Dhirender Gaba, New Delhi vs Department Of Income Tax

ITO, Ward 11 (1), vs. Shri Dhirender Gaba, New Delhi. Raheja Atlantis, D-12, Sector 31, Gurgaon (Haryana)

(PAN : AFUPG9615E)

(APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri Hiren Mehta, CA REVENUE by : Smt. Parwinder Kaur, Senior DR

Date of Hearing : 17.03.2015 Date of Pronouncement : .03.2015

ORDER

PER B.C. MEENA, ACCOUNTANT MEMBER :

This appeal filed by the assessee emanates from the order of the CIT

(Appeals) - IV, New Delhi dated 18.05.2012 for the assessment year 2008-09.

2. The return of income was filed declaring income of Rs.49,86,856/- on

29.09.2008. The assessment was finalized on 25.11.2010 on an income of

Rs.1,62,00,084/-. During the year, the assessee has shown long term capital

gains of Rs.1,09,20,000/- and the cost of acquisition of Rs.21,76,920/-. The

capital gain declared was on sale of shares of M/s. Markettopper Securities Pvt.

Ltd. and have been sold off market @ Rs.2,600/- per share. Assessee claimed 2 ITA No.4273/Del./2012

exemption of long term capital gains of Rs.87,43,080/- u/s 54F of the Act. The

Assessing Officer denied the claim of the assessee. The assessee has deposited

Rs.87,50,000/- with the capital gain fund scheme on 26.09.2008 and the return

was filed on 29.09.2008. The assessee purchased residential property from

Raheja Developers and paid Rs.17 lacs on 17.06.2009 and Rs.73 lacs on

17.07.2009. The assessee converted the capital gain account amount into term

fixed deposit by creating the Term fixed deposit on 22.11.2008. This term

deposit was released on 15.06.2009 and amount was directly transferred to

saving account of the assessee and the payments were made for the purchase of

residential property from Raheja Builders on 17.06.2009 and 17.07.2009 and

claimed deduction/s 54F of Rs.87,43,080/-. The CIT (A) has granted the

deduction u/s 54F. The relevant portion of the CIT (A)'s order read as under :-

"4.8 As regards the deduction u/s 54F, the appellant had claimed the said deduction in respect of the entire amount of Long Term Capital Gain of Rs.87,43,080/- as the appellant had deposited an amount of Rs.87,50,000/- in Capital Gain Saving Account with Punjab National Bank on 26.09.2008. The said amount was transferred to a Fixed Deposit Account under the Capital Gains Scheme with Punjab National Bank on 22.11.2009. The appellant had submitted original certificate from PNB certifying that the above Savings A/c and Fixed Deposit A/c were opened under the Capital Gains Scheme. It had also been submitted by the appellant before the AO during the assessment stage that the appellant had paid Rs.90,00,000/- from its account with PNB on 17.06.2009 and 17.07.2009 to one Shri Balbir Singh, owner of a new flat for purchase of the said flat by the assessee. The AO in the remand report dated 04.04.2012 has, on examination of the details and documentary evidences, accepted the above position and has not disputed the appellant's submission that the said accounts were covered under the Capital Gains Scheme. The relevant portion of the AO's report is reproduced hereunder :

"5. With regard to deduction u/s 54F, it is submitted that the AO had made the disallowance on various grounds.

3 ITA No.4273/Del./2012 Even if it is believed that the account opened with the PNB was covered the Capital Gain Account Scheme, 1988, the other grounds of disallowance mentioned by the AO may kindly be considered before deciding the issue."

In view of the above, this issue regarding the deposit being covered under the Capital Gains Scheme of the Act is decided in favour of the appellant.

4.8.1 With regard to the other issues involved in the deduction u/s 54F, the assessee has furnished a copy of Agreement to Sell dated 17.07.2009 for purchase of the new flat. The assessee has also furnished copy of certificate from M/s Raheja Developers, Builders certifying handing over of the new flat to the assessee on 17.07.2009. The full value consideration of the flat, being Rs.90,00,000/- was paid by the assessee on 17.06.2009 and 17.07.2009 to Shri Balbir Singh, the earlier allottee of the flat. The AO in the remand report dated 04.04.2012 has not disputed the above facts. In the assessment order, the AO had disallowed the deduction u/s 54F on the ground that the Agreement to Sell was not registered with the Sub-registrar. However, it is argued by the appellant that there is no necessity for the registration of the property for the purpose of deduction u/s 54F so long as the assessee has paid the full value consideration of the property and has taken possession of the property as per the Agreement to Sell which has not been disputed by the AO. The assessee had also deposited the capital gains amount under the Capital Gains Account Scheme on 26.09.2008 which is prior to the last date of filing of return of income in the case of the assessee which was 30.09.2008 as the assessee was subjected to Tax Audit u/s 44AB of the Act. The amount deposited was utilized for the purpose of purchase of the said flat as evidenced by the Agreement to Sell, possession letter issued by M/s. Raheja Developers and certificate dated 17.09.2009 issued by the Manager of PNB. Further, it is submitted by the appellant that at the time of transfer of the shares, the appellant owned only one residential house at Vasant Kunj, New Delhi and not more than one residential house and hence, the requirement of Proviso to Section 54F(1) was fully complied with. On careful consideration of the matter as mentioned above, I find that the disallowance of deduction u/s 54F made by the AO is not based on proper appreciation of the facts of the case and the legal provisions. The AO is, therefore, directed to allow deduction u/s 54F of Rs.87,43,0801- as claimed by the appellant."

4 ITA No.4273/Del./2012 3. Now, the revenue is in appeal before us by taking the following grounds:-

"1. The Learned CIT(A) has erred on the facts and circumstances of the case and in law in allowing the deduction u/s 54 F of Rs.87,43,080/- despite being fact that the assessee had never claimed deduction u/s 54F in return of income filed with the department but had claimed under several section viz 54D/54EC/54ED/54G/54GA of Income tax act 1961.

2. The Learned CIT(A) has erred on facts and circumstances of the case and in law in allowing the deduction of Rs.87,43,080/- u/s 54F(4) without appreciating that the assessee has failed to fulfill the conditions prescribed under section 54F of the Income tax act 1961.

3. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing."

4. After hearing both the sides and on careful consideration of the issue, we

hold that the CIT (A) was justified in allowing the claim of the assessee u/s 54F

of the Act. The capital gain arose was deposited in capital gain account by

assessee prior to filing return of income. The same was converted into Capital

Gain Term Deposit. Subsequently, assessee has invested the money in acquiring

assets which qualify for deduction u/s 54F of the Act. In view of these factual

matrixes, we find no fault in the order of the CIT (A). We dismiss all the

grounds raised in revenue's appeal.

5. In the result, the appeal of the revenue is dismissed.

Order pronounced in open court on this 20th day of March, 2015.

Sd/- sd/- (GEORGE GEORGE K) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated the 20th day of March, 2015 TS 5 ITA No.4273/Del./2012

Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-IV, New Delhi 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.