ACIT, New Delhi v. Sudha Gurtoo, New Delhi

ITA 939/DEL/2010 | 2005-2006
Pronouncement Date: 06-05-2010 | Result: Dismissed

Appeal Details

RSA Number 93920114 RSA 2010
Assessee PAN REAOF2398S
Bench Delhi
Appeal Number ITA 939/DEL/2010
Duration Of Justice 2 month(s) 1 day(s)
Appellant ACIT, New Delhi
Respondent Sudha Gurtoo, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 06-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 06-05-2010
Assessment Year 2005-2006
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI A.D. JAIN AND SHRI A.K. GARODIA ITA NO. 939(DEL)2010 ASSESSMENT YEAR: 2005-06 ASSTT.COMMISSIONER OF INCOME TAX SUDHA GUR TOO CIRCLE 22(1) NEW DELHI. V. C/ O SALUJA & ASSOCIATES 69 DESH BANDHU GUPTA ROAD PAHAR GANJ N. DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KISHORE B. SR. DR RESPONDENT BY: SHRI RAT AN KUMAR GURTOO CA ORDER PER A.D. JAIN J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2005-06 TAKING THE FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING EX EMPTION U/S 54 F OF THE I.T. ACT IN SPITE OF THE FACT THAT THE ASSESSEE HAD PURCHASED TWO DISTINCT RESIDENTIAL PROPERTIES O UT OF THE LONG TERM CAPITAL GAIN ARISING ON ACCOUNT OF SALE O F COMMERCIAL PROPERTY. 2. AS PER THE ASSESSMENT ORDER THE ASSESSEE DURIN G THE YEAR SOLD TWO COMMERCIAL PROPERTIES/CAPITAL ASSETS LOCATED AT 502 OCEAN PLAZA SECTOR I TA 939(DEL)2010 2 18 NOIDA FOR RS. 45 LAKHS AND AT 104 OCEAN PLAZA SECTOR 18 NOIDA FOR RS. 33.16 LAKHS. THE ASSESSEE CLAIMED DEDUCTION U /S 54 F OF THE I.T. ACT FOR PURCHASING TWO RESIDENTIAL UNITS I.E. IC -1 AND IC-2 IN GROUP HOUSING COMPLEX PURVA PARKRIDGE BANGALORE. 3. THE AO OBSERVED THAT THE PROPERTY AT IC-I WAS PU RCHASED BY THE ASSESSEE ON 14.10.2004; THAT IT WAS AN INDEPENDENT UNIT CONSISTING OF ONE BED ROOM DINING ROOM HALL KITCHEN TOILET AND SE RVANT ROOM; THAT THE PROPERTY AT IC-2 WAS SEPARATELY PURCHASED BY THE AS SESSEE ON 15.10.2004; THAT THIS PROPERTY WAS ALSO AN INDEPENDENT UNIT COM PRISING TWO BED ROOMS HALL KITCHEN AND TWO TOILETS; THAT SEPARATE AGREEMENTS WERE EXECUTED FOR BOTH THESE PROPERTIES; THAT AS PER THE PROVISIONS OF SECTION 54 F OF THE ACT DEDUCTION THEREUNDER IS TO BE ALLO WED ONLY FOR INVESTMENT IN ONE HOUSING PROPERTY AND NOT FOR A NU MBER OF PROPERTIES; THAT ACCORDING TO THE PROVISO TO SECTION 54F OF THE ACT IF THE ASSESSEE PURCHASES/CONSTRUCTS ANY RESIDENTIAL HOUSE OTHER THAN A NEW ASSET WITHIN A PERIOD OF ONE/3 YEARS AFTER THE DATE OF TR ANSFER OF THE ORIGINAL ASSET AND THE INCOME FROM SUCH RESIDENTIAL HOUSE OT HER THAN THE ONE OWNED ON THE DATE OF THE TRANSFER OF THE ORIGINAL A SSET IS CHARGEABLE AS INCOME FROM HOUSE PROPERTY NO DEDUCTION U/S 54 F I S ALLOWABLE; THAT IN THE ASSESSEES CASE INITIALLY THE DEDUCTION WAS A VAILABLE ONLY FOR I TA 939(DEL)2010 3 INVESTMENT MADE FOR PURCHASE/CONSTRUCTION OF PROPER TY NO. IC-1 FOR THE PURCHASE ON 14.10.2004; THAT HOWEVER SINCE THE ASS ESSEE HAD WITHIN THE PERIOD OF ONE YEAR I.E. ON 15.10.2004 (WRONGLY ME NTIONED IN THE ASSESSMENT ORDER AS 15.12.2004) PURCHASED ANOTHE R FLAT IN THE HOUSING SOCIETY AND THE INCOME FROM THE SAID RESIDENTIAL HO USE WAS CHARGEABLE AS INCOME FROM HOUSE PROPERTY NO DEDUCTION UNDER THE SAID SECTION WAS AVAILABLE. 4. IN RESPONSE THE ASSESSEE SUBMITTED THAT SHE HAD ONLY ONE DOUBLE STOREY HOUSE IN BANGALORE; THAT THE GROUND FLOOR OF THE HOUSE CONSISTED OF ONE BED ROOM DINING ROOM HALL KITCHEN TOILET S ERVANT ROOM AND AN INTERNAL STAIRCASE FOR ENTERING TO THE FIRST FLOOR OF THE HOUSE; THAT THE FIRST FLOOR OF THE CASE CONSISTED OF TWO BED ROOMS STUDY ROOM LOUNGE AND TWO BATH ROOMS; THAT EVEN IF THE TWO FLOORS WERE CONSID ERED TO BE SEPARATE UNITS AS PER ITO V. MS. SUSHILA M. JHAVERI 14 SOT 394(MUM) IF MORE THAN ONE ADJACENT UNIT ARE PURCHASED AND CONVE RTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDENCE BY HAVING COMMON PASS AGE COMMON KITCHEN ETC. IT WOULD BE A CASE OF INVESTMENT IN ONE RESIDENTIAL HOUSE. 5. THE AO HOWEVER DID NOT AGREE WITH THE CONTENTI ONS RAISED BY THE ASSESSEE. IT WAS HELD THAT IN THE ASSESSEES CASE THERE WERE TWO SEPARATE INDEPENDENT UNITS HAVING SEPARATE ENTRIES KITCHEN S ETC.; THAT IF ANY I TA 939(DEL)2010 4 MODIFICATION WAS TO BE DONE IN THE PROPERTY IT SHO ULD ONLY HAVE BEEN DONE ON OBTAINING NECESSARY APPROVAL AND ON PAYMENT OF STATUTORY DUES; THAT THE ASSESSEE HAD NOT BEEN ABLE TO SHOW ANY SUC H APPROVAL OR PAYMENT; AND THAT ITO V. MS. SUSHILA M. JHAVERI ( SUPRA) WAS NOT APPLICABLE SINCE THE REMARKS THEREIN AS CITED BY THE ASSESSEE WERE JUST A PASSING REFERENCE AND NOT A DECISION AS THE ISSUE IN THE ASSESSEES CASE WAS NEITHER THE SUBJECT MATTER BEFORE THE TRIBUNAL NOR HAD ANY DISCUSSION BEEN MADE THEREON BY THE TRIBUNAL. THUS HOLDING T HAT THE ASSESSEE HAD PURCHASED TWO DISTINCT RESIDENTIAL PROPERTIES THE AO HELD THE ASSESSEE NOT ENTITLED FOR DEDUCTION U/S 54 F OF THE ACT. 6. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE HELD THAT WHAT THE ASSE SSEE HAD WAS IN FACT ONE RESIDENTIAL UNIT AND NOT TWO MAKING THE ASSESS EE ELIGIBLE FOR CLAIMING DEDUCTION U/S 54 F OF THE ACT; AND THAT EV EN IF IT WERE TO BE HELD OTHERWISE I.E. THAT THERE WERE TWO DIFFERENT RESI DENTIAL UNITS THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION U/S 54 F OF THE ACT SINCE BOTH THESE UNITS WERE ADJACENT TO EACH OTHER BEING GROUND FLOOR AND FIRST FLOOR OF THE SAME PREMISES. 7. AGGRIEVED THE DEPARTMENT IS IN APPEAL. I TA 939(DEL)2010 5 8. CHALLENGING THE IMPUGNED ORDER THE LD. DR HAS C ONTENDED THAT THE LD. CIT(A) HAS ERRED IN ALLOWING EXEMPTION TO THE A SSESSEE U/S 54 F OF THE ACT; THAT WHILE DOING SO THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD PURCHASED TWO DISTINCT RESIDENTIAL PRO PERTIES OUT OF THE LONG TERM CAPITAL GAINS ARISING ON ACCOUNT OF SALE OF CO MMERCIAL PROPERTIES; THAT THE CASE LAW RELIED ON BY THE LD. CIT(A) IS NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE; AND THAT AS SUCH THE ORDER OF THE LD. CIT(A) BE REVERSED AND THAT PASSED BY THE AO REVIVED. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS STRONGLY RELIED ON THE IMPUGNED ORDER. 10. HAVING HEARD THE PARTIES AND HAVING PERUSED THE MATERIAL ON RECORD IT IS SEEN THAT THE LD. CIT(A) HAS HELD THE ASSESSEE ENTITLED TO DEDUCTION U/S 54 F OF THE ACT BY PASSING A DETAILED REASONED ORDER. 11. THE ASSESSEE HAD SOLD TWO COMMERCIAL PROPERTIES AND HAD INVESTED THE CAPITAL GAIN WITHIN THE STIPULATED PERIOD IN A GROUP HOUSING COMPLEX AT BANGALORE IN THE GROUND FLOOR AND FIRST FLOOR O F THE SAME PROPERTY NUMBERED AS IC-1 AND IC-2. BEFORE THE AO THE ASS ESSE ON QUERY HAD CONTENDED THAT BOTH THE PREMISES IN FACT CONSTITUTE D ONE RESIDENTIAL UNIT INASMUCH AS THE GROUND FLOOR THEREOF COMPRISED ONE BED ROOM DINING ROOM HALL KITCHEN TOILET AND SERVANT ROOM AND TH E FIRST FLOOR CONSISTED I TA 939(DEL)2010 6 OF TWO BED ROOMS HALL KITCHEN AND TWO TOILETS. THERE WAS ONLY ONE STAIRCASE WHICH WAS INTERNAL AND LED TO THE FIRST FLOOR. THERE WAS NO INDEPENDENT ENTRY TO THE FIRST FLOOR. THERE WAS ON LY ONE KITCHEN IN THE ENTIRE HOUSE. IT DID NOT MATTER THAT THE TWO FLOOR S HAD BEEN PURCHASED VIDE SEPARATE AGREEMENTS. IN FACT IC-2 I.E. TH E FIRST FLOOR WAS PURCHASED JUST ONE DAY AFTER THE PURCHASE OF THE GR OUND FLOOR. THE HOUSE THUS WAS A DUPLEX OR TWO STOREYED HOUSE COMPRISING ONE SINGLE RESIDENTIAL UNIT. VIDE LETTER DATED 8.6.07 ADDR ESSED BY THE ASSESSEE TO THE AO THIS STAND WAS MADE CLEAR TO THE AO. IT WA S REITERATED VIDE LETTERS DATED 24.7.2007 24.8.2007 AND 9.7.2007. THESE LETTERS HAVE BEEN OBSERVED BY THE LD. CIT(A) TO BE FORMING A PART OF THE ASSESSMENT RECORD. AS PER THE GROUNDS OF APPEAL RAISED BEFORE THE LD. CIT(A) THE ASSESSEE HAD DURING THE ASSESSMENT PROCEEDINGS VERBALLY RE QUESTED THE AO TO GET THE HOUSE PHYSICALLY INSPECTED BY HIS COUNTER PART IN BANGALORE. THIS THE AO DID NOT DO. IT CANNOT BE GAINSAID THAT THE AO I S AMPLY EMPOWERED TO GET SUCH AN INSPECTION DONE. 12. APROPOS THE AOS OBSERVATION THAT NO APPROVAL W AS SHOWN TO HAVE BEEN OBTAINED BY THE ASSESSEE NOR ANY PAYMENT OF S TATUTORY DUES HAD BEEN SHOWN TO HAVE BEEN MADE BY THE ASSESSEE CONCE RNING THE MODIFICATION TO THE HOUSE IT IS AVAILABLE FROM THE STATEMENT OF FACTS FILED I TA 939(DEL)2010 7 BEFORE THE LD. CIT(A) THAT THERE WAS NO QUESTION O F THE ASSESSEE OBTAINING ANY APPROVAL OR MAKING ANY PAYMENT SINCE THE MODIFICATION WAS DONE BY THE DEVELOPER HIMSELF AS PER THE PLANS THE APPROVAL WHEREOF WAS OBTAINED DIRECTLY BY THE DEVELOPER. OT HERWISE ALSO THE ASSESSMENT ORDER DOES NOT EVINCE ANY QUERY IN THIS REGARD HAVING EVER BEEN RAISED BY THE AO TO THE ASSESSEE. 13. WHILE BEFORE THE LD. CIT(A) THE ASSESSEE WAS A SKED BY THE LD. CIT(A) REGARDING ANY CONFIRMATION FROM THE BUILDER OR ANY OTHER DOCUMENT SUGGESTING THAT THE HOUSE WAS INDEED A SI NGLE UNIT. IN RESPONSE THE ASSESSEE FILED A CONFIRMATION FROM TH E DEVELOPER. THIS CONFIRMATION AS REPRODUCED IN THE IMPUGNED ORDER READS AS FOLLOWS:- THIS IS TO CONFIRM THAT A THREE BED ROOM RESIDENTI AL UNIT BEARING NO. IC CONSTRUCTED ON GROUND AND FIRST FLO OR HAVING A SUPER BUILT-UP AREA OF 2398 SQUARE FEET (COMPRISING OF UNIT NO. 1-CI ON THE GROUND FLOOR MEASURING 1196 SQ.FT. AND UNIT NO. 1-C2 ON THE FIRS T FLOOR MEASURING 1202 SQ.FT) IS PURCHASED BY MRS. SUDHA GU RTOO AND MR. RATAN KUMAR GURTOO. THIS IS A SINGLE VILL A WITH A SINGLE KITCHEN. THE POSSESSION OF THE UNIT HAVE BEEN HANDED OVER TO THE CUSTOMERS. FURTHER THE ASSESSEE ALSO FILED A COPY OF A LEASE DEED DATED 10.9.2009 ENTERED INTO BETWEEN THE ASSESSEE AND MRS. RUPA BHU DIA WHICH INTER ALIA GAVE DESCRIPTION OF THE PREMISES LEASED OUT AS FOLLOWS:- I TA 939(DEL)2010 8 SCHEDULE PREMISES ALL THAT PIECE AND PARCEL OF PROPERTY REFERRED TO A S VILLS IC IN PURAVE PARKRIDGE LOCATED ON GHOSHALA ROAD GARUD ACHAR PALYA MAHADEVPURA BANGALORE-560 048. VILL IC IS A SINGLE RESIDENTIAL UNIT ON THE GROUND AND FIRST FLOORS HA VING 1 BED ROOM KITCHEN DINING ROOM AND DRAWING ROOM AND 1 BATHROO M ON THE GROUND FLOOR AND TWO BED ROOMS STUDY LOBBY AND TW O BATH ROOMS ON THE FIRST FLOOR. IT IS BOUNDED: EAST BY HOUSE NO. 2 WEST BY COMPOUND WALL NORTH BY COMPOUND WALL SOUTH BY PURVA PARKRIDGE ROAD. 14. IT WAS AFTER CONSIDERING ALL THESE FACTORS THAT THE LD. CIT(A) ARRIVED AT THE CONCLUSION THAT WHAT THE ASSESSEE HAD IN HER POSSESSION WAS ONE SINGLE RESIDENTIAL UNIT AND NOT TWO COMPRISING TWO FLOORS OF ONE AND THE SAME DOUBLE STOREYED RESIDENTIAL HOUSE. THAT BEIN G THE CASE IT CANNOT AT ALL BE SAID AS TRIED TO BE MADE OUT BY THE DEPARTM ENT BEFORE US THAT THE LD. CIT(A) ERRED IN RELYING ON ITO V. MS. SUSHILA M. JHAVERI (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHERE MORE THAN ONE A DJACENT UNIT ARE PURCHASED AND CONVERTED INTO ONE HOUSE FOR THE PURP OSE OF RESIDENCE BY HAVING COMMON PASSAGE COMMON KITCHEN ETC. IT IS A CASE OF INVESTMENT IN ONE RESIDENTIAL HOUSE. THE AO ALSO ERRED IN ST ATING THAT THESE I TA 939(DEL)2010 9 OBSERVATIONS OF THE TRIBUNAL WERE JUST A PASSING RE FERENCE AND NOT A DECISION. 15. THE LD. CIT(A) HAS ALSO RELIED ON ADDL. CIT R ANGE 1 DEHRADUN V. NARENDER MOHAN UNIYAL 34 SOT 152(DEL). THEREI N THE ASSESSEE HAD SOLD A PIECE OF LAND AND HAD EARNED CAPITAL GAI NS. THEREAFTER THE ASSESSEE PURCHASED A PIECE OF LAND FOR RS. 30 LAKHS . LATER YET THE ASSESSEE PURCHASED A PLOT OF LAND CONTIGUOUS TO THE LAND PURCHASED EARLIER. A RESIDENTIAL HOUSE WAS CONSTRUCTED ONLY ON ONE PIECE OF LAND PURCHASED. THE OTHER PIECE WAS KEPT VACANT. ON D ENIAL OF BENEFIT U/S 54 F OF THE ACT TO THE ASSESSEE WHEN THE MATTER REACH ED THE TRIBUNAL IT WAS HELD THAT SECTION 54 F OF THE ACT CONTAINS NO RIDE R THAT NO DEDUCTION WILL BE ALLOWED IN RESPECT OF INVESTMENT OF CAPITAL GAIN S MADE IN ACQUISITION OF LAND APPURTENANT TO A BUILDING OR AN INVESTMENT IN LAND ON WHICH THE BUILDING IS TO BE CONSTRUCTED. RELIANCE BY THE LD . CIT(A) ON THIS DECISION IS BY HOLDING AND RIGHTLY SO THAT THE AS SESSEES CASE WAS STILL BETTER SINCE THE ASSESSEE HAD PURCHASED THE TWO FL OORS OF THE SAME BUILDING WITHIN A SHORT SPAN OF TWO DAYS. 16. IN VIEW OF THE ABOVE FINDING NO ERROR WHATSOEV ER IN THE ORDER PASSED BY THE LD. CIT(A) THE SAME IS HEREBY CONFIR MED. THE GRIEVANCE I TA 939(DEL)2010 10 SOUGHT TO BE RAISED BY THE DEPARTMENT BY WAY OF THE GROUND OF APPEAL TAKEN IS FOUND TO BE SHORN OF MERIT AND IS REJECTED AS SUCH. 17. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.05.2010 . SD/- SD/- (A.K. GARODIA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06.05.2010 *RM COPY FORWARDED TO: 1. ACIT CIRCLE 22(1) NEW DELHI. 2. SUDHA GURTOO C/O SALUJA & ASSOCIATES 69 DESH BANDHU GUPTA ROAD PAHAR GANJ N. DELHI. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR