×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal by the assessee is directed against the order dated 12.02.2018 of ld. CIT(A), Udaipur for the assessment year 2014-15. The assessee has raised following grounds:-
“1. The Learned CIT Appeals-2, Udaipur has grossly erred in confirming the restriction of claim u/s 54 of the Income Tax Act, 1961 to Rs. 2,50,00,003/- out of the total investment of Rs. 5,00,00,007/- claimed by the assessee for investment in two flats, one above the other in the same building for flat no. 7103 and 7113 adjacent by roof under the facts and circumstances of the case. The exemption claim u/s 54 covered by various pronouncements of Apex Court, High Courts and Coordinate Bench may please be allowed for the full amount of Rs. 5,00,00,007/- as claimed by the assessee in the return of income and relief may please be granted.
2. The AO as well as the Learned CIT Appeals-2, Udaipur have also erred in not allowing deduction for the deposit in Capital Gain Scheme Account amounting to Rs. 28177656/- invested before the due date of filing of return under the facts and circumstances of the case being contrary to the provisions of the sec. 54 of the Income Tax Act, 1961.
3. The Learned AO as well as Hon’ble CIT Appeals have grossly erred in applying the amended provisions of the Income Tax Act, 1961 in section 54(1) appl cable w.e.f. 01/04/2015 i.e. for assessment year 2015 16 onwards in the assessment year 2014- 15 without considering the fact that the amended law was applicable in the subsequent assessment year as clearly spelt out in the section itself under the facts and circumstances of the case. The addition of Rs. 2,50,00,003/- may please be deleted.
4. The assessee may please be permitted to raise more/additional grounds of appeal before or at the time of hearing.”
2. The assessee is HUF and filed e-return of income on 21.07.2014 declaring total income of Rs. 5,62,58,190/- which includes net long term capital gain of Rs. 5,55,30,511/- after claiming exemption U/s 54 of theIT Act at Rs. 5,00,00,007/- and deduction U/s 54EC at Rs. 50 lacs. The exemption claimed U/s 54 of the IT Act is in respect of the investment made in two new flats. The AO restricted exemption U/s 54 of the Act to half of the investment i.e. for one flat and accordingly made an addition of Rs. 2,50,00,003/- in the long term capital gain. The assessee challenged the action of the AO before the ld. CIT(A) but could not succeed.
3. Before us, the ld. AR of the assessee has submitted that the assessee has purchased two flats at 10th and 11th floor of the building with the purpose to make a duplex flat in the same building under construction at Bangaluru, therefore, the flats were purchased with the intention to make them one unit. The ld. AR has referred to the purchase documents and submitted that the assessee has booked flat Nos. 7103 and 7113 which are on 10th and 11th floors of the tower of the Gardenia at Bangaluru. The assessee booked these two flats during the construction of the said building so that these two flats can be used as a single house by joining them through stairs. In support of his contention, he has relied upon the decision of Hon’ble Delhi High Court in case of CIT vs. Gita Duggal 214 Taxman 51 and submitted that the SLP filed by the Department has been dismissed by the Hon’ble Supreme Court reported in 228 Taxman 62. Thus, the Hon’ble Delhi High Court has held that merely because a residential house consists of several independent residential unit deduction U/s 54/54F of the Act could not be disallowed. He has also relied upon the decision of Coordinate Benches of this Tribunal dated 18.03.2016 in case of Surendra Sharma vs. ITO in ITA No. 606/JP/2013 as well as decision in case of Jag Mohan Sharma vs. ITO dated 13.03.2018 in ITA No.1089/JP/2016 and submitted that the Tribunal has held that if two properties are adjacent to each other and to be used by the assessee for residential purpose the benefit of Section 54F of the Act cannot be denied. The ld. AR has then referred to a series of decisions on the point and submitted that when the assessee has purchased two flats which are adjacent to each other and with the purpose to use as duplex flats then the deduction in respect of the investment made in these two flats is eligible for deduction U/s 54 of the Act. He has further contended that the ld. CIT(A) has erred in applying the amended provisions of Section 54 of the Act without considering the fact that the said amendment is prospective in nature and w.e.f. 01.04.2015 and therefore, not applicable for the assessment year under consideration but it is applicable from the subsequent assessment year. Thus, the ld.