TaxTMI 
TaxTMI 
2015 (4) TMI 403
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....bsp; 2. That on the facts of the case and under the law, the ld. CIT(A) has erred in upholding the ld. AO's action to restrict the admissible deduction u/s 80C at Rs. 59,576/-, as against claimed by the assessee at Rs. 88,341/- 3. That on the facts of the case and under the law, the charging of interest u/s 234A & 234B is unjustified & illegal in rejecting the claim made by the appellant u/s 54F in respect of purchase of new assets (C) for Rs. 46,68,400/-, against long term capital gain on sale of assets (A). 3. The grounds raised in the departmental appeal read as under: "1. That the Ld. CIT(A) had erred in law and on facts by observing that section 54F is applicable on the instant case. 2. That the Ld. CIT(A) had erred in law and on facts by ignoring the various judicial pronouncements given by Assessing Officer without any basis. 3. That the Ld. CIT(A) has erred in ignoring the fact that the assessee has violated the provisions of clause (ii) of the proviso of section 54F(1), as he had purchased other residential house after the purchase of a new asset within a period of one year after....
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.... asked the assessee to explain as to why claim for exemption u/s 54 of the Act be not restricted to one property only and how the original property was sold to two persons when the property was considered to be one indivisible lot. In response to the above the assessee submitted to the AO as under: "Kindly refer to the discussion held with the undersigned, the Assessee has claimed the exemption u/s 54(1) of the Income tax Act, 1961. In respect of sale consideration of the Long term Capital Gain for the purpose of purchase of Residential Properties. Your goodself has pointed out that the exemption is not applicable being Vacant Land sold by the Assessee. The exemption is applicable only in case of sale of Residential House and Sales consideration is invested for the purpose of purchase/construction of Residential House. As per Section 54F(1) of the Income Tax Act, 1961, "(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 arises from the transfer of any long term capital asset, not being a residential house (hereafter in this section referred ....
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....t is respectfully made clear that at the time of making sales of both of immovable properties, to two different persons through two separate sale deeds, I did not own any residential house other than the New Assets. That I wish to clarify here that I never owned the Residential House, bearing no. C-48, Vivek Vihar, Delhi 110095. The said Residential House was & is owned by my mother. That during the previous year, relevant to the assessment year under consideration, I had sold my two immovable properties to two different persons, through two separate Sale Deeds. I have reworked out the assessable Long Term Capital Gains separately for both the sold immovable properties, as per sheets enclosed as Appendix A & B. You will observe/appreciate I had claimed exemption on a/c of two different New Assets against two different sales made by him. You will further observe/appreciate that I had not violated the provisions of section 54F of the I.T. Act, 1961. On the facts of the case and under the law the exemption claimed u/s 54F of the I.T. Act, 1961 cannot be denied to me. That now I have realized that the taxable Long Term Capital Gains had been incorrectly worked out at Rs. 25,56,75....
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....l Gain on sale of Property 'B' 2,662,317 Total 2,792,432 9. The AO, however was not convinced with the explanation given by the assessee and made the addition of Rs. 65,43,224/- by stating that the assessee did not fulfill the eligibility conditions prescribed by section 54F of the Act. The reliance was placed on the following case laws: CIT Vs Ajax Products Ltd. 55 ITR 741 (SC) CIT Vs Indo-Mercantile Bank Ltd. (1959) 36 ITR 1(SC) S. C. Cambatta and Co. Ltd. Vs CIT (1952) 21 ITR 121(Bom.) Tarulata Shyam Vs CIT 108 ITR 318 Mc Dowell & Co. Ltd. (1985) 154 ITR 148(SC) Workment of Associated Rubber Industry Ltd. Vs Associated Rubber Industry Ltd. (1986) 157 ITR 77 (SC) CIT Vs Durga Prasad More 82 ITR 540(SC) Bombay Oil Industries Ltd. VS DCIT (2000) 82 ITD 626(Mumbai) 10. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that there was no violation of the provisions of proviso (a)(ii) to section 54F of the Act. It was further stated that the assessee had not purchased any residential house other than the new assets which were purchased in respect of two different deeds. It was further stated that the....
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....ins are invested in the purchase/construction of residential house and that the clause (a)(ii) of the proviso of section 54F provides that if the assessee purchases any residential house other than the new asset within a period of one year after the date of transfer of original asset, then exemption u/s 54F(1) is not available to the assessee. The ld. CIT(A) pointed out that the assessee first purchased a residential house property (asset 'C') on 10.05.2008 and subsequently purchased another house property (asset 'D') on 02.09.2008 and apart from these two residential houses, the assessee did not have any other residential house i.e. on the date of transfer of the original asset on 09.04.2008, the assessee did not have any residential house. Therefore, if the asset 'C' is considered as the new asset then exemption u/s 54F cannot be allowed to the assessee in terms of clause (ii) of the proviso as the assessee purchased a residential house asset 'D' other than the new asset within one year of the date of transfer of the original asset. The ld. CIT(A) further stated that if the asset 'D' is to be considered as new asset then the proportionate e....
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....ve considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee purchased a Plot No. 12A situated in the Village Mandoli, Delhi. The said plot was divided into two plots and separate numbers were given to those plots i.e. 12A and 11A. The Plot No. 12A was measuring 413 sq. yds. i.e. 345.31 sq meter which is evident form page nos. 25 & 26 of the assessee's paper book. The another Plot No. 11A was measuring 414 sq. yds. i.e. 346.15 sq meter. The Plot No. 12A was sold to Sh. Pradeep Gupta for a sum of Rs. 47,30,747/- and the another plot i.e. 11A was sold to Smt. Sarita Gupta for a sum of Rs. 47,42,255/-. The assessee claimed the exemption u/s 54F in respect of two residential houses purchased for Rs. 46,68,400/- and Rs. 21,10,500/- from the sale proceeds of Plot Nos. 11A and 12A respectively. In the instant case to resolve the present controversy, it is relevant to discuss the provisions contained in section 54F(1) of the Act which read as under: 54F(1) "[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu u....
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.... the present case the assessee sold Plot No. 11A for Rs. 47,30,747/- and the indexed cost of acquisition of the said plot was of Rs. 68,673/-. As such the Long Term Capital Gains worked out to Rs. 46,62,074/-. The said Long Term Capital Gains was invested by the assessee in purchasing the residential house for a sum of Rs. 46,68,400/- as per following details: Investment made to acquire New Asset "C"Date 08.01.2008 5,00,0000 22.01.2008 5,00,0000 09.02.2008 6,00,000 19.03.2008 14,12,480 10.05.2008 9,00,000 Expenses on dalali, documentation Development & finishing 7,55,920 46,68,400 The exemption u/s 54F of the Act in respect of this plot worked out to Rs. 46,00,630/-. From the above details it would be clear that the assessee purchased the new residential house on 10.05.2008 and the Plot No. 12A was sold to Sh. Pradeep Gupta on 11.04.2008 for a sum of Rs. 47,30,747/- which is evident from the copy of the sale deed placed at page nos. 22 to 41 of the assessee's paper book. As such the taxable Long Term Capital Gains worked out at Rs. 1,30,117 (Rs. 47,30,747/- - Rs. 46,00,630/-), when the assessee purchased this residential house fo....
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.... was confirmed. 18. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that the assessee claimed the deduction as per following details: DATE AMOUNT PAID TO REMARKS 02/05/2008 3,193.00 LIC of India Deduction allo wed 17/05/2008 15,000.00 Max Ne w York Life Ins. Co. Ltd. Deduction not (on a/c of want of proof) 05/08/2008 12,075.00 LIC of India Deduction allo wed 08/10/2008 3,555.00 LIC of India Deduction not allowed (on a/c of want of proof) 08/10/2008 3,193.00 LIC of India Deduction allo wed 23/01/2009 12,075.00 LIC of India Deduction allo wed 49,091.00 DATE CHILD 1 CHILD 2 Total Fees Tuition Fees Total Fees Tuition Fees 25/04/2008 8,930 3750 8,540 3,510 18/07/2008 3,750 3750 3,510 3,510 14/11/2008 3,750 3750 3,510 3,510 28/01/2009 3,750 3750 3,510 3,510 20,180 15000 19,070 14,040 19. The ld. Counsel for the assessee requested ....