IN INCOME TAX APPELLATE TRIBUNAL, C BENCH MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 4383/Mum/2017 for Assessment Years 2007-2008 ACIT- 4(3)(1), Shri Pradipkumar R. Shah, th Room No. 649, 6 Floor, 2nd Floor, Shreeji Bhavan, Aayakar Bhawan, M.K. Road, Vs Mangaldas Road, Mumbai-400020. Mumbai-400002. PAN AAKPS6292G (Appellant) (Respondent) Appellant by Shri Chaudhary Arunkumar Singh (DR) Respondent by Dr. K. Shivram with Shri Sashank Dundu (DR) Date of Hearing 26/08/2019 Date of Pronouncement 30/08/2019 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER 1. This appeal by revenue is directed against order of ld. Commissioner of Income Tax (Appeals)-8, [CIT(A)], Mumbai dated 24.03.2017 for Assessment Year 2007-08. revenue has raised following grounds of appeal 1. On facts and in circumstances of case and in law, Ld. CIT(A) erred in directing AO to allow deduction u/s. 54 of I.T. Act of Rs. 61,69,712/- even though assessee has purchased new asset before one year prior to date of purchase of original asset. 2. Brief facts of case are that assessee is individual, filed his return of income for Assessment Year 2009-10 on 31.03.2008 declaring total income of Rs. 44,88,318/-. assessment was completed on 21.12.2009 ITA No. 4383 Mum 2017-Shri Pradipkumar R. Shah. under section 143(3) without any variance. Subsequently, assessment was re-opened under section 147. Notice under section 148 dated 28.03.2014 was served upon assessee on 31.03.2014. Assessing Officer while completed assessment under section 143(3) r.w.s. 147 disallowed exemption under section 54 of Rs. 61,69,712/-, which was allowed in original assessment order dated 21.12.2009. On appeal before ld. CIT(A), action of Assessing Officer in re-opening was upheld, however, on merit, assessee was allowed exemption under section 54 of Rs. 61,69,712/-. Thereby aggrieved by order of ld. CIT(A), revenue has filed present appeal before us. 3. We have heard submission of ld. Departmental Representative (DR) for revenue and ld. Authorized Representative (AR) of assessee and perused material available on record. ld. DR for revenue supported order of Assessing Officer. ld. DR for revenue further submits that assessee claimed deduction of Rs. 61,69,712/- under section 54 against Long Term Capital Gain (LTCG) earned on sale of residential property at Anuj Apartment, Gowalia Tank Road, Mumbai sold on 08.06.2006. assessee claimed deduction in respect of new asset which was purchased on 11.05.2005. assessee purchased new asset beyond one year prior to date of transfer of original asset. Assessing Officer in paragraph 4.2 of assessment order has clearly bought out fact that assessee transferred residential flat on 08.05.2006 and new flat was bought 2 ITA No. 4383 Mum 2017-Shri Pradipkumar R. Shah. by assessee within one year prior to date of transfer of original asset. Therefore, assessee was not entitled for deduction under section 54 of Act. ld. DR for revenue further submits that ld. CIT(A) allowed relief to assessee by considering Memorandum of Understanding (MOU) dated 08.05.2006, however, agreement to sale was registered only on 06.06.2006. 4. On other hand, ld. AR of assessee supported order of ld. CIT(A). ld. AR further submits that he has already filed application under Rule 47 for challenging re-opening of assessment as re-opening being bad-in-law. re-opening is beyond four year from end of relevant Assessment Year. re-opening was merely based on audit objection. copies of reasons recorded were never provided to assessee. 5. On merit of case, ld. AR of assessee submits that case of assessee throughout proceeding before Assessing Officer as well as before ld. CIT(A) was that new property was purchased within one year from sale of asset. assessee purchased new property on 11.05.2005 and one year from such date ended on 10.05.2006. assessee sold his old asset/property on 08.05.2006 as per MOU and major portion of consideration was received and possession of property was also handed over on 08.05.2006. ld. CIT(A) after considering documentary evidence concluded that date of sale of old property was to be taken as 08.05.2006. 3 ITA No. 4383 Mum 2017-Shri Pradipkumar R. Shah. And accordingly granted relief to assessee. ld. AR of assessee also invited our attention on MOU dated 08.05.2006, copy of which is placed at page no. 10 to 22 of Paper Book. Perusal of said MOU shows that out of total sale consideration of Rs. 85,00,000/- assessee has received Rs. 50,00,000/- of sale consideration on 08.05.2006 through cheques drawn on HDFC Bank and ICICI Bank and remaining consideration of Rs. 35,00,000/- was to be received on or before 10.06.2006. details of cheques are duly mentioned in MOU. assessing officer has neither disputed date of payment of substantial amount not made any investigation. 6. We have considered rival submission of parties and have gone through orders of authorities below. In return of income, assessee claimed deduction of LTCG on purchase of residential house. assessee claimed to have old residential house on 08.06.2006. assessee purchased new house on 11.05.2005. Assessing Officer treated sale of residential house as per agreement dated 06.06.2006. perusal of MOU dated 08.05.2006 reveals that assessee received substantial consideration i.e. Rs. 50,00,000/- through cheques drawn on HDFC and ICICI Bank. details of cheques are duly mentioned in MOU. assessing officer has neither disputed date of payment of substantial amount not made any investigation from purchaser of house. assessee also parted with possession of said assets/old house. 4 ITA No. 4383 Mum 2017-Shri Pradipkumar R. Shah. 7. date of purchase of new asset on 11.05.2005 is not in dispute. period of one year prior to sale of new asset for claiming deduction has to be counted from purchase of new asset i.e. from 11.05.2005, which in our view would end on 10.05.2006. assessee as per MOU received substantial consideration on 08.05.2006. At cost of repetition, we may mentioned that contents of MOU dated 08.05.226 reveals that assessee received consideration of Rs. 50,00,000/- by way of cheque no. 467067 dated 08.05.2006 and 054294 dated 08.05.2006 both of Rs. 23,00,000/- each drawn on HDFC Bank and Rs. 4,00,000/- by cheque no. 935963 dated 08.05.2006 drawn on ICICI Bank Ltd. assessee also handed over vacant and peaceful possession to transferee, this fact is duly recorded at page no. 9 of MOU dated 08.05.2006. Though agreement to sale was registered before Sub-Registrar concern on 06.06.2006. Perusal of registered agreement to sale, copy of which is placed at page no. 23 to 46 of Paper Book also contained recital that assessee has entered into MOU dated 08.05.2006 and received Rs. 50,00,000/- against t he sale consideration out of total consideration of Rs. 85,00,000/-. Assessing Officer treated date of registration of agreement to sale as transfer of asset. 8. definition of transfer in relation to capital asset is provided under section 2(47) of Act, wherein Cluase-6 of section 2(47) provide that any transfer involving or allowing possession of any immovable property to be taken or retain in part performance of contract of nature referred to 5 ITA No. 4383 Mum 2017-Shri Pradipkumar R. Shah. section 35A of Transfer of Property Act. Therefore, considering fact that assessee has parted with possession of property on 08.05.2006 in part performance of contract and received major portion of consideration. Thus, transfer of asset was substantially completed on 08.05.2006 itself, which is well within one year prior from date of transfer of original asset. Therefore, ld. CIT(A) has rightly allowed deduction of LTCG to assessee. 9. In result, ground raised by revenue is dismissed. 10. As we have dismissed ground of appeal raised by revenue, therefore, in our view, discussion and adjudication on application under Rule 27 of Income Tax Appellate Tribunal Rules filed by assessee have become academic. 11. In result, appeal of revenue is dismissed. Order pronounced in open court on this 30/08/2019. Sd/- Sd/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date 30.08.2019 SK Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT BY ORDER Assistant Registrar ITAT Mumbai 6 ACIT- 4(3)(1), Mumbai v. Pradipkumar R. Shah