ACIT 2(1)(1), AGRA V. MADHUKAR KAPUR, AGRA

ITA 429/AGR/2015

AI Insights

The case involves an appeal by the revenue against the decision of the Commissioner of Income Tax (Appeals)-II, Agra, which pertained to the Assessment Year 2011-12. The primary issue was the grant of deductions under sections 54 and 54F of the Income Tax Act, following an assessment order that assessed capital gains on the sale of a house property, which was not initially disclosed by the assessee in his return of income. The assessee, Shri Madhukar Kapoor, had sold his 2/3rd share of land to M/s Mahim Patran Pvt. Ltd., where he was a director, and claimed deductions for the purchase of a new property. The Assessing Officer rejected these claims, leading to the appeal. The CIT(A) directed further verification of facts but the matter remained unresolved, prompting the revenue's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126591 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV LD.
• Assessee Lawyers: ANURAG SINHA; LD
• Keywords: Set aside; Capital asset; Additional evidence; Corroborative evidences; Capital Gains; Supporting evidence; Commissioner; Commissioner of Income Tax; Statistical purposes; Transfer; Restored; Exempt; Claim of deduction; Opportunity to Furnish Details
• Section: 143(3); 54; 54F

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No. 429/Agr/2015 (िनधाŊरण वषŊ / Assessment Year: 2011-12 ) ACIT- 2(1)(1) Agra. बनाम/ Vs. Shri Madhukar Kapoor 64, Surya Nagar, Agra. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. ACNPK-8849-G (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Dr. Arun Kumar Yadav – Ld. CIT-DR ŮȑथŎकीओरसे/Respondent by : Sh. Anurag Sinha, Adv. – Ld. AR सुनवाईकीतारीख/Date of Hearing : 18-02-2025 घोषणाकीतारीख /Date of Pronouncement : 23-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2011-12 arises out of an order passed by learned Commissioner of Income Tax (Appeals)-II, Agra [CIT(A)] on 26-03-2015 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 28-02- 2014. The sole grievance of the revenue is qua grant of deduction u/s 54 / 54F. Having heard rival submissions and upon perusal of case records, the appeal is adjudicated as under. 2. In the assessment order, Ld. AO assessed capital gains on sale of certain house property for Rs.454.98 Lacs which was not shown by the assessee in the return of income. The assessee sold his 2/3rd share of land situated at 5/161, Saunth Ki Mandi, Agra to M/s Mahim Patran Pvt. Ltd. (MPPL) in which the assessee acted as a director. The total 2 consideration was fixed at Rs.7 Crores. The assessee’s son was holding 1/3rd share in the land and he also entered into agreement to sale. This land was found to be in possession of MPPL. M/s MPPL since a long time constructed a building on the said land according to its requirements. The Ld. AO, in terms of Sec.2(47)(v), as well as in terms of the provision of Sec.53A of Transfer of Property Act, held that the sale of property was completed during this year and the resultant gains would be assessable to capital gains. The assessee explained that the said property was given to MMPL as a tenant since a long time and it continued to be tenant even after the execution of agreement to sell. The assessee was reflecting rental income in the return of income. The agreement stipulated that the possession would continue to remain with the seller till final payment is received and transfer is registered. The assessee also stated that the possession was not parted with. However, Ld. AO assessed capital gains of Rs.454.98 Lacs and framed the assessment. 3. The assessee’s submissions during first appeal were subjected to remand proceedings vide AO’ remand report dated 19-09-2014. The assessee sought deduction u/s 54 and filed supporting evidences which were rejected by Ld. AO on the ground that new property at Maharani Bagh was purchased by the assessee jointly with Smt. Milan Kapoor. Further, the assessee was having three house properties and therefore, it was not entitled for deduction u/s 54F. The assessee controverted the arguments of Ld. AO and stated that it would be entitled for impugned deductions. The argument that the assessee would be entitled for deduction u/s 54 was again subjected to remand proceedings which remained un-responded to by Ld. AO. 3 4. The Ld. CIT(A) concurred with the findings of Ld. AO that the transfer had taken place in this year only. However, the Ld. CIT(A) agreed that the assessee was not given opportunity to furnish details on claim of deduction u/s 54 / 54F. The Ld. CIT(A), in para 6.8, observed that the rental income from impugned property was offered and computed under the head income from house property. However, it was not clear as to whether the property was a residential house or not. For the said purpose, Ld. AO was directed to verify the aforesaid fact and also ascertain the claim of deduction u/s 54 / 54F accordingly. On the issue of purchase of new property, Ld. AO was directed to ascertain the source of payment of new investment and allow the deduction to the extent of investment as made by the assessee. Aggrieved, the revenue is in further appeal before us on the ground that Ld. CIT(A) has erred in admitting additional evidences and allowing deduction as claimed u/s 54 / 54F. The Ld. AR, in its written submissions, claims that when the assessee is lawfully entitled for exemption, the same ought to have been granted to the assessee. The Ld. AR also contends that the impugned property was a residential house and the new property as purchased by the assessee was also a new residential house. Therefore, the assessee would be entitled for exemption u/s 54. Even if the impugned property could not be considered as residential house, the assessee would still be eligible to claim deduction u/s 54F. The Ld. AR stated that Property at 65, Surya Nagar was a property on which construction was not permitted. The property at Professor Colony, Agra was lying as a vacant plot. The property at Safdarjung House, Agra is stated to be used for commercial purposes. On these facts, Ld. AR laid its claim towards deduction u/s 54F. 4 5. We find that it is admitted position by the assessee that the transfer has happened in this year. The only question to be addressed is whether the assessee would be entitled for deduction u/s 54 / 54F or not. Both parties converge on the point that Ld. CIT(A) could not have remanded the matter back to the file of Ld. AO. It has also been stated that the consequential order has not been passed yet. It could also be seen that second remand report has never come from Ld. AO. In the light of all these facts, we set aside the impugned order to the extent of remand back of the issue of deduction u/s 54/ 54F. The limited issue is to decide the assessee’s eligibility to deduction u/s 54 / 54F. For the aforesaid purpose, the matter, to that limited extent, stand restored back to the file of Ld. CIT(A) for fresh adjudication with a direction to the assessee to substantiate its case. If no assistance is forthcoming from Ld. AO, the Ld. CIT(A) would be free to adjudicate the issue on the basis of material as available on record. 6. The appeal stand partly allowed for statistical purposes. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER Dated: 23-04-2025 आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AGRA "