TaxTMI 
TaxTMI 
2019 (5) TMI 851
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..../2015 (AY 2012-13) i) The Ld. CIT(A) has erred in deleting the addition of Rs. 4,01,93,262/- and Rs. 50,00,000/- on account of exemption u/s. 54 and 54EC of the Act treating the said house as being 'Constructed by the assessee and not considering the facts that the assessee has entered into buyer seller purchase agreement on 10.2.2006, thereby purchasing the said house on 10.2.2006 only. ii) The Ld. CIT(A) has erred in deleting the addition of Rs. 50,00,000/- on account of exemption u/s. 54EC of the Act without considering the date of purchase of REC bonds. iii) The Ld. CIT(A) has erred in deleting the addition of Rs. 14,07,474/- without considering the facts that as per para 8(v) in lease deed of M/s DT Cinema, the assessee has received maintenance charges as income in disguise. iv) The appellant craves leave to add, alter or amend any / all the grounds of appeal before or during the course of hearing of the appeal. ITA NO. 5901/DEL/2015 (AY 2012-13) i) The Ld. CIT(A) has erred in deleting the addition of Rs. 4,00,97,217/- and Rs. 50,00,000/- on account of exemption u/s. 54 and 54EC of the Act treating the said house as being 'Constr....
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.... amounting to Rs. 1,00,00,000/- following the decision of the ITAT, Jaipur Bench in ACIT Circle-2 vs. Sh. Raj Kumar Jain Sons HUF, January 31, 2012 as p the details in the impugned assessment order dated 4.2.2015. Further, AO observed that AO made the addition of Rs. 14,07,474/- in the rental income of above said amount on the grounds that the assessee has received Rs. 2010672/- from the tenant M/s DT Cinema Ltd. as per the calculations given in the impugned assessment orders dated 4.2.2015 and allowing deduction therefrom of 30% on account of statutory deduction under section 24(a) of the Income Tax Act resulting into the net addition of Rs. 14,07,474/- Z(Rs. 20,10,672/- less 30% Rs. 603202/-). Against the assessment order, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 21.08.2015, has deleted the additions in dispute and allowed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 3. Ld. CIT(DR) relied upon the order of the Assessing Officer and reiterated the contentions raised in the grounds of appeal and stated AO made the disallowance of deduction under section 54 was made on t....
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.... said order, the Assessee preferred an appeal before the Commissioner of Income-tax (Appeals) (hereinafter referred to as 'CIT(A)') whereby vide order dated 21.08.2015,the appeal of the assessee was allowed and the additions made by the Assessing Officer ('AO') were deleted. 1.3. The Revenue did not accept the abovereferred order of the CIT(A) and instead preferred an appeal before this Hon'ble Tribunal, seeking restoration of the additions made in the assessment order. 2. FACTUAL BACKGROUND 2.1. With regard to the above additions, the Assessee wishes to bring to the attention of this Hon'ble Tribunal the following facts, as under: 2.2. The Assessee had acquired a property at Jor Bagh during Financial Year ('FY') 2002- 03, which was subsequently sold during the subject AY on 21.12.2011 for a sum of Rs. 8 Crores. 2.3. As the said property was a long-term capital asset, the Assessee claimed benefit of indexation whereby the indexed cost of acquisition was arrived at Rs. 83,34,698/- resulting in capital gains of Rs. 7,16,65,302/-. Against the same, the Assessee claimed exemption u/s 54 of the Act of Rs. 3,00,86,525/- towards the amounts pai....
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....the amount of capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) ..." 3.2. In terms of the said provision, an assessee, in order to avail of the exemption u/s 54, is required to purchase a new asset one year before or within two years after the date of sale of the original asset, or construct a new asset within a period of three years after the date of transfer of original asset. It is the contention of the Assessee herein that by virtue of the agreement dated 10.02.2006, the Assessee had contracted with M/s DLF for construction bare residential house, which thereafter the Assessee undertook to get completed and furnished with all the necessary amenities, which was offered only as on 31.10.2013, possession of which was duly taken and is not disputed, and this period is within three years of sale of the original asset. 3.3. However, the AO has contended that the present is a case ....
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.... funds advanced by her, there appears to be no difficulty in treating the construction as the construction made by her. " In view of the afore said findings, which are factual, no question of law arises... " 3.7. The Assessee also wishes to place reliance on a decision of the Delhi Bench of this Hon'ble Tribunal in the case of ACIT v. Vineet Kumar Kapila [ITA/ 6868/ DEL/ 2015], wherein the facts of the case and the finding of the Hon'ble Tribunal were recorded thus: "2. ... During the assessment proceedings the AO also noticed that the assessee has entered into an 'Apartment Buyer Agreement' with M/s Standard Farms Pvt. Ltd. and Tata Housing Development Co. Ltd. on 27/08/2010. In this regard on consideration of facts and submission of the assessee, the AO was of the view that the impugned acquisition on new property by the assessee through 'Apartment Buyer Agreement', amounted to "purchase " of new house... 7. After perusing the aforesaid finding as well as the case laws and CBDT Circular discussed therein, we are of the view that booking of flat with the builder has to be treated as construction of flat by the assessee and hence period of th....
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.... under section 54. " 3.11. The Assessee also wishes to place reliance on a decision of the Hon'ble High Court of Allahabad in the case of CIT v. U.K. Kapoor, reported as [1998] 234 ITR 753 (Allahabad). In the said case, the facts were as follows: assessee therein sold a residential house on 10.07.1963, whereas construction of the new asset was commenced on 10.03.1963. The claim for deduction u/s 54 of the Act was rejected by the concerned AO on the ground that construction of the new asset was commenced before sale / transfer of the original asset. In its decision, the Hon'ble High Court of Allahabad, while approving the above-cited decision of the Hon'ble High Court of Karnataka, observed as under: "In the case before the Karnataka High Court, the date of the sale of the old building was February 9, 1977. The completion of the construction of the new building was in March, 1977, although the commencement of construction started in 1976. On these facts, the Karnataka High Court held that it was immaterial that the construction of the new building was started before the sale of the old building. We fully agree with the view taken by the Karnataka High Court. The Ap....
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....interpreted... " .14. Lastly, reference may also be made to a recent decision of Delhi Bench of this Hon'ble Tribunal in the case of Tarun Jalali v. DDIT (ITA/2376/Del/2014] wherein it has been observed as under: "5. ... Accordingly, respectfully following the ratio laid down by the Hon'ble Delhi High Court and the Hon 'ble Karnataka High Court as aforementioned, we are of the view that provisions of section 54F do not prescribe any condition as to the date of commencement of construction of new house property, meaning thereby that the construction of house property may be commenced even before the date of transfer of original asset... " 3.15. In view of the above-cited position of law and interpretation of section 54 of the Act, the Assessee wishes to contend that firstly, the acquisition of house from M/s DLF is a case of construction of house and not purchase of a house, secondly, the Assessee submits that the fact that the construction was commenced earlier would not have any bearing on the allowability of the claim under section 54 of the Act. 4. CLAIM U/S 54EC IS ALLOWABLE 4.1. The relevant facts regarding this claim are that a....
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....rect Taxes ('CBDT' or 'the Board'), which to the extent relevant, provides as under: "The existing provisions contained in sub-section (I) of section 5 4 EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, at any time within a period of six months, invested the whole or any part of capital gains in the long-term specified asset, out of the whole of the capital gain, shall not be charged to tax. The proviso to the said subsection provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. However, the wordings of the proviso have created an ambiguity. As a result the capital gains arising during the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second in the next year but before the expiry of six months. This resulted in the claim for relief of one crore rupees as against the intended limit for relief offifty lakh rupees. Accordingly, it is proposed to insert a proviso in sub-section (I) so as to provide th....
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.... which capital gains were declared at Rs. 1,09,98,256/-, out of which a sum of Rs. 1 Crore was claimed as a deduction under section 54EC of the Act, by purchase of REC bonds worth Rs. 50 Lakhs each on 31.03.2009 and 30.04.2009. While dismissing the appeal of the Revenue, the High Court affirmed its earlier above-cited decision and dismissed the appeal by the Revenue. 4.7. The aforesaid decision of the Madras High Court has also, inter alia, been referred to and followed, inter alia, in the following decisions: * ACIT v. Ajay Kalia (ITA/6907/Del/2015; order dated September 2017) * Bharatkumar M Jain (HUF) v. ACIT (ITA/169 & 170 / Mum/2015; order dated 07.09.2016); * Ms. Lilavati M. Sayani v. ITO (2014) 151 ITD 659 (Mum.); * Shri Vivek Jairazbhoy v. CIT (ITA No. 236/Bang/2012; order dated 14.12.2012) * Tulika Devi Dayal v. JCIT (2018) 89 taxmann.com 442 4.8. In view of the above position of law, the Assessee submits that subject ground of appeal may kindly be decided in favour of the Assessee and against the Revenue. 5. WRONG ADDITION OF PURPORTED RENTAL AMOUNTS RECEIVED FROM M/S DT CINEMAS 5.1.....
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....'s income, which is not even the case of the AO herein. Therefore, in this view of the matter, even if these amounts had been received by the Assessee (though denied), no addition thereof could have been validly made." + 5. Ld. counsel for the assessee also in support of his contention, has filed a Paper Book of compilation of cases i.e. copy of Circular 672 issued by the Central Board of Direct Taxes (1994) 205 ITR (St.) 47; CIT vs. Smt. Brindra Kumari (2002) 253 ITR 343 (Del.); ACIT vs. Vineet Kumar Kapila ITA /6868/Del/2015; CIT vs. JR Subramanya Bhat (1987) 165 ITR 571 (Karnataka); CIT vs. HK Kapoor (1998) 234 ITR 753 (Allahabad); CIT vs. Bharti Mishra (2014) 265 CTR 374 (Delhi); Tarun Jalali vs. DDIT ITA/2376/Del/2014; CIT vs. C. Jaichander (2015) 370 ITR 579 (Madras) and ACIT vs. Ajay Kalia ITA/6907/DEL/2015. 6. We have heard both the parties and perused the records, Paper Book filed by the assessee; submissions of both the parties, case laws cited by the Ld. counsel for the assessee and especially the impugned order passed by the Ld. CIT(A). With regard to ground no. 1 relating to disallowance of deduction u/s. 54 of the Act is concerned, we find that the assessee decl....
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....e date of transfer of the original asset. The above circulars are binding on revenue authorities under s. 119 of the Act. He referred the decision rendered by Honorable High Court of Bombay in the case of Mrs. Hilla J. B. Wadia (216 ITR 376), wherein the Honorable High Court has held that it is a case of "Construction". Reliance was placed on the judgment of Honorable Karnataka High Court in the case of CIT Vs. J.R. Subramanya Bhatt (1887) 165 ITR 571 (Karn), wherein it has been held at it is immaterial whether the construction of the new house was started before the ate of transfer, it should be completed after the date of transfer of the original house. In the present case, he had booked a semi finished flat with the builder, namely DLF Universal Limited in the residential group housing complex named as Magnolias DLF Golf Links) and as per agreement, he was to make payment in installments and the builder was to construct the unfinished bare shell of flat for finishing by the buyers on their own to make it live-able (having specifications set out in Annexure-V) as per clause 10.1 of the said agreement. It is also noted that Builder Company offered vide letter dated 30.12.2011 that....
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....h Oct,. 1986. The relief extending instructions of the CBDT, in wake of realization of practical difficulties faced by the assessees, by way of circular extending relief to even marginally non compliant assessees in its literal sense of hyper technicalities, cannot be used as a tool to interpreted instructions of the board or decision of the law Courts, to deny the very relief to the otherwise compliant assessees. In a recent reference to Honorable Delhi High Court, in the case of CIT vs Kuldeep Singh, the Honorable Court has observed and discussed various decision of the other Honorable High Courts and Honorable Supreme Court; as follows; A. CIT Andhra Pradesh vs. T. N. Aravinda Reddy (1979) 4 SCC 721; B. Civil Appeal nos. 5899-5900/2014 titled Sh Sanjeev Lai etc etc vs. CIT Chandigarh & Anr decided on 01/07/2014, 2014 (8) SCALE 432 C. Reference was made to the decision of Supreme court in CIT vs J.H. Gotla [1985] 156 ITR 323 (SC). D. Moreover in CIT vs Bharati C Kothari (2000) 244ITR 352 In the instant case, since the assessee entered into an agreement for construction of a bare shell of a house by periodic payment of installments and he had....
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....tal gain bonds are available on tap throughout the year without stopping but the limit of investment has been capped to Rs. 50,00,000/- per assessee per financial year. This has resulted in even distribution of benefit to public at large. Had the intention of the legislation was cap the total investment to Rs. 50,00,000/-, the amendment in statute would have prescribed the limit on deduction allowed under the section 54EC and not on investment allowed under section 54EC. Therefore, the interpretation of ITAT, Jaipur Bench in ACIT Circle-2 vs. Shri Raj Kumar Jain & Sons HUF, is misplaced, in total disregard to juagment of the higher authority (i.e. Honorable Madras High Court) which has elaborately discussed the issue involved, ambiguity of law and the provisions of latest amendments made to section 54EC by the Finance Act 2014 including the Notes on clauses - Finance Bill 2014 and Memorandum : Explaining the provisions in the Finance (No. 2) Bill, 2014; placing restriction on "lent to Rs. 50 lakhs with effect from 01.04.2015 by inserting a second proviso, assessing officer has totally ignored his reply in as much as reliance placed on the judgment of the Honorable Madras High Court....
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....t M/S D.T. Cinema Ltd. as per the calculation given in the impugned assessment orders dated 04.02.2015 and allowing deduction there from of 30% on account of statutory deduction under section 24(a) of the Income-tax Act resulting into the net addition of Rs. 14,07,474/-, however, the assessee submitted that the Assessing officer has miserably failed to arriving at any Annual value of the property under section 23(1)(a) and 23(1)(a) of the Income tax Act. The Assessing Officer has erred in treating the clubbed up Income as composite rent under the head 'Income from House Property' and in the process has failed to segregate composite rent into the rent of the premises taxable under the head 'Income from House Property' and taxable income of maintenance/service charges received by the appellant for provisioning of services under the head 'Income from business & Profession'. The Assessing Officer has misplaced reliance on the judgment of Honorable Delhi High Court in the case of CIT vs. H.G. Gupta & Sons [19841 149 ITR 253 (Delhi) and Honorable High Court at Calcutta in the case of Indian City Properties vs. CIT [1965] 55 ITR 262 (Cal). The facts and rationale o....