2021 (3) TMI 879 - AT - Income Tax

Capital gain computation - applicability of proviso to Section 50C - Admissibility of deductio u/s 54F - residential house property purchased in the name of his wife - HELD THAT - Proviso to Section 50C of the Act is applicable in the case of assessee as the entire sale consideration was received by the assessee through cheque before execution of the registration of the sale deed, therefore, the amount received by the assessee at the time of entered into an agreement has to be taken for the purpose of computing full value of consideration for such transfer. From perusal of the record, we also observed that the assessee as placed on record a chart which is at page No. 75 of the paper book which contains that similar situated properties were registered and the DLC value was taken at ₹ 1500 per sq.mt. which was registered up to 11/04/2011 and office order from the office of Sr. Regional Manager, RIICO Ltd. Kota dated 09/02/2011 has also been placed on record which shows that the rates of Indraprastha Industrial Area, Kota were revised from ₹ 1500 per sq.mt to ₹ 2000/- per sq. mt. vide office order dated 09/02/2011 and since admittedly, the agreement to sell was entered into between the parties with regard to sale of the property on 15/11/2010 and the entire sale consideration was paid in two installments on 16/11/2010 and 08/12/2010, however, the registered sale deed could be got executed on 20/04/2011 at that time, revised rates had come into operation but because of our detailed reasoning above by applying proviso to Section 50C of the Act, the rates prevalent at the time of agreement i.e. 15/11/2010 could be applicable in the present case for the purpose of computing full value of consideration for such transfer. A.O. has also made disallowance of improvement cost and making investment of the entire consideration in the new residential house as a new residential house was purchased by the assessee in the name of his wife. In the present case, the assessee had purchased house in the name of his wife, therefore, the Coordinate Bench in SMT. SUNITA SHARMA 2013 (1) TMI 1011 - ITAT CHANDIGARH held that the assessee is not disentitled for exemption U/s 54F of the Act and the said proposition has further been upheld by the coordinate bench of this Tribunal in the case of Shri Vivek Jain 2017 (12) TMI 1769 - ITAT JAIPUR wherein the assessee was found eligible for deduction U/s 54F of the Act in respect of residential house property purchased in the name of his wife. Since the factual position in this case is not in dispute, therefore, while applying the principles laid down by the Coordinate Benches as above and also respectfully following the decision of Hon ble Rajasthan High Court in the case of Sh. Mahadev Balai Vs ITO 2017 (1) TMI 183 - ITAT JAIPUR we also hold that the assessee is eligible for deduction U/s 54F of the Act in respect of residential house property purchased in the name of his wife. Considering the totality of facts and circumstances of the case, we direct to delete the addition so made and confirmed qua this issue. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of ?16,89,423 confirmed by ld. CIT(A) in the appeal filed by the assessee against the order of ld.CIT(A) for A.Y. 2012-13.

Detailed Analysis:

Issue 1: Addition of ?16,89,423
The assessee challenged the addition of ?16,89,423 confirmed by the ld. CIT(A) in the appeal before ITAT. The dispute arose from the disallowance of improvement cost and the investment made by the assessee in purchasing a residential house in his wife's name. The assessee sold an industrial plot for ?11,25,000 in two installments through cheques. The AO treated the DLV value on the date of registration as the full value of consideration, resulting in the addition. The assessee argued that the agreement for sale was executed before the increase in DLC rates, and the entire sale consideration was received before registration. The assessee presented evidence, including the sale deed, bank statements, and DLC rate charts, to support the claim. The ITAT noted that the proviso to Section 50C of the Act, which is curative in nature, could be applied retrospectively. Citing precedents, the ITAT held that the proviso applied to the assessee's case, allowing the consideration received at the time of the agreement to be used for computing the full value of consideration for the transfer.

The ITAT also considered the disallowance of improvement cost and the investment in a new residential house. The assessee provided evidence, including an agreement, ITR computation, balance sheet, and valuation reports. The ITAT found the engineer's valuation report unchallenged and in compliance with Section 54F of the Act. Citing previous tribunal decisions and high court rulings, the ITAT concluded that purchasing a property in the spouse's name did not disqualify the assessee from claiming exemption under Section 54F. Therefore, the ITAT directed the deletion of the addition, allowing the appeal of the assessee.

In conclusion, the ITAT allowed the appeal of the assessee, holding that the addition of ?16,89,423 was unwarranted based on the evidence presented and the application of relevant legal provisions and precedents.