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2022 (7) TMI 1139
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....office on 22/06/2015. It is further submitted that after perusal of the papers the Chartered Accountant advised the assessee to file the appeal against the impugned order, which advice was duly accepted by the assessee and instructions were given to the Chartered Accountant to file the appeal. In application it is submitted that pursuant thereto advice of Senior Counsel was also tried to be sought, however, due to paucity of time the same could not be availed within time. Accordingly, instructions were given to the Chartered Accountant to file the appeal without awaiting the advice from the Senior Counsel and eventually the appeal was filed on 03/07/2015, which resulted in delay of 5 days in filing the present appeal. In view of the above, the assessee has requested to condone the delay as the same is unintentional and due to circumstances beyond the control of the assessee. On the other hand, learned Departmental Representative ('learned DR') did not raise any serious objection against the application seeking condonation of delay. 3. Having perused the application, which is also supported by an affidavit sworn by the assessee, we are of the considered view that there exist suff....
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....urn of income on 15/10/2010 declaring total income of Rs. 39,15,433. During the course of assessment proceedings, assessee was asked to file the details of immovable assets. In reply, assessee submitted that the details of owning 2 flats namely, A-605 and A-608 at Harishchandra Apartment, Raheja Township, HIP, Malad (E), Mumbai-97. As the assessee was already having a residential property at B- 504, Harishchandra Apartment, Raheja Township, Malad (E), Mumbai, therefore, the aforementioned properties were subjected to house property income by the Assessing Officer vide order dated 26/03/2013 passed under section 143(3) of the Act and income from house property was computed at Rs.1,87,793, after adopting annual value of said property at 8% of capital cost. 8. In appeal, learned CIT(A) vide impugned order upheld the annual value of the aforesaid 2 flats as determined by the Assessing Officer. Being aggrieved, assessee is in appeal before us. 9. During the course of hearing, learned AR submitted that annual letting value determined by the Assessing Officer is contrary to the provisions of sections 22 and 23 of the Act. The learned AR further submitted that the properties are subj....
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.... deflate or inflate the rent by such methods, then, as held by the Delhi High Court, the Assessing Officer is not prevented from carrying out the necessary investigation and enquiry. He must have cogent and satisfactory material in his possession and which will indicate that the parties have concealed the real position. He must not make a guess work or act on conjectures and surmises. There must be definite and positive material to indicate that the parties have suppressed the prevailing rate. Then, the enquiries that the Assessing Officer can make, would be for ascertaining the going rate. He can make a comparative study and make a analysis. In that regard, transactions of identical or similar nature can be ascertained by obtaining the requisite details. However, there also the Assessing Officer must safeguard against adopting the rate stated therein straightway. He must find out as to whether the property which has been let out or given on leave and license basis is of a similar nature, namely, commercial or residential. He should also satisfy himself as to whether the rate obtained by him from the deals and transactions and documents in relation thereto can be applied or whether....
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.... 51] We quite see the force in the arguments of Ms. Vissanjee that ordinarily the license fee agreed between the willing licensor or a willing licensee uninfluenced by any extraneous circumstances would afford reliable evidence of what the landlord might reasonably be expect to get from a hypothetical tenant. She has in making this submission, answered the issue and summed up the conclusion as well. Then, it is but natural and logical that in the event, the transaction is influenced by any extraneous circumstances or vitiated by fraud, or the like that the Assessing Officer can adopt a "fair rent" based on the opinion obtained from reliable sources. There as well, we do not see as to how we can uphold the submissions of Mr. Chhotaray that the notional rent on the security deposit can be taken into account and consideration for the determination. If the transaction itself does not reflect any of the aforestated aspects, then, merely because a security deposit which is refundable and interest free has been obtained, the Assessing Officer should not presume that this sum or the interest derived therefrom at Bank rate is the income of the assessee till the determination or conclusion ....
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.... other determination and contrary thereto can be made by the Assessing Officer. Once again having respectfully concurred with the judgment of the Full Bench of the Delhi High Court, we need not say anything more on this issue." 13. In another decision, Hon'ble jurisdictional High Court in Smt. Kokilaben D. Ambani v/s CIT: [2014] 226 Taxmann 208 (Bombay), following the aforesaid decision in Tip Top Typography (supra), observed as under: "8. In our view, in the judgment in Tip Top Typography case (supra) after concurring with the conclusion of Delhi High Court, we have held that the assessing officer in the cases of properties, which are subject to Rent Control Legislation cannot ignore the same. If the standard rent has not been fixed under the Rent Control Legislation by the competent authority, it is the duty of the assessing officer to determine the same in of the Rent Control Legislation. The law has been crystallized in terms of the decision of the Hon'ble Supreme Court as also the Full Bench of the Delhi High Court. In these circumstances, we do not find any for an apprehension that the Tribunal would ignore the Rent Control Legislation and prefer some other mo....
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....erty and not the residential property as such. Being so, the claim of exemption u/s 54 of the I.T Act do not sustain, as the capital gain is not from sale of residential house. The payments towards acquisition of the 'right' is spread over from F.Y. 2004-05 to FY 2008-09, as per the details provided by the assessee. The assessee has not identified which are the payments made towards the right to acquisition of each property. Neither any computation of capital gain attributing cost individually to each property has been furnished Therefore, it is not possible to identify the property which was acquired and held for more than 36 months. As such, the compensation received as above amounting to Rs.59,29,200/- is assessed as short term capital gain. Since the income from surrendering the right to acquire the properties as above have been assessed as short term capital gain; the question of allowability of exemption u/s 54 of the I.T. Act do not arise. Penalty proceedings u/s 271(1)(c) is initiated for furnishing inaccurate particulars of income." 17. In appeal, learned CIT(A) vide impugned order accepted the plea of the assessee and treated the resultant gain to be long term ....
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....nt." Being aggrieved, assessee in appeal before us. 19. During the course of hearing, learned AR submitted that assessee is a joint owner in two residential Flats (No. A-408 and B-504) on the date of transfer of original asset and no residential house was owned in a single name. The learned AR further submitted that prior to amendment by the Finance Act (No.2), 2014, there was no bar under section 54F from purchasing/constructing more than one residential house and thus assessee is entitled to claim relief under section 54F of the Act. 20. On the other hand, learned DR vehemently relied upon the orders passed by the lower authorities. 21. We have considered the rival submissions and perused the material available on record. Section 54F of the Act, as prevalent during the year under consideration, reads 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 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 to as the original asset), and the assessee has, within a period of one year....
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....h residential house, other than the residential house owned on the date of transfer of original asset, is chargeable under the head 'Income from House Property' and that residential house is other than the new asset. As per section 54F, the expression 'new asset' refers to 'a residential house' purchased or constructed by the assessee, within the prescribed period. 23. The meaning of expressions 'own' and 'a residential house' has been the subject matter of litigation in past. We find that while dealing with the issue whether the term 'own' include the joint ownership also, Hon'ble Madras High Court in Dr. Smt. P.K. Vasanthi Rangarajan vs CIT, [2012] 209 Taxman 628 (Madras) held that merely because taxpayer jointly owned another property on date of transfer of asset, its claim for exemption under section 54F could not be rejected in respect of capital gains earned from transfer of her individual property. In CIT vs Kapil Nagpal, [2016] 381 ITR 351 (Delhi), Hon'ble Delhi High Court also took the similar view and granted relief to the taxpayer under section 54F. 24. However, Hon'ble Karnataka High Court in CIT vs M.J. Siwani, [2014] 366 ITR 356 (Karnataka) took a contrary view ....
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....t the word "own" in Section 54-F would include only the case where a residential house is fully and wholly owned by the assessee and consequently would not include a residential house owned by more than one person." 26. Thus, divergent views of the Courts are available as regards the meaning of the term 'own'. No decision of Hon'ble jurisdictional High Court was brought to our notice on this aspect. Thus, the difficulty arises as to which of the Hon'ble non jurisdictional High Court is to be followed by us in the present situation. It will be wholly inappropriate for us to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoints, as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect to both the views of Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us. We find guidance from the judgment of Hon'ble Supreme Court in CIT v. Vegetable Products Ltd., [1972] 88 ITR ....
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.... 189 (Madras), after considering the similar amendment vide Finance (No. 2) Act, 2014 in section 54 of the Act w.e.f 01/04/2015, observed as under: "19. A closer and bare reading of the aforesaid Explanatory Notes to the provisions of the said Act, clearly shows that the said amendment was intended to be specifically applied only prospectively with effect from A.Y.2015-2016. It took note of the judicial precedents for the period prior to 01.04.2015, giving a different and contra interpretation. Therefore this amendment cannot be held to be mere clarificatory so as to be applied retrospectively for A.Y.2005-2006 in the present case. 20. We have discussed about the two decisions from the Karnataka High Court, which, in our opinion, dealt with similar controversy as is raised before us herein. The only difference which we find is that the purchase of the residential houses in the present case is at different address in the same city of Madurai. In D. Ananda Basappa case stated (supra), two flats in question were admittedly adjacent to each other and which were joined to become one residential house. In the case of Khoobchand M. Makhija (supra), two door nos are given....
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.... the deduction under Section 54 of the Act for the entire investment in the properties and securities. Therefore, in our opinion, Judgment rendered by the Karnataka High Court in D. Ananda Basappa (supra) & Khoobchand M. Makhija (supra) cited at bar by the learned counsel for the Assessee apply on all fours to the facts of the present case." 29. Similarly, in an earlier decision, while dealing with similar issue in respect of benefit claimed under section 54F of the Act, Hon'ble Madras High Court in CIT vs Smt. V.R. Karpagam, [2015] 373 ITR 127 (Madras), observed as under: "10. The above-said amendment to Section 54F of the Income Tax Act, which will come into effect only from 01.04.2015, makes it very clear that the benefit of Section 54F of the Income Tax Act will be applicable to constructed, one residential house in India and that clarifies the situation in the present case, i.e, post amendment, viz., from 01.04.2015, the benefit of Section 54F will be applicable to one residential house in India. Prior to the said amendment, it is clear that a residential house would include multiple flats/residential units as in the present case where the assessee has got five res....
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....therefore, we are of the considered view that assessee is entitled to claim benefit under section 54F of the Act. Accordingly, ground No. 6 raised in assessee's appeal is allowed. 32. The issue arising in ground No. 7, raised in assessee's appeal, is pertaining to addition of Rs. 16,25,000 as income from other sources. 33. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee while filing its return of income, for the year under consideration, included an amount of Rs. 16,25,000, in computation of income, in anticipation of refund of investment made in property and cancelled during the year. The Assessing Officer vide order passed under section 143(3) of the Act, in absence of any supporting evidence, treated the amount of Rs.16,25,000, as income from other sources. In appeal before the learned CIT(A), assessee submitted that during relevant financial year the assessee had booked another set of Flats no. A-1003 and 1004 in the same building in May 2009, this was subsequently cancelled on 07/07/2009. The assessee was under impression that he will be compensated for an amount of Rs. 16,25,000 for appreciation in value of said flat....