SMT. SARITA DEVI GARG, Jaipur V. ITO, WARD-4-2, Jaipur

ITA 1024/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6534 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA CIT DHK
• Assessee Lawyers: R A VERMA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Set aside; Capital Gains
• Section: 143(3); 50C; 54F; 48; 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH LANHI XLKA ] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOSAIN, JM VK;DJ VIHY LA -@ ITA NO. 1024/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 SARITA DEVI GARG, 2/152, VIDYADHAR NAGAR, JAIPUR. CUKE VS. I.T.O., WARD 4(2), JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ABXPG 5442 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI R.A. VERMA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. GUPTA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/08/2020 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/09/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-2, JAIPUR DATED 27/06/2019 FOR THE A.Y. 2010-11 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PANDEMIC. THE GRIEVANCE OF THE ASSESSEE REVOLVES AROUND DISALLOWING CLAIM OF DEDUCTION U/S 54F OF THE ACT. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 2 PERUSED. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED HER RETURN OF INCOME ON DATED 30/03/2011 DECLARING THE TOTAL INCOME OF RS. 361039/- INCLUDING THE LONG-TERM CAPITAL GAIN AT RS. NIL. THE ASSESSEE HAS SOLD A LAND ON 18/08/2009 WHICH WAS HELD JOINTLY BY HER HUSBAND SH.RAJENDER GARG AND HER TWO SONS SH. SAURABH GARG AND KARTIK GARG. THE SAID LAND WAS AN AGRICULTURAL LAND MEASURING 1.26 HECTARE AT MOTU KA BAS, TEHSIL: AMER, JAIPUR. TOTAL SALE CONSIDERATION HAS BEEN SHOWN IN THE SALE DEED OF RS. 1,52,00,000/- OF WHICH 40% SHARE WAS BELONGING TO THE ASSESSEE WITH HER MINOR SON KARTIK I.E. RS.60,80,000/- HAD SHOWN BY ASSESSEE IN HER RETURN OF INCOME. HOWEVER, STAMP AUTHORITY VALUED THE LAND AT RS.1,91,13,876/- FOR STAMP PURPOSES AND AO HAS TAKEN 40% SHARE OF THAT VALUE I.E. RS. 76,45,550/- INSTEAD OF RS. 60,80,000 AND APPLIED 50C OF THE ACT WITH REDUCTION IN THE COST OF ACQUISITION. FURTHER, CLAIM OF ASSESSEE U/S 54F OF RS. 61,08,175/- WAS ALSO NOT ALLOWED. ORIGINAL ASSESSMENT ORDER WAS PASSED BY THE AO U/S 143 OF THE ACT ON DATED 05/03/2013 WITH THE ABOVE FINDINGS AGAINST THAT ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A)-II, JAIPUR WHICH WAS DECIDED ON DATED 02/01/2014 AND CLAIM OF ASSESSEE U/S 54F WAS REJECTED. THE SAID ORDER OF CIT(A) WAS CHALLENGED BY THE ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 3 ASSESSEE BEFORE THE ITAT, JAIPUR. THE ITAT, JAIPUR PASSED THE ORDER DATED 30/10/2015 WITH FINDINGS GIVEN IN PARA-6 OF ITS ORDER AND ASSESSING OFFICER WAS DIRECTED TO VERIFY THE DETAILS OF PAYMENTS FOR CONSTRUCTION MADE TO M/S KALYANI ENGINEERING, JHOTWARA, JAIPUR AND ALSO CONSIDER THE CASE LAW CITED BY THE ASSESSEE I.E. ACIT V/S OM PRAKASH GOYAL (2012) 53 SOT 158. ACCORDINGLY, THE MATTER WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER 3. IN THE SET ASIDE PROCEEDINGS, THE A.O. AGAIN DISALLOWED THE ASSESSEE'S CLAIM U/S 54F WITHOUT PROVIDING THE COPY OF THAT SPOT ENQUIRY REPORT TO THE ASSESSEE AND FINDINGS WERE GIVEN THAT THE PLOT ON WHICH CONSTRUCTION WAS MADE, WAS OF COMMERCIAL NATURE AND COPY OF AGREEMENT FOR CONSTRUCTION AND PAYMENT OF RECEIPTS WERE ON PLAIN PAPER AND ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE THE SOURCE OF PAYMENT OF RS. 6,50,000. AGAINST THE SAID ORDER OF ASSESSING OFFICER AN APPEAL HAS BEEN FILLED BY THE ASSESSEE BEFORE CIT(A)-II. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE A.O., AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 4 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO GONE THROUGH THE ORDER OF THE TRIBUNAL DATED 30/10/2015 IN THE FIRST ROUND. THE ITAT, JAIPUR HAS GIVEN CLEAR FINDINGS IN PARA-6 OF IT'S ORDER DATED 30/10/2015 THAT ASSESSEE PURCHASED THE COMMERCIAL PLOT FROM THE JDA, JAIPUR AND ON WHICH CONSTRUCTION WAS MADE FOR WHICH AN AGREEMENT WAS ALSO MADE WITH M/S KALYANI ENGINEERING, JHOTWARA, JAIPUR OF RS. 10.50 LACS AND RECEIPT OF PAYMENT WERE SUBMITTED FOR FILLING OF SOIL WITH EVIDENCE OF CONSTRUCTION OF BOUNDARY WALL, WHICH SHOWS THAT ASSESSEE HAS MADE SOME INVESTMENT IN CONSTRUCTION. AFTER ADMITTED ALL THESE FACTS IN ITS FINDINGS, ITAT HAS ONLY GIVEN TWO SPECIFIC DIRECTIONS AS UNDER WHICH WERE REQUIRED TO BE VERIFIED BY THE AO: (I) THE AO IS DIRECTED TO VERIFY THESE DETAILS OF PAYMENTS AND CONSTRUCTION MADE BY M/S KALYANI ENGINEERING, JHOTWARA, JAIPUR AND ALSO CONSIDER THE CASE LAW CITED BY THE ASSESSEE I.E. ACIT V/S OM PRAKASH GOYAL (II) TO RECONSIDER ALL THE EVIDENCES FURNISHED BY THE ASSESSEE AND MAKE SPOT ENQUIRY FOR USE OF THE PLOT, ELECTRICITY CONNECTION ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 5 AND OTHER FACILITIES CREATED BY THE ASSESSEE TO DECIDE THE NATURE OF BUILDING. 5. WE FOUND THAT THE AO JUST REPEATED HIS EARLIER FINDINGS GIVEN IN HIS ASSESSMENT ORDER DATED 05/03/2013 AND ONLY STRESS ON THE POINT THAT PLOT PURCHASED WAS OF THE COMMERCIAL NATURE. AO THOUGH NARRATED ALL THE EVIDENCES SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS IN PARA-8.5 & 8.6 OF HIS ORDER BUT HE DID NOT APPRECIATE THOSE EVIDENCES BY GIVING ANY DEFINITE FINDINGS IN SPITE OF CLEAR DIRECTIONS GIVEN BY THE ITAT. THE ITAT HAS NEVER GIVEN ANY SUCH DIRECTION TO VERIFY WHETHER PROPERTY WAS COMMERCIAL IN NATURE OR NOT. 6. THE FINDINGS GIVEN BY THE AO ARE COMPLETELY IRRELEVANT AND OVERLAPPING BY IGNORING THE DIRECTIONS OF THE HON'BLE ITAT, JAIPUR. HOWEVER, IN PARA-8.5 OF HIS ORDER, THE AO EXAMINED THE AGREEMENT DATE 13/07/2011 MADE BY THE ASSESSEE WITH M/S KALYANI ENGINEERING FOR CONSTRUCTION ON THE SAID PLOT AGAINST THE PAYMENT OF RS. 10.50 LACS OUT OF WHICH RS. 4.50 LACES WAS MADE BY CHEQUE NO. 919654 DATED 31/07/2010 MENTIONED IN THE AGREEMENT ITSELF AND REMAINING RS. 6.50 LACS MADE BY CASH FOR WHICH CASH RECEIPTS WERE ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 6 SUBMITTED TO THE AO. AGREEMENT WAS FOUND TO BE GENUINE BY THE AO WITH THE PAYMENT OF RS. 10.50 LACS INCLUDING CASH PAYMENT OF RS. 6.50 LACS, HOWEVER, AO HAS WRONGLY MENTIONED IN PARA-8.6 THAT SOURCE OF PAYMENT WAS NOT SUPPORTED BY EVIDENCES. FURTHER, AO ADMITTED THAT CONSTRUCTION OF TWO ROOMS WERE MADE ON THE PLOT BUT THOSE WERE APPEARING GODOWNS AND NOT FOR RESIDENTIAL PURPOSES AS PER THE SPOT ENQUIRY REPORT AND CONSTRUCTION WAS MADE BEFORE TAKING THE POSSESSION OF THE PLOT AS PER LEASE DEED. 7. AS PER SECTION 54F OF THE ACT, THE ASSESSEE IS ONLY REQUIRED TO HAVE CONSTRUCTION ON THE PLOT FOR RESIDENTIAL PURPOSE AND THAT CONDITION HAS BEEN FULFILLED BY THE ASSESSEE TO CONSTRUCT TWO ROOMS WITH BOUNDARY WALL AND AN IRON ENTRY GATE ON SAID PLOT WHICH IS NOT DISPUTED EITHER BY AO OR CIT(A). NATURE OF PLOT WHETHER IT IS COMMERCIAL OR AGRICULTURAL OR OTHERWISE AND WHETHER ASSESSEE IS RESIDING IN SAID HOUSE REGULARLY IS TOTALLY IRRELEVANT AS FAR AS CLAIM OF DEDUCTION U/S 54F OF THE ACT IS CONCERNED. THE PROOF OF CONSTRUCTION OF HOUSE ON SAID PLOT WITH ELECTRIC CONNECTION HAS BEEN GIVEN BY ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WHICH HAVE BEEN EXAMINED BY AO AND EVEN NOT QUESTIONED BY CIT(A) IN HER ORDER. ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 7 8. THE ONLY CONDITION HAS BEEN LAID IN THE SEC. 54F OF THE ACT IS THAT EITHER A RESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED A HOUSE FOR RESIDENTIAL PURPOSES IN STIPULATED TIME, MEANING THEREBY OF 'CONSTRUCTION OF A HOUSE FOR RESIDENTIAL PURPOSE' IS THAT SOME CONSTRUCTION SHOULD BE MADE BY THE ASSESSEE ON THE PLOT, WHETHER ASSESSEE IS PHYSICALLY RESIDING OR NOT IN THAT HOUSE, OR WHETHER PLOT ON WHICH HOUSE HAS BEEN CONSTRUCTED IS OF COMMERCIAL OR AGRICULTURAL NATURE, IS ALL IMMATERIAL. THE SAID CONDITION WAS FULFILLED BY THE ASSESSEE BY CONSTRUCTING A HOUSE FOR RESIDENTIAL PURPOSE ON THE PLOT PURCHASED BY HER FROM JDA ON AUCTION AND SAID HOUSE WAS CONSISTED OF TWO ROOMS, BOUNDARY WALL WITH IRON GATE, ELECTRICITY CONNECTION ETC. AND HOUSE WAS CONSTRUCTED WITHIN STIPULATED TIME. THUS, ALL THE CONDITIONS OF CLAIMING DEDUCTION UNDER SEC. 54F OF THE ACT WERE FULFILLED BY THE ASSESSEE AND ALL RELEVANT DETAILS/EVIDENCES SUBMITTED BEFORE THE AO DURING THE PROCEEDINGS WHICH WERE EXAMINED BY HIM AND NOTHING WAS REMAINED ON THE PART OF THE ASSESSEE TO PROVE HER CLAIM AS PER PROVISIONS OF SEC. 54F OF THE ACT. THE SAME RATIO WAS LAID DOWN BY THE HON'BLE ITAT, JAIPUR IN CASE OF OM PRAKASH GOYAL WHICH IS REPRODUCED AS UNDER: ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 8 'CAPITAL GAIN- ELIGIBILITY FOR EXEMPTION U/S 54F- ASSESSEE DECLARED LONG TERM CAPITAL GAIN AND CLAIMED EXEMPTION U/S 54F, WHICH WAS DISALLOWED BY AO ON GROUND THAT ASSESSEE HAS PURCHASED AGRICULTURAL LAND FOR CLAIMING EXEMPTION U/S 54F OF THE ACT- HOWEVER, CIT(A) HELD THAT ASSESSEE HAS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT-HELD, FOR PURPOSE OF SEC.54 BENEFITS, PRIMARY CONDITION TO BE FULFILLED IS TRANSFER OF LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE- BENEFIT OF SEC.54F CANNOT BE DENIED ON THE GROUND THAT LAND ON WHICH CONSTRUCTION WAS DONE WAS AGRICULTURAL IN NATURE- ALL THE CONDITIONS FOR CLAIMING EXEMPTION U/S 54 HAVE BEEN FOUND SATISFIED- IT IS ESTABLISHED THAT ASSESSEE PURCHASED A PLOT OF LAND AND THEN CONSTRUCTED A RESIDENTIAL HOUSE ON IT- HOUSE CONSTRUCTED ON AGRICULTURAL LAND OR ON OTHER LAND DOES NOT MATTER, BUT THE FACT THAT HOUSE SHOULD BE CONSTRUCTED-REVENUE'S APPEAL WAS DISMISSED.' THUS, ASSESSEE'S FACTS ARE SQUARELY COVERED BY THE ABOVE RATIO LAID DOWN IN THE CASE OF OM PRAKASH GOYAL AND THEREFORE, HON'BLE ITAT, JAIPUR SPECIFICALLY DIRECTED TO THE AO IN ITS ORDER DATED 30/10/2015 TO EXAMINE THE CASE OF THE ASSESSEE IN VIEW OF THE RATIO DECIDED BY THE ITAT IN ITS OWN CASE IN FAVOUR OF ASSESSEE BUT AO AND CIT(A) COMPLETELY IGNORED THE ABOVE ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 9 RATIO AND DIVERTED THE ASSESSEE'S CASE ON SOME OTHER FACTS WHICH MAKES THE ORDER OF THE AO AND CIT(A) BAD IN LAW. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY MERIT FOR DECLINING THE ASSESSEES CLAIM OF DEDUCTION U/S 54F OF THE ACT. 10. IN THE RESULT, GROUNDS NO. 1 TO 4 OF THE APPEAL ARE ALLOWED. 11. GROUND NO. 5 OF THE APPEAL TAKEN BY THE ASSESSEE READS AS UNDER: THE LEARNED AO HAS LEGALLY AND FACTUALLY ERRED IN INTERPRETING THE ACTUAL SPIRIT OF SECTION 50C OF THE ACT FOR THE PURPOSE OF WORKING OUT DEDUCTION UNDER SECTION 54F OF THE ACT AS SEC 50C IS DEEMING PROVISION AND ONLY APPLICABLE TO SEC. 48 NOT TO THE SEC. 54F & OTHERS. 12. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE AO HAS WORKED OUT THE CAPITAL GAIN BY TAKING THE VALUE AS PER STAMP AUTHORITY AGAINST ACTUAL SALE VALUE SHOWN IN THE SALE DEED BY APPLYING THE SEC. 50C OF THE ACT. AS PER OUR CONSIDERED VIEW SECTION 50C OF THE ACT IS A DEEMING PROVISION WHICH WAS BROUGHT ON THE STATUE AS A PREVENTIVE MEASURE TO CURB THE GENERAL TENDENCY OF CHANGE OF HANDS OF THE ON-MONEY IN REAL ESTATE TRANSACTIONS. SUCH SPIRIT OF THE LEGISLATION WAS MADE VERY CLEAR IN FINANCE BILL/ACT WHILE BRINGING SUCH PROVISIONS ON THE STATUE. THEREAFTER, THE JUDICIAL AUTHORITIES HAVE BEEN TAKING SUCH VIEW CONSISTENTLY IN NUMBER OF JUDICIAL ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 10 DECISIONS THAT THE PROVISIONS OF SEC. 50C OF THE ACT WOULD BE APPLICABLE WHILE TAXING THE CAPITAL GAINS ONLY. FOR WORKING OUT DEDUCTION U/S 54F OF THE ACT, THESE PROVISIONS WOULD NOT COME INTO PLAY. THE ITAT, JAIPUR IN CASE OF GYANCHAND BATRA, ITA NO. 9/JP/2010 AY 2006-07, (2010) 133 TTJ 482 (ITAT, JP) IN WHICH IT HAS BEEN HELD THAT LEGISLATURE IN ITS WISDOM HAS REFERRED TO SEC. 48 IN SEC. 50C FOR ADOPTING THE STAMP DUTY VALUE AS FAIR MARKET VALUE. HENCE, THE DEEMING FICTION AS PROVIDED IN SEC. 50C IN RESPECT OF THE WORDS 'FULL VALUE OF CONSIDERATION' IS TO BE APPLIED ONLY TO SEC. 48. WORDS 'FULL VALUE OF CONSIDERATION' IN OTHER PROVISIONS OF THE ACT ARE NOT GOVERNED BY THE MEANING OF THESE WORDS AS MENTIONED IN SEC. 50C. THUS, FOR ASCERTAINING THE FULL VALUE OF CONSIDERATION AS MENTIONED IN DIFFERENT PROVISIONS EXCEPT SEC. 48, CONSIDERATION SPECIFIED IN SALE DEED HAS TO BE CONSIDERED. THE MEANING OF FULL VALUE OF CONSIDERATION AS REFERRED TO IN EXPLANATION TO SEC. 54F(1) IS NOT GOVERNED BY THE MEANING OF THE WORDS FULL VALUE OF CONSIDERATION AS MENTIONED IN SEC. 50C. IN THE INSTANT CASE, THE COST OF NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION, THEREFORE, THE WHOLE OF THE CAPITAL GAIN IS NOT CHARGEABLE TO TAX EVEN IF THE CAPITAL GAIN IS COMPUTED BY TAKING THE VALUE ITA 1024/JP/2019_ SARITA DEVI GARG VS ITO 11 ADOPTED BY THE STAMP AUTHORITY. HENCE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 54F OF THE ACT. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH SEPTEMBER, 2020. SD/- SD/- LANHI XLKA JES'K LH 'KEKZ (SANDEEP GOSAIN) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKA D@ DATED:- 04 TH SEPTEMBER, 2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. SARITA DEVI GARG, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 4(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1024/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR