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2016 (8) TMI 819 - ITAT MUMBAI

2016 (8) TMI 819 - ITAT MUMBAI - TMI - Entitlement to exemption claimed u/s 54 - CIT(A) allowed the claim - Held that:- As the assessee infact using one residential unit consisting of four flats and therefore, on sale of such residential unit, the LTCG from the sale of residential unit of flat no. 1201A in “Evita” building was eligible for exemption u/s 54 of the Act in purchasing the residential unit (3 flats) 2203A, 2203B, 2203C & 2203D in “Richmond”. Thus, we do not find any illegality or inf .....

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lause (v) of sub-section (2) of section 56 of the Act. Thus, we hold that the order of CIT(A) does not suffer from any illegality or infirmity, thus this Ground of appeal raised by Revenue has also no force and the same is dismissed.- Decided in favour of assessee. - ITA No.7225/Mum/2014 - Dated:- 20-7-2016 - SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Revenue : Shri Maurya Pratap (DR) For The Assessee : Shri Haresh P. Khunadia (AR) ORDER PER PAWAN SINGH, J .....

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ng the addition on account of cessation of liability of unsecured loan ? 2. The brief facts of the case are that the assessee filed its return of income for relevant AY on 06.07.2010 showing total income of ₹ 15,70,601/-. The return of income as selected for scrutiny. While framing assessment order, the Assessing Officer (AO) disallowed exemption holding that assessee sold four flats bearing Nos. 1201A, 1201B, 1201C and 1201D in building known as Evita at Hiranandani Garden, Powai, Mumbai, .....

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ave heard Ld DR for revenue and Ld AR for assessee and perused the material available on record. Departmental Representative (DR) for Revenue argued that the assessee was not entitled for the exemption u/s 54 of the Act. The assessee during the year under consideration sold four residential flat which were four different units in Evita at Hiranandani Garden, Powai, Mumbai. There were four electricity meter and after sale of the flats assessee purchased three residential flat no. 2203A, 2203B &am .....

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1201D, though there was four different agreement for acquiring the said residential unit but it was one residential house. All four units comprise one flat having a kitchen, common passage and single entrance and even as per society record, it was one residential house on 12th floor of the building. The assessee purchased one residential unit i.e. flat no. 2203 and building known at Richmond at Hiranandani Garden, Powai, the said residential unit are divided into three residential unit of the s .....

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TO vs. Ms. Sushila M. Jhaveri [2000] 107 ITD 327 (Mum)(SB) and further in K.G.Vyas vs. Seventh Income Tax Officer. 4. We have considered the rival contentions of the parties and perused the material available on record. Section 54 of the Income-tax Act deals with the provisions for profit on sale of property used for residence which may be read as under: 54. [Subject to the provision of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family] the capita .....

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house], then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain [is greater than the cost of [the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset .....

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tal gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. [(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing .....

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shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount not so .....

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sidential house consisting four flats and purchase of new residential house (consisting of three flats), the amount of ₹ 14,93,942/- was offered as LTCG and after claiming the exemption u/s 54 of the Act, however, the AO denied the exemption that four units sold through different agreements and all units were treated as separate unit contrary to the claim asserted by assessee. Further, the assessee has obtained the loan from purchased units (4) in the year 2005 and at the time of sale of t .....

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cts of the case. The appellant during the year under consideration had sold four units i.e. Flat No. 1201A, 1201B, 1201C & 1201D. These units had been sold through four different Sale-deeds and had been purchased from the builder through four different agreements. The appellant has submitted that though these units had been purchased and sold through four different agreements / Deeds but these being on the same floor and being contiguous, were used as one residential flat by the appellant ha .....

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its as different independent units. The detailed reasons of the AO for doing so, have already been reproduced above. The AO therefore, restricted exemption u/s. 54 of the LT. Act to sale and purchase of only one unit. In this regard, it is seen that the appellant had placed on record of the AO and has again filed a copy of typical floor plan of the units purchased and sold, which shows that the units purchased as well as sold were on the same floor and were contiguous. From the copy of electrici .....

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Tower, Cliff Avenue, Hiranandani Gardens, Powai and not separately in the address of three different units of 2203A, 2203B & 2203C. Thus both the units purchased and sold were on the same floor and were contiguous having one common electricity meter, one kitchen and one entrance as confirmed by the builder. Therefore, though there were different agreements/deeds of purchase and sale in respect of these units but they were being used by the appellant as one residential flat having one common .....

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y maintenance bills were also in the separate name of the units. However, these maintenance bills alone do not in any way establish that the four units were not used by the appellant as one residential flat. 15. With regard to AO's observation that the repayment of loan to Citibank had been made through four different cheques, as mentioned in four different sale-deeds of the units, it is seen that the loan account is bearing a common Account No. i.e. 216931. The appellant has placed on recor .....

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rd, it is seen that Unit No. 1201A & 1201B have been sold to Mr. Rajaish Bajpaee and units No. 1201C & 1201D have been sold to Mrs. Vandana Bajpaee. Thus, the units have not been sold not to two different persons but to husband and wife. The price of the property sold being very high, there is nothing wrong with the registration of the property being done in the name of husband and wife partly rather than the whole of the property being sold to only one person . 6. The Co-ordinate Bench .....

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d counsel for the assessee wherein exemption was allowed in respect of investments in two adjacent or contiguous units converted into one residential house by having common passage/stair case, common kitchen, etc. intended to be used as single house for the residence of the family. Further, the Karnataka High Court in case of D. Ananda Basappa held as under: Sec. 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural. The con .....

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osition. After all, the HUF property is held by the members as joint tenants. The members keeping in view the future needs in event of separation, purchase more than one residential building, it cannot be said that the benefit of exemption is to be denied under s. 54(1). On facts, it is shown by the assessee that the apartments are situated side by side. The builder has also stated that he has effected modification of the flats to make it as one unit by opening the door in between two apartments .....

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hese flats is allowable in accordance with s. 54 r/w s. 54F. Further, the Hon ble jurisdictional High Court in case of CIT vs. Ramankumar Suri held that exemption can be claimed for different flats joined together treating one flat only and held as under: We find no fault with the order of the Tribunal which has upheld the finding of fact of the Commissioner of Income Tax (Appeals) to the effect though the respondent- assessee had purchased flat Nos. 416A and 516A it was only purchase of one res .....

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to the extent the consideration is paid for the purpose of a residential house: Consequently, where respondent-assessee has acquired one residential house consisting of two flats, it cannot be said the respondent assessee had purchased two residential houses. 7. In view of the above factual and legal discussion narrated above, we may conclude that the assessee infact using one residential unit consisting of four flats and therefore, on sale of such residential unit, the LTCG from the sale of res .....

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nsecured loan of ₹ 7,88,000/- from his close relative Mrs Manuben Rathod who was real sister of his father and she has expired on 22.11.2009 leaving behind no legal heir, thus the liability of the assessee ceased. Ld DR for revenue supported the order of AO. We have seen that during the assessment proceeding, the AO observed that confirmation of unsecured loan, was unsigned, the assessee was asked to explain to give the explanation about the unsecured loan from Mrs. Manuben Rathod. The ass .....

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