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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 ..... assessee has raised the following grounds of appeal in ITA No.1675/Chny/2019 for the AY 2013-14: 1. The Assessment Order for the Assessment Year-2013-2014, passed under Sec.143(3) of the Act, by the Learned Assessing Officer was arbitrary and is against law and contrary to facts of the case and hence Erroneous and untenable in Law. 2. The Learned Assessing Officer grossly erred in application of the provisions of Section 54F, and had denied the benefit of claim of exemption U/s 54F, amounting to a value of Rs 2,60,54,377/-. 3. The appellant had purchased a residential house at Besant Nagar in the Assessment Year of 2012-13; and to meet out the costs of purchase; had sold his lands at Kunnakkadu in this Assessment Year of 2013-14; and as the sale of lands is covered within the time period stipulated U/s 54F of the Act, the addition of Rs.2,60,54,377/- caused due to disallowance of exemption U/s 54F is unjustified. 4. The Learned Assessing Officer has miserably failed 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 fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction without considering that the assessee was taking shelter u/s.24(b) in respect of the self-occupied property. 3. Addition to Short term capital gains: 3.1 The CIT(A) erred in coming to conclusion that income received from Chennai Metro Rail which is compensation for acquiring the property of the assessee as business income instead of capital gains. 3.2 The CIT(A) erred in ignoring the sworn statement recorded u/s 131 of the Act from the assessee, in which he had stated that the sale of land of Mudaliyar Kuppam was his personal asset and not business stock in trade. 3.3 The CIT(A) ought not to have allowed the assessee's claim since the assessee failed to furnish any evidence with regard to his business income during the course of assessment proceedings so as to prove his statement that he was in receipt of any business income. 3.4 The CIT(A) erred in stating that the commission income received 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of new asset at Besant Nagar on 14.10.2011, is less than one year before sale of original asset, he has claimed exemption u/s.54F of the Act. 5.1 The AO, however, was not convinced with the explanation of the assessee and according to the AO, deduction claimed u/s.54F of the Act, is not in accordance with law, because, the assessee has purchased new house property beyond one year from the date of sale of original asset. Although, the assessee claims to have entered into agreement to sale on 28.09.2012, but in the recitals of Sale Deed, there is no specific reference to agreement to sale. Therefore, the AO opined that so called agreement to sale is a make belief story to get benefit of deduction u/s.54F of the Act, and thus, rejected the arguments of the assessee. The AO, further observed that without prejudice to the above on perusal of the statement of income filed for the AY 2012-13, it 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 ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the assessee had sold a property vide Sale Deed dated 07.01.2013 for a consideration of Rs.3,63,50,450/-. It was not in dispute that the assessee had purchased a new residential house property at Besant Nagar on 14.10.2011. It was also not in dispute that amount paid for purchase of property at Besant Nagar, is higher than the amount of consideration received for sale of property. According to the AO, the period between sale of original asset i.e. 07.01.2013 and purchase of another residential property on 14.10.2011, is more than one year before the sale of original asset at Kunnakkadu. The AO further was of the opinion that the assessee had already claimed deduction u/s.54F of the Act, in respect of sale consideration received towards property in the AY 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed only by a registered deed of conveyance. Further, as per the Stamps and Registration Act, the title and interest in the property will not transfer to the buyer unless such transfer is by way of a deed, as held by the Hon'ble Supreme Court. But, when it comes to the beneficial provisions of Sec.54F of the Act, what is required to be seen is whether the assessee has invested consideration for purchase of property or not? In case, the assessee has satisfied conditions prescribed therein and invested sale consideration for purchase of residential house property, then even if some technical lapses like non-registration of agreement to sale, etc., does not disentitle assessee to claim benefit u/s.54F of the Act, in case, the assessee proves with evidences that finally he had registered the property in his favour. In this case, although, the agreement to sale was not registered, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.08.1969. 6.1 The Ld.DR present for Revenue submitted that the Ld.CIT(A) ought not to have allowed the claim of interest on housing loan claimed to have received from Karvy Finance in the absence of assessee showing the nexus between the settlement of loan of HDFC Bank with that of borrowings made from Karvy Finance in respect of OMR property. The Ld.DR further referring to loan sanction letter from Karvy Finance, submitted that loan availed from said financial institutions is a secured business loan, which cannot be considered as housing loan. The Ld.CIT(A) without appreciating the facts, simply deleted the additions made by the AO. 6.2 The Ld.Counsel for the assessee referring to sanction letter from Karvy Finance and also loan statement of HDFC Bank submitted that the AO never disputed the fact that the assessee has availed loan from HDFC Bank for purchase 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Rs.1,50,000/- and disallowed balance amount of Rs.75,60,327/-. On appeal, the Ld.CIT(A) has deleted the additions made by the AO by holding that the assessee has let out the property for a monthly rental income of Rs.60,000/- to Mr.L.Mohansundaram and has also offered rental income for the impugned assessment year. Therefore, interest if any paid on loan borrowed from bank for purchase of property is allowable as deduction. 7.1 The Ld.DR submitted that the Ld.CIT(A) erred in appreciating the fact that the rental agreement dated 28.10.2011, which was a new evidence presented before the Ld.CIT(A) was not filed before the AO and thus, admission of new evidence before the Ld.CIT(A) without providing an opportunity to the AO, is violation of Rule 46A of Income Tax Rules, 1962. The Ld.DR further submitted that the Ld.CIT(A) failed to appreciate 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 fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 8. The next issue that came up for our consideration from Revenue's appeal is deletion of additions towards 'short term capital gains'. The AO has made addition of Rs.62,94,736/- 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'. It was the arguments of the assessee that, he was involved in the business of commission & brokerage and therefore, income derived from commission business has rightly 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 which was not produced during the course of assessment proceedings before the AO. 2.3 The CIT(A) erred in not appreciating the sworn statement recorded u/s 131 of the Act from the assessee on 31.12.2016 and the Inspector's enquiry report dt.20.12.2016 at the time of which the assessee had not produced the above rental agreement. 2.4 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 opportunity to the AO under Rule 46A of the Income tax Rules, for verifying the said claim of the assessee based on evidences filed afresh during appellate proceedings. 2.5 The CIT(A) failed to appreciate that the assessee had claimed a total payment of interest at Rs.1,90,37,045/- during the 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was able to establish nexus between interest paid on loan borrowed for purchase of property. The reasons given by us in the preceding paragraph Nos.7 to 7.3 in ITA No.1727/Chny/2019 for the AY 2013-14 shall, mutatis mutandis, apply to this appeal, as well. Therefore, for similar reasons, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. 12. The next issue that came up for our consideration from Ground Nos.3.1 to 3.5 of the Revenue's appeal is disallowance of interest u/s.24(b) of the Act, in respect of OMR property. We find that an identical issue had been considered by us in ITA No.1727/Chny/2019 for the AY 2013-14, where we have dealt with the issue of disallowance of interest u/s.24(b) of the Act, in respect of OMR property and held that the assessee was able to establish nexus between interest paid on loan borrowed for purchase of property. The reasons given by us in the preceding paragraph Nos.6 to 6.3 in ITA No.1727/Chny/2019 for the AY 2013-14 shall, mutatis mutandis, apply to this appeal, as well. Therefore, for similar reasons, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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