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TMI Blog2012 (8) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to which assessee claims to have purchased the property was the same which was occupied by the assessee and it is legally permitted to be constructed by the municipal authorities - assessee is at liberty to show that he is legally entitled to claim deduction under section 54F - claim of deduction under section 54F of the Act is set aside to the file of the Assessing Officer. - IT APPEAL NO. 4141 (MUM.) OF 2010 - - - Dated:- 30-8-2011 - D. MANMOHAN AND T.R. SOOD, JJ. A.K. Nayak for the Appellant. M.P. Makhija for the Respondent. ORDER D. Manmohan, Vice-President. - This appeal is directed against the Order passed by the CIT(A)-32, Mumbai and it pertains to the assessment year 2007-2008. Assessee was an employee of M/s. L T. During the previous year relevant to the assessment year under consideration the assessee derived income from LIC commission, interest, dividend, and capital gains. During the course of scrutiny proceedings, the Assessing Officer noticed that the assessee had surrendered his tenancy rights in favour of M/s. HBS Developers for a consideration of Rs. 1.20 crores. He claimed exemption under section 54F and 54EC of the Act on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase consideration shown against Flat No. 102-B, presumably on the ground that higher of the two purchase value has to be allowed under section 54F of the Act. He thus disallowed Rs. 22,31,500; referable to purchase of Flat No. 102A (394 sq. feet), on the ground that assessee is entitled to claim deduction u/s. 54F only with reference to one residential house. 4. Assessee claimed a further deduction u/s. 54EC of the Act on the ground that he invested a total sum of Rs. 46 lakhs in REC bonds, out of the amount received in respect of surrender of his tenancy rights in the premises situated at bungalow known as 'Mayank'. Investment was made in two different names and accordingly bond certificates were issued for a sum of Rs. 23 lakhs each. In the first certificate Shri Vijay S. Shirodkar was mentioned as the main holder of the bonds whereas Smt. Sabita V. Shirodkar and Renuka R. Jalan were shown as the joint holders. In the light of the decision of the ITAT, Mumbai Bench in the case of Dr. Mrs. Sudha S. Trivedi v. ITO [2009] 31 SOT 38 the Assessing Officer accepted the claim of deduction u/s. 54EC of the Act in respect of the aforesaid investment though his wife and daughter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's wife had instructed REC to remit the maturity proceeds directly to the account of the assessee and REC had agreed to the change readily without asking for any documentation for the reason that they are not concerned with the question as to who among the joint applicants are the true owners of the bonds. It was stated that the REC had confirmed the change vide their letter dated 27.7.2009. Having regard to the factual matrix, learned CIT(A) observed that the payment of the maturity deposit to any one of the bond holders is not a material factor so long as investment was made out of the sale proceeds and assessee's name also figures as one of the investors, more particularly when REC changed the name of recipient in it's records. Thus, CIT(A) held that the assessee had invested in REC bonds. Under the circumstances the Assessing Officer was directed to allow claim of deduction u/s. 54EC of the Act. 9. Aggrieved, the revenue is in appeal before the Tribunal. Case of the revenue is that the claim of purchase of two properties was bogus/non-genuine and hence the assessee is not entitled to claim deduction u/s. 54EC of the Act on the strength of the registered deeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s. 54EC of the Act, learned counsel submitted that the assessee is a co-holder of REC bonds and in fact a letter was obtained from REC to prove that the maturity proceeds would directly be sent to the account of the assessee. Under the circumstances, decision of ITAT, Mumbai Bench in the case of Dr. Mrs. Sudha Trivedi ( supra ) squarely covers the issue. He thus supported the order of learned CIT(A). 13. We have carefully considered the rival submission and perused the record. It is well settled that in order to claim any deduction against taxable income, initial onus is cast upon the assessee to prove that he has complied with the conditions laid down therein. Under section 54F of the I.T. Act, a deduction is permissible against the consideration received on surrender of tenancy rights provided assessee has purchased a residential house within a period of two years. In the instant case, the documents produced by the assessee smacks of bona fide deal. Assessee has worked for L T for a considerable length of period and was aware of his tenancy rights and the implications therein and hence, it cannot be said that he is not aware of what should be the precaution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the flat. No doubt sale deeds in respect of Flat No. 102-A and 102-B were produced but it is not established that such construction was legally permitted by the Municipal Authorities i.e., by joining the two flats. Despite lack of evidence, Assessing Officer was reasonable in allowing deduction under section 54F of the Act to the extent of Rs. 31,64,120. 16. On a conspectus of the matter, we are of the view that deduction under section 54F of the Act is permissible only upon furnishing admissible evidence to show that the assessee has purchased a residential house within a period of two years. In the interest of justice, we direct the Assessing Officer to give the assessee one more opportunity to prove that the sale deeds with reference to which assessee claims to have purchased the property was the same which was occupied by the assessee and it is legally permitted to be constructed by the municipal authorities. It may not be out of place to mention that if the construction is illegal and the same is not compounded or regularized by the municipal authorities, it may not, in strict legal sense, be treated as a purchase of a residential house. However, the assessee is at l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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