B.Sivasubramanian, Salem V. ITO Ward I (1), Salem

ITA 1/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73730 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 06-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 01-01-2013
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: T VASUDEVAN
• Keywords: Competent authority; Benefit of exemption
• Section: 143(3); 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 01/MDS/2013 / ASSESSMENT YEAR : 2006-07 B.SIVASUBRAMANIAN, 99/43, SECOND AGRAHARAM, SALEM-636 001 [PAN: AMOPS 9402 Q] ( !% /APPELLANT) VS INCOME TAX OFFICER, WARD I(1), SALEM ( &'!% /RESPONDENT) / APPELLANT BY : SHRI T.VASUDEVAN, ADVOCATE / RESPONDENT BY : SHRI T.N.BETGERI, JCIT / DATE OF HEARING : 06-03-2014 ! / DATE OF PRONOUNCEMENT : 12-03-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-SALEM DA TED 31-10-2012 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 6-07. I.T.A. NO. 01/MDS/2013 2 2. THE ASSESSEE IS A AN INDIVIDUAL AND HAS FILED HI S RETURN OF INCOME FOR THE AY.2006-07 ON 20-07-2006 DECLARING H IS INCOME AS ` 1,01,899/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSE E ON 30-01-2007. IN THE SCRUTINY ASSESSMENT ORDER, ADDI TION OF ` 3,45,000/- WAS MADE BY DIS-ALLOWING THE CLAIM OF TH E ASSESSEE U/S.54F OF THE ACT. THE ASSESSEE PREFERRED AN APPE AL AGAINST THE ASSESSMENT ORDER. THE CIT(APPEALS) CONFIRMED THE A DDITION OF ` 3,45,000/- VIDE ORDER DATED 23-01-2009. THEREAFTER , THE ASSESSEE FILED SECOND APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL IN ITA NO.550/MDS/2009, VIDE ORDER DATED 04-09-2009 SE T ASIDE THE ORDER OF THE AUTHORITIES BELOW AND REMITTED THE MAT TER BACK TO THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER V ERIFYING AND EXAMINING THE NATURE OF CONSTRUCTION I.E., WHETHER IT IS A CASE OF RECONSTRUCTION AFTER DEMOLITION OR RENOVATION AND E XTENSION OF EXISTING HOUSE. 3. IN THE SECOND INNINGS, THE ASSESSING OFFICER HEL D THAT THE ASSESSEE HAS FAILED TO PRODUCE EVIDENCE TO SHOW THA T IT IS NOT RENOVATION BUT CONSTRUCTION OF A NEW HOUSE, THE ASS ESSEE CANNOT CLAIM THE BENEFIT OF EXEMPTION U/S.54F OF THE ACT. THE ASSESSING I.T.A. NO. 01/MDS/2013 3 OFFICER VIDE ORDER DATED 18-01-2010 PASSED U/S.143( 3) R.W.S.254, MADE ADDITION OF ` 3,33,984/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE ASSESSEE, AGGRIEVED AGAINST THE ASSESSMENT ORDE R, FILED APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) H ELD THAT SINCE THERE IS NO APPROVED PLAN FOR THE NEW CONSTRUCTION, THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION U/S.54F AND THUS CO NFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW, AGAIN THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF THE CIT(APPEALS ). 4. SHRI T.VASUDEVAN, APPEARING ON BEHALF OF THE ASS ESSEE SUBMITTED THAT IN THE PERIOD RELEVANT TO THE AY.200 6-07, THE ASSESSEE HAD SOLD SHARES. THE LONG TERM CAPITAL GA IN FROM THE SALE OF SHARES WAS WORKED AS ` 3,33,985/-. THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION U/S.10(36) AND 10(85) ON LON G TERM CAPITAL GAIN AS THE SALE OF SHARES WAS NOT MADE THROUGH REC OGNIZED STOCK EXCHANGE. THE ASSESSEE UTILIZED THE SALE PROCEEDS OF THE SHARES IN CONSTRUCTION OF A RESIDENTIAL HOUSE AFTER DEMOLI SHING THE OLD HOUSE AND THUS CLAIMED EXEMPTION U/S.54F OF THE ACT . SINCE, THE ASSESSEE HAD CONSTRUCTED A NEW RESIDENTIAL HOUSE IN PLACE OF THE OLD EXISTING BUILDING, THE ASSESSEE DID NOT GET THE PLAN APPROVED I.T.A. NO. 01/MDS/2013 4 FROM THE MUNICIPAL CORPORATION. HOWEVER, ON 08-02- 2007, THE SALEM CORPORATION ISSUED AN INTERIM ORDER WHICH SHO WS THAT THE ASSESSEE HAS PUT UP NEW CONSTRUCTION WITHOUT THE PE RMISSION OF THE SALEM CORPORATION. THE LD.COUNSEL FOR THE ASSE SSEE PLACED ON RECORD THE COPY OF THE INTERIM ORDER DATED 08-02 -2007 FROM THE OFFICE OF THE COMMISSIONER OF SALEM CORPORATION. T HE LD.COUNSEL FURTHER PLACED ON RECORD A COPY OF THE BUILDING PLA N AS WELL AS ESTIMATION FOR THE NEW CONSTRUCTION AFTER DEMOLISHI NG OF THE WALLS AND ROOFS OF THE EXISTING BUILDING. 5. ON THE OTHER HAND, SHRI T.N.BETGERI, APPEARING O N BEHALF OF THE REVENUE SUBMITTED THAT THE ASSESSEE HAS MISERAB LY FAILED TO PLACE ON RECORD ANY DOCUMENT TO SHOW THAT THE ASSES SEE HAS UNDERTAKEN CONSTRUCTION OF A NEW RESIDENTIAL HOUSE. THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT THE ASSESSEE HAS FAILED TO PRODUCE APPROVED BUILDING PLAN FROM THE M UNICIPAL CORPORATION OF SALEM. THE LD.DR CONTENDED THAT AT THE BEST IT CAN BE A CASE OF RENOVATION FOR WHICH THE ASSESSEE IS N OT ELIGIBLE TO CLAIM EXEMPTION U/S.54F. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE I.T.A. NO. 01/MDS/2013 5 ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DOCU MENTS PLACED ON RECORD BY THE LD.COUNSEL FOR THE ASSESSEE. IT IS N OT DISPUTED THAT THE ASSESSEE IS NOT IN POSSESSION OF PLOT ON WHICH A RESIDENTIAL BUILDING IS IN EXISTENCE. THE ASSESSEE HAS ALLEGED LY UTILIZED THE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF SHA RES TOWARDS THE CONSTRUCTION OF A NEW RESIDENTIAL HOUSE AFTER D EMOLITION OF OLD BUILDING ON THE PLOT-IN-QUESTION. THE ASSESSEE HAS CLAIMED EXEMPTION U/S.54F ON THE GROUND THAT THE ASSESSEE H AS INVESTED LONG TERM CAPITAL GAINS ARISING FROM SALE OF SHARES TOWARDS CONSTRUCTION OF A NEW HOUSE WITHIN THE PRESCRIBED P ERIOD AS MENTIONED IN THE ACT. HOWEVER, THE CONTENTIONS OF THE ASSESSEE HAS BEEN REJECTED BY THE AUTHORITIES BELOW FOR THE REASON THAT THE ASSESSEE HAS NOT PLACED ON RECORD THE APPROVED BUIL DING PLAN FROM THE MUNICIPAL CORPORATION. THE ASSESSEE HAS A DMITTED THE FACT THAT THE NEW RESIDENTIAL HOUSE HAS BEEN CONSTR UCTED WITHOUT THE APPROVAL OF THE MUNICIPAL CORPORATION. RATHER, IN SUPPORT OF HIS CONTENTIONS, THE LD.COUNSEL FOR THE ASSESSEE HA S PLACED ON RECORD AN INTERIM ORDER DATED 08-02-2007 FROM THE C ORPORATION OF SALEM, WHEREIN IT HAS BEEN STATED THAT THE ASSESSEE HAS CONSTRUCTED A NEW BUILDING WITHOUT THE PERMISSION O F THE COMMISSIONER OF SALEM CORPORATION. THE ASSESSEE HA S ALSO I.T.A. NO. 01/MDS/2013 6 PLACED ON RECORD THE BUILDING PLAN AND THE ESTIMATI ON FOR THE CONSTRUCTION OF A NEW HOUSE OF DEMOLITION OF THE EX ISTING BUILDING. RELIANCE CANNOT BE PLACED ON THE BUILDING PLAN AS I T IS NOT APPROVED BY ANY STATUTORY AUTHORITY. HOWEVER, THE FACT THAT THE ASSESSEE HAS CONSTRUCTED A NEW HOUSE IS PROVED BY T HE INTERIM ORDER ISSUED BY THE CORPORATION OF SALEM WHEREIN IT HAS BEEN STATED THAT THE ASSESSEE HAS PUT UP A NEW CONSTRUCT ION WITHOUT PERMISSION OF THE COMMISSIONER, SALEM CORPORATION. THE PROVISIONS OF SECTION 54F MANDATES THE CONSTRUC TION OF A RESIDENTIAL HOUSE, WITHIN THE PERIOD SPECIFIED. HO WEVER, THERE IS NO CONDITION THAT THE BUILDING PLAN OF THE RESIDENTIAL HOUSE CONSTRUCTED SHOULD BE APPROVED BY THE MUNICIPAL CORPORATION OR ANY OTHER COMPETENT AUTHORITY. IF ANY PERSON CONSTRUCTS A HO USE WITHOUT APPROVAL OF BUILDING PLAN, HE WILL BE RAISING CONST RUCTION AT HIS OWN RISK AND COST. AS FAR AS FOR AVAILING EXEMPTION U/ S.54F, APPROVAL OF BUILDING PLAN IS NOT NECESSARY. THE APPROVED BUILD ING PLAN, CERTIFICATE OF OCCUPATION ETC. ARE SOUGHT TO SUBSTA NTIATE THE CLAIM OF NEW CONSTRUCTION. IN THE PRESENT CASE, THE FACT TH AT THE ASSESSEE HAS RAISED NEW CONSTRUCTION IS EVIDENT FROM THE INT ERIM ORDER ISSUED BY THE CORPORATION OF SALEM. I.T.A. NO. 01/MDS/2013 7 7. WE ARE OF THE CONSIDERED OPINION THAT IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE ASSESSEE HAS PUT UP A NEW CONSTRUCTION IN PLACE OF OLD RESIDENTIAL BUILDING, THUS, THE ASS ESSEE IS ENTITLED TO CLAIM EXEMPTION U/S.54F. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH MARCH, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 12 TH MARCH, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR