent of sale of one residential flat, is absolutely misconceived, as the said issue so assailed by the revenue before us, neither arises from the ; | impugned order, i.e the order of the CIT(A), nor any < disallowance/ addition on the said ground was made by the A.O while assailed by the revenue by way of 'Ground of appeal No. 3', does not dl .
be allowed to build up a new case before us, therefore refrain from adjudicating the 'Ground of appeal No. 2' so raised by the revenue before us. The 'Ground of appeal No. 2' is thus dismissed, for the reason that the same does not arise from the impugned order before us.
1310. We now advert to 'Ground of appeal No. 3' raised by the revenue before us. That it was submitted by the Ld. D.R, that the CIT(A) in the absence of any 'material' being placed on record by the assessee, which could go to establish that the Flat No(s). 901, 902, 1001 and 1002, in Raheja Empress, Veer Savarkar Marg, Prabha Devi, Mumbai, were being used as a composite residential house, had therein erred in allowing the deduction under Sec. 54, in terms of the claim raised by the jassessee in her return of income. That on the other hand the Ld. A.R|submitted that during the course of the assessment proceedings, substantial material was placed on record by the assessee, which assessee at Raheja Empress (Supra), were interconnected by a capsule lift, |and used by the assessee alongwith her family members, as a composite residential house. That during the course of the hearing of the appeal, the Ld. A.R referring to the observations of the A.O, that though the assessee had purchased the four flats in January 2011, whil for the letter issued by M/s Bluestar Evevator (India) Ltd., dated. 15.10.2011, therein revealed that at the time the four flats in Raheja Empress (supra) were purchased by the assessee, the same were not interconnected from inside, therein drew our attention to a letter dated 17.12.2010, which was addressed by the assessee to the aforesaid M/s Bluestar Elevator (India) Ltd (supra), from where it could be fairly gathered that an order for purchase of the aforesaid two home lifts was already placed on the aforesaid company as on 18.12.2010, and an advance of 20% already stood paid to the company. It was thus averred by the Ld. A.R, that in light of the aforesaid facts, the aforesaid adverse inferences so drawn by the the A.O by referring to the date of purchase of the lifts, therein did not hold any ground.
141]. We have heard the Ld. Representative of both the parties, perused the orders of the lower authorities and the material available on record. We are of the considered view that it remains as a matter of fact, that substantial evidence was brought on record by the assessee during the course of the assessment proceedings, from where it could be safely concluded that the four flats purchased by the assessee at Raheja Empress, Prabha Devi, Mumbai, were interconnected by a capsule lift, and were being used by the assessee alongwith her family members, as a composite residential unit. We find that despite the fact that the assessee had categorically stated during the course of the assessment proceedings, that the Flats No(s). 901 and 902 on the 9th floor were being used as bedrooms, while for the Flats No(s). 1001 and 1002 at the top of the flats on the 9th floor, were being used as kitchen and drawing room, and had also placed on record of the A.O the opinion of an engineer, therein certifying that the installation of the lifts would not endanger the structural stability and the safety of the building, as well as had furnished with him a copy of the 'NOC' which was obtained by the assessee from Raheja Empress Apartment Owners Association, Mumbai, the A.O proceeded with in a whimsical manner, and had drawn adverse inferences as regards the claim raised by the assessee. We find, that the A.O did not find favor with the documents which were placed on record by the assessee, to sub tantiate her claim that the aforesaid four flats were inte connected by a capsule lift, and were used as single residential hou €, and had rejected the same on hyper technical grounds. We fu er find, that the A.O instead of clarifying his doubts as regards uthenticity of the aforesaid claim of the assessee, instead of ing out any independent verifications, which to our considered view he could have fairly done by getting a spot inspection through his inspector, rather Sat tight and chose to refrain from carrying out any 15 such verifications on his part, nor placed on record any material, which could either go to prove that the respective documents furnished by the assessee were bogus, or could go to dislodge the aforesaid claim of the assessee, by proving the same to be an inauthentic claim. We are of the considered view that the adverse inferences drawn by the A.O, as regards the claim of the assessee, that the aforesaid four flats were interconnected by way of a capsule lift, is not| based on any material available on record, but is merely supported by fanciful observations of the A.O. We are unable to persuade ourselves to subscribe to the view of the A.O, that as the assessee had failed to place on record the approval from the BMC as regards installation of the capsule lift to interconnect the aforesaid four flats ?
the) same would go to disprove the claim of the assessee, that the aforesaid four flats were interconnected by a capsule lift. We are of the considered view, that in light of the facts available on record, it can safely be concluded that the four flats, i.e Flats No(s). 901 and 902-on the |9% floor and the Flats No(s). 1001 and 1002 on the 10t floor, at eja Empress, Prabha Devi, Mumbai, were interconnected by a capsule lift, and were used by the assessee and her family members, as a single residential property. We are of the considered view that though the assessee to her level best had proved her aforesaid claim before the A.O, however the latter had desperately failed to disprove the| same. We thus in light of our aforesaid observations, find ourselves to be in agreement with the claim of the assessee, that the four flats, i.e Flats No(s). 901 and 902 on the 9t floor and the Flats No(s). 1001 and 1002 on the 10% floor, at Raheja Empress, Prabha , Mumbai, were interconnected by a capsule lift, and were used by the assessee and her family members, as a single residential unit. We are jof the considered view that in the backdrop of the facts of the present case, now when the assessee, as observed by us hereinabove, 16 had invested towards purchase of four flats, which were interconnected by a capsule lift and used by the assessee and her family members as a single residential house, it can safely be cancluded that the assessee had invested towards purchase of one residential house, and as such would duly stand entitled towards claim of deduction under Sec. 54, as regards the aggregate of the investment so made by her towards purchase of the said four flats, as claimed in the return of income. That our aforesaid view is fortified by the order of the 'Special Bench' of the Tribunal in the case of: Sushila Jhaveri (supra), wherein the Tribunal had held that where an assessee had purchased more than one residential units, which are adjacent to each other, and had converted the same into one residential house, then the same would be a case of investment in one tov reg residential house', and the assessee would duly stand entitled vards claim of deduction under Sec. 54 and Sec. 54F of the 'Act', as sards the aggregate of such investments. We find no reason to take different view as regards the entitlement of the assessee towards claim of deduction u/s 54, as had been so adopted by the CIT(A).
12} The 'Ground of appeal 3' raised by the revenue is dismissed. 13, That the Ld. D.R had not raised any contention in context of 'Gr
14. ound of 'appeal No. 4' and 'Ground of appeal No. 5', therefore the Samne are dismissed, as not pressed.
The appeal of the revenue is dismissed.
Order Pronounced in the open courton 18 /01/2017.
17Sd/- a Sd/-
(B.R BASKARAN) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 18th, January, 2017 Copy to :
1) The Appellant
2) The Respondent
3) The CIT(A) concerned
4) The CIT concerned
5) The D.R, "I" Bench, Mumbai
6) Guard file By Order Dy./Asstt. Registrar I.T.A.T, Mumbai