Sh. Pawan Arya v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Sh. Pawan Arya. Vs. Commissioner of Income Tax I.T.A. No.613 of 2010 Date of decision: 13.12.2010 -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Akshay Bhan, Advocatefor the appellant. ---for the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assesseeunder Section 260-A of the Income Tax Act, 1961 (for short, “theAct”) against the order of the Income Tax Appellate Tribunal, NewDelhi dated 17.12.2009 in I.T.A. No.2416/Del/2008 for theassessment year 2005-06 proposing to raise following substantialquestions of law:- (i)“Whether in facts and circumstances of the case, theaction of the authorities below in rejecting the claim ofthe assessee when all the conditions under section 54of the Act have been fulfilled is legally sustainable inthe eyes of law?action of the authorities below in rejecting the claim ofthe assessee when all the conditions under section 54of the Act have been fulfilled is legally sustainable inthe eyes of law? (ii)Whether in facts and circumstances of the case, theaction of the authorities below in rejecting the claim ofaction of the authorities below in rejecting the claim of the assessee without their being any materialevidence to rebut the claim of the assessee/appellantis legally sustainable in the eyes of law? (iii)Whether in facts and circumstances of the case, theaction of the authorities below in ignoring the ratio ofthe decision in the case of D. Anand Basapa v/sITO (2004) 91 ITD 53 (Bang.) wherein the exemptionu/s 54 of the Act was granted on the acquisition of twohouses out of the proceeds of one residential house islegally sustainable in the eyes of law? action of the authorities below in ignoring the ratio ofthe decision in the case of D. Anand Basapa v/sITO (2004) 91 ITD 53 (Bang.) wherein the exemptionu/s 54 of the Act was granted on the acquisition of twohouses out of the proceeds of one residential house islegally sustainable in the eyes of law? (iv)Whether in facts and circumstances of the case, theaction of the authorities below, impugned ordersAnnexures A-1 and A-5 are legally sustainable in theeyes of law?action of the authorities below, impugned ordersAnnexures A-1 and A-5 are legally sustainable in theeyes of law? 2. The assessee claimed exemption on capital gains onsale of flat on the ground of acquisition of two houses. TheAssessing Officer set off the capital gain against one of thehouses but held the claim not to be admissible against secondhouse. However, the CIT(A) upheld the claim of the assesseerelying upon decision of Bangalore Bench of the Tribunal in D.Anand Basapa Vs. ITO (2004) 91 ITD 53. The said view hasbeen reversed by the Tribunal as follows:- “6. We have carefully considered the rivalsubmissions in the light of the material placed beforeus. The facts in the present case are clear. Theassessee is claiming exemption in respect of twoindependent residential houses situated at differentlocations; one is in Dilshad Colony, Delhi and theother is in Faridabad. The assessee in the Special “6. We have carefully considered the rivalsubmissions in the light of the material placed beforeus. The facts in the present case are clear. Theassessee is claiming exemption in respect of twoindependent residential houses situated at differentlocations; one is in Dilshad Colony, Delhi and theother is in Faridabad. The assessee in the Special Bench case had also purchased two residentialhouses against sale consideration of residential flat at‘Gulistan’ situated at Bhulabai Desai Road, Mumbai.One residential property was at Varun Apartments atVarsova and the other property was at ErlynApartments, Bandra and it was held by the Specialbench in the aforementioned case i.e. ITO Vs. Ms.Sushila M. Jhaveri (supra) that the assessee isentitled to get exemption only in respect of one houseof her choice. Therefore, the decision of SpecialBench is fully applicable to the present case and theassessee can avail exemption u/s 54 in respect of oneresidential house only. The factual aspect has notbeen disputed by ld. AR. The only dispute before usis legal proposition that whether the assessee isentitled to get exemption in respect of twoindependent residential houses purchased out of saleconsideration of another residential house. Therefore,the issue is decided in favour of the department and itis held that the assessee is entitled to get exemptionu/s 54 in respect of one property only and no questionhas been raised by ld. AR regarding the choice of theproperty or the factual aspect of the matter. 7. So it relates to the decision relied upon by ld.AR of Hon’ble Karnataka High Court in the case ofCIT Vs. D. Anand Basapa, it may be mentioned thatthe said case cannot be applied to the case of theassessee on the ground that in that case the twohouses purchased by the assessee were notindependent properties and a factual finding has beenrecorded that the two apartments which were claimedto be exempted against sale consideration weresituated side by side and it was also stated by the builder in that case that he has effected modificationof the flats to make it as one unit by opening the doorin between two apartments. On these facts, theHon’ble High Court has observed that the fact that atthe time when Inspector inspected the premises, theflats were occupied by two different tenants is not theground to hold that apartment is not one residentialunit. The fact that the assessee could have purchasedboth the flats in one single sale deed or could benarrated the purchase of two premises as one unit inthe sale deed is not the ground to hold that theassessee had no intention to purchase two flats asone unit. From these observations of Hon’ble HighCourt, it is clear that while rendering the decision theyhave kept in mind that the purchase of two flats in thesame building which were united for living of theassessee by making necessary modifications madethe residential unit as one and, thus, that case couldnot be applied to the facts of the case of theassessee.........” 3. We have heard learned counsel for the appellant. 4. As regards claim for exemption against acquisition oftwo houses under Section 54 of the Act, the same is notadmissible in plain language of statute. In the judgment ofKarnataka High Court inCITv. D. Ananda Basappa [2009] 309ITR 329 (Kar), referred to in the impugned order, exemptionagainst purchase of two flats was allowed having regard to thefinding that both the flats could be treated to be one house as both had been combined to make one residential unit. The saidjudgment, thus, proceeds on a different fact situation. 5. Learned counsel for the appellant wanted to raisecertain other points which have neither been pleaded in thememo of appeal nor raised before the Tribunal. The same couldnot be allowed merely on the basis of oral submissions. 6. No substantial question of law arises. 7. The appeal is dismissed. both had been combined to make one residential unit. The saidjudgment, thus, proceeds on a different fact situation. 5. Learned counsel for the appellant wanted to raisecertain other points which have neither been pleaded in thememo of appeal nor raised before the Tribunal. The same couldnot be allowed merely on the basis of oral submissions. 6. No substantial question of law arises. 7. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE December 13, 2010ashwani (AJAY KUMAR MITTAL) JUDGE