9911796707
TMI Blog2025 (5) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of 1,07,33,165/- towards the amount deposited in SBI capital gain account scheme within the time limit against the capital gain on sale of residential property by the appellant without considering the facts and circumstances of the case." 3. Ground No. 1 is general in nature, and therefore, the same needs no separate adjudication. 4. The issue arising in Ground No. 2, raised in assessee's appeal, pertains to taxability of the gains arising from the surrender of LIC policy under the head "Income from Other Sources" instead of "Capital Gains". 5. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and filed his return of income for the year under consideration in the capacity of a non-resident Indian declaring a total income of INR 2,40,670. Thereafter, the assessee filed the revised return of income on 31/03/2018, declaring a total income of INR 5,11,880. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, on the basis of the information received from ITO (I & CI), Unit-2(1), Mumbai, wherein it was reported that the assessee has prematurely surrendered the pension ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to INR 28,56,026 earned from the surrender of the LIC policy is taxable under section 56 of the Act. Being aggrieved, the assessee is in appeal before us. 7. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee invested in LIC Market Plus-1 Policy No. 903629621 and paid a yearly premium of INR 15 lakh. On 28/03/2016, the assessee surrendered the said policy and received an amount of INR 88,56,026, which was offered for taxation as capital gains. The AO, on the basis that the policy was an annuity/deferred pension plan as referred to in section 10(23AAB) of the Act, held that the proceeds from the surrender of such pension plan are taxable under section 80-CCC(2) of the Act. Accordingly, the AO made the addition with respect to the difference between the maturity value and investment value under section 80-CCC(2) of the Act. The learned CIT(A), vide impugned order, granted partial relief to the assessee and held that since the assessee has not claimed any deduction under section 80-CCC(1) of the Act in respect of the payment of premium related to LIC Market Plus-1 Policy, therefore addition cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) in treating the same as not covered under the provisions of section 2(14) of the Act. 10. During the hearing, the learned Departmental Representative ("learned DR") raised a plea that the amendment by the Finance Act, 2021 to section 2(14) of the Act, whereby ULIP is considered to be a capital asset, was made with effect from 01/04/2021, and therefore, the same is not applicable to the year under consideration. Thus, it was submitted that, accordingly, the accretion from the surrender of the policy will be taxable only under the head "Income from Other Sources" during the year under consideration. From the perusal of the memorandum explaining the provisions of the Finance Act, 2021, we find that the amendment was brought in to overcome the mischief of high-net-worth individuals claiming exemption under section 10(10D) of the Act by investing in ULIP with a huge premium. Since allowing the exemption to policies with huge premium was defeating the legislative intent as the legislature intended to provide benefit to small and genuine cases of life insurance, vide aforesaid amendment, the amount of premium payable for claiming the benefit under section 10(10D) of the Act was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 12. The issue arising in Ground No. 3, raised in assessee's appeal, pertains to the disallowance of exemption claimed under section 54 of the Act. 13. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the re-assessment proceedings, in addition to the reasons recorded for reopening (i.e. proceeds from the LIC pension plan), it was observed that the assessee also indulged in the transactions relating to immovable properties during the year under consideration. It was noticed that the assessee sold two immovable properties during the year under consideration, and claimed an exemption under section 54 of the Act. Accordingly, the assessee was asked to explain the capital gains earned on the sale of the immovable properties. In response, the assessee submitted that he deposited an amount of INR 1,07,23,165 in the Capital Gains Scheme Account, and subsequently, invested the long-term capital gains for the purchase of a new residential house on 02/02/2019. 14. The AO, vide assessment order passed under section 147 read with section 144C(3) of the Act, held that as per the provisions of the Act, prevailing during the year under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow deduction u/s.54 of the I.T. Act. The appellant purchased new flat no.2003 Ajmera Treon, 'B' Wing, Wadala Link Road, Wadala East vide allotment letter dated 03.08.2015. The construction of the flat was completed and possession of the flat was given by the builder to the appellant vide agreement dated 02.02.2019. The case of the appellant is that out of capital gain of Rs. 1,24,96,570/- Rs. 1,07,33,165/- was deposited in Capital Gain A/c. scheme with state Bank of India. Out of which the amount of Rs. 75,24,765/- was paid to the builder and Rs. 32,08,400/- was paid for stamp duty and registration charges for purchase of the property. The appellant has not given the details of datewise payment made to the builder in respect of purchase of the flat. The appellant has provided a copy of bank account with Citibank bearing A/c. No.55XX3XXX07 in the name of Sanjeev Behl for the period from 01.04.2015 to 31.03.2016. From the bank account, it is seen that amount of Rs. 2,20,00,000/- has been transferred from Simpson E V on 14.03.2016. Other than this no other amount has been deposited in the Citibank Account. It is stated by the appellant that the amount of Rs. 1,07,33,16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2019, the date on which the assessee was required to construct the new residential property as per provisions of Section 54 of the Act. The sale agreement has been registered with Sub Registrar on 02.02.2019 therefore, the appellant became the owner of the property as on the date of the sale deed and not the date on which actual possession was taken by the appellant. Thus, the appellant constructed a new house property within a period of 3 years from the end of the date of sale of 2 old properties. However, as discussed above, the appellant has not proved with evidences that the amount of Rs. 1,07,33,165/- was invested into SBI Capital Gain Account scheme from sale proceeds from sale of 2 old residential properties and also the amount paid to the builder amounting to Rs. 75,24,765/- and Rs. 22,08,400/- was utilized for payment of stamp duty and registration charges was from withdrawal from the SBI Capital Gain Account scheme. Thus, in absence of documentary evidences regarding utilization of amount deposited in Capital Gain Account scheme and deposit of sale proceeds/capital gain from sale of old property in to Capital Gain Account scheme, the deduction of Rs. 1,07,33,165/- claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the benefit of section 54 of the Act is only available when the assessee sells one residential property. Since, in the present case, the assessee has sold two residential properties on 18/02/2016, therefore, the learned CIT(A) held that the benefit under section 54 of the Act could not be given to the assessee. In this regard, the learned CIT(A) placed reliance upon the decision of the coordinate bench of the Tribunal in Nilufer Sayed vs. ITO, reported in [2021] 126 Taxmann.com 173 (Mum-Trib.). From the perusal of the aforesaid decision, we find that the Tribunal was analysing the provisions of section 54 of the Act in the facts wherein the taxpayer invested the capital gains earned from the sale of the residential property in two flats. Therefore, in view of the fact that prior to the amendment by the Finance (No. 2) Act, 2014, section 54 of the Act required the assessee to purchase or construct "a residential house", the Tribunal decided the issue in favour of the taxpayer and held that the taxpayer would be eligible to claim exemption under section 54 on account of investment made in both flats for the assessment year 2011-12. However, in the present case, such is not the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial house has been invested in a residential house. Therefore, even if two flats are sold in two different years, and the capital gain of both the flats is invested in one residential house, exemption u/s 54 will be available in case of sale of each flat provided the time limit of construction or purchase of the new residential house is fulfilled in case of each flat sold." 20. Therefore, respectfully following the aforesaid decision of the coordinate bench of the Tribunal, we do not find any merit in the findings of the lower authorities that since the assessee has sold two residential house properties, the exemption under section 54 of the Act is not available to the assessee. 21. As noted elsewhere, the exemption under section 54 of the Act is available only if the assessee either purchases the new residential property either one year before or two years after the transfer of the original asset or constructs a residential house within a period of 3 years from the date of transfer of the original asset. From the record, it is evident that the AO, vide assessment order, held that the assessee failed to construct a residential house within a period of 3 years from the date of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
