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TMI Blog2018 (10) TMI 1933X X X X Extracts X X X X X X X X Extracts X X X X ..... it is alleged that it was being used as a godown, in the face of the judicial precedent is not relevant. Admittedly as per the Chandigarh Administration Town Planning, the specific property is described as SCF i.e. shop-cum-flat wherein detailed shop-cumresidential flat plan etc. as per the map approved is available. The issues have been enquired into by the AO in the course of the assessment proceedings as for this specific purpose, admittedly the case was selected for scrutiny in CASS. Before the AO, the assessee s explanation has been offered. The plan and the map site etc. have all been made available. Nothing has been brought out in the order to show the status of the property at the time of investment. Accordingly, in the peculiar facts and circumstances of the present case, the Explanation 2(a) of Section 263 of the Income Tax Act is not attracted. - Decided in favour of assessee. - ITA No. 627/CHD/2017 - - - Dated:- 8-10-2018 - Smt. Diva Singh, JM Dr. B.R.R. Kumar, AM For the Assessee : Shri Ajay Jain, CA. For the Revenue : Mrs. Mona Mohanty, CIT-DR. ORDER PER DIVA SINGH The present appeal has been filed by the assessee assai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which is not a fact in the present case. Thus, for the Tax Authorities to go beyond the scope and pass orders after a huge lapse of time considering the permissible use of the said property for deciding the issue of investment made in October, 2012 is de-horse facts and law. The Pr. CIT-I Chandigarh, it was submitted, has passed an order wherein he has failed to point out any error committed by the AO at the time of passing the order let alone such an error which is prejudicial to the interests of the Revenue. 2.1. Apart from these arguments assailing the foundation of the order, it was submitted that the AO in the course of the assessment proceedings before passing the order dated 12.09.2014 had specifically enquired into and considered the submissions on the said issue of investment. Inviting attention to the copy of the office note in the assessment order which has been extracted in the impugned order in para 4, it was submitted that the case of the assessee was selected under CASS specifically for the reason that the assessee had claimed deduction u/s 54. Reference to the specific property being sold i.e. Booth No. 36 Sector 8B Chandigarh on 25.10.2011 for total co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n being re-examined under the 263 where no error had been pointed out by the Pr. CIT. Copy of the letter issued by the Estate Officer, U.T. Chandigarh dated 26.10.2012 showing that the property purchased by the assessee was SCF (shop-cum-flat) and the first floor of which consisted of drawing room, dining room, kitchen and toilet was referred to. Copy of the map sanctioned by the Chandigarh Administration showing that the first floor was residential made available to the AO was also relied upon. Attention was also invited to the fact that various writs and cases had been filed before the Hon ble Punjab Haryana High Court in respect of SCF allotted by Chandigarh Administration by the owners when notices u/s 8-A of Capital of Punjab (Development Regulations) Act, 1952 where the Chandigarh Administration noticed that the residential portion of SCF was being used as commercial contrary to permission. The writ petitions, it was submitted, had been dismissed by the Hon ble Court holding that no commercial activity can be done in the residential portion of SCF. Copy of transfer letter after purchase of SCF 13 Sector 11-D Chandigarh available at Paper Book page 32 alongwith copy of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other major issues during the course of assessment proceedings. During the year under consideration, the assessee has sold a booth A/0,36, Sector-SB, Chandigarh on 25.10.2011 for total sale consideration of ₹ 59,00,000/- and claimed deduction u/s 54 of the I.T. Act. 1961 on the amount of long term capital gain as the assessee has invested whole of the amount in the purchase of first floor of SCF, Sector- 11D, Chandigarh. Copy of title deed of booth No. 36/86, Chandigarh alongwith purchase deed alongwith intersee agreement for SCF No. 13, Sector-11D, Chandigarh have also obtained and examined. 4.1 It is seen from the scrutiny order as noted by the AO that the details requisitioned vide questionnaire as well as during the course of hearing from time to time were furnished and were examined with reference to income shown by the assessee . It is also seen that the AO also notes that the assessee has declared long term capital gain on sale of Booth No. 36, Sector 8, Chandigarh and concluded the assessment taking note of the above quoted office note which he also appended in the assessment order. It is seen that the Pr. CIT exercising the Revisionary Powers u/s 263 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the proceedings u/s 263 cannot be invoked for substituting the opinion which is different from the opinion of the Assessing Officer. It is not a case of the department that the Assessing Officer has not applied his mind while allowing the claim of the assessee u/s54Fof I.T. Act. In this show cause notice, it was mentioned that the assessee has invested in commercial property not in the residential property and therefore, the assessee is not eligible for deduction u/s 54 of I. T. Act. In this regard, we respectfully submit that assesses has invested in residential portion of shop-cum-flat No. 13 sector-11D, Chandigarh and copy of purchase deed and intersee agreement was given during the course of assessment proceedings and these documents are part of assessment record. We are also enclosing the copy of transfer letter issued by the Estate Officer, U.T., Chandigarh dated 26.10.2012 which clearly shows that the property purchased by the assessee was SCF. Further, the assessee has purchased first floor of SCF-13, Sector-11B, Chandigarh and first floor consist of drawing room, dining room, kitchen and toilet. We are enclosing the map duly sanctioned by Chandigarh Administr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012. The assessee in support of her claim that she has purchased the 1st floor has furnished an intersee agreement showing that Smt. Sharda Rani and Smt. Sudesh Bansal are the owners of 66.67% and are in possession of ground and 2nd floor of the said SCF and that as per the agreement, Smt. Meenu Bansal is the owner of 33.33% and is in the possession of 1st floor of the said SCF. The agreement has been made on 12.10.2012 i.e. after the registration of sale deed and is without any legal sanctity. The property purchased i.e. the shop-cum-flat is a single property and cannot be sold in parts which is evident from the composite sale deed registered with the competent registering authority. The Assessing Officer allowed the claim of the assessee without inquiring the nature of the property purchased. 7. Further, inquiries were got conducted through the Addl. Commissioner of Income Tax, Range-1, Chandigarh. In the report furnished by the Inspector of Income Tax who was deputed by the Addl. Commissioner of Income Tax, Range-1, Chandigarh to conduct spot inquiries, it has been reported that :- As directed, I visited sector-HD, Chandigarh. In Sector-11D, Chandigarh, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the terms of allotment of flat or house in the U.T. of Chandigarh or in any of the Urban Estates of Mohali or Panchkula and in various cases as cited and quoted, the flouting of conditions of eligibility mentioned in the Regulations of the Chandigarh Housing Board (Allotment, Management and Sale of Tenements) Regulations, 1971 and the Administration has aggressively pursued litigation not only before the National Consumer Disputes Redressal Commission after loosing before the District Consumer Disputes Redressal Commission and has carried the issue right upto the Apex Court as borne out from the decision in the case of Chandigarh Housing Board another Vs Narinder Kaur Makol as available at pages 11 and 13 of the Paper Book filed. It is also seen that in a spate of writ petitions filed by various persons seeking quashing of notices issued u/s 8A of the Capital of Punjab (Development Regulations) Act, 1952, where the U.T. Administration, Chandigarh alleged misuse of premises owned by the petitioners in the shop-cum-flats allotted to the petitioners, the petitioners allegedly had started Guest Houses/lodges in the first floor and second floor of the shop-cum-flats allotted. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] 6. We notice that the issues have been enquired into and replied to and considering these, the assessment order was passed. To infer that no inquiries were made or no verification was done, the Pr. CIT has justified his action on the basis of the report of the Inspector which admittedly was carried out in November,2016 and admittedly does not refer to the position as on 05.10.2012. The subsequent usage of the premises as per settled legal principle cannot be said to be a relevant factor for deciding the issue. For the said purpose, we refer to the decision of Co-ordinate Bench of the ITAT in the case of Sham Lal Tandon Vs ITO (2014) 39 CCH 0268 (Hyd) (Trib) available at pages 14 to 18 and Mahavir Prasad Gupta Vs JCIT (2005) 25 CCH 0676 (Delhi) (Trib) available at pages 19 to 23 which have been specifically relied. It is seen that in the case of Sham Lal Tandon, the Co-ordinate Bench held that the subsequent change in the use of proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the impugned order of the Tribunal does record the fact that specific queries were made during the Assessment proceedings with regard to details of expenditure claimed under the head miscellaneous expenses aggregating to ₹ 2.94 crores. The respondent-assessee had responded to the same and on consideration of response of the respondent-assessee, the Assessing Officer held that of an amount of ₹ 17.98 lakhs incurred on account of repairs and maintenance out of ₹ 2.94 cores is capital expenditure. This itself would be indication of application of mind by the Assessing Officer while passing the impugned order. The fact that the assessment order itself does not contain any discussion with regard to the balance amount of expenditure of ₹ 1.76 crores i.e. ₹ 2.94 crores less ₹ 17.98 lakhs claimed as revenue expenditure would not by itself indicate non application of mind to this issue by the Assessing Officer in view of specific queries made during the assessment proceedings and the Respondentassessee s response to it. In fact this Court in the case of Idea Cellular Ltd. Vs. Deputy Commissioner of Income Tax Ors., [(2008) 301 ITR 407 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific property, the property purchased was a shop-cum-flat wherein admittedly the assessee s share was the first floor. The fact that as per the Inspector s report, sometime between November,2016 and March,2017, it is alleged that it was being used as a godown, in the face of the judicial precedent is not relevant. Admittedly as per the Chandigarh Administration Town Planning, the specific property is described as SCF i.e. shop-cum-flat wherein detailed shop-cumresidential flat plan etc. as per the map approved is available. The issues have been enquired into by the AO in the course of the assessment proceedings as for this specific purpose, admittedly the case was selected for scrutiny in CASS. Before the AO, the assessee s explanation has been offered. The plan and the map site etc. have all been made available. Nothing has been brought out in the order to show the status of the property at the time of investment. Accordingly, in the peculiar facts and circumstances of the present case, the Explanation 2(a) of Section 263 of the Income Tax Act is not attracted. Considering the judicial precedent available, the 263 order passed by the Pr. CIT Chandigarh is quashed as no error ..... X X X X Extracts X X X X X X X X Extracts X X X X
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