Appeal details
Counselvise Citation
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-11-2024
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
G
Next Hearing Date
09-10-2024
Assessment Year
2020-2021
Appeal Filed On
21-05-2024
Judgement Text
" \nIN THE INCOME TAX APPELLATE TRIBUNAL, \nMUMBAI BENCH “G”, MUMBAI \n \nBEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER \n AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER \n \n \n ITA No.2877/Mum/2024 \nAssessment Year: 2020-21 \n \nGangaram Vallabhji Soni \n \nAdarsh Nagar, Prabhadevi S.O. \nMumbai, Maharshtra-400025. \n \nPAN: AKHPS 9016 R \nVs. \n \nDCIT, \nCircle-5(2)(1), \nMumbai \n \n (Appellant) (Respondent) \n \n \nPresent for: \nAssessee by \n: Shri Bharat Kumar \nRevenue by \n \n: Shri Bhangepatil Pushkaraj Ramesh, Sr. DR \n \nDate of Hearing \n: 09.10.2024 \nDate of Pronouncement \n: 13.11.2024 \n \nO R D E R \n \nPER AMARJIT SINGH, ACCOUNTANT MEMBER: \n \n \nThis appeal of the assessee for the assessment year 2020-21 \nis directed against the order dated 06.05.2024 passed by the ld. \nCommissioner of Income-tax (Appeal), NFAC, Delhi. The assessee \nhas raised the following grounds of appeal: \n“1. On the facts and circumstances of the case in law the ld. CIT(A) did \nnot appreciated the facts the assessee received flat under development \nagreement. \n2 On the facts and circumstances of the case in law the ld. CIT(A) erred in \nconfirming addition u/s 56(2)(x) of Rs. 1,67,45,456/-. \n3. Without prejudice to above, assessee prayed before your honours to \nallow the claim u/s 54/54F for benefit capital gain for acquisition of flat. \n4. The assessee have right reserve to amend modify delete and make \nany additional grounds of appeal.” \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n2 \n2. \nFact in brief is that return of income declaring total income of \nRs. 4,54,240/- was filed on 24.03.2021. The case was subject to \nscrutiny assessment and notice u/s 143(2) was issued on \n29.06.2021. After perusal of the detail filed the assessing officer \nnoticed that during the year under consideration Flat No. 23B, \nVraj Tiara Building No. 17, Adarshnagar Beach Corner, Veer \nNariman Road, Worli, Mumbai-400030 was registered in the name \nof the assessee on 03.04.2019 and consideration paid for this \nproperty was Rs. 85,50,000/-. The market value was determined \nby the Registration Authorities at Rs. 2,66,83,000/-. The AO \nstated that one more flat in the aforesaid building was also \nregistered in his name on 03.04.2019 i.e. flat no. 23A and total \nconsideration paid was Rs. 85,50,000/- however market value \ndetermined by the Registration Authorities was Rs. 2,66,83,000/-. \nOn query, the assessee claimed that he was in possession of flat \nno. 273 in the erstwhile Adarshnagar Beach Corner Co-operative \nHousing Society and this flat was purchased for a total \nconsideration of Rs. 7,50,000/- on 13.02.1995/-. Subsequently, \nall the owners of 23 flats at the above referred Housing Society \nentered into a re-development agreement with M/s. Vraj Realtors \nfor re-developing this flat after demolition the existing flats. The \nassessee who was having 410 sq. ft. flat in the old building was \nentitled for a total carpet area of 656 sq. ft. in the new building as \nper the terms of the agreement. The flats were handed over for \ndemolition \nand \nre-development \nduring \nthe \nF.Y. \n2015-16. \nThereafter, the assessee received flat no. 23B and in accordance \nwith the agreement and also purchased additional carpet area of \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n3 \n192 sq. ft. for a consideration of Rs. 85,50,000/-. The wife of the \nassessee was also a co-owner of a flat no. 266 in the erstwhile \nAdarshnagar Beach Corner Co-operative Housing Society. As per \nthe copy of purchase deed Flat No. 266 was purchased on \n14.08.2013 for a total consideration of Rs. 1,40,00,000/- from Shri \nVikash Ankush Aklekar on 14.08.2013. Subsequently, in exchange \nof existing flat no. 266, on re-development of the society property, \nthe assessee himself and his wife had also received flat no. 23A in \naccordance with agreement and also purchased additional carpet \narea of 192 sq. ft. for a consideration of Rs. 85,50,000/-. The \nstamp value of the same as determined as per the stamp value \nauthority was of Rs. 2,66,83,000/-. Thereafter, the assessing \nofficer computed the total carpet area purchased by the assessee \nfor deemed exchange as per the terms of the agreement and extra \ncarpet area received by the assessee as under: \nFlat \nNo. \nTotal carpet \narea (new) \nDue as per \nagreement \nExcess \nPurchase by \nassessee/wife \nCarpet area deemed to \nhave been received free of \ncost \n23A \n1160 sft \n552 sft \n608 sft \n192 sft \n416 sft \n23B \n1160 sft \n656 sft \n504 sft \n192 sft \n312 sft \n \n3. \nBoth the properties transferred to the assessee have been \nvalued \nby \nthe \nstamp \nduty \nregistering \nauthority \nat \nRs. \n2,66,83,000/- for each flat for carpet area measuring 1160 sq. ft. \ncost of each sq. ft., therefore, the AO worked the cost of each flat at \nRs. 23,002/- per sq. ft. The extra carpet area of (416 sq. ft. + 312 \nsq. ft.) 728 sq. ft. as computed as above was treated as deemed \nincome accrued to the assessee amounting to Rs. 167,45,456/- \n(Rs. 23,002/- x 728 sqf) as income from other sources. \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n4 \n4. \nAggrieved assessee filed before the ld. CIT(A). However, the ld. \nCIT(A) has dismissed the appeal of the assessee. Even the assessee \nhas filed alternative ground of appeal before the ld. CIT(A) to allow \nclaim u/s 54 for benefit of capital gain for acquisition of flat. \nHowever, the ld. CIT(A) has not allowed the alternative claim of \nexemption of capital gain u/s 54 of the Act. \n5. \nDuring the course of appellate proceedings before us, the ld. \nCounsel filed paper book comprising copies of agreement for \npurchases of the flat, copies of agreement for alternative \naccommodation and detail of stamp duty paid along with detail of \nallotment of the flats etc. The ld. Counsel submitted that assessee \nalong with his wife were the rightful owners of the property and \npursuant to a re-development claim, the assessee and his wife \nreceived properties against their existing owned properties and the \nassessee has not received any additional carpet area free of cost \nbut has received additional carpet area in lieu of existing property \nowned by the assessee which was given for re-development. \nAlternatively, ld. Counsel also submitted since the assessee has \nmade investment of higher amount being the stamp duty value of \nthe property therefore, any capital gains arising on such transfer \nshall be considered as exempt u/s 54 of the Act. The ld. Counsel \nhas also placed reliance on the following judicial pronouncements” \n“i. Hon’ble ITAT, Mumbai Bench in the case of Shri Dilip P. Ahuja ITA \n6419/M/2012 for the A.Y. 2009-10. \nii. Hon’ble Bombay High Court in the case of Devdas Naik (2014) 49 \ntaxmann.com 30 (Bomba). \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n5 \niii. Hon’ble ITAT, Mumbai Bench in the case of Seema Heera (2024) 164 \ntaxmann.com 329 (Mumbai – Trib.). \niv. Hon’ble Bombay High Court in the case of Pruthvi Brokers & \nShareholders (2012) 23 taxmann.com 23 (Bom). \nv. Hon’ble Bombay High Court in the case of B.G. Shirke Construction \nTechnology (P) Ltd. (2017) 79 taxmann.com 306 (Bombay).” \n6. \nOn the other hand, ld. DR supported the order of lower \nauthorities. \n7. \nHeard both the sides and perused the material on record. \nWithout reiterating the fact as discussed above in this order, the \nassessee has ben allotted flat no. 23B and 23A in Vraj Tiara \nBuilding No. 17, Adarshnagar Beach Corner, Veer Nariman Road, \nWorli, Mumbai-400030 in exchange of existing flats no. 273 and \n266 under the re-development project. The flat no. 234A was co-\nowned by the assessee along with his wife. As per the Registration \nAuthorities, the market value of each flat was at Rs. 2,66,83,000/-\nand the assessee had also paid total consideration of Rs. \n85,50,000/- for each flat as per the term of the agreement for \npurchasing additional carpet area for both the flats. \nThe ld counsel has also submitted that when two flats no. 23A and \n234B were provided as exchange of old flts no. 266 and 273 as \ndiscussed as exchange of property no deemed income have \naccrued to the assessee or his wife. In respect of alternative claim \nof the assessee that he has made investment of higher amount \nbeing the stamp duty value of the property and capital gains \narising on such transfer shall be considered as exempt as \nconditions of section 54 of the Act are duly fulfilled, we have \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n6 \nperused the decision of ITAT, Mumbai in the case of Shri Dilip P. \nAhuja referred by the assessee wherein on similar issue and \nidentical fact, ITAT, Mumbai vide ITA No.6419/M/2012 on \n10.10.2014 held that assessee is entitled to avail deduction u/s 54 \nin respect of the cost of new flat obtained on transfer of old flat as \nper the re-development agreement entered by the assessee with \nthe developers. The relevant extract of the decision of ITAT is \nreproduced as under: \n“5. We have heard the Ld. Representatives of both the parties and have \nalso gone through the records. The Ld A.R for the assessee has submitted \nbefore us that the capital gains, that can be charged, were only in respect \nof transfer of additional FSI to which the assessee was entitled. The Ld \nA.R further submitted that assessee had not transferred nor was \nrequired to transfer the land of which the assessee was the owner along \nwith the other occupants. Accordingly the Ld A.R submitted that the \ntransfer was only in respect of additional FSI which the assessee had \nacquired as per the Government policy and further the said additional FSI \nhad no cost of acquisition. Accordingly, the Ld A.R contended that the \ncompensation received for transfer of additional FSI cannot be subjected \nto Capital gain tax, since there was no cost of acquisition. In this regard, \nthe assessee mainly placed reliance on the decision of Mumbai bench of \nTribunal rendered in the case of Jetha Lal D Mehta (2 SOT 422) and other \ndecisions rendered by the co-ordinate benches. \n6. However, a perusal of the agreement entered by the assessee with the \ndeveloper, which is titled as “AGREEMENT (individual member \nagreement) FOR PERMANENT ALTERNATE AGREEMENT” would show \nthat the Society, in which the flat owned by the assessee was located, \nhas obtained the land from the Government and the said Society has \nbecome lessee of the Government in respect of the said land. This fact is \nin total contradiction to the submissions made by the assessee, i.e., it is \nthe society which is the lessee of land and not the assessee and other \nmembers. Hence, it cannot be said that the assessee and other members \nhave got the right of additional FSI. In fact, the assessee along with other \nowners of the flat and the society has collectively handed over the land \nand flats for re-development, meaning thereby, the existing right of the \nassessee over his flat got extinguished and in lieu thereof the assessee \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n7 \nhas obtained a compensation of Rs.11,00,000/- and a new flat having an \narea of 660 Sq.ft. Hence, in our view, the Ld CIT(A) was justified in \nholding that the impugned transaction is liable for Capital gains tax. \n7. In the case of Jethalal D Mehta (referred supra), the assessee therein \nwas the owner of a Plot, which was reserved for public purposes. Hence, \nthe assessee became eligible for Transferrable Development Rights (TDR). \nThe question that was considered by the Tribunal was about the \ntaxability of consideration received on transfer of TDR. However, in the \ninstant case, the assessee has given his old flat and obtained \ncompensation amount and new flat. Hence, in our view, the assessee \ncannot derive support from the above said decision, as the facts \nprevailing in both the cases are entirely different. \n8. The other case laws relied upon by the assessee also, in our view, \ndoes not support the submissions made by the assessee, since in the \ninstant case, the assessee has given his old flat and in turn obtained a \nnew flat plus compensation. As stated earlier, the Society was the lessee \nof the plot, in which the impugned flat was located. \n9. In view of the foregoing, we are of the view that the value of new flat \nand the compensation received is to be considered as the sale \nconsideration received on giving of old flat. Against the same, the \nassessee is entitled to deduct the indexed cost of acquisition of old flat \nand the indexed cost of improvement, if any, incurred in respect of that \nflat in order to arrive at the Capital gain. Since the new flat is obtained on \ntransfer of old flat, the assessee’s claim for deduction u/s 54 of the Act is \nalso justified, i.e., the assessee is entitled to avail deduction u/s 54 of the \nAct in respect of the cost of the new flat.” \n8. \nWe have also perused the provision of section 2(47) of the Act \nwhich define the terms ‘transfer’ to include various kinds of \ntransactions. This section defines transfer as the ‘transfer of \ncapital asset including the sale, exchange relinquishment or \nextinguishment of the capital asset or extinguishment of any right \ntherein or the compulsory acquisition thereof under any law’. \nSince in the case of the assessee there is an exchange of capital \nasset (old flats no. 266 and 273) for another capital assets (new \n\n \nITA No.2877/Mum/2024 \n Gangaram Vallabhji Soni \nA.Y. 2020-21 \n \n8 \nflats no. 23 and 23B) as discussed as per the re-development \nagreement entered with the developer therefore following the \ndecision of ITAT as referred above, we direct the assessing officer \nto allow the claim of deduction u/s 54 of the Act as directed by the \nITAT in the above referred case of Shri Dilip P. Ahuja vide ITA No. \n6419/Mum/2012. Since we have allowed the alternative claim as \nper ground no. 3 of the assessee therefore grounds no. 1 & 2 are \ndismissed as infructuous. Accordingly, the appeal of the assessee \nis partly allowed. \n \n9. \nIn the result, the appeal of the assessee is partly allowed. \nOrder pronounced in the open court on 13.11.2024. \n \n Sd/- \n \n \n \nSd/- \n (SANDEEP SINGH KARHAIL) (AMARJIT SINGH) \n JUDICIAL MEMBER ACCOUNTANT MEMBER \n \nMumbai, Dated: 13.11.2024 \nBiswajit, Sr. P.S. \n \nCopy to: \n \n1. The Appellant: \n \n2. The Respondent: \n \n3. The CIT, \n \n4. The DR \n \n \n \n \n//True Copy// \n \n[ \n \n \n \n \n \n \n \n \n \n \n By Order \n \n \n Assistant Registrar \n ITAT, Mumbai Benches, Mumbai \n \n \n"
