ITO, Ward-13(5), Hyd, Hyderabad V. Srinivas Dharmapuri, Hyd, Hyderabad

ITA 1009/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3062 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2015
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: M V ANIL KUMAR
• Section: 54F; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1 0 09 /H YD /201 5 ASSESSMENT YEAR: 20 1 0 - 1 1 INCOME TAX OFFICER, WARD - 1 3( 5 ), HY DERABAD VS SRI SRINIVAS DHARMAPURI, HYDERABAD [PAN: A BPPD7919P ] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M. SITARAM , DR FOR ASSESSEE : SHRI M.V. ANIL KUMAR , AR DATE OF HEARING : 0 3 - 0 2 - 201 6 DATE OF PRONOUNCEMENT : 10 - 0 2 - 201 6 O R D E R PE R B. RAMAKOTAIAH, A.M. : THIS IS A REVENUES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 4 , HYDERABAD DT. 27 - 03 - 2015. THE REVENUE IS AGGRIEVED ON THE RELIEF GRANTED BY THE CIT(A) U/S. 54F OF T HE INCOME TAX ACT [ACT]. IT HAS RAISED THE FOLLOWING GROUNDS: 1.0 ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED IN ALLOWING BENEFITS OF SECTION 54F OF THE INCOME - TAX ACT, 1961 (THE ACT) WITHOUT CONSIDERING THE MANDATE OF THE SECTION ABOUT 'CONSTRUCTED RESIDENTIAL HOUSE' WITHIN THREE YEARS FROM THE DATE OF TRANSFER? I.T.A. NO. 1009 / HYD / 201 5 SRI SRINIVAS DHARMAPURI : - 2 - : 1.1 ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED C!T(A) HAS ERRED IN INTERPRETING THE MEANING OF THE WORD 'CONSTRUCTED' IN COMPLETE DISREGARD TO THE ESTABLISHED CAN NONS OF INTERPRETATION THAT WHERE THE LANGUAGE OF A STATUTE IS CLEAR AND UNAMBIGUOUS, SUCH INTERPRETATION HAS TO BE ADOPTED NOTWITHSTANDING THAT IT CAUSES INCONVENIENCE OR HARDSHIPS OR LEADS TO ANOMALOUS RESULTS. 2.0 WITHOUT PREJUDICE TO THE FIRST GROUND , ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED C I T(A) HAS ERRED IN ALLOWING THE BENEFITS OF SEC.54A OF THE ACT ON PAYMENTS MADE AFTER THE STATUTORY PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER? 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNE D C!T(A) HAS ERRED IN INTERPRETING THE MEANING OF THE EXPRESSION' WITHIN A PERIOD OF THREE YEARS' IN COMPLETE DISREGARD TO THE ESTABLISHED CANNONS OF INTERPRETATION THAT WHERE THE LANGUAGE OF A STATUTE IS CLEAR AND UNAMBIGUOUS, SUCH INTERPRETATION HAS TO B E ADOPTED NOTWITHSTANDING THAT IT CAUSES INCONVENIENCE OR HARDSHIPS OR LEADS TO ANOMALOUS RESULTS AND WITHOUT APPRECIATING THAT THE STATUTORY PERIOD EXPIRED ON 02.11.2009 BUT THE PAYMENTS OF RS.1,20,00,000 / - HAS BEEN MADE ON 13 - 11 - 2009 FROM THE CAPITAL GAI NS ACCOUNTS SCHEME ACCOUNT TO THE SAVINGS BANK ACCOUNT. 2.2 ANY OTHER GROUNDS AT THE TIME OF HEARING . 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND FILED INCOME OF RS. 4,93,446/ - . ON RECEIPT OF INFORMATION FROM CBI THAT AN AMOUNT OF RS. 10 LAKHS WA S PAID OVER AND ABOVE THE VALUE OF REGISTERED DOCUMENT FOR PURCHASE OF VILLA FLAT NO. A - 26 CONSISTING OF 1171 SQ. YDS., FROM M/S. E MAAR HILLS TOWNSHIP PVT. LTD., A NOTICE U/S. 148 WAS ISSUED AND AN ASSESSMENT HAS BEEN COMPLETED BY THE ASSESSING OFFICER (AO ). APART FROM BRINGING TO TAX THE AMOUNT OF RS. 10 LAKHS STATED TO HAVE BEEN PAID OVER AND ABOVE THE REGISTERED VALUE, AO ON EXAMINATION NOTICED THAT ASSESSEE EVEN THOUGH ASSESSEE DEPOSITED NET SALE CONSIDERATION IN THE CAPITAL GAINS D EPOSIT SCHEME MAINTA INED BY SBI, H E HAS NOT UTILIZED THE AMOUNT WITHIN THE PERIOD OF THREE YEARS , AS THE CHEQUE WA S ENCASHED ON 11 - 11 - 2009 WHICH WA S BEYOND THE THREE YEARS PERIOD FROM THE DATE OF TRANSFER OF PROPERTY ON 26 - 10 - 2006. IT IS ALSO NOTICED THAT THE BUILDING WAS NO T CONSTRUCTED WITHIN THREE YEARS AS I.T.A. NO. 1009 / HYD / 201 5 SRI SRINIVAS DHARMAPURI : - 3 - : THERE IS NO COMPLETION OF THE RESIDENTIAL HOUSE. ON THESE REASONS, AO BROUGHT THE ENTIRE CAPITAL GAINS TO TAX BY DENYING THE CLAIM U/S. 54F. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE NOTICED T HAT EVEN TH OUGH CHEQUE WAS CL E ARE D ON 11 - 11 - 2009, THE CHEQUE WAS ISSUED ON 20 - 10 - 2009 ON WHICH DATE, M/S. RA A GA INFRASTRUCTURE S PVT. LTD., HAS ACKNOWLEDGED AND ISSUED A RECEIPT. IT WAS THE SUBMISSION OF ASSESSEE BEFORE THE LD. CIT(A) THAT HE HAS NO CONTROL ON DELAYE D PRESENTATION OF CHEQUE BY THE SAID M/S. RAAGA INFRASTRUCTURES PVT. LTD., BUT AS FAR AS ASSESSEE IS CONCERNED, HE HAS UTILIZED THE AMOUNTS FOR CONSTRUCTION OF HOUSE WHICH WAS PAID OUT OF THE CAPITAL GAINS A/C AND ALSO ACKNOWLEDGED BY THE BUIL DER AND THE E NTIRE UTILIZATION WA S WITHIN THE THREE YEARS PERIOD. 3. LD. CIT(A) EXAMINED THE SAME AND DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AS UNDER: 6.3 REGARDING THE DATE BY WHICH THE INVESTMENT HAS TO BE MADE, THE FOLLOWING DATES ARE DISCUSSED IN THE ASSESSMENT ORDER: I. DATE OF PAY ORDER RECEIVED IN RESPECT OF SALE OF PROPERTY 26/10/2006 II. DATE OF SALE DEED IN RESPECT OF SALE OF PROPERTY 02/11/2006 III. DATE OF CHEQUE ISSUED BY ASSESSEE IN FAVOUR OF M/S.RAGA INFRASTRUCTURE PVT. LTD., FOR PAYMENT TOWARDS CONSTRUCTION OF HOME 10/10/2009 . IV. DATE WHEN THE CHEQUE WAS RECEIVED BY M/ S. RAGA INFRASTRUCTURE PVT. LTD.,20/10/2009 V. DATE WHEN THE AMOUNT WAS TRANSFERRED FROM CAPITAL GAINS ACCOUNT 11/11/2009 VI. DATE WHEN THE CHEQUE WAS HONOURED/ PAYMENT MADE 13/11/2009 6.3.1. THE AO HAS DISCUSSED THAT AS THE TOTAL CONSIDERATION WAS RECEIVED BY ASSESSEE THROUGH PAY ORDER DATED 26/10/2006, THE DATE SHOULD BE TAKEN AS TRANSFER AND THE INVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY SHOULD BE MADE BEFORE 26/10/2009 . EVEN, IF DATE OF SALE DEED (I.E. I.T.A. NO. 1009 / HYD / 201 5 SRI SRINIVAS DHARMAPURI : - 4 - : 02/11/2006) IS TAKEN AS DATE OF TRANSFER, THE INVESTMENT IN CONSTRUCTION OF HOUSE SHOULD BE MADE BEFORE 02/11/2009. THE DATE WAS INVESTMENT IN CONSTRU CTION OF HOUSE W AS TAKEN AS 11/11/2009 OR 13/11/2009 AND THE ASSESSEE H AS NOT COMPLIED WITH PROVISION OF SEC. 54F AND THE WHOLE OF CAPITAL GAINS ARISING IN AY 2007 - 08 IS TAXABLE IN AY 2010 - 11 AS THE ASSESSEE HAS FAILED TO INVEST IN CONSTRUCTION OF HOUSE PROPERTY WITHIN 3 YEARS. 6.3.2. IN THIS CONTEXT, THE ACTUAL ISSUE BOILS DOWN TO THE DATE OF PAYMENT FOR CONSTRUCTION OF HOUSE. THE HON'BLE SUPREME COURT HAD OCCASION TO DEAL WITH ISSUE AS EARLY AS IN 1954. IN THE CASE OF CIT VS OGALE GLASS WORKS LTD., 1954 AIR 429 (SC), IT WAS HELD THAT IN RESPECT OF CHEQUE PAYMENTS 'THE DATE OF PAYMENT WOULD RELATE BACK TO THE DATE WHEN THE CHEQUE WAS ISSUED AND NOT WHEN IT WAS ENCASHED OR CREDITED TO THE ACCOUNT'. IN VIEW OF THE ABOVE POSITION, THE DATE OF PAYMENT IS TO BE TAKEN AS 20/10/2009, THE DATE ON WHICH THE CHEQUE HAS BEEN HANDED OVE R, WHICH HAS NOT BEEN DISPUTED. ONCE, THE DATE OF PAYMENT IS TAKEN AS 20/10/2009, THE ISSUE THAT INVESTMENT FOR CONSTRUCTION OF HOUSE HAS NOT BEEN MADE WITHIN 3 YEARS OF 'TRANSFER' GETS SETTLED. IT IS HELD THAT THE REQUIREMENT OF SEC. 54F TO THAT EXTENT IS MET. 6.3.3. THE AO HAS HELD THAT SINCE THE CONSTRUCTION OF HOUSE IS NOT COMPLETED AND NO EVIDENCE TO THIS EFFECT IS FILED / FURNISHED BY THE ASSESSEE. HENCE, THE REQUIREMENTS OF SEC. 54F ARE NOT MET. BUT IT WAS HAS EBEN HELD IN VARIOUS DECISION THAT IN THE SEC 54F, THE THRUST IS ON THE INVESTMENT OF NET CONSIDERATION AND NOT ON COMPLETION OF CONSTRUCTION. RATION. IN CASE OF RANJEET SANDHU VS DECIT 16 TAXMANN.COM 210 AND ACIT VS SUDHAKAR RAM 16 TAXMAN.COM 175 ARE RELIED UPON. ACCORDINGLY, WHETHER THE CONS TRUCTION OF HOUSE IS COMPLETED WITHIN 3 YEARS OR NOT IS CONSEQUENTIAL BUT THE QUESTION WHETHER THE PAYMENT WAS MADE OR NOT IS RELEVANT. ONCE, IT IS HELD (SUPRA) THAT THE PAYMENT IS MADE WITHIN 3 YEARS, THE REQUIREMENT OF SEC. 54F ARE MET. 6.3.4. FURTHER, FINDING OF AO REGARDING AGREEMENT WITH M/ S. EMAAR HILL TOWNSHIP PVT. LTD., AND THE PAYMENT BEING MADE TO M/S. RAGA INFRASTRUCTURE PVT. LTD., IT IS SEEN THAT AS LONG AS THE CONSTRUCTION IS CARRIED ON AND PAYMENTS ARE MADE, THE ASSESSEE CANNOT BE DENIED SE C. 54F ON THIS ACCOUNT. 6.3.5. IN VIEW OF THE FACTUAL POSITION AS DISCUSSED (PARA 6.3 TO 6.3.4) ABOVE IT IS HELD THAT, THE ASSESSEE HAS COMPLIED WITH PROVISIONS OF SECTION 54F AND NO CAPITAL GAINS IS LIABLE TO TAX FOR THIS ASSESSMENT YEAR. REVENUE IS AGGRIEVED AND RAISED THE GROUNDS ON THE ABOVE ISSUE. I.T.A. NO. 1009 / HYD / 201 5 SRI SRINIVAS DHARMAPURI : - 5 - : 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE EVIDENCE ON RECORD, WE DO NOT SEE ANY REA SON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). EVEN THOUGH LD. DR TRIED TO DISTINGUISH THE JUDGM ENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. OGALE G L A SS WORKS LTD., RELIED ON BY THE LD. CIT(A) , BY RELYING ON THE DECISION OF CIT VS. CALCUTTA KNITWEARS [362 ITR 673], WE NOTICE THAT THE FACTS IN THE ABOVE REFERRED CASE OF CIT VS . CALCUTTA KNI TWEARS [362 ITR 673] , ARE ENTIRELY DIFFERENT FROM THE ISSUE ON HAND RELIED ON BY THE LD. CIT(A). THE HON'BLE SUPREME COURT IN THE LATER CASE WAS INTERPRETING THE PROVISIONS OF SECTION 158BC AND 158BD AND I N THAT CONTEXT RELIED ON THE LANGUAGE USED IN SECT ION 158BE(II)(B) , WHEREAS THE DECISION IN THE CASE OF CIT VS. OGALE GALSS WORKS LTD., (SUPRA) WAS WITH REFERENCE TO THE DATE OF ISSUANCE OF A CHEQUE , WHEN IT WAS SUBSEQUENTLY CLEARED . S INCE THE FACTS IN BOTH THE CASES AND THE ISSUES ARE ENTIRELY DIFFEREN T, WE REJECT THE OBJECTION S OF THE LD. DR . SINCE THE LAW IN THIS ISSUE IS VERY CLEAR AND AS ASSESSEE HAS ISSUED THE CHEQUE AND HAS ALSO WRITTEN TO THE BANK FOR TRANSFER OF FUNDS FROM HIS CAPITAL GAINS A/C TO HIS SB A/C TOWARDS INVESTMENT OF THE CONSTRUCTI ON OF HOUSE, IT IS TO BE STATED THAT ASSESSEE HAS UTILIZED THE CAPITAL GAINS FUNDS IN CONSTRUCTION OF A HOUSE. LAW IS ALSO VERY CLEAR THAT COMPLETION OF HOUSE IS NOT MATERIAL AND WHAT IS REQUIRED UNDER THE PROVISIONS OF SECTION 54F IS UTILIZATION OF THE N ET CONSIDERATION IN CONSTRUCTING A NEW HOUSE. RELIANCE IS PLACED ON THE FOLLOWING CASES: I. CIT VS. SMT. G. VENKATA LA X MI [373 ITR 572] (T&AP); II. CIT VS. SAR DAR MAL KOTHAR I AND ANOTHER S [302 ITR 286] (MAD); III. CIT VS. SMT. B.S. SHANT HAKU MARI IN ITA NO. 165/2014 DT. 13 - 07 - 2015; I.T.A. NO. 1009 / HYD / 201 5 SRI SRINIVAS DHARMAPURI : - 6 - : IV. ORDER OF ITAT A BENCH , HYDERABAD IN ITA NO. 1520/HYD/2013 IN THE CASE OF SRI PRADEEP KUMAR VS. DCIT DT. 3 1 - 12 - 2014. IN VIEW OF THE PRINCIPLES LAID DOWN IN THE ABOVE SAID CASES WITH REFERENCE TO THE INVESTMENT IN A HOUSE , WE UPHOLD THE OR DER OF THE CIT(A) AND REJECT THE REVENUES CONTENTIONS. 5 . IN THE RESULT , REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRU ARY , 201 6 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH FEBRUARY, 2016 TNMM COPY TO : 1. INCOME TAX OFFICER, WARD - 1 3( 5 ), 2 ND FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2 . SRI SRINIVAS DHARMAPURI, A - 26, PLOT NO. 164A, MLA COLONY, ROAD NO. 12, BANJARA HILLS, HYDERABAD. 3 . CIT (APPEALS) - 4 , HYDERABAD. 4. CIT - 4 , HYDERABAD. 5 . D.R. ITAT, HYDERABAD. 6 . GUARD FILE.