C.Anitha, CHENNAI V. ITO Non Corporate Ward 1(1), CHENNAI

ITA 1038/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1031 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 27-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA IRS
• Keywords: Deduction for capital gain; Capital Gains
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NO.1038/CHNY/2018 ! / ASSESSMENT YEAR : 2012-2013. C. ANITHA, OLD NO.25, NEW NO.26, VAIDYARAMAN STREET, T.NAGAR, CHENNAI 600 017. VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 1(1) CHENNAI. [PAN AALPA 8804D] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SUHRITH PARTHASARATHY, ADVOCATE &' '# $ % /RESPONDENT BY : R. ANITHA, IRS, JCIT. ( ) $ * /DATE OF HEARING : 03-09-2019 +,! $ * /DATE OF PRONOUNCEMENT : 12-09-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2 , CHENNAI ITA NO.1038/2018 :- 2 -: (CIT(A) FOR SHORT) DATED 26.12.2017 FOR THE ASS ESSMENT YEAR (AY) 2012-2013. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE LD COMMISSIONER HAS WHOLLY MISUNDERSTOOD T HE FACTS OF THE CASE. 2. THE LD. COMMISSIONER HAS FAILED TO APPRECIATE TH AT THE ENTIRE SALE CONSIDERATION OF RS. 1,00,00,000 RECEIVED BY T HE APPELLANT UPON SALE OF VACANT LANDS ON 2.9.2011 WAS UTILIZE D FOR THE PURPOSE OF CONSTRUCTION OF A RESIDENTIAL HOUSE UPON THE PLOT AT SHOLINGANALLUR. 3. THE LD COMMISSIONER HAS FAILED TO CONSIDER THE L EDGER ACCOUNT OF THE APPELLANT MAINTAINED BY SINMAK FOUN DATIONS INDIA PVT LTD, THE CONTRACTOR, IN WHICH IT IS CLEAR THAT THE APPELLANT MADE REMITTANCES TOWARDS CONSTRUCTION EXP ENSES WELL UNTIL AUGUST, 2013, I.E. MUCH AFTER THE SALE C ONSIDERATION OF RS.1,00,00,000 WAS RECEIVED BY THE APPELLANT ON 2.9.2011. 4. THE LD COMMISSIONER HAS FAILED TO APPRECIATE THA T THE CONSTRUCTION UPON THE PLOT AT SHOLINGANALLUR WAS CO MPLETED ONLY AFTER THE SALE CONSIDERATION OF RS.1,00,00,000 WAS RECEIVED BY THE APPELLANT UPON THE SALE OF VACANT L ANDS ADMEASURING 3,37() SQUARE FEET AT PLOT NO. 17 THORI AIPAKKAM VILLAGE ON 2.9.20 11. 5. THE LD. COMMISSIONER HAS ALTOGETHER DISREGARDED THE BANK STATEMENTS AND LOAN ACCOUNT OF THE APPELLANT WITH B ANK OF BARADA. ON A PLAIN PERUSAL OF THESE DOCUMENTS, IT W OULD BE CLEAR THAT THE ENTIRETY OF THE CONSIDERATION AMOUNT ING TO RS. 1,00,00,000 BY WAY OF THE SALE ON 0.9.2011 WAS UTIL IZED BY THE APPELLANT TOWARDS THE CONSTRUCTION OF A RESIDENTIAL HOUSE UPON THE PLOT AT SHOLINGANALLUR. 6. THE LD. COMMISSIONER HAS FAILED TO APPRECIATE TH AT EVEN POSSESSION OF THE RESIDENTIAL HOUSE UPON THE PLOT A T SHOLINGANALLUR WAS TAKEN OVER L)Y THE APPELLANT ONL Y AFTER THE SALE ON 2.9.2011. ITA NO.1038/2018 :- 3 -: 7. THE JUDGMENTS RELIED UPON BY THE ED. COMMISSIONE R ARE WHOLLY DISTINGUISHABLE FROM THE FACTS OF THE PRESEN T CASE. 8. THE ED. COMMISSIONER HAS FAILED TO FOLLOW THE DE CISION OF THE HONBLE HIGH COURT, MADRAS IN CIT V SARDARINAL KOTHARI 302 ITR 286, WHEREIN THE HONBLE HIGH COURT, MADRAS HAS HELD THAT SECTION 54F OF THE INCOME TAX ACT HAS TO BE LIBERA LLY CONSTRUED TO BENEFIT THE ASSESSEES. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL. THE RETURN OF INCOM E FOR THE ASST. YEAR 2012-2013 WAS FILED ON 26.07.2012 DISCLOSING TOTAL INCOME OF H4,34,578/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, NON CORPORATE WARD 1(1), CHENNAI VIDE ORDER DATED 12.03.2015 PASSED U/S. 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT TOTAL INCOM E OF H14,48,241/-. WHILE DOING SO, THE AO ASSESSED CAPI TAL GAINS ARISING ON SALE OF VACANT LAND MEASURING 3370 SQ.FT. AT TH ORAIPAKKAM VILLAGE. ON 02.09.2011 ASSESSEE SOLD THE LAND FOR TOTAL CO NSIDERATION OF H1,00,00,000/- AND CLAIMED CAPITAL GAIN EXEMPTION U/S.54F OF THE ACT BY INVESTING IN NEW HOUSE SITUATED AT PLOT NOS.8A , 9A & 10, ANNA ENCLAVE, INJAMBAKKAM VILLAGE, SHOLINGANALLUR TALUK, CHENGAI MGR DISTRICT FOR A SUM OF H1,05,01,000/-. IT WAS STATE D THAT THE ABOVE PLOTS WERE BROUGHT BY THE ASSESSEE ON 02.12.2010 AN D CONSTRUCTED NEW HOUSE PROPERTY BEFORE 31.03.2012 AND IN SUPPORT OF THIS HE FILED ITA NO.1038/2018 :- 4 -: HOUSE TAX RECEIPT. THE ASSESSING OFFICER NOTING TH AT OUT OF 3370 SQ.F.T OF VACANT LAND SOLD, ASSESSEE HAD ACQUIRED 1552.5 SQ.FT OF LAND BY THE SETTLEMENT DEED DATED 22.09.2011 FROM HER SPOUS E SHRI. K. CHANDRASEKARAN. THEREFORE HOLDING PERIOD IN RESPEC T OF THIS PROPERTY WAS TREATED AS SHORT TERM, ACCORDINGLY, ASSESSEE E ARNED SHORT TERM CAPITAL GAINS. THEREFORE NOT ALLOWED EXEMPTION U/ S.54F OF THE ACT. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER HELD THAT THE PROPERTY SETT LED IN FAVOUR OF THE ASSESSEE CANNOT BE TREATED AS SHORT TERM, BUT LONG TERM IN VIEW OF SUB SECTION 2 OF SECTION 47 (V) OF THE ACT. HOWEVE R, THE LD. CIT(A) HAD MADE ENHANCEMENT OF ASSESSMENT BY ISSUING SHOW CAUSE NOTICE U/S.251 OF THE ACT ON THE GROUND THAT ASSESSEE IS N OT ELIGIBLE FOR CLAIMING EXEMPTION U/S.54F OF THE ACT SINCE THE N EW HOUSE WAS CONSTRUCTED BEFORE THE SALE OF ORIGINAL ASSET. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEA L. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE LD. CIT(A) WAS RIGHT IN HOLDING THAT EX EMPTION U/S.54F OF THE ACT WAS NOT ALLOWABLE IN RESPECT OF THE CONSTR UCTION OF THE HOUSE WHICH IS COMPLETED BEFORE THE SALE OF THE ORIGINA L ASSET. BUT THE ITA NO.1038/2018 :- 5 -: AMOUNT SPENT TOWARDS CONSTRUCTION OF HOUSE AFTER S ALE OF THE ORIGINAL ASSET SHOULD BE ALLOWED EXEMPTION. THEREFORE SINCE THE ASSESSING OFFICER HAD NOT EXAMINED THE DETAILS OF THE CONSTRU CTION EXPENDITURE, WE REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER TO GIVE EXEMPTION U/S.54F OF THE ACT IN RESPECT OF MONEY SP ENT ON CONSTRUCTION OF HOUSE PROPERTY AFTER SALE OF ORIG INAL ASSET AFTER DUE VERIFICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 12TH DAY OF SEPTEMBER, 2019, A T CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED: 12TH SEPTEMBER, 2019 KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF