9911796707
TMI Blog2015 (6) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... -. She has claimed D.P. Charges of Rs. 16,000/- and showed net receipt of Rs. 2,43,93,344/-. 2.1 The AO observed that the assessee has claimed deduction of Rs. 30,78,228/- u/s. 54 for investment of long term capital gain towards purchase of a house. This amount was paid to City Corporation Ltd., Pune during A.Y. 2007-08 and the assessee has claimed the entire amount as exempt u/s. 54. The AO observed that the assessee cannot claim deduction u/s. 54 as that section deals with the transfer of a capital asset being building or lands appurtenant thereto. If at all she should have claimed u/s. 54F which is for the transfer of any long term capital asset not being a residential house and the proceeds are invested in a residential house. The AO further observed that the assessee apparently booked a flat bearing No. 1001 in Tower-8 of Amanora Park Town, Hadapsar, Pune. The cost of the flat is Rs. 1,34,59,685/- and till 23-11-2009, an amount of Rs. 98,50,000/- has been paid. Possession of the said flat has not been given till date. He, therefore, held that even if the assessee is eligible, then also the deduction allowable will not be the entire investment but as calculated as per provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4F while filing of the income tax return. It was argued that merely because the assessee has claimed deduction under an incorrect section, she would not be prohibited during the assessment proceedings from claiming the deduction under correct Section. There is no estoppel against law, which would prevent the assessee claiming the deduction, which the assessee is otherwise eligible to claim. She can correct the mistake made at the time of filing of return during the assessment proceedings. For the above proposition the assessee relied on various decisions. 3.1 As regards the allegation of the Assessing Officer that the assessee is not entitled to deduction as she was not the owner of the property purchased but a lessee it was argued that the lease agreement entered into by her is for a period of 999 years which is extendable for a further period of 999 years on the same terms. Therefore, it is an agreement for the perpetual period. Further, according to the lease agreement, there is no bar on the transfer of property except for the payment of transfer charges of 1% to lessor. The lessee may transfer the property to any person within the time of lease. It was submitted that one time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d made substantial payment for the purchase of flat and had obtained substantial dominion over the residential property within the period of three years. 4. The assessee also raised two additional grounds in which it was claimed that exemption u/s. 54F is allowable in respect of the total cost of the residential house acquired by the assessee of Rs. 1,24,65,625/- as against the amount of Rs. 30,78,228/- claimed by the assessee in the return filed. Without prejudice to the above it was submitted that the exemption u/s. 54F may be allowed in respect of the amount of Rs. 1,00,03,125/- paid within the period of three years form the date of transfer of the original asset. 5. Based on arguments advanced by the assessee the Ld. CIT(A) held that the assessee is entitled to claim deduction u/s. 54F to the extent of Rs. 1,00,03.125/- which is the amount the assessee has paid within the period of three years from the date of transfer of original cost. While doing so he observed that merely because the assessee has mentioned a wrong or incorrect Section in the return of income the same will not be a ground to deny the deduction to the assessee. 6. As regards the allegation of the AO that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case the Ld. Commissioner of Income tax (Appeals) grossly erred in failing to appreciate that the only avenue for the assessee to make any claim is in the return of income or revised return and no claim can be made other than these prescribed means 5. On the facts and in the circumstances of the case the Ld. Commissioner of Income-tax (Appeals) grossly erred in failing to consider that the assessee is only a lessee and not the owner of the flat and the deduction is allowable u/s 54F only to the owner and not a lessee. 6. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 8. The Ld. Departmental Representative strongly supported the order of the Assessing Officer. Referring to the decision of the Hon'ble Kerala High in the case of CIT Vs. V.R. Desai reported in 197 Taxman 52 (Kerala) he submitted that the Hon'ble High Court in the said decision has held that the assessee was not entitled to exemption u/s. 54F because he has neither deposited the sale proceeds in the specified Bank Account in terms of Section 54F(4) before the due date of filing of return nor were the sale proceeds utilized for construction in terms of Section 54F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an utilize the profits for purchase of residential properties or deposit in specified account before the due date of furnishing such return u/s. 139(4). 9.3 Referring to the decision of the Pune Bench of the Tribunal in the case of DCIT Vs. Ashok Deokishan Bhutada vide ITA No. 966/PN/2011 order dated 18-03-2013 for the A.Y. 2008-09 he submitted that the Tribunal following the aforementioned decision has held that the assessee has fulfilled the condition of investing the amount for acquiring the flat within the time limit for filing the belated return u/s. 139(4) and therefore is entitled to claim the deduction u/s. 54F. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Mrs. Prema P. Shah Vs. ITO reported in 100 ITD 60 he submitted that the Tribunal in the said decision has held that where the lease is for 150 years which is in perpetuity, therefore, the assessee is as good as absolute owner of the property. As regards the allegation of the Assessing Officer that the assessee has made a claim under wrong provision i.e. u/s. 54 instead of Section 54F, he submitted that the Hon'ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 125/- which the assessee has paid within the period of three years form the date of transfer of the original asset. He further observed that merely because the assessee has made a wrong claim u/s. 54 the same cannot be a ground to deny the benefit of deduction u/s. 54F to which the assessee is otherwise eligible. As regards the observation of the Assessing Officer that the assessee is only a lessee and the lease period is only 999 years and therefore, the assessee is not the owner of the house, he observed that the long period of lease of 999 years is as good as permanent. The nature of rights enjoyed by the assessee are sufficient enough to show that the assessee is owner of the property and therefore she can be treated as a purchaser for the purpose of Section 54F. As regards the allegation of the Assessing Officer that the assessee has not taken over possession of the property he held that by making approximately 80% of the payment before the time limit of three years the assessee acquired dominion over the flat before the prescribed time limit. 11. As regards the ground raised by the Revenue that by making a wrong claim u/s. 54F the assessee is not entitled to claim deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential property on January 2, 2007, claimed deduction under section 54 of the Income-tax Act, 1961. The Assessing Officer declined the claim holding that the assessee failed to deposit the amount in the capital gains account scheme and also failed to purchase house property before the due date of filing the return of income. The Commissioner (Appeals) held that the assessee had purchased a new residential property on 2nd January, 2007, and the due date according to section 139(4) was March 31 2007, and, thus, the assessee had complied with the provisions of section 54 of the Act. This order was affirmed by the Tribunal. On further appeal by the Revenue, the Hon'ble High Court held as under (Short notes) : "The assessee sold her house property for Rs. 45 lakhs on January 13, 2006, and having purchased a new residential property on January 2, 2007, claimed deduction under section 54 of the Income-tax Act, 1961. The Assessing Officer declined the claim holding that the assessee failed to deposit the amount in the capital gains account scheme and also failed to purchase house property before the due date of filing the return of income. The Commissioner (Appeals) held that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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