TMI Blog2018 (8) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in favor of assessee. - ITA No. 1136/Mum/2018 - - - Dated:- 4-7-2018 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM For The Appellant : Shri Prakash G Jhunjhunwala, Shri Abhishek Jhunjhunala, ARs For The Respondent : Shri V. Vidhyadhar, DR ORDER PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-33, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-33/Rg.21/385/2015-16 dated 22.12.2017. The Assessment was framed by the Income Tax Officer, Ward-21(3)(5), Mumbai (in short ITO / AO) for the assessment year 2012-13 order dated 26.03.2015 under section 143(3) of the Income Tax Act, 1961(hereinafter the Act ). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the claim of deduction under section 54 of the Act on purchase of new residential house. For this assessee has raised the following three grounds, without prejudice to each other: - The appellant prefers an appeal against the order passed by Ld. Commissioner of Income Tax (A)-33, Mumbai on following amongst other grounds each of which are withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that it has purchased a Flat at B/104, Raheja Exotica, Malad West on 19.04.2011, for a sum of ₹ 91.20 lakhs to the extent of his share. The assessee explained before the AO that he has sold residential flat at B/802, Jupitar CHS, Goregaon West, Mumbai for a total sum of ₹ 1.11 crores on 04.02.2012, which gives long term capital gain of ₹ 83,04,453/-. The assessee claim that in view of the provisions of section 54 of the Act, the assessee is entitled for claim of exemption on the investment/ purchase of new residential house i.e. before the sale of the another residential house, that was sold on 04.02.2012. The AO has not accepted the explanation of the assessee and disallowed the claim of exemption of long term capital gain by observing that the assessee has not utilized capital gains of ₹ 83,04,453/- for purchase of new residential house contending that the new residential house has been purchased out of own sources i.e. savings from saving bank account and bank loans. According to AO, the assessee has not utilized this long term capital gain for the purchase of new assets and not eligible for claim of deduction under section 54 of the act. Aggrieved, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial house on which capital has accrued. The relevant date of purchase of sale reads as under:- a) Purchase of residential house at Barcelona, 19.04.2011 b) Sale of residential house at Vasant Galaxy, Jupiter co-op. Housing society, Goregaon (West) of ₹ 1,11,00,000/- 04.02.2012 7. We also find that the assessee had made purchase of residential house in Malad west and the payments are made as under: - Date Bank name Amount 03.03.2011 Union Bank of India 5,00,000 28.03.2011 Union Bank of India 12,00,000 30.03.2011 Union Bank of India 7,00,000 06.05.2011 Union Bank of India (Home Loan) 67,20,000 Total purchase value 91,20,000 8. From the above, we find that the assessee has sold self-occupied residential flat at B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital 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 nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital 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. 9. From the above provision of section 54(1) of the Act, we observed that capital gains arising on the transfer of a house property which in the two y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of transfer of particular type of capital asset, namely, house property which was being used by the assessee or a parent of his for the purpose of their residence. Entitlement of the exemption under section 54 relates to the cost of the acquisition of a new asset in the nature of a house property for the purpose of his own residence within the specified period. The three decisions relied on by the learned standing counsel for the revenue have no application to the issue raised in this appeal. The statutory provision is clear that it does not call for a different interpretation from what has been given to it by the Commissioner (Appeals) and the Tribunal. 10. We also find that co-ordinate Bench of this Tribunal in the case of ACIT vs. Dr. PS Pasricha for AY 2001-02 in ITA No. 6808/Mum/2003 vide order dated 11-01-2008, wherein Tribunal has interpreted the provision as under: - Having heard the rival submissions and from careful perusal of the Orders of the lower authorities and provisions of section 54 of the Act, we find that the assessee has initially utilized the sale proceeds on sale of its residential flat in commercial properties and later on he purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Once that is so, the assessee was entitled for benefit under section 54F of the Act. Hon ble High court further observed that the Tribunal has categorically observed that the assessee has made investment well within the stipulated period. The investment was more than the capital gain earned by him. The investment made by the assessee being within the stipulated time and more than the capital gain earned by him, the addition was rightly deleted by the Tribunal under the head long-term capital gain. Similar issue also arose before Hon ble Gauhati High Court in the case of CIT vs. Rajesh Kumar Jalan (2006) 286 ITR 286 (Gau), wherein Hon ble High Court observed as under:- We are of the view that the assessee had already appropriated the entire capital gain for purchase of the new asset within the stipulated time. In this regard, we find support from the decision of the Kerala High Court in the case of K.C. Gopalan wherein it was held that the assessee is entitled to exemption under section 54 even though for the construction of the new house, the amount that was received by way of sale of his old property as such was not utilized. It was held by the Kerala High Court that no provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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