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TMI Blog2023 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld.CIT(A) is erred in not considering the agreement to sale between the parties to allwo the benefit of deduction u/s.54F. Whether the assessee has invested consideration for purchase of property or not? - When the assessee has filed evidences in the form of agreement to sale and if the agreement to sale date is considered, then the period of investment in new house property is less than one year before the date of sale of original asset and thus, in our considered view, the assessee is entitled for deduction u/s.54F of the Act. Multiple deductions in two assessment years - In this case, on the basis of details filed by the assessee, we find that amount paid for purchase of new property at Besant Nagar is much more than the amount of sale consideration received for transfer of original asset, including the asset sold in AY 2012-13 and thus, in our considered view, the assessee can claim deduction u/s.54F of the Act, as long as he or she satisfies other conditions. Since, the assessee has satisfied all conditions prescribed therein, as per provisions of Sec.54F of the Act, he is entitled to claim deduction towards re-investment of sale consideration for purchase of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our considered view, the findings and facts recorded by the Ld.CIT(A) is uncontroverted with any evidences except stating that there is a violation of Rule 46A of Income Tax Rules, 1962 - assessee has placed all evidences to prove that rental agreement was filed before the AO and also rental income has been offered for earlier assessment years also. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to delete the additions made towards disallowance of interest u/s.24(b) of the Act and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Short term capital gains OR income from business - commission brokerage income - AO has made addition on the ground that the assessee claimed exemption on sale of his own land and thereby concluded that business profit claimed by the assessee needs to be treated as short term capital gains - HELD THAT:- There is no dispute with regard to the fact that the assessee has admitted commission income apart from real estate deals for the earlier assessment years and the Department has accepted the claim of the assessee. AO has taken a differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to comprehend and appreciate the binding nature of the decisions of the various Hon'ble High Courts on the same issue on hand and various associated aspects thereof. In view of the above and in view of further grounds that may be advanced, as the circumstances may warrant, in the interest of deliverance of justice, during the course of hearings, it is prayed that the Honourable Commissioner of Income Tax (Appeals) may be pleased to grant suitable relief after considering all the evidences and explanations that the Assessee could produce before the Honourable Commissioner of Income Tax (Appeals), during the course of hearing on appeals, on the issues raised in the Assessment Order concerned. 3. The Revenue has raised the following grounds of appeal in ITA No.1727/Chny/2019 for the AY 2013-14: The order of the Ld. CIT(A) is contrary to law, facts and circumstances of the case. 1. Disallowance of interest claimed OMR property: 1.1 The CIT(A) ought not to have allowed the claim of interest on housing loan in the absence of assessee showing the nexus between the settlement of loan of HDFC Bank with that of the borrowings made from Karvy Finance in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived in earlier assessment years was accepted by the Assessing Officer, since the principle of res judicata does not apply to the Income Tax proceedings. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the AO restored. 4. The brief facts of the case are that the assessee is an individual and filed his return of income for the AY 2013-14 declaring total income of Rs.1,14,05,810/-, which consist of income from house property, income from business and income from capital gains. The assessment has been completed u/s.143(3) of the Act, on 30.03.2016 and determined total income of Rs.6,03,43,840/- by making additions towards disallowance of deduction u/s.54F of the Act, for Rs.2,60,54,377/-, disallowance of deduction u/s.24(b) of the Act, towards interest paid on housing loan on OMR property, on Besant Nagar property, and additions made under the head short term capital gains , towards brokerage commission received amounting to Rs.62,94,736/-. The assessee carried the matter in appeal before the First Appellate Authority, and the Ld.CIT(A) for the reasons stated in their app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was noticed that the assessee had already claimed the benefit of exemption u/s.54F of the Act, for residential house at Besant Nagar and thus, claim of the assessee for the AY 2013-14, once again, is to evade payment of tax. Therefore, rejected the arguments of the assessee and disallowed deduction claimed u/s.54F of the Act, amounting to Rs.2,60,54,377/-. 5.2 The Ld.Counsel for the assessee submitted that there is no dispute with regard to the fact that the assessee had purchased a new house property at Besant Nagar on 14.10.2011. It is also not in dispute that the assessee had sold a property on 07.01.2013, and the same has been agreed to sale to the purchaser vide agreement to sale dated 28.09.2012. The AO disbelieved agreement to sale only on the ground that there is no reference to agreement to sale in the Sale Deed without appreciating the fact that the law does not mandate reference of any sale agreement in the Sale Deed. He, further submitted that if you go by date of agreement to sale and date of purchase of new asset, investment in purchase of new house property is within one year from the date of sale of original asset and thus, the assessee is entitled for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2012-13, for purchase of house property at Besant Nagar. Therefore, once again claiming deduction u/s.54F of the Act, for very same property is not in accordance with law. 5.5 We have given our thoughtful consideration to the reasons given by the AO to deny the benefit of deduction u/s.54F of the Act, towards purchase of residential house property at Besant Nagar and we ourselves do not subscribe to the reasons given by the AO for simple reason that if you go by date of purchase of new asset i.e. on 07.01.2013 and date of agreement to sale for sale of property at Kunnakkadu i.e. on 28.09.2012, then the period is less than one year before the date of sale of original asset as prescribed u/s.54F of the Act, and the assessee is entitled for deduction. In fact, the AO and the Ld.CIT(A) are not in dispute with regard to fact that if you go by date of purchase of new asset and date of agreement to sale for property, it is less than one year before the date of sale of original asset. However, the AO and the Ld.CIT(A) denied deduction claimed u/s.54F of the Act, only on the ground that agreement to sale dated 28.09.2012, is not bona fide. We find that the assessee has filed copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, but the final Sale Deed executed in favour of purchaser, has been registered as required under the law. Therefore, in our considered view, when the assessee has filed evidences in the form of agreement to sale and if the agreement to sale date is considered, then the period of investment in new house property is less than one year before the date of sale of original asset and thus, in our considered view, the assessee is entitled for deduction u/s.54F of the Act. 5.7 In so far as observation of the AO and the Ld.CIT(A) with regard to multiple deductions in two assessment years, we find that the ITAT Delhi Bench in the case of ACIT v. Mahinder Kumar reported in 84 taxmann.com 141 (Delhi-Trib.), has considered identical issue and held that capital gains on sale of house property can be invested in construction/purchase of house property more than once for same property, if cost of new property is less than capital gains that arose to aassessee. In this case, on the basis of details filed by the assessee, we find that amount paid for purchase of new property at Besant Nagar is much more than the amount of sale consideration received for transfer of original asset, including t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of OMR property. He further submitted that the assessee has availed loan from Karvy Finance by mortgaging OMR property to re- pay existing loan with HDFC Bank. The assessee further referring to a letter from HDFC Bank dated 24.02.2012 submitted that the assessee has closed loan with HDFC Bank upon receipt from Karvy Finance. The AO without appreciating the relevant facts, simply made addition. 6.3 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the assessee has availed loan from HDFC Bank when he had purchased property at Kottivakkam, OMR, Chennai. It was also not in dispute that the assessee has availed fresh loan from Karvy Finance to pre-close the loan availed from HDFC Bank, which is evident from documents submitted by the assessee, where loan proceeds from Karvy Finance has been used to re-pay existing loan with HDFC Bank. Since, there is a direct nexus between loan availed from HDFC Bank and purchase of property at OMR, in our considered view, subsequent loan taken from Karvy Finance to re-pay existing loan with HDFC Bank, satisfies the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the fact that the assessee failed to prove the nexus of loan with the investment in house property with appropriate documentary evidence. Therefore, the AO has rightly disallowed interest paid on housing loan. 7.2 The Ld.Counsel for the assessee supporting the order of the Ld.CIT(A) submitted that the Ld.CIT(A) has recorded categorical findings in light of evidences filed by the assessee that house property at Besant Nagar was let out and rental income from the said property has been offered under the head income from house property . The Ld.Counsel for the assessee further submitted that the assessee had also filed necessary evidences to prove that he had borrowed loan from bank for purchase of property. In fact, the AO never disputed the fact that the assessee has availed loan from bank for purchase of property. However, disallowed interest claimed u/s.24(b) of the Act, only on the ground that house property was selfoccupied, but was not let. The Ld.CIT(A) after considering relevant facts has rightly deleted the additions made by the AO and their orders should be upheld. 7.3 We have heard both the parties, perused the materials available on record and gone through or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly offered to tax under the head income from business or profession . 8.1 The Ld.DR submitted that the Ld.CIT(A) erred in coming to conclusion that income received from Chennai Metro Rail which is compensation for acquiring property of the assessee as business income instead of capital gains . The Ld.DR further submitted that the Ld.CIT(A) erred in ignoring the sworn statement recorded u/s.131(1) of the Act, of the assessee in which he had stated that the sale of land was a personal asset and was not come under stock in trade. The Ld.CIT(A) without appreciating the facts simply deleted the additions made by the AO. 8.2 The Ld.AR, on the other hand, supporting the order of the Ld.CIT(A) submitted that the assessee is in the business of real estate and derived commission brokerage income. The assessee has offered commission brokerage income under the head income from business even for earlier assessment years and Department has accepted. However, the AO has taken a different view for the impugned assessment year without there being any change in facts for the current assessment year. The Ld.CIT(A) after considering relevant facts has rightly concluded that commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration and had claimed the entire interest payment as deduction u/s 24(b) on three different properties but had declared only Rs.6,47,44,374/- as the loan obtained from Federal Bank for the purpose of housing, the rest being business loan in his balance sheet. 2.6. The CIT(A) failed to appreciate that no TDS was deducted on the payment received of Rs.7,20,000/- as rental income, which goes to prove that the assessee had offered this notional income only to claim deduction u/s24(b) of the Act. 3.1 The CIT(A) erred in deleting the disallowance of interest claimed at Rs.1,15,70,736/- u/s 24(b) of the Act against the Kottivakkam (OMR) property merely relying on the Board's Circular, in the absence of proving any nexus between the borrowed capital and the let out property at OMR. 3.2 The CIT(A) erred in accepting new evidences claiming that the loan availed from HDFC was foreclosed and another loan from Karvy finance was availed without affording any opportunity to the AO. 3.3 The CIT(A) erred in giving relief to the assessee by deleting the interest based on fresh evidence submitted for the first time before the CIT(A) without giving opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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