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TMI Blog2017 (1) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/Mum/2014 - - - Dated:- 4-11-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain , Judicial Member For The Assessee : Shri Ajay R. Singh For The Revenue : Shri Ravinder Sindhu ORDER Per Jason P. Boaz, A.M. These are cross appeals, one by the assessee and the other by Revenue, directed against the order of the CIT(A)-3, Mumbai dated 22.09.2014 for A.Y. 2010-11. 2. The facts of the case, briefly, are as under: - 2.1 The assessee filed the return of income for A.Y. 2010-11 on 09.10.2010 declaring total income of ₹ 60,80,920/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was subsequently taken up for scrutiny. The assessment was completed under section 143(3) of the Act vide order dated 11.03.2013, wherein the assessee s income was determined at ₹ 2,41,41,920/- in view of the following additions/disallowances: - (i) Disallowance of 20% of Professional Expenses ₹ 3,86,890/- (ii) Disallowance out of interest expenditure ₹ 5,77,205/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by the learned D.R. on the decision of the AO in holding that the assessee was not eligible for exemption under section 54 of the Act. 4.3 Per contra, the learned A.R. of the assessee supported the decision of the learned CIT(A) in the impugned order holding the assessee eligible to claim and be allowed exemption under section 54 of the Act. According to the learned A.R., the assessee had purchased flat No. 1303 and 1304 in Oshiwara Yashodeep CHS Ltd. for ₹ 42,73,360/- on 12.07.2004 and sold the same on 25.11.2009 for Rs. 2,16,08,967/- resulting in capital gains of ₹ 1,60,65,590/-. The assessee has purchased two flats No. 3205 and 3206 in Oberoi Springs on 05.08.2009 for ₹ 3,26,47,674/-, but claimed exemption of ₹ 1,63,25,027/- under section 54 of the Act in respect of one flat i.e. No. 3205, Oberoi Springs. The above flat was purchased in the joint names of the assessee and his wife, inter alia, with the loan of ₹ 1.25 crores taken from Kotak Mahindra Bank (details at pg. 138 and 139 of paper book) and claimed exemption under section 54 of the Act. It is submitted that the AO denied the assessee the exemption claimed under section 54 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed deduction u/s. 54 for the entire capital gains on the purchase of flat No., 3205 of Oberoi Springs., Andheri, on 05-082009, tin the joint name of self and his wifre Vidhi Krishna Acharya. The Assessing Officer denied the deduction u/s. 54 on the following two grounds. I. The new property in Oberoi Springs is not solely in the name of the assessee. II. The investment has not been made in the new property from the sale consideration of the original asset. 1.3 It is the appellant's contention that the provisions of section 54 do not prohibit the assessee from purchasing the new asset in a joint name or from purchasing the new asset from borrowed funds. I am in agreement with the appellant that the provisions of section 54 lay down no such embargo, as made out by the AO. For the sake of clarity the provisions are reproduced hereunder: 54. [(1)] Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset of***], being buildings or lands appurtenant thereto, and being a residential house, the income of which is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter, within the period specified under section 54(1), the assessee purchased two adjoining residential flats in one building for a total consideration of ₹ 104.78 lakhs and gave them on rent to two different tenants. The assessee worked out the capital gain arising on sale of the aforesaid flat approximately at ₹ 1.24 crores. The assessee further claimed deduction of ₹ 104.78 lakhs under section 54(1) and, thus, returned the taxable capital gain at ₹ 19.23 lakhs. The Assessing Officer denied the deduction under section 54 on the grounds that the sale proceeds from the original flat were not deployed fully in the new flats, and that the assessee had not purchased one single property, but two units. On appeal, the Commissioner (Appeals) held that the assessee was entitled to deduction under section 54 (1) even when the capital gain was invested in more than one flat and that the entire sale proceeds were utilized for purchase of both the flats in question. The Commissioner (Appeals), therefore, allowed the deduction under section 54(1) as claimed by the assessee. On second appeal, the revenue contended that the sale proceeds were utilized by the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee and the assessee has, within the period of one year before or two years after the date on which the transfer took place purchase or has, within the period of three years after the date of transfer, construct residential house, then instead of capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the provisions made under the section which grants exemption from payment of capital gains as set out thereunder. Therefore, in the entire section 54, the purchase to be made or the construction to be put up by the assessee should be there in the name of the assessee, is not expressly stated. Similarly, even in respect of section 54EC, the assessee has at any time within a period of six months after the date of such transfer invested the whole or any part of the capital gains in the long term specified asset then she would be entitled to the benefit mentioned in the said section. There also, it is not expressly stated that the investment should be in the name of the assessee. Therefore, to attract section 54 and section 54EC what is material is the investment of the sale consideration in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below and the judicial pronouncements cited (supra). In respect of the issue of purchase of the new asset (flat No. 3205 3206 at Oberoi Springs) in the joint names of the assessee and his wife, we find that the provisions of section 54 of the Act do not prohibit the same or mandate that the purchase of the property should be shown entirely in the assessee s name. In the case on hand even though the wife is shown as joint owner in the sale deed, the AO has not doubted that the consideration for acquisition of the new asset has flown from the assessee; including the loan taken from Kotak Mahindra Bank. In fact, the property is admittedly reflected in the assessee s Balance Sheet. In this factual matrix of the case, in our considered view, the assessee cannot be denied exemption under section 54 of the Act. This view was upheld, on similar facts, by the Hon'ble Karnataka High Court in the case of DIT (IT) vs. Mrs Jennifer Bhide (2012) 349 ITR 80 (Kar). In this factual and legal matrix of the case, drawing support from the ratio of the decision of the Hon'ble Karnataka High Court in the case of Mrs. Jennifer Bhide (supra), we uphold the decision of the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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