Itxa/483/2016 Of Pr. Commissioner Of Income Tax-23 v. Peter Savio Pereira

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.483 OF 2016 Pr.Commissioner of Income Tax-23 … Appellant V/s. Mr.Peter Savio Pereira … Respondent --- Mr.A.R.Malhotra with Mr.N.A.Kazi for the Appellant.Mr.K.Gopal with Mr.Tanmay Phadke with Ms.Neha Paranjpe i/byMr.Jitendra Singh for the Respondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : NOVEMBER 26, 2018. P.C.:- 1.Revenue has filed this appeal against the judgment ofIncome Tax Appellate Tribunal (“Tribunal” for short) dated 27[th]February, 2015. 2.Following question is pressed before us : “Whether in the facts and circumstances of thecase, the Hon'ble ITAT was justified to hold thatmarket value of flats should be considered asinvestment towards purchase/construction of newHouse property for purpose of 54(1) deduction computation, when the assessee had practicallynot made any payment in money terms or in kindtowards the value of the flats and car spacereceivable from the builder?” 3.The issue pertains to the assessment year 2007-08.Respondent-assessee is an individual. He owned 75% share in aresidential property called “Violet Valley” situated at Bandra,Mumbai, remaining 25% share was that of the sister of theassessee. During the period relevant to the assessment year inquestion, the said property was sold for a consideration of Rs.3.05crores in cash. The purchaser additionally agreed to providethree flats of specified carpet area and three parking spaces inthe same scheme which was part of the consideration that thesellers would receive from the purchaser. 4.In the return filed the assessee adopted the fair marketvalue of the property as on 1[st] April, 1981 at Rs.35,00,000/- Theassessee also claimed exemption under Section 54 of the Actpointing out that the allotment of the flats was in the nature ofthe assessee's investments in new residential property. TheAssessing Officer did not accept the assessee's claim of Priya Soparkar 313 itxa 483-16-o exemption under Section 54 also noticing that the assessee hadnot included the value of the flats towards the total saleconsideration received by the assessee. We are informed thatupon being so pointed out the assessee had also agreed toinclude the price of the flats as part of the sale considerationreceived by him upon sale of the immovable property. 5.The issue eventually reached the Tribunal in an appeal filedby an assessee. The Tribunal was of the opinion that theexemption could not be denied to the assessee. The Tribunal inits order made following observations:- “9.It is clear from the above that residentialhouse was given to the assessee in consideration ofthe sale of old house. The sale consideration waspartly received in cash and partly in the form ofnew flats to be constructed on the plot of old housesold by assessee. The new flats agreed to be givento assessee amounts to investment by assessee inresidential house. Therefore, the AO was notjustified in adding back the additionalconsideration given in the form of allotment ofthree flats by declining claim of deduction underSection 54 of the I.T. Act.10.In the present case before us, the assessee haspurchased/constructed the new residential propertyand paid the consideration equivalent of price bypayment in kind. Therefore, the assessee is entitledfor exemption u/s. 54 of I.T.Act, 1961 in respect of Priya Soparkar these flats.” Priya Soparkar these flats.” 6.In the nutshell, therefore, the Tribunal notices that theassessee had received sale consideration partly in cash andpartly in form of new flats to be constructed and to be allotted tothe assessee. The Tribunal, therefore, correctly came to theconclusion that the assessee's investment in such new flatsamounts to investment for acquisition of new residential house.The Tribunal, therefore, correctly held that the Assessing Officerwas not justified in disallowing the exemption under Section 54of the Act. No question of law arises. Tax Appeal, therefore,dismissed. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….