Case Number: ITA 1160/DEL/2020
Appellant: Ashok Kumar, Ghaziabad
Respondent: ITO Ward 24(1), New Delhi
Assessment Year: 2014-15
Result: Appeal allowed
Case Filed On: 2020-06-11
Order Type: Final Tribunal Order
Date of Order: 2021-02-02
Pronounced On: 2021-02-02
The case involves Ashok Kumar (the appellant) appealing against the order passed by the Income Tax Officer (ITO), Ward 24(1), New Delhi, for the assessment year 2014-15. The appeal was directed against the order of the learned Commissioner of Income-tax (Appeals) [CIT(A)]-25, New Delhi, dated 28.02.2020.
The appellant raised the following grounds of appeal:
During the hearing, the appellant was represented by Shri Rakesh Jain, Advocate, and Shri Gurjeet Singh, C.A., while the respondent was represented by Mrs. Alka Gautam, Sr. D.R. The case was heard through video conferencing.
The appellant had filed his return of income on 13.01.2015, declaring an income of Rs.4,43,090/-. He claimed a long-term capital loss of Rs.52,01,327/- from the sale of two properties located at 380 Ramnagar, Delhi, and 80 Shanti Vihar, Delhi. The dispute arose regarding the computation of the capital gains and the eligibility for exemption under Section 54 of the Income Tax Act, 1961.
The Assessing Officer (AO) took the indexed cost of acquisition for the properties and disallowed the claimed transfer expenses and cost of improvement. The AO rejected the revised computation of capital gains filed by the appellant because no revised return had been filed under Section 139(5) of the Income Tax Act. The AO also disallowed the exemption under Section 54 in respect of the long-term capital gains arising from the sale of the property at 80 Shanti Vihar, Delhi, on the grounds that the purchase of the residential house at Ground Floor D-50, Kushambi, Ghaziabad, Uttar Pradesh, was made more than one year before the sale.
The Income Tax Appellate Tribunal (ITAT), comprising Shri Bhavnesh Saini, Judicial Member, and Shri Anil Chaturvedi, Accountant Member, reviewed the submissions and evidence. The ITAT allowed the appeal, focusing on the eligibility for deduction under Section 54 of the Income Tax Act, 1961.
The ITAT noted that although the sale deed of the property at D-50 Ground Floor, Kushambi, Ghaziabad, was registered on 19.02.2013, the property was incomplete and further construction and renovation were required. A supplementary agreement dated 19.02.2013 indicated that the physical possession of the property would be handed over to the appellant after completion of the work on or before 19.04.2013.
The ITAT referred to similar cases and judgments, including the decision of the ITAT Mumbai in the case of Smt. Ramita Mahendra Mehta and the ITAT Delhi in the case of Shri Rajiv Madhok, where the date of taking possession was considered the date of acquisition for the purpose of computing capital gains under Section 54.
The ITAT concluded that the appellant was entitled to the deduction under Section 54 of the Income Tax Act, 1961, as the possession of the new property was taken within one year before the date of transfer of the original property. The ITAT set aside the orders of the authorities below and deleted the entire addition, allowing the appeal of the appellant.
Implications: This case highlights the importance of considering the date of possession as the date of acquisition for the purpose of computing capital gains and the eligibility for deductions under Section 54. It also emphasizes the need for proper documentation and timely filing of revised returns or computations to support claims for exemptions.
Ashok Kumar vs. ITO Ward 24(1), New Delhi – ITA 1160/DEL/2020: Assessment Year 2014-15
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