R.Srinivasan -HUF, CHENNAI V. ITO, Trichy

ITA 1005/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8820 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: M NARAYANAN
• Keywords: Sale consideration of property below Jantri Value; Valuation report
• Section: 50C; 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.1005/MDS/2015 # % &% / ASSESSMENT YEAR : 2008-2009 SHRI. R. SRINIVASAN (HUF) 5/33, AGRAHARAM, KATTUPUTHUR VIA, TRICHY DIST 621 207. VS. THE INCOME TAX OFFICER, WARD I(1) TRICHY 620 001. [PAN AAAHR 0264B] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. M. NARAYANAN, C.A., +,'( ) * /RESPONDENT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. ! ) - / DATE OF HEARING : 08-06-2016 ./& ) - / DATE OF PRONOUNCEMENT : 15-07-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TIRU CHIRAPALLI, IN ITA NO.390/2010-11/CIT(A)/TRY, DT 05.02.2015 FOR THE AS SESSMENT YEAR ITA NO.1005/MDS/2015 :- 2 -: 2008-2009 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ONCE THE ASSESSING OFFICER AD OPTED THE SAME VALUE AS THAT OF DVO FOR WORKING OUT CAPITAL G AINS TAX, NO FURTHER OBJECTIONS CAN BE ENTERTAINED ON THIS IS SUE, IGNORING THE JUDICIAL PRONOUNCEMENTS UNDER SIMILAR / IDENTICAL CIRCUMSTANCES, WHICH ARE IN FAVOUR OF THE APPELLANT . 3. THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) H AS ERRED IN NOT AT ALL CONSIDERING THE ADDITIONAL GROU NDS SUBMITTED BY THE APPELLANT BEFORE DECIDING THE CASE ; HE HAS SIMPLY MENTIONED THE ADDITIONAL GROUNDS AND THE JUD ICIAL PRONOUNCEMENTS QUOTED BY THE APPELLANT WITHOUT ANY DISCUSSION ON THE SAME. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THAT WHERE THE FULL VALUE OF TH E CONSIDERATION RECEIVED AS PER SALE AGREEMENT HAS BE EN INVESTED IN THE NEW HOUSE PROPERTY, EXEMPTION U/S 5 4F IS TO BE GIVEN FOR THE FULL LTCG, AS SECTION 54F IS AN EX EMPTION PROVISION AND A COMPLETE CODE IN ITSELF AND AND DEE MING FICTION CONTAINED IN ANY OTHER PROVISION CANNOT BE BROUGHT INTO SECTION 54F, AS HELD OUT IN VARIOUS JUDICIAL PRONOU NCEMENTS. 5. WITHOUT PREJUDICE TO ABOVE CLAIM OF FULL EXEMPTION OF LTCG, IT IS SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE P LEA OF THE APPELLANT TO CONSIDER THE FULL VALUE OF THE INVESTM ENT OF RS 17,31,975/- IN THE NEW HOUSE PROPERTY WHEREAS THE A SSESSING OFFICER HAS RESTRICTED THE EXEMPTION TO RS 15,37,00 0/- , BEING THE AMOUNT DEPOSITED INITIALLY IN THE SPECIAL CAPIT AL GAINS DEPOSIT ACCOUNT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ASSESSED IN STATUS OF HUF AND IS IN THE BUSINESS OF FINANCE AND FILED RETURN OF INCOME ON 05.02.2009 WITH TOTAL INCOME OF A1,23,100 /- AND RETURN OF ITA NO.1005/MDS/2015 :- 3 -: INCOME WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQ UENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND NOTICE U/ S.143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOTICES, THE LD. AUTH ORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TI ME AND PRODUCED BOOKS OF ACCOUNT AS CALLED FOR. IN THE ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS S OLD LAND ON 03.12.2007 AT ABISHEKAPURAM VILLAGE, TRICHY AND REC EIVED SALE CONSIDERATION A15,67,125/- AS AGAINST MARKET VALUE/ GUIDELINE VALUE OF STAMP DUTY A33,22,305/-. THE LD. ASSESSING OFFICER ON REQUEST OF THE ASSESSEE REFERRED THE PROPERTY TO VALUATION OFFICER AND THE DVO HAS DETERMINED MARKET VALUE OF THE PROPERTY AT A24,45,0 00/- U/S.16A(5) OF THE WEALTH TAX ACT R.W.S. 50C(2) OF THE INCOME TAX ACT. THE LD. ASSESSING OFFICER DETERMINED CAPITAL GAINS BASED ON THE DVO VALUE AND WORKED OUT LONG TERM CAPITAL GAINS OF A7,21,294 /- WHEREAS THE ASSESSEE HAS ENTERED INTO AGREEMENT FOR RESIDENTIA L FLAT WITH TWO OTHERS IN BANGALORE ON 06.11.2009 BUT SALE DEED WAS REGISTERED ON 29.03.2010 FOR A CONSIDERATION OF A51,95,926/- AND THE ASSESSEES SHARE IN THE INVESTMENT BEING A17,31,975/- AND C LAIMED THE EXEMPTION U/SEC. 54F OF THE ACT. BU THE LD. ASSESS ING OFFICER HAS NOT ALLOWED EXEMPTION AS THE NEW RESIDENTIAL ASSET WAS PURCHASED ON 29.03.2010 AFTER A PERIOD OF TWO YEARS AND THREE M ONTHS AND ASSESSED TOTAL INCOME INCLUDING LONG TERM CAPITAL G AINS A8,44,394/- ITA NO.1005/MDS/2015 :- 4 -: AND RAISED DEMAND. AGGRIEVED BY THE ORDER, THE ASS ESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS AND EXPLAINED THE FACTS THAT THE LD. ASSESSING OFFICER HAS ERRED IN ADOPTING THE VALUE OF DVO, AS VACANT LAND SOLD AT TRICHY IS SITUATED ON THE BANKS OF UYYAKONDAN CANAL, A LOW LYING AREAS AS PER REGISTER ED DEED AND THE ASSESSEE HAS DEPOSITED THE SALE PROCEEDS AMOUNT WI TH STATE BANK OF TRAVANCORE. THE FACT THAT THE LAND SOLD WAS ADJACE NT TO CANAL AND IT HAS BECOME DRAINAGE AND FURTHER DUE TO ODD SHAPE O F THE PLOT WHICH REQUIRES HEAVY FILING OF MUD FOR USAGE. THE ADOPTIO N OF MARKET VALUE DETERMINED FOR STAMP DUTY CANNOT BE APPLIED CONSID ERING THE FACTS AND LOCATION OF THE LAND. FURTHER, THE LD. ASSESSI NG OFFICER HAS RESTRICTED THE CLAIM IN THE CONSTRUCTION OF THE HOU SE PROPERTY TO THE EXTENT OF A15,37,000/- AS AGAINST A17,31,975/- TOWA RDS ASSESSEE SHARE. THE ASSESSEE HAS ENTERED INTO AGREEMENT WIT H BUILDER ON 06.11.2009 AND THE POSSESSION WAS TAKEN ON 29.03.20 10 ON REGISTERING DEED WITHIN THREE YEARS FROM THE DATE O F TRANSFER OF ORIGINAL ASSET. THE ASSESSEE FILED ADDITIONAL GROUNDS AND R ELIED ON THE JUDICIAL DECISIONS BUT THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) FOUND THAT THE ASSESSEE HAS REQUESTED FOR VALUATION BY DVO WER E THE DVO HAS FIXED THE VALUE AT A24,45,000/-. THE LD. ASSESSING OFFICER HAVE ITA NO.1005/MDS/2015 :- 5 -: ADOPTED THE VALUATION BUT THE ASSESSEE WAS PREVENTE D FROM FILING THE OBJECTIONS ON THE VALUE. BUT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF ASSESSING OFFICER. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE ASS ESSEE ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS M ADE IN THE ASSESSMENT AND APPELLATE PROCEEDINGS AND CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE THAT THE VACANT LAND SOLD AT TRICHY IS ON THE BANKS OF CANAL WHICH BEING LOW LYING AREA FOR A CO NSIDERATION OF A15,67,125/- BY REGISTERED DEED ON 03.12.2007 AND T HE ASSESSEE HAS DEPOSITED THE SALE CONSIDERATION WITH STATE BANK OF TRAVANCORE IN ACCORDANCE WITH THE PROVISIONS OF SEC. 54F(4) OF TH E ACT TILL THE CONSTRUCTION OF THE HOUSE. THE LD. ASSESSING OFFIC ER IN THE ASSESSMENT PROCEEDINGS AS PER PROVISIONS OF SEC. 50C ADOPTED T HE GUIDELINE OF THE PROPERTY AT A33,22,305/- AND AT THE REQUEST OF THE ASSESSEE, THE LD. ASSESSING OFFICER REFERRED TO VALUATION OFFICER AND FIXED THE DVO VALUE AT A24,45,000/- WHICH WAS NOT ACCEPTED AND ASSESSE E WAS PREVENTED FROM FILING OBJECTIONS ON VALUATION REPORT AND THE LD. ASSESSING OFFICER WHILE COMPUTING LONG TERM CAPITAL GAINS HAS RESTRIC TED CLAIM OF INVESTMENT IN HOUSE PROPERTY TO THE EXTENT OF A15,3 5,000/-INSTEAD OF 1/3 RD SHARE BEING A17,31,975/- THE ASSESSEE HAS DEPOSI TED THE SALE ITA NO.1005/MDS/2015 :- 6 -: CONSIDERATION OF PLOT IN CAPITAL GAINS ACCOUNT SCH EME AND ASSESSEE WAS NOT PROVIDED WITH ADEQUATE OPPORTUNITY TO REBU T THE DVO VALUATION. FURTHER, THE LD. AUTHORISED REPRESENTAT IVE SUBMITTED THAT THE ASSESSEE HAS INVESTED SALE CONSIDERATION BY E NTERING INTO SALE AGREEMENT ON 06.11.2009 FOR INVESTMENT IN NEW HOUS E PROPERTY AND COMPLIED THE PROVISIONS OF SEC. 54F OF THE ACT WE RE AS THE PROVISIONS OF SEC. 50C OF THE ACT ARE DEEMING PROVISIONS AND CANNOT BE APPLIED AS THE ASSESSEE HAS INVESTED NET SALE CONSIDERATION IN CONSTRUCTION OF RESIDENTIAL PROPERTY WHICH IS NOT DISPUTED BY THE R EVENUE AND PRAYED FOR ALLOWING THE APPEAL. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF ASSESSING AUTHORITY AND OPPOSED THE GROUN DS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISION. THE ONLY CRUX OF THE DISPUTED ISSUE ARGUED BY THE LD. AUTHORISED REPRESENTATIVE THAT T HE ASSESSEE HAS INVESTED ENTIRE NET SALE CONSIDERATION IN THE CONST RUCTION OF HOUSE PROPERTY ALONGWITH TWO OTHERS AT BANGALORE WHICH IS NOT DISPUTED AND COMPLIED THE STIPULATED CONDITIONS OF PROVISIONS OF SEC. 54F OF THE ACT THAT WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET I.E. 3 RD DECEMBER, 2007 AND ASSESSEE SHOULD CONSTRUCT AND T AKE POSSESSION OF THE RESIDENTIAL PROPERTY ON OR BEFORE 3 RD DECEMBER, ITA NO.1005/MDS/2015 :- 7 -: 2010. BUT THE ASSESSEE HAS ENTERED INTO AGREEMENT OF CONSTRUCTION ON 06.11.2009 FOR CONSTRUCTION OF HOUSE PROPERTY AT B ANGALORE ALONGWITH TWO OTHERS AND SALE DEED WAS REGISTERED ON 29.03.20 10 MUCH BEFORE THE STIPULATED DATE. THEREFORE, THERE IS NO DISPUT E ON VIOLATION OF STIPULATED CONDITIONS OF SEC. 54F OF THE ACT. FURT HER, ON THE ASPECT OF APPLICABILITY OF PROVISIONS SEC. 50C OF THE ACT, T HE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE GUIDELINE IS TO BE CONSIDERED FOR THE PURPOSE OF STAMP DUTY VALUATION AND NOT FOR ASS ESSMENT. FURTHER, THE VACANT LAND SOLD AT TRICHY IS ON CANAL AND LOW LYING AREAS FORMED INTO DRAINAGE PIT WHICH SHALL NOT FETCH THE SUCH MA RKET VALUE. THE SECTION 50C OF THE ACT PROVISIONS ARE DEEMING FICT IONS AND THE ASSESSEE HAS NOT RECEIVED SALE CONSIDERATION OTHER THAN THE AMOUNT SPECIFIED IN THE SALE DEED. UNDER PROVISIONS OF SEC . 54F OF THE ACT, NET CONSIDERATION HAS TO BE INVESTED IN THE RESIDENTIAL PROPERTY BUT NOT THE DEEMING VALUE BEING FICTION. THE LD. AUTHORISED RE PRESENTATIVE RELIED ON THE DECISIONS OF PRAKASH KARNAWAT VS. ITO, (2011) 16 TAXMANN.COM 357(JP), GYAN CHAND BATRA VS. ITO, (2010) 133 TTJ 4 82 (JP), NAND LAL SHARMA VS. ITO (2015) 61 TAXMANN. COM 271 (JAIPUR-T RIB), ACIT, KANPUR VS. M/S. THE UPPER INDIA CHAMBER OF COMMERCE , IN ITA NO.601/LKW/2011 IN ASSESSMENT YEAR 2008-2009, DATED 05.11.2014, LUCKNOW BENCH AND SUBASH CHAND VS. ACIT IN ITA NOS. 571 TO 573/CHANDI/2011, DATED 28.11.2011, CHANDIGARH BENCH . WE ITA NO.1005/MDS/2015 :- 8 -: CONSIDERED THE CO-ORDINATE BENCH DECISION IN THE CA SE OF SHIVKUMAR LAKSHMAN VS. ITO IN ITA NO.402/MDS/2015, DATED 29.0 5.2015 WERE IT WAS HELD AT PARA 9, PAGE 6 AS UNDER:- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. T HE QUESTION ARISES FOR CONSIDERATION IS THAT FOR THE P URPOSE OF GRANTING DEDUCTION UNDER SECTION 54F OF THE ACT, WHETHER THE SALE CONSIDERATION DISCLOSED IN THE SAL E DEED HAS TO BE TAKEN OR THE VALUE ADOPTED BY THE SUBREGISTRAR FOR REGISTERING THE DOCUMENT HAS TO BE TAKEN. THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT FOR THE PURPOSE OF GRANTING DEDUCTION UNDER SECTION 54F OF THE ACT, THE VALUE DISCLOSED IN THE SALE DEE D HAS TO BE ADOPTED RATHER THAN THE VALUE DETERMINED BY T HE SUB-REGISTRAR ON THE BASIS OF GUIDELINE VALUE. ACTU AL SALE CONSIDERATION AS REFLECTED IN THE SALE DEED HA S TO BE ADOPTED IN THE ABSENCE OF ANY OTHER MATERIAL TO INDICATE THAT THE ASSESSEE HAS RECEIVED ANY ON-MONE Y OVER AND ABOVE THE AMOUNT DISCLOSED IN THE SALE DEE D. IN THIS CASE, IT IS NOBODYS CASE THAT THE ASSESSEE RECEIVED ON-MONEY OVER AND ABOVE THE SALE CONSIDERATION DISCLOSED IN THE SALE DEED. THEREFORE , THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO ADOPT THE ACTUAL SALE CONSIDERATION OF 90 LAKHS FOR THE PURPOSE OF CONSIDERING THE CLAIM OF EXEMPTION UNDER SECTION 54 F OF THE ACT. ITA NO.1005/MDS/2015 :- 9 -: RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECIS ION, WE ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1005/MDS/2015 IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 15TH DAY OF JULY , 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 1 / DATED:15.07.2016 KV 2 ) +#-34 54&- / COPY TO: 1 . '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :;% < / GF