2025 (12) TMI 166

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....on u/s. 54 of the Income Tax Act, 1961 even though the conditions of section 54 were not fulfilled. 4. The department craves leave to add/delete/amend the grounds of appeal. 2. The Ld. CIT (A)'s order is contrary in law and on facts and deserves to be set aside. 3. The appellant prays that the order of Ld. CIT (A) on the above ground be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary at the time of hearing The Appellate Order of NFAC, Delhi vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1073529583 (1) dated 20.02.2025 in the case of Divyesh Ramniklal Muni for A.Y. 2016-17, has been received in the O/o. Pr. CIT-8, Mumbai through ITBA on 20.02.2025. The Last date for filing appeal is 30.04.2025. However, appeal should be filed immediately." Brief facts of the case are as under: 2. The assessee is Charted Accountant by profession and during the year under consideration, he derived income from house property, income from business & profession, income from capital gains and income from other sources. The assessee filed its return of income on 17/10/2016, d....

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....with monetary compensation of hardship and cost incurred by the member was agreed to be payable. 2.6 The developer also provided for an option to acquire more area than the entitled area of the type of flat owned by each member on payment of an agreed sum of Rs. 22,000/- per sq. ft. The assessee submitted that, he opted for the area of 205 sq. ft. for each of the flat. The assessee submitted that payment of the cost for the additional area was recovered by the developer from payment of the said monetary compensation. In lieu of which, a confirmation was issued by the developer for payment of hard ship compensation in the course of redevelopment and the flat of recovery all for the cost for the additional area from the compensation was recovered from the hardship compensation payable by the developer. The said confirmation is placed on record. 2.7 On considering the submissions filed by the assessee, the Ld.AO considered investment in the additional area of 205 sq.ft. by assessee as forming part of the consideration. As assessee submitted that, he was entitled for flat at 1381 sq.ft. as per development agreement and hence realisation of old flat was only to the said extension.....

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....arding ground No. 3 of appeal: ............................. Decision :I have carefully considered the facts of the case, above submission of the appellant as well as gone through the observation and findings of the AO 's assessment order. I find merit in the above submission in as much as the AO, without referring the valuation cell and without providing opportunity to the appellant regarding higher value/rate adopted by him, arbitrarily has taken the decision of taken Rate as Rs. 27,193/- based on ready reckoner. In view of above after considering the submission of the appellant I find infirmity in the order of the AO in taking rate as Rs. 27,193/- while calculating the sale consideration of 1st and 2nd Old Flat. Therefore this ground is allowed. Appellant's Contentions and Submissions regarding ground ........................ Decision :I have carefully considered the facts of the case, above submission of the appellant as well as gone through the observation and findings of the AO's assessment order. I find merit in the contention of the appellant in as much as the hardship compensation is duly offered for taxation in the yea....

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....,362 2,58,120 10,32,482 7,74,362 2,58,120 10,32,482                 Value of New Flat allotted to D Type 1176 sq. ft. x 22000) (D) 2,58,72,000 2,58,72,000 86,24,000 3,44,96,000       Value of New Flat allotted to D Type 1176 + 205 sq. ft. x 27193)         3,75,53,533 1,25,17,844 5,00,71,377           Total consideration (A+B+C+D) 3.84,27,313 3,84,27,313 1,28.09,104 5,12,36,417 4,55,98,876 1,51,99,625 6.07,98,501                 Lesa:               Indexed cost of acquisition 26,04,187   8,33,837 34,38,023       (1200000"1081/519)+(61250'1081/632               (153500*1081/199)/3               Rent pald 22,12,050   - 22,12,050       ....

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....pment. The said condition was accepted by the assessee and accordingly, invested in additional area of 205 Sq. ft. at the rate of 22,000/- as per the development agreement. The assessee thus acquired additional area 205 sq.ft. for Rs. 60,13,293/- in respect of two flats on exchange in the redevelopment. It is noted that, the Ld.AO allowed the deduction of Rs. 60,13,293/- being the cost of additional space however, deducted the said amount while computing capital gain as cost of asset held. 5.1 The assessee had shown the said amount to be an investment in the new flat eligible for deduction u/s. 54 as said area of 205sq.ft. was additional purchase by the assessee along with area that was exchanged by the developer with newly constructed area. 5.2 Reliance is placed on the decision of Hon'ble Bombay High Court in case of CIT vs. Mrs. Hilla J. B. Wadia reported in 216 ITR 376 wherein it has been held that acquisition of dominant right in the definite identified property is due compliance for eligibility or deduction u/s. 54. The decision relied by the assessee of Hon'ble Bombay High Court in case of CIT(A) vs. Mrs. Hilla J.B. Wadia (supra) supports the above claim of the assesse....