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2015 (4) TMI 403 - ITAT DELHI

2015 (4) TMI 403 - ITAT DELHI - [2015] 40 ITR (Trib) 361 (ITAT [Del]) - Entitlement to exemption u/s 54F - computation of capital gain - It is submitted that the assessee purchased one plot which was divided in two plots having different numbers, those plots were sold to two different persons through separate sale deeds but the exemption u/s 54F has been allowed by the Department in respect of one plot only. - Held that:- The time of purchasing the new residential house for a sum of ₹ 21,1 .....

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allowable for a sum of ₹ 20,79,938/- (21,10,500 46,73,582 47,42,255) and taxable Long Term Capital Gains worked out to ₹ 26,62,317/- (Rs. 47,42,255/- ₹ 20,79,938/-). We, therefore, considering the totality of the facts as discussed here in above are of the view that the ld. CIT(A) was not justified in directing the AO to sustain the addition on account of Long Term Capital Gains for a sum of ₹ 46,63,324/-. Accordingly, we delete the addition confirmed by the ld. CIT(A .....

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w.- Decided in favour of assessee for statistical purposes. - ITA No. 4914/Del/2012, ITA No. 5326/Del/2012 - Dated:- 30-3-2015 - Sh. N. K. Saini And Sh. George George K. JJ For the Assessee by : Sh. Sanat Kapoor, C. S. and & Vikas Jain, Advs. For the Revenue by : Smt. Parwinder Kaur, DR ORDER Per N. K. Saini, AM: These cross appeals by the assessee and the department are directed against the order dated 04.07.2012 of CIT(A)-XXVII, New Delhi. 2. In the assessee's appeal i.e. ITA No. 4914/ .....

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enable. 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 ₹ 59,576/-, as against claimed by the assessee at ₹ 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 ₹ 46,68,400/-, against long .....

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roviso 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 the date of transfer of original asset. 4. That the Ld. CIT(A) committed an error in observing the exemption on proportionate basis amounting to ₹ 20,79,900/- was allowable to the appellant in terms of provisions of section 54F(1)(b). 5. The appellant craves leave to add, alter or amend any/all the grounds of appeal before or during the course of hearing .....

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; 88,341/-. The said return was processed u/s 143(1) of the Act and subsequently, the case was selected for scrutiny through CASS. 6. During the course of assessment proceedings the AO noticed that the assessee had declared income under the head "Long Term Capital Gains" for a sum of ₹ 25,56,756/- and claimed capital gain as exempt u/s 54F of the Act. The AO also noticed that the assessee had sold one vacant plot divisible into two units vide two separate sale deeds for a total s .....

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8 5.00.000/- Expenses on dalali, documentation, development and finishing-Rs. 6,10,500/- Investment made to acquire New Asset 'C' 08.01.2008 5,00,000/- 22.01.2008 5,00,000/- 09.02.2008 6,00,000/- 19.03.2008 14,12,480/- 10.05.2008 9,00,000/- Expenses on dalali, documentation, development and finishing-Rs. 7,55,920/- 7. The AO 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 pe .....

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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 to .....

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t of the original asset, the whole of such capital gain shall not be charged under section 45. b) If the cost of the new assets is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45." 2. That the declaration by the assessee that he has not have any residential house on the date of transfer .....

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ions of section 54F. The assessee vide letter dated 05.12.2011 explained to the AO as under: "In continuation of my letter dated 29.11.2011 and with reference to the remarks made by you on the order sheet on 25.11.2011, it is respectfully submitted as under: That initially the exemption had been inadvertently claimed u/s 54 of the I.T. Act, 1961. On the last date of hearing you have been requested to kindly consider & allow the exemption u/s 54F of the I.T. Act, 1961. You have been kind .....

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n 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 immo .....

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ncorrectly worked out at ₹ 25,56,756/-, while the taxable Long Term Capital Gains was ₹ 27,92,432/- (see Appendix- C). To this extent my return of income may kindly be treated to has been revised. That in case you still hold some different view on this issue, kindly communicate your view point and the basis thereof, to enable me to further clarify the position/support my contention. " PROPERTY "A" AMOUNTS Sale Consideration 47,30,747 Date 20.12.2007 9,50,000 06.02.2008 .....

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47 Less: Exemption u/s 54F 46,00,630 46,68,400*46,62,074/47,30,747 1,30,115 PROPERTY "B" AMOUNTS Sale consideration Date 4,742,255 07.04.2008 47,25,000 15.04.2008 17,255 47,42,255 Less: Indexed Cost of Acquisition 45900*582/389 68,673 Long-Term Capital Gains 46,73,582 Investment made to acquire New Asset "D" Date 5,00,000 30.08.2008 5,00,000 30.08.2008 5,00,000 02.09.2008 6,10,500 Expenses on dalali, documentation, Development & finishing 21,10,500 Taxable Long Term Capit .....

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bility 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 Ind .....

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original asset nor had he purchased any residential house after acquiring those two new assets. As regards to the case laws relied upon by the AO, the assessee submitted that those were not relevant because none of the case laws referred to by the AO with reference to section 54F. It was also stated that even if the exemption u/s 54F was to be disallowed with respect to new asset "C" on the ground that the assessee had purchased another residential house "D" within one year f .....

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lhi as a single unit through one purchase deed for ₹ 91,800/- and by selling this plot of land to two different persons i.e. husband and wife through two separate sale deeds, it cannot be said that the assessee had sold two different immovable properties. According to the ld. CIT(A), it was the same plot which has been sold in two different parts through two different sale deeds. Therefore, the contention of the assessee that he had purchased two new assets in respect of two sale instances .....

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ect to a residential house and not more than one residential house. The ld. CIT(A) further observed that in assessee's case the sale consideration had been invested by him in the purchase of two residential houses whereas in terms of provisions of section 54F of the Act, the exemption is available to the assessee if the Long Term Capital Gains 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 .....

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.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 co .....

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the assessee in terms of provisions of section 54F(1)(b) of the Act. Accordingly, the ld. CIT(A) confirmed the addition of ₹ 46,63,324/-. 12. Now the assessee is in appeal against the sustenance of addition and the department is in appeal against the relief allowed to the assessee. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee purchased one plot which was divided in two plots having different numbers, t .....

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a No. 12/23 and bifurcated it into two plots measuring 413 sq. yds. and 414 sq. yds. which were sold as Plot Nos. 12A and 11A respectively to Smt. Anjali Gupta and Sh. Pradeep Gupta. It was further stated that the ld. CIT(A) wrongly confirmed the action of the AO who disallowed the claim of the assessee by considering the provisions contained in proviso (a)(ii) to sub-section (1) of section 54 of the Act instead of clause (a)(i) of section 54F(1) of the Act. It was submitted that the assessee wa .....

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arties 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. .....

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ed 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 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 before or [two years] after the date on which the transfer took place purchased, or h .....

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n respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub- section shall apply where (a) The assessee- (i) Owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) Purchases any residential house, other than the new asset, within .....

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t consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer." 15. From the provisions of the above said proviso (a)(i) to sub-section (1) of section 54F of the Act, it would be clear that the provisions of sub-section (1) to section 54F of the Act shall not apply where the ass .....

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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 ₹ 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 ₹ 47,30,747/- which is evi .....

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om the page nos. 42 to 58 of the assessee's paper book which is the copy of the sale deed for a sum of ₹ 47,42,255/-, The indexed cost of acquisition of the said plot was at ₹ 68,673/-, as such the Long Term Capital Gains worked out to ₹ 46,73,582/-. The assessee out of the said sale consideration purchased another residential house property for a sum of ₹ 21,10,500/- as per following details: Investment made to acquire New Asset "D" Date 30.08.2008 5,00,000 .....

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) to sub- section (1) of section 54F of the Act. The sale consideration of ₹ 47,42,255/- relating to Plot No. 11A was utilized by the assessee for purchasing the new house for a sum of ₹ 21,10,500/-, therefore, the exemption u/s 54F was allowable for a sum of ₹ 20,79,938/- (21,10,500 × 46,73,582 ÷ 47,42,255) and taxable Long Term Capital Gains worked out to ₹ 26,62,317/- (Rs. 47,42,255/- ₹ 20,79,938/-). We, therefore, considering the totality of the fac .....

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341/-. The AO, however, in the absence of complete documentary evidences allowed the deduction for a sum of ₹ 59,576/-. When the matter was taken to the ld. CIT(A), the action of the AO 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 ( .....

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