Case Number: ITA 1501/DEL/2019
Appellant: Monika Jain, New Delhi
Respondent: ITO, Ward-2(2), Faridabad
Assessment Year: 2011-12
Result: 2011-12
Case Filed On: 2019-02-22
Order Type: Final Tribunal Order
Date of Order: 2020-07-21
Pronounced On: 2020-07-21
Bench: Delhi Bench ‘SMC-1’, New Delhi
Members: Shri Bhavnesh Saini (Judicial Member) and Shri O.P. Kant (Accountant Member)
This case involves the appeal filed by Monika Jain against the order of the Commissioner of Income-Tax (Appeals), Faridabad, dated 24/12/2018 for the assessment year 2011-12. The primary grievances are the denial of exemption under Section 54 of the Income Tax Act and the disallowance of construction costs claimed by the appellant.
The appellant, Monika Jain, along with two co-owners, owned an ancestral property at Versova, Mumbai. On 05/03/2009, they entered into a development agreement with M/s J.V. Construction and Developers for the construction of a multi-storey building named “Ratan Kunj.” In exchange for their land share, the co-owners received a residential flat on the second floor.
On 02/07/2010, the appellant and the co-owners sold the flat for a consideration of Rs. 4.2 crores. In her return of income, the appellant declared the sale proceeds under long-term and short-term capital gains, claiming a deduction under Section 54 for the purchase of a new residential property.
During the assessment, the Assessing Officer (AO) disallowed the deduction under Section 54, citing that the appellant already owned a residential house at the time of the investment in the new property and had not claimed the deduction in her return. Additionally, the AO disallowed the cost of construction of the flat against short-term capital gains, stating that the appellant did not incur such costs.
On further appeal, the CIT(A) upheld the AO’s decision, stating that the appellant did not raise the issue during the initial appellate proceedings and failed to provide evidence for the construction costs. The appellant then appealed to the Income Tax Appellate Tribunal (ITAT).
During the hearing on 15/07/2020, the appellant was represented by Ms. Gunjan Jain, CA, and the respondent by Shri R.K. Gupta, Sr. DR. The appellant argued that the CIT(A) did not properly consider the evidence for the investment in the new property and the construction costs.
The ITAT found that the appellant had made an investment in a new property and provided evidence that was not adequately considered by the CIT(A). The Tribunal noted that as per CBDT Circulars, the booking of a flat is eligible for deduction under Section 54, and the evidence should be examined accordingly. The Tribunal also noted that the cost of construction incurred by the developer should be considered, similar to the co-owner’s case.
In view of the findings, the ITAT set aside the impugned order of the CIT(A) and remitted the issues back to the AO for fresh adjudication. The AO was directed to verify the documentary evidence provided by the appellant and decide the issues on merits. The Tribunal emphasized that the AO should consider the CBDT Circulars and judicial decisions while examining the claim under Section 54 and the cost of construction.
In the result, the appeal by Monika Jain was allowed for statistical purposes. The Tribunal highlighted the importance of proper consideration of evidence and adherence to principles of natural justice in adjudicating tax disputes.
Decision: Appeal allowed for statistical purposes.
Signed by: Shri Bhavnesh Saini (Judicial Member) and Shri O.P. Kant (Accountant Member)
Date: 21.07.2020
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