R.Ramanathan, Pollachi V. ITO, Pollachi

CO 163/CHNY/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9034 (ITAT-CHENNAI)
• Duration Of Justice: 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: T N BETGERI
• Section: 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1723/MDS/2013 & C.O. NO.163/MDS/2013 ( IN ITA NO.1723/MDS/2013) (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER, WARD-I(2), 112, ALAGAPPA LAYOUT, POLLACHI. VS. MR. R.RAMANATHAN, 35, VENKATARAMANAN STREET, POLLACHI-642 001. PAN: AASPR2509K (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : MR. T.N.BETGERI, JCIT RESPONDENT BY : MR. K.RAVI, ADVOCATE DATE OF HEARING : 6 TH NOVEMBER, 2013 DATE OF PRONOUNCEMENT : 6 TH NOVEMBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBA TORE DATED 11.6.2013 FOR THE ASSESSMENT YEAR 2008-09 AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 2 . THE LEARNED CIT(A) HAS ERRED IN ALLOWING ` 16,35,326/- RECE I VED AS CAPITAL GAIN ON SALE OF ITA NO. 1723/MDS//2013 & CO. NO.163/MDS/2013 2 HOUSE PROPERTY AS EXEMPTION U/S 54(1) THOUGH THE APPELLANT HAS NOT FULFILLED THE CONDITIONAL PROVISION LAID DOWN IN SUBSECTION 2 OF SECTION 54 REGARDING THE MANNER OF DEPOSIT OF THE UNUTILISED AMOUNT SET APART FOR CONSTRUCTION. 3. THE LEARNED CIT(A) OUGHT TO HAVE TAKEN INTO CONSIDERATION THAT THE ASSESSEE HAD NOT DEPOSITED THE AMOUNT OF ` 16,35,326/- BEING THE BALANCE OF CAPITAL GAIN SET APART FOR CONSTRUCTION OF A NEW HOUSE IN ANY ACCOUNT AS SPECIFIED IN SECTION 54(2) BEFORE THE DUE DATE OF FILING OF RETURN FOR THE A.Y. 2008-09 AS PER SECTION 139(1). 4. THE LEARNED CIT(A) IS WRONG IN INTERPRETING THE STATUTORY PROVISION OF SECTION 54(2) AND ALLOWING THE EXEMPTION FOR THE REASON THAT THE ASSESSEE HAD COMPLETED CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE BEFORE THE DUE DATE OF FILING OF RETURN FOR THE A.Y . 2008-09 AS PER SECTION 139(4). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO LD A HOUSE AND CLAIMED EXEMPTION UNDER SECTION 54 ON THE CAPITAL GAINS ON SALE OF SUCH HOUSE PROPERTY. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DENIED EXEMPTION UN DER SECTION 54 OF THE ACT STATING THAT THE ASSESSEE HAS NOT CONSTRUCTED A RESIDENTIAL HOUSE WITHIN THE DUE DATE UNDER SECTION 139(1) AND NOT DEPOSITED THE SALE PROCEEDS IN THE ITA NO. 1723/MDS//2013 & CO. NO.163/MDS/2013 3 CAPITAL GAINS ACCOUNT SCHEME. ON APPEAL, THE COMMI SSIONER OF INCOME TAX (APPEALS) REFERRING TO VARIOUS DECISI ONS HELD THAT SINCE THE ASSESSEE HAS UTILIZED THE ENTIRE SAL E PROCEEDS BEFORE THE DUE DATE FOR FILING OF RETURN UNDER SECT ION 139(4) OF THE ACT, THE CLAIM OF THE ASSESSEE IS ALLOWABLE. TH E REVENUE IS IN APPEAL BEFORE US. 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF THE ASSESSING OFFICER IN DENYING EXEMPTION UNDER SECTION 54 OF THE ACT TO THE ASSESSEE, WHEREAS THE COUNS EL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING THE CLAIM OF THE ASSESSEE . 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE THAT THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED AS THE SALE PROCEEDS WERE UTILIZED BEFORE THE DUE DATE FOR FILI NG THE RETURN UNDER SECTION 139(4) OF THE ACT, THOUGH NOT DEPOSIT ED UNDER THE CAPITAL GAINS SCHEME, IS ACCEPTED BY THE COMMIS SIONER OF INCOME TAX (APPEALS) OBSERVING AS UNDER:- ITA NO. 1723/MDS//2013 & CO. NO.163/MDS/2013 4 6.0 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND THE MATERIAL A VAILABLE ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER WOULD INDICATE THAT THE ASSESSING OFFICER HAS TAKEN A NARROW INTERPRETATION OF SECTION 54 (2) OF THE INCOME TAX ACT . ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAS NOT CONSTRUCTED A RESIDENTIAL HOUSE WITHIN THE DUE DATE U/S 139 (1) AND NOT DEPOSITED THIS AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME. HOWEVER, ACCORDING TO THE APPELLANT THE FOLLOWING DECISIONS OF VARIOUS COURTS HAVE TAKEN A LIBERAL INTERPRETATION OF PROVISIONS OF SECTION 54 (2). THE COURT CASES CITED BY THE APPELLAN T ARE AS FOLLOWS: 1) RAJESH KUMAR JALAN VS. ITO , 286 ITR 274 (GAU) (HC) HELD THAT 'IF A PERSON PURCHASE A RESIDENTIAL HOUSE WITHIN THE STIPULATED PERIOD, THEN THERE IS NO NEED TO DEPOSIT THE UNPAID AMOUNT IN A SEPARATE BANK UNDER CAPITAL GAIN SCHEME.' 2) FATHIMA BAI VS. ITO (2010) 032 ITCL 97 (KAR-HC) HELD THAT ' SECTION 54(2) DECLARES THAT THE ENTIRE CAPITAL GAIN WAS UTILISED BY THE ASSESSEE FOR PURCHASING HOUSE PROPERTY BEFORE THE. EXTENDED DUE DATE UNDER SECTION 139 (4) THEN THE EXEMPTION UNDER SECTION 54 WOULD BE ALLOWED TO THE ASSESSEE. ' ITA NO. 1723/MDS//2013 & CO. NO.163/MDS/2013 5 3) NIPUN MEHROTRA VS. ASS.CIT 287 ITR 0110 (2008) (KAR-HC) HELD THAT ' THERE IS NO MENTION OF ANY SUB-SECTION OF SECTION 139 IN SECTION 54 AND THE ASSESSEE HAVING UTILIZED THE SALE CONSIDERATION FOR THE ACQUISITION OF NEW ASSET BEFORE THE DATE OF FILING OF RETURN UNDER SECTION 139 (4), THEN, THE ASSESSEE WAS ENTITLED TO ENTIRE EXEMPTION UNDER SECTION 54.' 7.0. THE PROVISIONS OF SECTION 54(2) ALONG WITH THE ABOVE MENTIONED COURT DECISIONS WILL INDICATE THAT THE ASSESSING OFFICER IS NOT RIGHT IN INTERPRETING THAT SECTION 139 MENTIONED IN SECTION 54 SHOULD BE TAKEN AS 139(1). THE SAME VIEWS WERE SUPPORTED DURING A DIFFERENT CONTEXT BY THE JURISDICTIONAL TRIBUNAL IN P.THIRUMOORTHY VS. ITO 2010 TAX PUB (DT) ITA NO.1297/MAD/2009. IN VIEW OF THE JURISDICTIONAL PRONOUNCEMENTS AND DUE TO THE FACT THAT THE ASSESSEE HAS COMPLETED THE RESIDENTIAL HOUSE BEFORE THE ALLOWED TIME U/S.139(4) THE CLAIM OF THE ASSESSEE SUCCEEDS AND THE ADDITION OF ` 16,35,326/- IS DELETED. 6. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISIONS OF THE HONBLE GUWAHATI & KARNATAKA HIGH COURTS AND THE CO-ORDINAT E BENCH OF THIS TRIBUNAL ALLOWED THE CLAIM OF THE ASS ESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMI SSIONER OF ITA NO. 1723/MDS//2013 & CO. NO.163/MDS/2013 6 INCOME TAX (APPEALS) IN ALLOWING THE CLAIM OF THE A SSESSEE. THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 8. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONL Y IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). AS WE SUSTAINED THE IMPUGNED ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS), THE CROSS OBJ ECTION OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 6 TH DAY OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K.NARAYANAN ) (CHALLA N AGENDRA PRASAD) VICE-PRESIDENT J UDICIAL MEMBER CHENNAI, DATED THE 6 TH NOVEMBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.