Sh. Kiranjit Passi, Banur V. ITO, Rajpura

ITA 1049/CHANDI/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8344 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: K P BAJAJ
• Keywords: Cost of acquisition; Fair market value; Tax effect
• Section: 54B; 54; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1031/CHD/2010 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER, VS. SHRI KIRANJIT PASSI, RAJPURA. ADVOCATE, WARD 9, BANUR. PAN: AGUPP7418F AND ITA NO.1049/CHD/2010 (ASSESSMENT YEAR : 2007-08) SHRI KIRANJIT PASSI, VS. THE INCOME TAX OFFICER, ADVOCATE, WARD 9, RAJPURA. BANUR. PAN: AGUPP7418F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.P. BAJAJ DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 08.03.2016 DATE OF PRONOUNCEMENT : 21.03.2016 O R D E R PER RANO JAIN, A.M . : BOTH THESE CROSS APPEALS FILED BY THE DEPARTMEN T AND ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LEAR NED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 25.5.2010, RELATING TO ASSESSMENT YEAR 2007-08, PAS SED 2 UNDER SECTION 250(6) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING THE YEAR, THE ASSESSEE SOLD CERTAIN LANDS, THE SHARE OF THE ASSESSEE IN SALE CONSIDERATION WAS RS.43,86,153/-. OUT OF THE SALE PROCEEDS, THE ASSESSEE CLAIMED TO HAVE PURCHASED CERTAIN AGRICULTURAL LAND. THE CAPITAL G AIN WORKED OUT BY THE ASSESSEE WAS NIL. AS PER ASSESSE E, THE FIRST PART OF SALE PROCEEDS AMOUNTING TO RS.20,18,6 19/- WAS INVESTED IN PURCHASE OF LAND AS PER AGREEMENT TO SELL AND THE BALANCE OF RS.23,67,894/- WILL BE INVESTED IN THE PERIOD ALLOWED FOR THIS PURPOSE. THE ASSESSING OFF ICER REJECTING THE CONTENTION OF THE ASSESSEE, REWORKED THE INDEXED COST OF ACQUISITION. FURTHER, SHE ALSO DEC LINED THE EXEMPTION UNDER SECTION 54B OF THE ACT, CLAIMED BY THE ASSESSEE ON THE GROUND THAT SINCE INVESTMENT WA S NOT MADE PRIOR TO THE DUE DATE OF FILING RETURN UNDER SECTION 139(1) OF THE ACT, NO EXEMPTION IS ALLOWED. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND MADE ELABORATE SUBMISSIONS. THE LEARNED CIT (APPEALS) GAVE PART RELIEF TO THE ASSES SEE WITH REGARD TO CAPITAL GAINS. 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS), BOTH THE DEPARTMENT AS WELL AS THE ASSES SEE ARE IN APPEAL BEFORE US. 3 ITA NO.1031/CHD/2010 : (REVENUES APPEAL) : 5. IT IS STATED THAT IN THE PRESENT APPEAL THE TAX EFFECT IS LESS THAN THE PRESCRIBED LIMIT PROVIDED B Y THE RECENT CBDT CIRCULAR. 6. ACCORDING TO CIRCULAR NO.21/2015 DATED 10.12.2015, THE CBDT IN SUPERCESSION OF EARLIER INSTRUCTIONS HAS DIRECTED THAT DEPARTMENTS APPEALS BEFORE ITAT SHALL NOT BE FILED IN CASES WHERE THE TAX EFF ECT DOES NOT EXCEED THE MONETARY LIMIT OF RS.10 LACS. THE T AX WILL NOT INCLUDE ANY INTEREST THEREON. IT IS FURTHER CL ARIFIED THAT IF IN THE CASE OF AN ASSESSEE, DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH T HE TAX EFFECT IN RESPECT OF DISPUTED ISSUES EXCEEDS THE MO NETARY LIMIT SO SPECIFIED. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO B E FILED HENCEFORTH BEFORE THE TRIBUNAL. THE PENDING APPEALS BELOW THE SPECIFIED TAX LIMIT MAY BE WITHDRAWN/NOT PRESSE D. 7. ADMITTEDLY, IN THE DEPARTMENTAL APPEAL, THE TAX EFFECT IS LESS THAN RS.10 LACS, THEREFORE, DEPARTME NTAL APPEAL IS NOT MAINTAINABLE. THE LEARNED CIT (APPEA LS) DECIDED THE ISSUE IN DEPARTMENTAL APPEAL ON FACTS A ND THE CASE OF THE REVENUE WOULD NOT FALL IN THE EXCEPTION S PROVIDED IN THE ABOVE CIRCULAR. 8. IN VIEW OF THE ABOVE, LEARNED D.R. STATED THAT SINCE DEPARTMENTAL APPEAL IS FILED AGAINST THE CBDT 4 INSTRUCTIONS, THEREFORE, HE WOULD NOT BE PRESSING DEPARTMENTAL APPEAL. THEREFORE, THE ABOVE DEPARTME NTAL APPEAL IS DISMISSED BEING NOT PRESSED. ITA NO.1049/CHD/2010 : (ASSESSEE APPEAL) : 9. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ID. C.I.T(A) IS NOT JUSTIFIED IN RESTRIC TING THE FAIR MARKET VALUE OF THE LANDS SOLD AT RS. 1,00,000/- IGNORING THE EVIDENCE ON RECORD. 2. THAT THE ID. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ID. A.O IN NOT ALLOWING EXEMPTION IN RESPECT OF THE LANDS ACQUIRED WITHIN TWO YEARS OF TH E SALE OF ORIGINAL ASSET PURELY ON TECHNICAL GROUNDS. 10. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS GROUND NO.1,THEREFORE, THE SAME IS DIS MISSED AS NOT PRESSED. 11. THE GROUND NO.2 RELATES TO THE ISSUE OF ALLOWANCE OF EXEMPTION UNDER SECTION 54B OF THE ACT . THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSION MADE BEFORE THE LOWER AUTHORITIES AND FURTHER STATE D THAT THE EXEMPTION IS NOT ALLOWED TO THE ASSESSEE ONLY O N TECHNICAL GROUNDS. RELIANCE WAS PLACED ON THE JUDG MENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MS. JAGRITI AGGARWAL (2011) 339 ITR 610, TO THE EFFECT THAT THE DATE OF FURNISHING THE RETURN REFE RRED TO IN SECTION 54 OF THE ACT CAN BE THE DATE UNDER SECTION 139(4) 5 OF THE ACT AND AMOUNT UTILIZED FOR SPECIFIC PURPOSE IS EXEMPT UNDER SECTION 54 OF THE ACT. 12. THE LEARNED D.R. RELIED ON THE ASSESSING OFFIC ER. 13. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THREE ISSUES AROSE BEFORE THE LEARNED CIT (APPEALS) . FIRST ISSUE WAS THE DISPUTE REGARDING FAIR MARKET VALUE ( FMV) OF THE LAND. IN THIS REGARD, THE LEARNED CIT (APPE ALS) GAVE PART RELIEF TO THE ASSESSEE. THOUGH BOTH THE ASSES SEE AS WELL AS THE DEPARTMENT HAVE COME IN APPEAL BEFORE U S AGAINST THIS ACTION OF THE LEARNED CIT (APPEALS). THE DEPARTMENTAL APPEAL HAS NOT BEEN PURSUED, TAX EFFEC T BEING LESS THAN PRESCRIBED BY CBDT CIRCULAR. THE ASSESSEE ALSO PREFERRED NOT TO PRESS GROUND AGAINST THE SAID ISSUE. THEREFORE, WE NEED NOT ADJUDICATE THE SAME. 14. SECOND ISSUE BEFORE THE LEARNED CIT (APPEALS) WAS WITH REGARD TO PURCHASE OF LANDS OUT OF SALE PR OCESS, WHICH WERE DISPUTED BY THE ASSESSING OFFICER ON ACC OUNT OF CERTAIN DISCREPANCIES IN THE AGREEMENTS ETC. TH E LEARNED CIT (APPEALS) DECIDED THIS GROUND IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE FACT THAT THE DEPARTMENTA L APPEAL IS NOT BEING PURSUED AS STATED HEREINABOVE, WE NEED NOT ADJUDICATE THE SAME ALSO. 6 15. THIRD AND THE RELEVANT ISSUE FOR THE PRESENT APPEAL IS WITH REGARD TO DISALLOWANCE OF EXEMPTION BY THE ASSESSING OFFICER IN RESPECT OF LAND TO BE ACQUIRED WITHIN TWO YEARS OF SALE OF ORIGINAL ASSET ON THE GROUND T HAT THE FUNDS WERE NOT PARKED IN THE SPECIFIED ACCOUNT. TH E UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YE AR 2007-08, AS ON 16.9.2007. SINCE THE DUE DATE OF FI LING THE RETURN WAS 30.6.2007, IT WAS ADMITTEDLY A BELATED RETURN. THE ASSESSEE DID NOT DEPOSIT THE SALE PROCEEDS IN A SPECIFIED BANK ACCOUNT, IS ALSO AN UNDISPUTED FACT. THE CONTENTION OF THE ASSESSING OFFICER IS THAT THE ASS ESSEE HAS NOT MADE INVESTMENT BEFORE THE DUE DATE OF FILI NG OF RETURN, WHILE THE CONTENTION OF THE ASSESSEE ALL AL ONG HAS BEEN THAT SINCE HE HAS INVESTED THE MONEY BEFORE TH E DUE DATE OF FILING RETURN UNDER SECTION 139(4) OF THE ACT, THERE WAS NO NEED FOR DEPOSITING THE SAME IN A SPECIFIED BANK ACCOUNT. 16. WE DO NOT FIND OURSELVES IN AGREEMENT WITH ANY OF THE LOWER AUTHORITIES. THE CLAIM OF DEDUCTION I S DENIED TO THE ASSESSEE PURELY ON A TECHNICAL GROUND. THE REQUIREMENT TO GET EXEMPTION UNDER SECTION 54 OF TH E ACT IS THAT THE INVESTMENTS ARE TO BE MADE BEFORE THE D UE DATE OF FILING RETURN UNDER SECTION 139(1) OF THE ACT. THE ASSESSEE HAS INVESTED THE SALE PROCEEDS AS ON 3.10. 2010 AND 10.10.2007, WHICH ARE CERTAINLY BEYOND THE DUE DATE OF FILING RETURN UNDER SECTION 139(1) OF THE ACT, 7 NEVERTHELESS BEFORE THE DUE DATE OF FILING RETURN UNDER SECTION 139(4) OF THE ACT, WHICH FOR THE RELEVANT ASSESSMENT YEAR WAS 31.3.2008. THE DATE OF FURNISH ING THE RETURN OF INCOME REFERRED IN THE EXEMPTION SECT ION CAN BE A DATE UNDER SECTION 139(4) ALSO, FOR THIS, WE A RE SUPPORTED BY THE JUDGMENT OF GAUHATI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN, REPORTED IN 28 6 ITR 274 (GAU), WHEREBY THE HON'BLE HIGH COURT HELD AS U NDER: 6. FROM A PLAIN READING OF SUB-SECTION (2) OF SECTIO N 54 OF THE INCOME-TAX ACT, 1961, IT IS CLEAR THAT ONLY SECTION 139 OF THE INCOME-TAX ACT, 1961, IS MENTIONED IN SECTION 54(2 ) IN THE CONTEXT THAT THE UNUTILISED PORTION OF THE CAPITAL GA IN ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD BE DEPOSITE D BEFORE THE DATE OF FURNISHING THE RETURN OF THE INCOME-TAX UNDER SECTION 139 OF THE INCOME-TAX ACT. SECTION 139 OF THE INCOME- TAX ACT, 1961, CANNOT BE MEANT ONLY SECTION 139(1) BUT IT MEANS ALL SUB-SECTIONS OF SECTION 139 OF THE INCOME-TAX ACT, 1961. UNDER SUB-SECTION (4) OF SECTION 139 OF THE INCOME-TAX ACT ANY PERSON WHO HAS NOT FURNISHED A RETURN WITHIN THE TIME ALLOWED TO HIM UNDER SUB-SECTION (1) OF SECTION 142 MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSE SSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT YEAR WHICHEVER IS EARLIER. SUCH BEING THE SITUATION, IT IS THE CASE OF THE RESPONDENT/ASSESSEE THAT THE RESPONDENT/ASSESSE E COULD FULFIL THE REQUIREMENT UNDER SECTION 54 OF THE INCOME-TAX ACT FOR EXEMPTION OF THE CAPITAL GAIN FROM BEING CHARGED TO INC OME- TAX ON THE SALE OF PROPERTY USED FOR RESIDENCE UP TO MARCH 30, 1998, INASMUCH AS THE RETURN OF INCOME-TAX FOR THE ASSESSMENT YEAR 1997-98 COULD BE FURNISHED BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSE SSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT WHIC HEVER IS EARLIER UNDER SUB-SECTION (4) OF SECTION 139 OF THE INCOME-TAX ACT, 1961. 8 17. A JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF FATIMA BAI VS. ITO (2009) 32 DTR (KAR) 243 IS ALSO RELEVANT FOR THE ISSUE IN QUESTION, WHEREBY IT HAS BEEN HELD AS UNDER : 11. THE EXTENDED DUE DATE UNDER S. 139(4) WOULD BE 3 1ST MARCH, 1990. THE ASSESSEE DID NOT FILE THE RETURN WITHIN THE EXTENDED DUE DATE, BUT FILED THE RETURN ON 27TH FEB., 2000. HOWEVER, THE ASSESSEE HAD UTILISED THE ENTIRE CAPITAL GAINS BY PURCHASE OF A HOUSE PROPER TY WITHIN THE STIPULATED PERIOD OF S. 54(2) I.E., B EFORE THE EXTENDED DUE DATE FOR RETURN UNDER S.139.THE ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RETURN UNDER S. 139(4). BUT, HOWEVER, UTILIZED T HE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATEUNDERS.139(4).THE CONTENTION OF TH E REVENUE THAT THE DEPOSIT IN THE SCHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE AND NOT THE EXTENDED DUE DATE IS AN UNTENABLE CONTENTION. 18. FOLLOWING THE ABOVE TWO JUDGMENTS, A JUDGMENT OF THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT I S ALSO DELIVERED IN THE CASE OF JAGRITI AGGARWAL (SUPRA), RELEVANT PARAS OF WHICH READ AS UNDER : 12. THE SALE OF THE ASSET HAVING TAKEN PLACE ON 13 TH JAN., 2006, FALLING IN THE PREVIOUS (SIC ASSESSMEN T) YEAR 2006-07, THE RETURN COULD BE FILED BEFORE THE END O F RELEVANT ASST. YR. 2007-08 (SIC2006-07) I.E. 31ST MARCH, 2007. THUS, SUB-S. (4) OF S.139 PROVIDES EXTENDED P ERIOD OF LIMITATION AS AN EXCEPTION TO SUB-S. (1) OF S. 1 39 OF THE ACT. SUB-S. (4) IS IN RELATION TO THE TIME ALLOWED TO AN ASSESSEE UNDER SUB-S. (1) TO FILE RETURN. THE REFORE, SUCH PROVISION IS NOT AN INDEPENDENT PROVISION, BUT RELATES T O TIME CONTEMPLATED UNDER SUB-S. (1) OF S. 139. THEREFORE, SUCH 9 SUB-S. (4) HAS TO BE READ ALONG WITH SUB-S. (1). SI MILAR IS THE VIEW TAKEN BY THE DIVISION BENCH OF KARNATAKA AND GAUHATI HIGH COURTS IN FA TIMA BAI AND RAJESH KUMAR JALAN CASES (SUPRA) RESPECTIVELY. 13. IN VIEW OF THE ABOVE, WE FIND THAT DUE DATE FOR FURNISHING THE RETURN OF INCOME AS PER S. 139(1) OF THE ACT IS SUBJECT TO THE EXTENDED PERIOD PROVIDE D UNDER SUB-S. (4) OF S. 139 OF THE ACT. 19. RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HON'BLE HIGH COURTS, WE ARE INCLINED TO HOLD THE IS SUE IN FAVOUR OF THE ASSESSEE. 20. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF MARCH, 2016. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 21 ST MARCH, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH