ITO 19(2)(4), MUMBAI v. NARINDERKAUR BHATIA, MUMBAI

ITA 1791/MUM/2011 | 2007-2008
Pronouncement Date: 12-11-2014 | Result: Dismissed

Appeal Details

RSA Number 179119914 RSA 2011
Assessee PAN AAJPB9900F
Bench Mumbai
Appeal Number ITA 1791/MUM/2011
Duration Of Justice 3 year(s) 8 month(s) 8 day(s)
Appellant ITO 19(2)(4), MUMBAI
Respondent NARINDERKAUR BHATIA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 12-11-2014
Date Of Final Hearing 16-10-2014
Next Hearing Date 16-10-2014
Assessment Year 2007-2008
Appeal Filed On 04-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI B.R. BASKARAN ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER ITA NO. 1791/MUM/2011 ASSESSMENT YEAR: 2007-08 ITO 19(2)(4) R. NO. 310 3 RD FLOOR PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI- 400 012 VS. NARINDER KAUR BHATIA 501 ELEGANT ORCHID TAGORE ROAD SANTACRUZ(W) MUMBAI- 400 054 PAN: AAJPB 9900F (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI SUBHASH S. SHETTY REVENUE BY : SHRI R. N. DSOUZA DATE OF HEARING : 16.10.2014 DATE OF PRONOUNCEMENT : 12 . 1 1 .2014 O R D E R PER AMIT SHUKLA JM: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGA INST THE ORDER DATED 16.12.2010 PASSED BY THE LD.CIT(A) -30 FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE A.Y. 2007-08 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAD ERRED IN ALLOWING THE EX EMPTION CLAIMED OF RS.1 14 63 654/- U/S 54 OF THE I.T. ACT 1961 AGAINST THE PROPERTY SOLD FOR CONSIDERATION OF RS.1 25 00 000/- ON 07.02.2007 IGNORING THE FACT TH AT:- (A) THE ASSESSEE HAS PURCHASED PROPERTY JOINTLY WITH HE R SON AND DAUGHTER IN LAW ON 28.12.2005 WHICH IS BEYOND O NE YEAR BEFORE THE DATE OF SALE. ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 2 (B) THE ASSESSEE HAD MADE TWO PAYMENTS OF RS.5 LACS EAC H ON 13.12.2005 AND 16.05.2006 WITH RESPECT TO THE PURCH ASE OF NEW PROPERTY. (C) THE ASSESSEE FURTHER PURCHASE THE UNDIVIDED SHARES OF HER SON IN THE FLAT FOR CONSIDERATION OF RS. 1 10 00 00 0/- AS PER AGREEMENT DATED 20.03.2007 WHICH WAS ALSO CLAIMED A S EXEMPT AS WITH THE TIME PRESCRIBED U/S 54 OF THE I. T. ACT WITHIN 2 YEARS FROM THE DATE OF SALE OF ORIGINAL FL AT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL WHO HAD PURCHASED A RESIDENTIAL FLAT IN SAGAR APART MENT PALI HILL ROAD KHAR MUMBAI ON 08.01.1981 FOR PURCHASE CONSIDERATIO N OF RS.1 48 000/- THE TOTAL COST OF THE FLAT INCLUDING STAMP DUTY WAS RS.1 65 000/-. THE ASSESSEE SOLD THE SAID FLAT ON 07.02.2007 FOR SALE CONSIDERATION OF RS.1 25 00 000/- AND AFTER APPLYING THE INDEX COST LONG TERM CAPITAL GAIN WAS COMPUTED AS UNDER:- (A) COST OF FLAT RS.1 65 000/- (B) INDEX COST RS.8 56 350/- 1 65 000 X 519 100 (C) SALE CONSIDERATION OF FLAT RS.1 25 00 000/- LESS: TRANSFER FEE PAID TO SOCIETY RS.1 80 0 00/- NET SALE CONSIDERATION RS.1 23 20 000/- (D) LONG TERM CAPITAL GAIN ON SALE OF FLAT RS.1 14 63 650/- THE ASSESSEE HAD PURCHASED A NEW RESIDENTIAL FLAT NO. 501 ELEGANT ORCHID AT SANTACRUZ (WEST) MUMBAI JOINTLY WITH HE R SON GURDEEP SINGH BHATIA AND DAUGHTER-IN-LAW SMT. GURBIR KAUR B HATIA VIDE AGREEMENT FOR SALE DATED 28.12.2005. THE ASSESSEE H AD MADE FOLLOWING PAYMENTS TO THE BUILDER IN PURSUANCE OF THE SAID AG REEMENT:- ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 3 DATE OF PAYMENT MODE OF PAYMENT AMOUNT PAID 13.10.2005 BY CHEQUE 5 00 000 16.05.2006 BY CHEQUE 5 00 000 3. THEREAFTER THE ASSESSEE ENTERED INTO AGREEMENT F OR SALE ON 20.03.2007 WITH HER SON GURDEEP SINGH BHATIA FOR P URCHASING HIS UNDIVIDED SHARE FOR RS.1 10 00 000/- IN THE SAID FL AT AS PER THE FOLLOWING THE PAYMENT SL NO. CHEQUE NO. DATE NAME OF BANK AMOUNT 1 546409 18.06.2005 UNIO N BANK OF INDIA 1 00 000 2 546410 19.07.2005 UNION BANK OF INDIA 1 70 000 3 546412 16.12.2005 UNION BANK OF INDIA 1 00 000 4 700784 08.03.2007 UNION BANK OF INDIA 50 00 000 5 700786 20.03.2007 UNION BANK OF INDIA 50 00 000 6 - 30.04.2007 CASH 6 30 000 7 - - TOTAL 1 10 00 000 THUS THE TOTAL COST OF FLAT TO THE ASSESSEE WAS RS. 1 20 00 000/- WHICH WAS REFLECTED IN HER BALANCE SHEET AS ON 31 ST MARCH 2008 IN THE FOLLOWING MANNER. (RS.) AMOUNT PAID TO VENDOR OF FLAT : 10 00 000/- AMOUNT PAID TO GURDEEP SINGH BHATIA FOR ACQUIRING HIS UNDIVIDED SHARE IN SAID FLAT: 1 10 00 000/- 1 20 00 000/- THIS AMOUNT OF RS.1 20 00 000/- WAS CLAIMED AS DEDU CTION U/S 54 ON THE GROUND THAT PURCHASE OF NEW FLAT FELL WITHIN TIME L IMIT PRESCRIBED U/S 54 IN THE FOLLOWING MANNER. ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 4 (A) RS.5 00 000/- PAID TO BUILDER DURING CONSTRUCTION P ERIOD ON 16.05.2006 IS WITHIN ONE YEAR BEFORE THE DATE OF SA LE OF ORIGINAL FLAT I.E. FROM 07.02.2007 FALLS WITHIN TIM E PERIOD PRESCRIBED U/S 54 OF I.T. ACT 1961. (B) THAT PAYMENTS MADE TO SHRI GURDEEP SINGH BHATIA VID E AGREEMENT FOR SALE DATED 20.03.2007 ARE ALSO WITHIN TIME PRESCRIBED U/S 54 OF I.T. ACT. 1961 I.E. WITHIN 2 Y EARS FROM DATE OF SALE OF ORIGINAL FLAT. (C) HENCE PAYMENTS OF RS.1 15 00 000/- MADE FRO PURCHAS E OF NEW RESIDENTIAL FLAT FALLS WITHIN PRESCRIBED TIME U /S 54 OF I.T. ACT 1961. 4. HOWEVER THE ASSESSING OFFICER DENIED THE CLAIM OF EXEMPTION U/S 54 ON THE GROUND THAT THE ASSESSEE HAD ALREADY ACQ UIRED THE FLAT NO. 501 AT ELEGANT ORCHID SANTACRUZ JOINTLY WITH HER SON AND HER DAUGHTER- IN-LAW FROM EXCESS REALITY PVT. LTD. SINCE THIS PUR CHASE TRANSACTION HAS TAKEN PLACE ON 28.12.2005 WHICH IS BEYOND THE PERI OD OF ONE YEAR FROM THE DATE OF SALE THEREFORE THE SAME IS NOT ELIGIB LE FOR EXEMPTION U/S 54. FURTHER THE ACQUIRING THE SHARE OF HER SON VIDE AGR EEMENT DATED 20.03.2007 IS NOT A NEW PROPERTY PURCHASED BY THE ASSESSEE BUT ONLY A REPAYMENT IN RESPECT OF THE PROPERTY WHICH HAS ALRE ADY BEEN ACQUIRED ON 28.12.2005. FURTHER THE SUBSEQUENT PURCHASE AGRE EMENT DATED 20.03.2007 FOR PURCHASING THE SHARE OF HER SON NO STAMP DUTY WAS PAID. THUS ON THESE COURTS THE ASSESSEE IS NOT ELIG IBLE FOR EXEMPTION U/S 54. ACCORDINGLY HE ADDED THE LONG TERM CAPITAL GAIN OF RS.1 14 63 650/-. 5. BEFORE THE LD.CIT(A) THE ASSESSEE MADE DETAILED SUBMISSIONS WHICH HAVE BEEN DEALT BY THE LD.CIT(A) FROM PAGES 6 TO 8 OF THE APPELLATE ORDER. THE LD.CIT(A) AFTER EXAMINING THE RECORDS AND THE SUBMISSIONS OF THE ASSESSEE HELD THAT SO FAR AS TH E PAYMENT OF RS.5 00 000/- MADE ON 16.05.2006 IS CONCERNED THE S AME FALLS WITHIN ONE YEAR BEFORE THE DATE OF SALE OF ORIGINAL FLAT H ENCE QUALIFIES FOR ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 5 EXEMPTION U/S 54. THEREFORE TO THE EXTENT OF RS.5 00 000/- ASSESSEE IS ENTITLED FOR EXEMPTION AND NOT FOR ENTIRE RS.10 00 000 AS CLAIMED BY THE ASSESSEE. FURTHER AFTER ANALYZING THE PURCHASE AGRE EMENT OF THE FLAT AND OTHER RECORDS LD.CIT(A) FOUND THAT SHRI GURDEEP SI NGH SON OF THE ASSESSEE HAD MADE THE PAYMENT OF RS.1 22 38 750/- TOWARDS THE PURCHASE CONSIDERATION FOR THE FLAT WHICH WAS REFL ECTED IN HIS BOOKS OF ACCOUNT AND IN HIS BALANCE SHEET BEFORE THE DATE OF SALE OF UNDIVIDED SHARE IN THE FLAT TO HIS MOTHER. THE PURCHASE AGREE MENT DID NOT SPECIFY THE SHARES OF CO-OWNERS THAT IS THEY ARE 1/3 RD EACH. WHEN THE ASSESSEE HAD MADE THE PAYMENT OF RS.1 10 00 000/- TO HER SON FOR PURCHASING OF UNDIVIDED SHARE VIDE AGREEMENT DATED 07.02.2007 I T TANTAMOUNT PURCHASE ONLY. THIS CONCLUSION WAS BASED ON VARIOUS DECISIONS OF THE HIGH COURTS IN THE FOLLOWING MANNER: FINALLY REGARDING CONTENTION OF AO THAT PURCHASE O F FURTHER UNDIVIDED SHARE IN FLAT AT ELEGANT ORCHID FROM SON BY APPELLANT IS NOT NEW PROPERTY WITHIN THE MEANING OF SECTION 54 THE LEARNED AR ON BEHALF OF APPELLANT RELIED ON JUDGMENT OF GUJ ARAT HIGH COURT IN CASE OF CHANDANBEN MAGANLAL. IN THIS CASE IT IS HELD BY THE HONBLE HIGH COURT THAT APPELLANT PURCHASED 15% SHARE IN A HOUSE PROPERTY OWNED BY HER HUSBAND AND SON WOULD Q UALIFY FOR EXEMPTION U/S 54 OF THE I.T. ACT. IN CASE OF VIDYA PRAKASH TALWAR HE HAS BEEN RESIDING ON GROUND FLOOR OF A N EW HOUSE AND SHE FURTHER CONSTRUCTED 1ST FLOOR AND BARSATI IN NE W HOUSE AND STARTED RESIDING ON 1 ST FLOOR DELHI HIGH COURT HE LD THAT APPELLANT WAS ENTITLED TO EXEMPTION OF CAPITAL GAINS U/S 54 O F THE ACT. THIS JUDGMENT OF DELHI HIGH COURT WAS APPLIED IN CASE OF P.V.NARASIMHAN BY MADRAS HIGH COURT. IN CASE OF 8.8 .SARKAR- ASSESSEER SPENT AMOUNT BOTH ON PURCHASE OF NEW HOUS E PROPERTY AND ON FURTHER CONSTRUCTION ON IT CALCUTTA HIGH CO URT HELD THAT EXEMPTION IS AVAILABLE IN RESPECT OF BOTH THE AMOUN TS THAT IS TO SAY EITHER PURCHASING A HOUSE PROPERTY WITHIN ONE Y EAR BEFORE OR ACQUIRING HOUSE WITHIN 2 YEARS WHERE BOTH THE CONDI TIONS ARE FULFILLED WITHIN THE TIME STIPULATED THE ASSESSEE IS ENTITLED TO RELIEF U/S 54 OF THE ACT I HAVE CONSIDERED THE ISSU ES CAREFULLY AND RESPECTFULLY FOLLOWING THE JUDGMENTS OF HON. HIGH C OURTS I HOLD THAT PURCHASE OF UNDIVIDED SHARE BY APPELLANT ON 20 -03-2007 ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 6 WITHIN STIPULATED PROVIDED U/S 54 FROM HER SON IN T HE FLAT OF WHICH SHE WAS ALREADY PART OWNER AMOUNTS TO NEW PROPERTY AND THEREFORE ASSESSEE IS ALSO ENTITLED TO EXEMPTION U/ S 54 OF THE ACT IN RESPECT OF PURCHASE CONSIDERATION RS.1 10 00 000 /-. HENCE THE A.O. IS DIRECTED TO ALLOW EXEMPTION U/S 54 OF THE A CT IN RESPECT OF BOTH THE AMOUNTS I.E. RS.5 00 000/- AND RS.1 10 00 000/-. 6. BEFORE US LD. DR STRONGLY RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT PURCHASE OF THE SHARE OF HER SON IN WHICH SHE WAS ALREADY CO-SHARER AT THE TIME OF PURCHASE CANNOT B E HELD TO BE A FRESH PURCHASE OF HOUSE SO AS TO QUALIFY FOR THE BENEFIT OF SECTION 54. FURTHER ORIGINAL PURCHASE AGREEMENT WAS DATED 13.12.2005 I N PURSUANCE OF WHICH ASSESSEE HAD MADE PART PAYMENT THEREFORE IT CANNOT BE HELD THAT THE ASSESSEE HAD PURCHASED HOUSE WITHIN THE PE RIOD OF ONE YEAR BEFORE THE DATE OF SALE. THEREFORE THE EXEMPTION U/ S 54 HAS RIGHTLY BEEN DENIED BY THE AO. 7. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSESS EE STRONGLY RELIED UPON THE ORDER OF THE LD.CIT(A) AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CHANDAN BEN MAGAN LAL REPORTED IN (2000) 245 ITR 182. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER. THE ASSESSEE HAD PURCHASED A RESIDENTIAL FLAT ON 08.01.1981 WHICH WAS SOLD ON 0 7.02.2007 FOR A SALE CONSIDERATION OF RS.1 25 00 000/-. THE LONG TERM CA PITAL GAIN ON SUCH SALE AMOUNTED TO RS.1 14 63 650/-. BEFORE THE SAID SALE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO PURCHASE A RESIDENTIAL FLAT BEING FLAT NO. 501 ELEGANT ORCHID AT SANTACRUZ (WEST) MUMBAI ALON G WITH HER SON GURDEEP SINGH BHATIA AND DAUGHTER-IN-LAW VIDE AGRE EMENT DATED 28.12.2005 AND PAYMENT OF RS.5 00 000/- WAS MADE. A NOTHER PAYMENT OF RS. 5 LAKHS WAS MADE ON 16.05.2006. THIS PAYMENT OF RS. 10 LAKHS ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 7 WAS CLAIMED AS EXEMPTION U/S 54 WHICH HAS BEEN RES TRICTED TO RS.5 LAKHS BY THE LD. CIT(A). THEREAFTER THE ASSESSEE HA D ENTERED INTO AN AGREEMENT WITH HER SON GURDEEP SINGH BHATIA ON 20.0 3.2007 WHO WAS THE CO-OWNER FOR PURCHASING HIS UNDIVIDED SHARE IN THE NEW FLAT FOR SUM OF RS. 1 10 00 000/-. THE PAYMENT SCHEDULE HAS ALRE ADY BEEN RECORDED ABOVE. THE DEPARTMENTS CASE IS THAT FIRSTLY THE PURCHASE AGREEMENT FOR NEW FLAT ON WAS 28.12.2005 WHICH IS BEYOND THE PERIOD OF ONE YEAR BEFORE THE DATE OF SALE AND SECONDLY THE PURCHASIN G OF UNDIVIDED SHARE IN THE FLAT FROM THE SON DOES NOT AMOUNT TO PURCHAS E OF A FLAT; AND THEREFORE ON THESE TWO COUNTS EXEMPTION U/S 54 IS NOT AVAILABLE TO THE ASSESSEE. ON THE FIRST ISSUE LD.CIT(A) HAS HELD THA T THE PAYMENT OF PURCHASE CONSIDERATION TO THE EXTENT OF RS.5 LAKHS WHICH WAS MADE ON 16.05.2006 FALLS WITHIN THE PERIOD OF ONE YEAR BEF ORE THE DATE OF SALE OF ORIGINAL FLAT AND HENCE THIS AMOUNT IS ELIGIBLE FOR EXEMPTION U/S 54. THE OTHER PART OF THE RS. 5 LAKHS PAID ON 13.10.2005 WA S DENIED BY HIM AS IT WAS BEYOND PERIOD OF ONE YEAR. TO THIS EXTENT TH E FINDING OF THE LD.CIT(A) IS FACTUALLY AND LEGALLY CORRECT THEREFOR E NO INFERENCE IS CALLED FOR AND SAME IS AFFIRMED. 9. NOW COMING TO THE OTHER PART OF THE ISSUE WHETH ER PURCHASING OF SHARE OF THE SON WHO IS CO-SHARER IN THE FLAT AMOUN TS TO PURCHASE OR NOT. WE FIND THAT THIS ISSUE IN PRINCIPLE IS SETTLED B Y THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. T.N. ARAVINDA REDDY REPORTED IN (1979) 120 ITR PAGE 46 (SC) WHEREIN IT WAS HELD THA T THE WORD PURCHASE IN SECTION 54(1) HAD TO BE GIVEN A COMMO N MEANING THAT IS BUYING FOR A PRICE OR EQUIVALENT OF A PRICE ON BY P AYMENT IN KIND OR ADJUSTMENT TOWARDS DEBT OR FOR OTHER MONITORY CONSI DERATION. IN THE CASE BEFORE THE HONBLE SUPREME COURT FOUR BROTHER S WERE THE ITA NO. 1791/MUM/2011 NARINDER KAUR BHATIA ASSESSMENT YEAR: 2007-08 8 MEMBERS OF HUF WHO HAD PARTITIONED A JOINT FAMILY PROPERTY LEAVING AN UNDIVIDED COMMON HOUSE. THE THREE BROTHERS EXECUTED A RELEASE DEED IN FAVOUR OF THE ELDER BROTHER FOR A CONSIDERATION WHICH WAS TREATED AS PURCHASE OF THE HOUSE BY THE ELDER BROTHER. THE ELD ER BROTHER HAD SOLD ONE OF HIS HOUSE AND OUT OF THE SALE PROCEEDS PAID THE CONSIDERATION TO HIS BROTHERS TO ACQUIRE THEIR SHARES IN THE HOUSE. IN THIS CONTEXT IT WAS HELD THAT THE ELDER BROTHER WOULD BE ENTITLED T O RELIEF U/S 54(1) SIMILARLY THE HONBLE GUJARAT HIGH COURT IN CIT VS. CHANDAN BEN MAGANLAL HAS HELD THAT SALE PROCEEDS INVESTED FOR P URCHASE OF INTEREST IN THE RESIDENTIAL HOUSE OWNED BY ASSESSEES HUSBAND A ND SON AMOUNTS TO PURCHASE HENCE ENTITLED FOR EXEMPTION U/S 54. THER E ARE OTHER HIGH COURT DECISIONS ON THIS SCORE WHICH HAVE BEEN REFE RRED AND RELIED UPON BY THE LD.CIT(A). THUS FOLLOWING THE SAID PROPOSIT ION LAID DOWN BY THE HONBLE COURTS WE HOLD THAT THE REASONING AND THE CONCLUSION DRAWN BY THE LD.CIT(A) IS LEGALLY CORRECT AND THE SAME IS UP HELD. IN THE RESULT THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 0 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF NOVEMBER 2014. SD/- SD/- (B.R.BASKARAN) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 12.11.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR G BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.