Dcit, Gurgaon vs Department Of Income Tax

This appeal by the assessee arises out of the order passed by the

CIT(A) on 28.2.2013 in relation to the assessment year 2007-08. ITA No.2869/Del/2013

2. First ground was not pressed by the ld.AR, which hereby stands

dismissed.

3. Second ground is against the treatment given to the stamp duty of

Rs.2,16,750/- paid for the registration of new house in the name of the

assessee, as not forming part of the cost of new asset for the purpose of

exemption u/s 54F of the Income-tax Act, 1961 (hereinafter also called

`the Act').

4. Briefly stated, the facts of the case are that the assessee sold certain

shares for a sum of Rs.49,26,773/-. Exemption u/s 54F was claimed

towards purchase price of house/flat for a sum of Rs.43.35 lac; Stamp

duty of Rs.2,16,750/- paid for registration of such house in the name of

the assessee; and the amount spent on fittings etc. at Rs.3,75,100/-.

The assessee claimed that the profit from sale of shares was exempt in

view of the above investments in purchase of a new house property. The

AO completed assessment u/s 144. However, the issues in the present

appeal came to be decided by the ld. CIT(A) for the first time. The

assessee argued that stamp duty amounting to Rs.2,16,750/- paid by it

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should be considered towards cost of purchase of new asset and the

benefit of exemption under section 54F be allowed. The ld. CIT(A)

refused to accept this argument by holding that the registration was not

an essential requirement for transfer of immovable property.

5. After considering the rival submissions and perusing the relevant

material on record, it is found as an admitted position that the assessee

was otherwise entitled to claim the benefit of exemption u/s 54F, which

fact has not been denied by the AO. The only dispute is as to whether

stamp duty charges paid should be considered as a part of `cost of new

asset' or not. There is no quarrel over the proposition that this stamp

duty was paid in respect of the property purchased amounting to

Rs.43.35 lac, in respect of which the assessee claimed the benefit of

exemption u/s 54F. We fail to appreciate the view point of the ld.

CIT(A) in not treating the cost of registration as part of cost of new

asset by opining that it was not an essential requirement for transfer of

immovable property. Registration of immovable property cannot be

disassociated from its purchase. Only when a particular property is

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registered in the name of the purchaser, that the entire transaction of

purchase finally comes to an end. Since the assessee paid stamp duty

amounting to Rs.2,16,750/- in connection with the registration of the

property in his favour, for which it claimed the benefit of exemption u/s

54F, we cannot view the payment of such stamp duty as independent of

cost of new house. The impugned order is overturned on this score and

the benefit of exemption u/s 54F is allowed on the amount of stamp duty

paid as part of cost of new asset. This ground is allowed.

6. The only other issue which survives in this appeal is against

treating the amount of Rs.3,75,100/- incurred by the assessee on fittings

etc., as not part of the cost of new house. The assessee claimed that the

said sum of Rs.3,75,100/- was part of the cost of new asset in terms of

section 54F. The ld. CIT(A) observed that the assessee got hold of

brand new flat to live in and, hence, there was no point in treating such

amount as a part of cost of new asset. On a specific query from the

Bench, the ld. AR could not file any details of the amount claimed to

have been incurred on fittings etc. In our considered opinion, without

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examination of the nature of the amount spent, the dates on which such

amount was spent, there cannot be any decision about the formation of

this sum as part of cost of new asset or otherwise. It goes without saying

that unless the payment is evidenced as cost of fittings etc., the same

cannot be taken up for consideration as to whether it forms part of the

cost of new asset. In other words, the amount spent on furniture etc.,

would automatically go out of consideration. Once it is shown that the

amount is incurred towards fittings in house, then the point for

consideration is the occasion of such fittings. If the date of fittings

coincide with the occasion of taking possession of the new house, then it

will assume the character of part of cost of the new house. In the

otherwise situation, it will not qualify as cost of new house, but be

treated as cost of improvement, to be considered at the time of transfer

of such property. In the absence of any details of this amount, we set

aside the impugned order on this score and remit the matter to the file of

AO for deciding it afresh as per law and in conformity with our above

observations, after allowing a reasonable opportunity of being heard to

the assessee.

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7. In the result, the appeal is partly allowed.

The order pronounced in the open court on 12.03.2015.

Sd/- Sd/-

[A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 12th March, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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