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2015 (6) TMI 720 - ITAT PUNE

2015 (6) TMI 720 - ITAT PUNE - TMI - Entitlement to benefit of deduction u/s. 54F - long term capital gain on sale of shares invested towards purchase of a flat - allegation of the AO that it is only a lease and not a purchase - Assessing Officer denied the deduction on the ground that the assessee has made the claim under wrong provision and the correct provision is Section 54F - CIT(A) allowed claim of deduction u/s. 54F issue as raised in additional ground - Held that:- Hon'ble Bombay High Co .....

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hange of circumstances or law, but with additional grounds which were available when the return was filed. The words "could not have been raised" must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. In the instant case the assessee has already made a claim although under the wrong head. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) allowing the claim .....

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the instant case the lease is for a period of 999 years subject to renewal for further period of 999 years. Further, as per clause 26 of the lease agreement, the assessee enjoys all the rights, i.e. transfer, mortgage, sub-lease etc. Therefore, it cannot be said that the assessee is not the owner of the property.

Amount of deduction to be allowed u/s.54F - we find it is an admitted fact that the assessee has not deposited the sale proceeds in the specified bank account till 31-03-2009 .....

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the extent of ₹ 55,40,625/- as against ₹ 100,03,125/- allowed by the Ld. CIT(A). As in the instant case the assessee has utilized a part of capital gain towards purchase of flat which is not in dispute. Therefore, we are of the considered opinion that the assessee is entitled to deduction u/s. 54F to the extent of ₹ 55,40,625/- only. - Decided partly in favour of Revenue. - ITA No. 69/PN/2014 - Dated:- 20-5-2015 - Sushma Chowla, JM And R. K. Panda, AM,JJ. For the Appellant : S .....

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#8377; 1,44,13,610/-. During the course of assessment proceedings, the AO observed that the assessee has earned long term capital gain from sale of shares at ₹ 1,67,70,424/- and short term capital gain of ₹ 5,95,155/-. The long term capital gain was derived by selling 762792 shares of Mangalam Drugs & Organics Ltd. to IPCA Laboratories off market for a consideration of ₹ 2,44,09,344/-. She has claimed D.P. Charges of ₹ 16,000/- and showed net receipt of ₹ 2,43,9 .....

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ve 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 ₹ 1,34,59,685/- and till 23-11-2009, an amount of ₹ 98,50,000/- has been paid. Possession of the said flat has not been given till date. He, therefore, held that even if .....

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9-12-2007 he observed that the assessee is a lessee for Unit No. 0081001 in Tower No. 008 of Amanora Park Town, Hadapsar, Pune. The lease is for a period of 999 years commencing from the date of the lease deed i.e. 29-01-2007, for a total one time premium of ₹ 1,23,12,500/- and at an yearly rent of ₹ 1. Since, the assessee is not the owner of the property but merely a lessee and as the deduction available u/s. 54F is for purchase of a house and not for a leased property, the Assessin .....

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ble to claim the deduction u/s. 54F of the Act. He also rejected the contention of the assessee that it is a deemed purchase. From the details received by him u/s. 133(6) of the I.T. Act the Assessing Officer noted that City Corporation Ltd. has not given possession till 23-11-2009 and the tentative possession date is going to be in April, 2010. Therefore, he concluded that the assessee has not completed the purchase, if any, within the stipulated time and therefore is ineligible for the said de .....

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instead of claiming the same u/s. 54F 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 durin .....

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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 lease premium of ₹ 1,23,12,500/- is to be paid before the possession which is in the nature of the purchase consideration. It was argued that the characteristics and rights attached to property under the lease are similar to the rights obtained by a purchase .....

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lder for construction of the flat and not for purchase of the flat. Therefore, the time limit for construction of house available to the assessee according to Section 54F is of three years from the date of transfer of the capital asset and not of two years. For the above proposition the assessee relied on various decisions. It was further stated that the assessee has purchased the property for total consideration of ₹ 1,23,12,500/- being one time lease premium and further by paying amount .....

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to hand over the possession of the flat on or before 30-09- 2009. Had the builder fulfilled his commitment, the assessee would have obtained possession of the flat before 30-09-2009 i.e. within the period of three years from the date of transfer of original capital asset. It was argued that there is no delay on part of the assessee in making payments of the installments to the builder. The delay in getting possession of the property was not attributable to the assessee and the same was for the .....

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f ₹ 1,24,65,625/- as against the amount of ₹ 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 ₹ 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 ₹ 1,00,03. .....

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the lease agreement the assessee enjoys all the rights i.e. transfer, mortgage, assignment, sub-lease etc., which are enjoyed by the owner of the immovable property. Therefore, considering the long period of lease, which is as good as permanent and nature of the rights enjoyed by the assessee, he held that the assessee is owner of the property and therefore, she can be treated as a purchaser for the purpose of Section 54F. He observed that Courts have interpreted in a liberal manner to hold tha .....

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s not provide that the construction should be completed within the prescribed time limit. Since, the assessee in the instant case has paid approximately 80% of the payment before the time limit of three years, he held that the assessee is entitled to claim deduction u/s. 54F of the Act. Since, the assessee according to him has paid an amount of ₹ 1,00,03,125/- before the period of three years from the date of transfer of original assets, he held that the assessee is entitled to claim deduc .....

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he facts and circumstances of the case the Ld. Commissioner of Income tax (Appeals) grossly erred in allowing deduction u/s 54F of ₹ 1,00,03,125/- without considering the fact that the assessee has claimed ₹ 30,78,228/- in the return. 4. the facts and in the circumstances 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 b .....

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erring 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(1). 9. The Ld. Couns .....

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is not the owner of the flat as envisaged in provisions of Section 54F of the Act. 9.1 He submitted that the Ld. CIT(A) allowed the claim of deduction u/s. 54F to the extent of ₹ 1,00,03,125/- which the assessee has paid within the period of three years from the date of transfer of shares towards purchase of flat. Referring to Page 15 of the Paper Book he drew the attention of the Bench to the details of payments made to the builder for purchase of flat the details of which are as under : .....

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od of three years from the date of sale of shares. Referring to the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. MS. Jagrity Aggarwal reported in 339 ITR 610 he submitted that the Hon'ble High Court in the said decision has held that Sub-section (4) of Section 139 of the Act is, in fact, a proviso to Sub-section (1) of Section 139 of the Act. Therefore, if a person has not furnished the return of the previous year within the time allowed under Sub-section .....

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ng 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 Mum .....

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Vs. Pruthvi Brokers and Shareholders P. Ltd. reported in 349 ITR 336 has held that the assessee can make a claim before the appellate authority even if no claim was made before the Assessing Officer. However, in the instant case the assessee has already made a claim although under the wrong Section. He submitted that admittedly the assessee has not deposited the sale proceeds in the specified bank account under capital gain scheme. However, the assessee has paid an amount of ₹ 55,40,625/- .....

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es, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the assessee had claimed deduction of ₹ 30,78,228/- u/s.54 being long term capital gain on sale of shares invested towards purchase of a flat. The Assessing Officer denied the deduction on the ground that the assessee has made the claim under wrong provision and the correct provision is .....

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allowed to the assessee to this extent as against the amount of ₹ 30,78,228/- inadvertently claimed. Alternatively it was argued that the assessee has paid an amount of ₹ 1,00,03,125/- within the period of three years form the date of transfer of the original asset and therefore the same should be allowed as deduction u/s. 54F. We find the Ld. CIT(A) directed the Assessing Officer to allow claim of deduction u/s. 54F amounting to ₹ 1,00,03,125/- which the assessee has paid with .....

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ase 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 .....

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ion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words "could not have been raised" must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its ow .....

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the case of Mrs. Prema P. Shah (supra). In the above decision the Tribunal has held that the lease is valid for a period of 150 years, which is in perpetuity and as such, the assessee is as good as absolute owner of the property. In the instant case the lease is for a period of 999 years subject to renewal for further period of 999 years. Further, as per clause 26 of the lease agreement, the assessee enjoys all the rights, i.e. transfer, mortgage, sub-lease etc. Therefore, it cannot be said tha .....

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ty for ₹ 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 assessee had purchased a new residential property on 2n .....

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x 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 January 2, 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. T .....

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sub-section (1) to file the return. Therefore, such provision was not an independent provision, but relates to the time contemplated under sub-section (1) of section 139. Therefore, sub-section (4) had to be read along with sub-section (1). Therefore, the due date for furnishing the return of income according to section 139(1) of the Act was subject to the extended period provided under subsection (4) of section 139 of the Act." 14. We find following the above decisions, the Pune Bench of .....

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