ITO, Ward 3(1), Hyderabad, Hyderabad V. Narayana Rao Tummalapalli, Hyderabad

CO 12/HYD/2015

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1934 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Capital asset; Corroborative evidences
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1528/HYD/2014 ASSESSMENT YEAR 2009-2010 THE INCOME TAX OFFICER, WARD-3(1), HYDERABAD. VS., MR. NARAYANA RAO TUMMALAPALLI, HYDERABAD 500 033 PAN ABMPT8003B (APPELLANT) (RESPONDENT) C.O.NO.12/HYD/2015 ARISING OUT OF ITA.NO.1528/HYD/2014 - ASSESSMENT YEAR 2009-2010 MR. NARAYANA RAO TUMMALAPALLI, HYDERABAD 500 033 PAN ABMPT8003B VS., THE INCOME TAX OFFICER, WARD-3(1), HYDERABAD. ( CROSS - OBJECTOR ) (RESPONDENT) FOR REVENUE : MR. M. H. NAIK FOR ASSESSEE : MR. V. RAGHAVENDRA RAO DATE OF HEARING : 13 .01.2016 DATE OF PRONOUNCEMENT : 20 .01.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-IV, HYDERABAD DATED 25.07.2 014 FOR THE A.Y. 2009-2010 WHILE THE CROSS OBJECTION IS FILED BY THE ASSESSEE IN SUPPORT OF LD. CIT(A) ORDER. 2 ITA.NO.1528/H/2014 & C.O.NO.12/H/2015 MR. NARAYANA RAO TUMMALAPALLI, HYD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A .Y. 2009- 10 ON 31.07.2009 ADMITTING TOTAL INCOME OF RS.10,08 ,400. THE INCOME COMPRISES OF SALARY AND INCOME FROM OTHE R SOURCES AND ALSO LONG TERM CAPITAL GAINS ON SALE OF A RESIDENTIAL HOUSE. ASSESSEE CLAIMED THE LONG TERM C APITAL GAIN AS EXEMPT UNDER SECTION 54 OF THE I.T. ACT ON THE GROUND THAT HE HAS UTILISED THE SAME FOR PURCHASE / CONSTRUCTION OF AN INDEPENDENT HOUSE. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, THE A.O. OBSERVED THAT THE ASSESSEE HAS ENTERE D INTO A DEVELOPMENT AGREEMENT WITH M/S. SAI VENKATESWARA ESTATES, HYDERABAD FOR CONSTRUCTION OF AN INDEPENDE NT HOUSE IN A GATED COMMUNITY IN THE SAID LAND BUT THE CONSTRUCTION OF THE SAID HOUSE WAS NOT COMPLETED WI THIN THE STIPULATED PERIOD. HE, THEREFORE, DISALLOWED TH E EXEMPTION UNDER SECTION 54 OF THE I.T. ACT. AGGRIEV ED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE SAME BY FOLLOWING THE JUDGMENT OF THE H ONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMBANDHAM UDAYKUMAR AND ALSO DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NARASIMHA RAJU RUDRA R AJU VS. ACIT IN ITA.NO.234/HYD/2012 DATED 26.04.2013. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE IS IN APPEAL BEFORE US AND IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND ALSO RAISING AN ALTERNATIVE GROUND THAT EVEN IF THE CAPITAL GAINS IS NOT ALLOWABLE IN THE RELEVANT ASSESSMENT YEAR UNDER SECTION 54 OF THE I.T. ACT, T HE 3 ITA.NO.1528/H/2014 & C.O.NO.12/H/2015 MR. NARAYANA RAO TUMMALAPALLI, HYD. SAME IS TAXABLE AT THE END OF THE THIRD YEAR, THE A SSESSEE IS IN CROSS-OBJECTION BEFORE US. 3. AT THE TIME OF HEARING, THE LD. D.R. RELIED ON THE ORDER OF THE A.O. WHILE THE LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO FILED BEFORE US V ARIOUS DECISIONS BY WHICH THE ISSUE IS COVERED. HE HAS ALS O RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN T HE CASE OF FIBRE BOARDS (P) LTD. VS. CIT REPORTED IN ( 2015) 376 ITR 596 (SC). 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS UTILISED THE ENTIRE CAPI TAL GAINS WITHIN THE PERIOD OF ONE YEAR BUT DUE TO CERTAIN CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE, T HE CONSTRUCTION OF THE HOUSE COULD NOT BE COMPLETED WI THIN THE SPECIFIED PERIOD. THE FACTS AND CIRCUMSTANCES B EFORE US ARE SIMILAR TO THE CASE BEFORE THE COORDINATE BE NCH OF THIS TRIBUNAL IN THE CASE OF NARASIMHA RAJU RUDRA R AJU VS. ACIT (SUPRA) WHEREIN THE TRIBUNAL HAS HELD AS U NDER : 11. . . WE AGREE WITH THE CONTENTION OF THE LEARNED AR THAT PROVISION CONTAINED U/S 54F BEING A BENEFICIAL PROVISION HAS TO BE CONSTRUED LIBERALLY. IN VARIOUS JUDICIAL PRECEDENTS AS ALSO IN THE DECISION CITED BEFORE US BY THE LEARNED AR, IT HAS BEEN HELD THAT THE CONDITION PRECEDENT FOR CLAIMING BENEFIT U/S 54F IS THE CAPITAL GAIN REALIZED FROM THE SALE OF CAPITAL ASSET SHOULD HAVE BEEN PARTED BY THE ASSESSEE AND INVESTED 4 ITA.NO.1528/H/2014 & C.O.NO.12/H/2015 MR. NARAYANA RAO TUMMALAPALLI, HYD. EITHER IN PURCHASING A RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE. IF THE ASSESSEE HAS INVESTED THE MONEY IN CONSTRUCTION OF RESIDENTIAL HOUSE MERELY BECAUSE THE CONSTRUCTION WAS NOT COMPLETE IN ALL RESPECTS AND IT WAS NOT IN A FIT CONDITION TO BE OCCUPIED WITHIN THE PERIOD STIPULATED THAT WOULD NOT DISENTITLE THE ASSESSEE FROM CLAIMING THE BENEFIT U/S 54F OF THE ACT. ONCE THE ASSESSEE DEMONSTRATES THAT THE CONSIDERATION RECEIVED ON TRANSFER HAS BEEN INVESTED EITHER PURCHASING A RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE EVEN THOUGH THE TRANSACTIONS ARE NOT COMPLETE IN ALL RESPECTS AND AS REQUIRED UNDER THE LAW, THAT WOULD NOT DISENTITLE THE ASSESSEE FROM AVAILING BENEFIT U/S 54F OF THE ACT. EVEN INVESTMENT MADE IN PURCHASING A PLOT OF LAND FOR THE PURPOSE OF CONSTRUCTION OF A RESIDENTIAL HOUSE HAS BEEN HELD TO BE AN INVESTMENT SATISFYING THE CONDITIONS OF SECTION 54F OF THE ACT. THOUGH THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE ABOVE SAID PROPOSITION OF LAW, THE ASSESSEE IS REQUIRED TO PROVE THE ACTUAL DATE OF INVESTMENT AND THE AMOUNT INVESTED TOWARDS PURCHASE/CONSTRUCTION OF THE RESIDENTIAL HOUSE WITH SUPPORTING EVIDENCE. 4.1. THE HONBLE SUPREME COURT IN THE CASE OF FIBRE BOARDS (P.) LTD., VS. CIT (2015) 376 ITR 596 (SC) HAS HELD AS UNDER : 38. WE ARE OF THE VIEW THAT THE AFORESAID CONSTRUCTION OF SECTION 54G WOULD RENDER NUGATORY A VITAL PART OF THE SAID SECTION SO FAR AS THE ASSESS EE IS CONCERNED. UNDER SUB-SECTION (1), THE ASSESSEE IS GIVEN A PERIOD OF THREE YEARS AFTER THE DATE ON WHI CH THE TRANSFER TAKES PLACE TO PURCHASE NEW MACHINERY OR PLANT AND ACQUIRE BUILDING OR LAND OR CONSTRUCT BUILDING FOR THE PURPOSE OF HIS BUSINESS IN THE SAI D 5 ITA.NO.1528/H/2014 & C.O.NO.12/H/2015 MR. NARAYANA RAO TUMMALAPALLI, HYD. AREA. IF THE HIGH COURT IS RIGHT, THE ASSESSEE HAS TO PURCHASE AND/OR ACQUIRE MACHINERY, PLANT, LAND AND BUILDING WITHIN THE SAME ASSESSMENT YEAR IN WHICH THE TRANSFER TAKES PLACE. FURTHER, THE HIGH COURT H AS MISSED THE KEY WORDS NOT UTILIZED IN SUB-SECTION (2) WHICH WOULD SHOW THAT IT IS ENOUGH THAT THE CAPITAL GAIN MADE BY THE ASSESSEE SHOULD ONLY BE UTILIZED BY HIM IN THE ASSESSMENT YEAR IN QUESTION FOR ALL O R ANY OF THE PURPOSES AFORESAID, THAT IS TOWARDS PURCHASE AND ACQUISITION OF PLANT AND MACHINERY, AND LAND AND BUILDING. ADVANCES PAID FOR THE PURPOSE OF PURCHASE AND/OR ACQUISITION OF THE AFORESAID ASSETS WOULD CERTAINLY AMOUNT TO UTILIZAT ION BY THE ASSESSEE OF THE CAPITAL GAINS MADE BY HIM FO R THE PURPOSE OF PURCHASING AND/OR ACQUIRING THE AFORESAID ASSETS. WE FIND THEREFORE THAT ON THIS GROUND ALSO, THE ASSESSEE IS LIABLE TO SUCCEED. THE APPEALS ARE, ACCORDINGLY, ALLOWED AND THE JUDGMENT OF THE HIGH COURT IS SET ASIDE. 4.2. SINCE THE FACTS IN THE PRESENT CASE ARE ON RECORD AND IT IS NOT DISPUTED BY THE AUTHORITIES BE LOW THAT THE ASSESSEE HAS INVESTED THE AMOUNT OF CAPITAL GAI N FOR CONSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THE SPEC IFIED PERIOD, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) WHICH IS INCONSONANCE WITH THE PRECEDENTS ON THE ISSUE. 5. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.01.2 016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 20 TH JANUARY, 2016 VBP/- 6 ITA.NO.1528/H/2014 & C.O.NO.12/H/2015 MR. NARAYANA RAO TUMMALAPALLI, HYD. COPY TO 1. THE INCOME TAX OFFICER, WARD - 3(1), 7 TH FLOOR, B BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD 500 004. 2. MR. NARAYANA RAO TUMMALA PALLI, 8 - 2 - 293/82/A/451, ROAD NO.19, JUBILEE HILLS, HYDERABAD 500 033. 3. CIT(A) - IV, HYDERABAD. 4. CIT - III, HYDERABAD. 5. D.R. I.T.A.T. B BENCH, HYDERABAD. 6. GUARD FILE