TMI Blog2021 (10) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... e department on the basis of its totally unsubstantiated claim is trying to build up a fresh case on the basis of certain facts which are not available on record. It was in the backdrop of the aforesaid admitted facts i.e the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset that the CIT(A) had thereafter adjudicated the issue under consideration. Backed by our aforesaid deliberations, we are of the considered view that the revenue by now raising the aforesaid claim is trying to change the entire complexion of the case by making a complete volte face and improving upon the assessment by canvassing facts which are not borne from the records. Aforesaid claim raised by the revenue before us, which as observed by us hereinabove clearly militates against the factual position that was admitted by the A.O in the course of the assessment proceedings and formed the very basis of framing the assessment order cannot be accepted, specifically when neither any material in support thereof is available on record or filed in the course of the proceedings before us, nor any contention to the said effect had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Also, as observed by the A.O, the wife of the assessee had sold 5,000 shares of MCPL that were gifted to her by the assessee and the LTCG arising there from was clubbed under Sec. 64(1)(iv) in the hands of the assessee. The assessee had claimed exemption of the entire amount of LTCG arising from the aforesaid transaction of sale of 54,584 shares u/s 54F of the Act. However, the assessee s claim for exemption u/s 54F was rejected by the A.O for two fold reasons, viz. (i). that the assessee on the date of transfer of the original asset i.e shares of MCPL was an owner of more than one residential house, i.e (a) residential house No. 31/348, Akshar Mahol, Telang Cross Road, Matunga, Mumbai- 400 019; and (b) Flat No. 2602, Indiabulls Greens, Panvel, Sawala, Apta Road, Navi Mumbai 410 221 AND ; (ii). that the assessee could not substantiate his claim of having purchased a new residential property by placing on record the copy of the purchase agreement/allotment letter of the new residential property. Rebutting the aforesaid observations of the A.O the assessee tried to impress upon him that his claim for exemption u/s 54F was in order. It was submitted by the assessee that as he was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a residential property within the meaning of Sec. 54F of the Act. In sum and substance, it was observed by the A.O that if the new residential property i.e property at Matunga which was under construction was to be construed as a residential house within the meaning of Sec. 54F of the Act, then, a different meaning could not be given to the under construction flat at Indiabulls Greens, Panvel, Mumbai that was owned by the assessee. Accordingly, on the basis of his aforesaid observations, the A.O was of the view that as the assessee on the date of transfer of the original asset was an owner of more than one residential house, therefore, he was ineligible to claim exemption u/s 54F of the Act. Backed by his aforesaid observations, the A.O after, inter alia, disallowing the assessee s claim for exemption of ₹ 18,13,71,487/- u/s 54F of the Act, vide his order passed u/s 143(3), dated 17.12.2018 assessed his income at ₹ 20,14,44,920/-. 4. Aggrieved, the assessee assailed the order passed by the A.O before the CIT(A). After deliberating at length on the contentions advanced by the assessee, the CIT(A), observed, that as the assessee had vide his letter dated 10.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Also, it was observed by the CIT(A) that from the verification of the return of income filed by the assessee for the preceding years, it was therein discernible that the assessee had never claimed deduction under Sec. 54F in any of the previous years other than the year in question i.e A.Y. 2016-17. Further, it was observed by the CIT(A) that the exemption allowed to the assessee u/s 54F would be withdrawn if he, viz. (i) sells or transfer the new house within three years of its purchase; or (ii) purchases within a period of two years of transfer of the original asset OR constructs within a period of three years of transfer of the aforesaid asset, a residential house other than the new house. Backed by his aforesaid observations the CIT(A) partly allowed the appeal of the assessee. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short D.R ) relied on the assessment order. It was submitted by the ld. D.R that as the assessee at the time of transfer of the original asset i.e shares of MCPL owned two residential houses, therefore, as observed by the A.O, and rightly so, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 54F of the Act. As per the details filed by the assessee in the course of the assessment proceedings the LTCG on sale of 54,584 shares of MCPL was worked out by him as under : Particulars For 49,584 shares (Rs.) For 5,000 shares (Rs.) Total (Rs.) Sale Consideration 18,32,98,645/- 1,84,83,506/- 20,17,82,151/- Less: Expenses (Professional Fees) (79,13,173/-) Nil (79,13,173/-) Net Sale consideration 17,53,85,472/- 1,84,83,506/- 19,38,68,978/- Less : Indexed Cost (1,13,71,449/-) (11,26,042/-) (1,24,97,491/-) Capital Gain as per Indexation 16,40,14,023/- 1,73,57,464/- 18,13,71,487/- Further, the aforesaid LTCG of ₹ 18,13,71,487/- was claimed as exempt by the assessee u/s 54F of the Act, as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not assailed the same any further before us. As regards the claim of the assessee that he on the date of transfer of the original asset did not own more than one residential house, the same, as observed by us at length hereinabove comprised of two limbs, viz. (i). that as the assessee was a joint owner of the residential house at 31/348, Akshar Mahol, Matunga, thus, not being the absolute owner of the said property he could not be held to be the owner of a residential house within the meaning of Sec. 54F of the Act; and (ii). that as the residential property owned by the assessee at Indiabulls Greens, Panvel, Mumbai was on the date of transfer of the original asset an under construction property, therefore, it could not be brought within the meaning of a residential house u/s 54F of the Act. Insofar the claim of the assessee that as he was a joint owner of the residential house at 31/348, Akshar Mahol Matunga, thus, not being the absolute owner of the said property he could not be held to be the owner of a residential house within the meaning of Sec. 54F of the Act is concerned, the same was rejected by the A.O and his view was thereafter upheld by the CIT(A). As the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse property . (emphasis supplied by us) On a perusal of the aforesaid, the conditions contemplated in Clause (a)(i) to (iii) to the 1st proviso of Sec. 54F(1) can be summed up as, viz. (i) that the assessee on the date of transfer of the original asset should not own more than one residential house, other than the new asset; or (ii) that the assessee shall not purchase any residential house, other than new asset within a period of one year after the date of transfer of the original asset; or (iii) that the assessee shall not construct any residential house, other than the new asset within a period of 3 years after the date of transfer of the original asset. At the same time, we find that the embargo contemplated in the Clause (a)(i) to (iii) to the 1st proviso of Sec. 54F(1) is further supplemented by Clause (b) to the 1st proviso of Sec. 54F(1), which provides that the income from such residential property, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head income from house property. In the case before us, we are concerned with the scope and gamut of Clause (a)(i) to the 1st proviso of Sec. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n if he fulfils certain conditions. As per the principles of interpretation, words are to be construed strictly. In this case, the legislature has used the word and amongst the two parts of the proviso (a) and (b). As per English Grammar, use of the word and is conjunctive, meaning whereby that all the listed requirements must be satisfied. The word and requires that the appellant assessee has to satisfy both conditions, (a)(i) or (ii) or (iii) and condition (b). Hence, to be eligible for exemption u/s 54F, the appellant should not have more than one residential house which is capable of generating house property income. As observed by the CIT(A), as the property owned by the assessee at Indiabulls Greens, Panvel, Mumbai, on the date of transfer of the original asset was an under construction property, therefore, the same, as observed by her, and rightly so, could not have generated any income chargeable under the head Income from house property . Backed by her aforesaid observation, the CIT(A) was of the view that as the property in question, viz. Indiabulls Greens, Panvel, Mumbai did not satisfy the condition (b) of the 1st proviso to Sec. 54F, therefore, it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential house, viz. House No. 31/348, Akshar Mahol, Telang Cross Road, Matunga, Mumbai, other than the new asset. 10. Now, coming to the grievance of the revenue, that the CIT(A) had failed to appreciate that as the assessee had purchased the flat at Indiabulls Greens, Panvel, vide agreement dated 11.09.2012 executed between m/s Lucina Land Development Ltd. and Mrs. Mr. Krishanan Muthukumar, therefore, he was on the date of investment an owner of two houses i.e including the house at Matunga. In our considered view, the aforesaid claim raised by the revenue before us does not arises from the orders of the lower authorities, and in fact militates against the factual position that was admitted by the A.O and formed the very basis for framing the assessment. As is discernible from the records, it was the claim of the assessee that as on the date of transfer of the original asset his property at Indiabulls Greens, Panvel was an under construction property, therefore, the same could not be held to be a residential house owned by him. Not rebutting the claim of the assessee that the property in question was an under construction property, the A.O had rejected the said claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, they were owners of both the residential properties, but then, he had at no stage denied the fact that the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset by the assessee. In fact, it is a matter of fact borne from the record that both the lower authorities had adjudicated the issue in hand considering the fact that the property in question, viz. Indiabulls Greens, Panvel was an under construction property on the date of transfer of the original asset. In our considered view, the department on the basis of certain facts which are not borne from the record is trying to change the entire complexion of the case and is seeking to improve upon the assessment, which we are afraid is not permissible under Sec. 254 of the Act. Our aforesaid conviction is fortified by the order of the Special Bench of the ITAT, Mumbai in the case of ACIT Vs. Prakash L. Shah (2008) 115 ITD 167 (Mum)(SB). Elaborating on the limitation on the powers of the department qua raising of contentions that are found to be contrary to the stand taken by the A.O, the Special bench of the ITAT, Mumbai in the case of Mahindr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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