Shri Sudheer S.Mehta, Baroda V. The Income tax Officer,Ward-8(2), Baroda

CO 66/AHD/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8602 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: O P BATHEJA
• Section: 143(3); 54

Judgement Text

ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 260/AHD/2013 &CO. NO. 66/AHD/ 2013) (ASSESSMENT YEAR:2009-10) THE ITO, WARD-8(2) , RACE COURSE CIRCLE BARODA (APPELLANT) VS. SHRI SUDHEER S MEHTA, FLAT NO.-401, SAPTRISHI CO-OP SOCIETY, OPP-PUNIT NAGAR, OFF-OLD PADRA ROAD, BARODA (RESPONDENT) SHRI SUDHEER S MEHTA, FLAT NO.-401, SAPTRISHI CO-OP SOCIETY, OPP-PUNIT NAGAR, OFF-OLD PADRA ROAD, BARODA (APPELLANT) VS. THE ITO, WARD-8(2) , RACE COURSE CIRCLE BARODA (RESPONDENT) PAN: ADWPM0601J APPELLANT BY : SHRI O.P. BATHEJA, SR. D.R . RESPONDENT BY : SHRI ANUJ KUMAR TIWARI A.R. ( )/ ORDER DATE OF HEARING : 16-07-20 13 DATE OF PRONOUNCEMENT : 26-07-2013 PER SHRI ANIL CHATURVEDI,A.M. ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 2 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-VI, BARODA DATED 21.11.2012 FOR A.Y. 2009-10 AND THE AS SESSEE HAS ALSO FILED A CROSS OBJECTION (C.O). 2. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER: 3. ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALA RY. HE FILED HIS RETURN OF INCOME FOR A.Y. 2009-10 ON 22.06.2009 DECLARING TOTAL INCOME OF RS. 8,18,720/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORD ER DATED 19.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS. 35,95,94 0/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MA TTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 21.11.2012 ALLOWED THE APPE AL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 27,30,350/- ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S. 54 OF THE ACT WITHOUT APPRECIATING THAT THE ASSESSE E IS NOT ENTITLED FOR EXEMPTION U/S. 54 OF THE ACT.THE CIT(A) FAILED TO TAKE INTO ACCOUN T THE FACTS BROUGHT OUT BY THE AO THAT THE ASSESSEE PURCHASED THE PARTLY CONSTRUCTED PROPERTY (CONSTRUCTED UPTO SLAB LEVEL) BY A CONSTRUCTION AGREEMENT DATED 14/11/2006 FOR RS 13,51,000/-. HE WAS TO GET THE REMAINING CONSTRUCTION DONE FROM THE SAME B UILDER. HOWEVER BY A SUBSEQUENT SALE DEED DATED 7/09/2007, WHICH RECOGNIZES THE ORI GINAL AGREEMENT DT 14/11/2006, THE ASSESSEE HAS PURCHASED THE PROPERTY FOR ADDITIO NAL CONSIDERATION OF RS 14,50,000/-. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE A CTUALLY BOUGHT THE PROPERTY ON 14/ LL/2006(I.E MORE THAN ONE YEAR BEFORE THE DATE OF SALE OF RESIDENTIAL HOUSE) AND ONLY GOT THE REMAINING CONSTRUCTION DONE FOR ADDITI ONAL CONSIDERATION OF RS 14,50,000/-AS PER DEED DATED 7/09/2007. THE CIT (A) ALSO FAILED TO APPRECIATE THAT SUBSTANT IAL PART OF THE PAYMENT TOWARDS THE TOTAL COST OF THE PROPERTY (RS 13,51,000 +RS 14,50, 000 = RS 28,01,000) WAS MADE BEFORE 29/04/2007 I.E MORE THAN ONE YEAR BEFORE THE DATE OF SALE OF RESIDENTIAL HOUSE. 4. ASSESSEE HAS ALSO FILED A CO WHICH IS IN SUPPORT OF THE ORDER OF CIT(A). ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 3 THE ONLY EFFECTIVE GROUND IS WITH RESPECT TO DEDUCT ION U/S. 54:- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER NOTICED THAT ASSESSEE HAS SOLD A RESIDENTIAL PROPERTY FOR R S. 30 LACS AND THE LONG TERM CAPITAL GAIN EARNED ON ITS SALE AMOUNTING TO R S. 27,30,352/- WAS CLAIMED AS EXEMPT UNDER SECTION 54 OF THE ACT ON A CCOUNT OF THE PURCHASE OF NEW RESIDENTIAL PROPERTY. HE FURTHER NOTICED THAT IN CASE OF THE ASSESSEE THE AGREEMENT FOR SALE WAS REGISTERED ON 29.04.2008 AND IN VIEW OF THE PROVISIONS OF SECTION 54 OF THE ACT, TH E ASSESSEE SHOULD HAVE PURCHASED THE NEW RESIDENTIAL PROPERTY WITHIN A PER IOD OF 1 YEAR BEFORE THE SALE I.E. BETWEEN 28.4.2007 TO 29.04.2008. HE NOTICED THAT THE ASSESSEE HAD NOT PURCHASED THE HOUSE PROPERTY BUT H AS COMPLETED THE CONSTRUCTION OF PARTLY CONSTRUCTED PROPERTY PURCHAS ED BY HIM AND THAT TOO WITHIN A PERIOD OF 1 YEAR BEFORE FROM THE DATE OF W HICH THE TRANSFER TOOK PLACE. HE THEREFORE CONCLUDED THAT THE ASSESSEE WA S NOT ELIGIBLE UNDER DEDUCTION 54 OF THE ACT FOR THE FOLLOWING REASONS:- 1. THE ASSESSEE HAS NOT PURCHASED A RESIDENTIAL PROPER TY BUT PURCHASED PARTLY CONSTRUCTED PROPERTY UP TO SLAB LEVEL AS MENTIONED IN THE DEED AND COMPLETED THE REMAINING CONSTRUCTION BY HIM SELF BEFORE EXECUTING THE SALE DEED. 2. THOUGH THE AGREEMENT FOR PARTLY CONSTRUCT ED PROPERTY WAS EXECUTED ON 07/09/2007 FOR RS.14,50,000/-, THE MAJOR PAYMENTS W AS MADE BEFORE 28/04/2007. 3. AS THE ASSESSEE HIMSELF HAS CARRIED OUT THE REMAINI NG CONSTRUCTION BY HIMSELF THE POSSESSION OF THE PROPERTY WAS WITH HIM . HE ACCORDINGLY DISALLOWED THE CLAIM OF DEDUCTION OF ASSESSEE U/S 54 OF RS. 28,01,000/- AND TAXED THE LONG TERM CAPITAL GAI N OF RS. 27,30,352/-. ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 4 6. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMIS SIONS MADE BY THE ASSESSEE ALLOWED THE APPEAL OF THE ASSESSEE BY HOLD ING AS UNDER:- 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE, FINDINGS O F THE ASSESSMENT ORDER AND SUBMISSION MADE BY APPELLANT. (A) THE ASSESSEE HAS SOLD HIS OLD PROPERTY, SALE DEED O F WHICH WAS EXECUTED ON 31 ST MARCH 2008. HOWEVER, SALE DEED WAS REGISTERED ON 29 APRIL, 2008 THAT IS A.Y. 2009-10. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE DATE OF REGISTRATION IS TO BE TAKEN W ITH REGARD TO THE TAXABILITY OF CAPITAL GAIN. HOWEVER, THE ASSESSEE HAS RECEIVED PAYMENT THROUGH CHEQUES ALL OF WHICH WERE CLEARED B Y 4 TH APRIL, 2008. SINCE THE APPELLANT HAS GIVEN THE REVISED COMPUTATI ON AND EFFECTIVELY ACCEPTED THE VIEWS OF ASSESSING OFFICER THEREFORE, THIS ISSUE DOES NOT REQUIRE ANY ADJUDICATION. IN VIEW OF THE MATTER SAL E TRANSACTION AND CAPITAL GAIN THEREON HAVE BEEN CONSIDERED IN THE IN STANT ASSESSMENT YEAR. (B) THE APPELLANT HAD PURCHASED A NEW RESIDENTIAL PROPE RTY ON 7.9.2007 FOR RS. 28,01,000/-. THE ASSESSING OFFICER HAS MAD E THE FOLLOWING OBSERVATIONS. (I) THAT THE APPELLANT HAS ENTERED INTO AN AGREEMENT FO R CONSTRUCTION- ON 14.11.2006 (FOR VALUE OF RS. 13,51,000/-) (J) THAT THE APPELLANT HAS EXECUTED SALE DEED ON 7.09,2 007 ( FOR VALUE OF RS. 14,50,000/-), TOTAL CONSIDERATION RS. 28,01,000 /- (13,51,000/- + 14,50,000/-) (K) THAT THE APPELLANT HAS TAKEN LOAN OF RS. 25,00,000 /- FROM HDFC AND 1 ST EMI INSTALLMENT WAS PAID ON 1 ST JANUARY 2007. IN VIEW OF THE ABOVE FACTS, AO HAS HELD THAT LOAN R AISED BY THE APPELLANT ON 01.01.2007 WHICH IS OUTSIDE THE PERIOD OF ONE YEAR BACKWARD THEREFORE, PROPERTY WAS PURCHASED WELL BEFORE ONE YEAR COMMENC ING ON 28 APRIL 2007 (29 APRIL 2008 IS TAKEN AS THE DATE OF SALE OF THE OLD PROPERTY AND TO CLAIM EXEMPTION U/S 54 A NEW ASSET MUST BE PURCHASED WITH IN ONE YEAR FROM 30 APRIL 2007 TO 29 APRIL 2008). HENCE THE EXEMPTION U /S 54 WAS NOT GRANTED. (C) THE AO HAS APPLIED TWO DIFFERENT SETS OF RULES. WHILE CONSIDERING SALE TRANSACTION HE HOLDS THAT TRANSFER IS EFFECTIVE ON THE DATE ON WHICH SALE DEED IS REGISTERED.WHEREAS IN CASE OF THE PURCHASE HE DOES NOT RELY ON THE DATE OF SALE DEED EXECUTION. HE HAS EFFECTIVELY TAKEN THE DATE O F TRANSFER IN CASE OF NEW ASSETS TO BE THE DATE ON WHICH 1ST EML INSTALLMENT WAS PAI D- ASSESSING OFFICERS_FINDINGS ARE MISPLACED WITH REGARD TO THE PRINCIPLES OF TRANSFER OF IMMOVEABLE PROPERTY VIS-A-VIS EXEMPTION U/S 54. THE APPELLANT HAS REGISTERED HIS NEW PROPERTY ON 07.09.2007. HE HAS MADE THE FINAL PAYMENT OF RS.9,00,000/-TO THE BUILDER THROUGH BANK LOAN ON 08.09.2007 AND HE HAS TAKE POSSESSION OF THE ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 5 NEW PROPERTY AFTER 07.09.2007 AND ALSO PAID MAINTEN ANCE CHARGES OF RS.1,42,500/- ON 09.02.2008. THUS ASSESSEE HAS EXEC UTED AND REGISTERED THE SALE DEED AND ALSO TAKEN POSSESSION OF THE HOUSE WITHIN THE PERIOD OF ONE YE AR PRESCRIBED FOR CLAIMING DEDUCTION U/S 54. RESPECTFULLY FOLLOWING THE DECISION OF AP HIGH COUR T IN THE CASE OF CIT VS MRS. SAHAZADA BEGAMG. (1988) 173 ITR 397 THE AO IS DIREC TED TO COMPUTE AND ALLOW EXEMPTION U/S 54 IN RESPECT OF THE NEW RESIDENTIAL PROPERTY PURCHASED BY THE ASSESSEE . 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US . 8. BEFORE US, THE LEARNED D.R. SUBMITTED THAT THE ASSE SSEE HAD ENTERED INTO AN AGREEMENT ON 14.11.2006 FOR CONSTRUCTION OF PART LY CONSTRUCTED NEW PROPERTY FOR RS. 13,51,000/- AND HAD PAID RS. 2 LAC AT THE TIME OF EXECUTION OF THE CONSTRUCTION AGREEMENT. HE FURTHE R SUBMITTED THAT AS PER THE SALE DEED EXECUTED ON 7.09.2007, THE ASSESSEE H AD MADE TOTAL PAYMENT OF RS. 14,50,000/-. HE THUS SUBMITTED THAT THE ASSESSEE HAD MADE TOTAL PAYMENT OF RS. 28,01,000/- IN TWO PARTS THAT IS ONE FOR THE CONSTRUCTION OF PARTLY CONSTRUCTED PROPERTY AND THE OTHER FOR PURCHASES OF PARTLY CONSTRUCTED PROPERTY CONSTRUCTED UP TO THE S LAB LEVEL. HE THUS SUBMITTED THAT SINCE THE ASSESSEE HAD NOT PURCHASED THE HOUSE PROPERTY BUT HAS COMPLETED THE CONSTRUCTION OF PARTLY CONSTR UCTED PROPERTY AND THAT TOO WITHIN A PERIOD OF 1 YEAR ON WHICH THE TRANSFER TOOK PLACE, THE ASSESSEE WAS NOT ENTITLED DEDUCTION UNDER SECTION 5 4. HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF JATINDRA KU MAR MADAN VS. ITO (2012) 21 TAXMANN. COM. 316 (MUM), DECISION OF PUNJ AB AND HARYANA HIGH COURT. IN THE CASE OF ASHOK SYAL VS. CIT (20 12) 24 TAXMANN. ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 6 COM. 274 AND DECISION OF KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. J.R. SUBRAMANYA BHATT (1987) 165 ITR 571 (KARNATAKA ). 9. THE LEARNED A.R. ON THE OTHER HAND REITERATED THE S UBMISSIONS MADE BEFORE CIT(A) AND SUPPORTED THE ORDER OF CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT T HE ASSESSING OFFICER HAS APPLIED 2 DIFFERENT SET OF RULES FOR PURCHASE A ND SALE OF PROPERTY. HE HAS NOTED THAT ASSESSING OFFICER WHILE CONSIDERING THE SALE TRANSACTION HOLDS THE TRANSFER IS EFFECTIVE ON THE DATE ON WHIC H THE SALE DEED IS REGISTERED WHEREAS IN THE CASE OF PURCHASE, HE DOES NOT RELY ON THE DATE OF SALE DEED. HE HAS FURTHER GIVEN A FINDING THAT THE ASSESSEE HAS REGISTERED HIS NEW PROPERTY ON 7.09.2007, HAD MADE THE FINAL P AYMENT OF RS. 9 LACS TO THE BUILDER THROUGH BANK ACCOUNT ON 8.09.2007 AN D HAD TAKEN THE POSSESSION OF THE NEW PROPERTY AFTER 7.09.2007. HE HAS FURTHER NOTED THAT THE ASSESSEE HAS PAID MAINTENANCE CHARGES OF RS. 1, 42,500/- ON 9.02.2008 AND THUS THE ASSESSEE HAS EXECUTED AND RE GISTERED THE SALE DEED AND ALSO TAKEN THE POSSESSION OF THE HOUSE WIT HIN THE PERIOD OF 1 YEAR PRESCRIBED FOR CLAIMING DEDUCTION UNDER SECTIO N 54. 11. BEFORE US, THE REVENUE COULD NOT CONTROVERT THE FIN DING OF CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. WE THUS FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THE APP EAL OF THE REVENUE IS DISMISSED. ITA NO 260/A/2013 & C O. NO. 66/A/2013 . A.Y.2009- 10 7 12. THE CO OF ASSESSEE IS IN SUPPORT OF ORDER OF CIT(A) . SINCE THE APPEAL OF REVENUE IS DISMISSED THE CO OF THE ASSESSEE BECOMES INFRUCTUOUS IN VIEW OF OUR ORDER IN ITA NO. 260/AHD/2013 HEREINABO VE. 13. IN THE RESULT, THE APPEAL OF THE REVENUE AND CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 26 -07- 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD