Smt. Selvi Venkatasubramanya, V. ITO,

ITA 1052/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95296 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G RAMESHA J
• Assessee Lawyers: V CHANDRASHEKAR
• Keywords: Capital asset; Principle of natural justice; Period of limitation; Additional evidence; Corroborative evidences
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER A ND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO. 1052 /BANG/201 3 (ASSESSMENT YEAR: 20 08 - 09 ) SMT.SELVI VENKATASUBRAMANI, NO.3, 12 TH CROSS, 6 TH MAI N, MALLESWARAM, BANGALORE - 560003. PAN: AAVPV4348P APPELLANT VS. INCOME - TAX OFFICER, WARD 9(4), BANGALORE. RESPONDENT APPELLANT BY: SHRI V.CHANDRASHEKAR, ADVOCATE. RESPONDENT BY: SHRI G.RAMESHA, JCIT(DR). DATE OF HEARING : 09 /09/2015. DATE OF PRONOUNCEMENT: 07 / 1 0 /2015. O R D E R PER VIJAY PAY RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01/04/2013 OF THE CIT(A) - V, BANGALORE , FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 2 OF 9 EVIDENCE, PROBABILITIES AND THE FACTS AND CIRCUMSTANCES IN THE APPELLANT'S CASE. 2. THE LEARNED CIT(A) IS N OT JUSTIFIED IN NOT GIVING AN OPPORTUNITY TO THE APPELLANT PRIOR TO PASSING OF THE APPELLATE ORDER WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 3. THE LEARNED CIT(A) IS NOT JUSTIFIED IN DENYING THE EXEMPTION U/S 54F OF THE ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. THE LEARNED CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE PROPERTY AT KILPAUK, CHENNAI WAS NOT DEMOLISHED BEFORE THE SALE OF THE VACANT PROPERTY AT MYSORE UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PROPERTY AT GEDALAHALLI CAN BY NO STRETCH OF IMAGINATION CAN BE TERMED AS A RESIDENTIAL HOUSE FIT FOR HABITATION IN AS MUCH AS IT IS A DILAPIDATED STRUCTURE WITH AC SHEET HAVING NO DOORS NOR WINDOWS UNDER THE FACTS OF THE APPELLANT'S CASE 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THE RATIO OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MEHTA D.P. V CIT(2001) 251 ITR 529(DEL) CITED BY THE APPELLANT IN SUPPORT OF HER CONTENTION THAT AN UNIN HABITABLE BUILDING WAS NOT ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. 7. THE LEARNED CIT(A) ERRED IN GIVING DIRECTION TO THE A.O. IN RESPECT OF AN AMOUNT OF RS.3,98,318/ - UNDER THE FACTS OF THE APPELLANT'S CASE. THE DIRECTION IS BAD AS NO INFORMATION WAS S OUGHT FROM THE APPELLANT AS REGARDS THIS ISSUE. ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 3 OF 9 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 9. IN THE VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 13/11/2009 DECLARING INCOME AT RS.7,24,120/ - AFTER CLAIMING EXEMPTION U/S 54F OF THE IT ACT,1961 TOWARDS LONG - TERM CAPITAL GAINS(LTCG). THE AO HAS DENIED THE CLAIM OF DEDUCTION U/S 54F ON THE GROUND THAT THE ASSESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE ON THE DATE OF SALE OF THE ORIGINAL ASSET. 4. THE AS SESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS ASSUMED WRONG FACT WITHOUT VERIFYING THE CLAIM OF THE ASSESSEE. IT WAS SUBMITTED THAT THE PROPERTY AT KILPAUK, CHENNAI WAS ALREADY DEMOLISHED ON 18/5/2007 WHEREAS THE CAPITAL ASSET IN QUESTION WAS SOLD BY THE ASSESSEE ON 07/06/2007. THEREFORE, AS ON THE DATE OF SALE OF THE CAPITAL ASSET IN QUESTION THE PROPERTY AT KULPAUK, CHENNAI WAS NOT IN EXISTENCE. THE CIT(A) DID NOT ACCEPT THE CLAIM OF THE ASSESSEE BY RECORD ING REASON THAT THE ASSESSEE HAS NOT FILED ANY PROOF OF DEMOLITION OF THE PROPERTY AT KILPAUK, CHENNAI AND FURTHER THE CIT(A) HAS ALSO DOUBTED THE UTILISATION OF THE SALE ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 4 OF 9 PROCEEDS OF THE EXISTING ASSET FOR ACQUIRING OR CONSTRUCTION OF THE NEW RESIDENTIAL H OUSE. AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. 5. BEFORE US, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS HAVING THREE PROPERTIES AS UNDER: DETAILS OF PROPERTY INCOM E DERIVED I) PROPERTY AT GEDDALAHALLI, BANGALORE RS. 38,409/ - II) PROPERTY AT 241, MINT STREET, CHENNAI RS.1,26,600/ - II I) PROPERTY AT KILPAUK, CHENNAI RS.1,04,300/ - THE PROPERTY AT MINT STREET, CHENNAI IS A COMMERCIAL PROPERTY AND THEREFORE, T HE SAME IS NOT RELEVANT FOR THE PURPOSE OF CONSIDERING THE RESIDENTIAL PROPERTY FOR THE PURPOSE OF SEC.54F. THE LEARNED AR OF THE ASSESSEE HAS POINTED OUT THAT THE ASSESSEE SOLD HIS VACANT SITE AT NAZARBAD MOHALLA,MYSORE ON 7/6/2007 WHICH HAS RESULTED THE LTCG. THE ASSESSEE HAS CONSTRUCTED THE RESIDENTIAL HOUSE AT KILPAUK, CHENNAI AFTER DEMOLITION OF THE EXISTING RESIDENTIAL HOUSE. THE LEARNED AR OF THE ASSESSEE HAS REFERRED TO THE AFFIDAVIT FILED BY THE ASSESSEE ALONG WITH ADDITIONAL EVIDENCE COMPRISING OF SALE DEED OF PROPERTY AT GEDDALAHALLI, BANGALORE CERTIFICATE OF CHARTERED ENGINEER, CONFIRMATION LETTER ISSUED BY THE DEMOLISHER, OTHER DETAILS OF CONSTRUCTION OF THE RESIDENTIAL HOUSE, BANK ACCOUNT OF THE ASSESSEE SHOWING THE DEPOSITS AND EXPENDITURE IN RESPECT OF CONSTRUCTION OF THE HOUSE. ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 5 OF 9 THE LEARNED AR OF THE ASSESSEE HAS ALSO SUBMITTED A CERTIFICATE ISSUED BY THE CORPORATION OF CHENNAI DATED 23/7/2015 WHEREIN THE DETAILS OF THE STATUS OF PROPERTY I.E. DATE OF DEMOLITION AND RE - CONSTRUCTION APPROVA L AS WELL AS COMPLETION OF THE PROPERTY AND ASSESSED TO HOUSE TAX, HAS BEEN CERTIFIED BY THE CORPORATION. THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT AS PER DIRECTIONS OF THIS BENCH, THE ASSESSEE OBTAINED THE CERTIFICATE AND IS BEING FILED IN SUPPO RT OF THE CLAIM THAT ON THE DATE OF SALE OF THE EXISTING ASSET, THE RESIDENTIAL HOUSE AT KILPAUK CHENNAI WAS ALREADY DEMOLISHED AND THEREFORE, THE ASSESSEE WAS NOT HAVING MORE THAN ONE RESIDENTIAL HOUSE AT THE TIME OF SALE OF THE EXISTING ASSET. THUS, THE LEARNED AR OF THE ASSESSEE HAS PLEADED THAT IN VIEW OF THE EVIDENCE FILED BY THE ASSESSEE, THE CLAIM OF THE ASSESSEE IS PROVED. HOWEVER SINCE THIS RECORD COULD NOT BE FILED BEFORE THE AO, THE SAME MAY BE VERIFIED BY THE AO. 6. AS REGARDS THE OBJEC TION OF THE AUTHORITIES REGARDING NON - DEPOSIT OF THE CAPITAL GAIN AMOUNT IN THE SPECIFIED CAPITAL GAIN BANK ACCOUNT, THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT WHEN SALE PROCEEDS AND CAPITAL GAIN HAVE BEEN INVESTED IN CONSTRUCTION OF THE NEW HOUSE W ITHIN THE PERIOD OF LIMITATION AS PER PROVISIONS OF SEC.139(4), THEN THE CLAIM OF DEDUCTION U/S 54F CANNOT BE DENIED. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 6 OF 9 CASE OF CIT VS. SMT.VRIN DA P.ISSAC REPORTED IN (2011) 64 DTR(K A R) 376. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS VEHEMENTLY OPPOSED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS GIVEN BY THE AO AS WELL AS THE CIT(A) TO THE ASSESSEE TO FILE SUPPORTING EVIDENCE BUT THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM. THEREFORE, WHEN THE ASSESSEE HAS FAILED TO EXPLAIN THE SUFFICIENT CAUSE FOR NOT FILING THE EVIDENCE BEFORE THE AO AS WELL A S THE CIT(A), ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE SHOULD NOT BE ADMITTED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE DENIAL OF CLAIM U/S 54F ON THE GROUND THAT THE ASSESSEE DID NOT DEPOSIT THE SALE PROCEEDS IN THE CAPITAL GAIN ACCOUNT AS PER THE PROVISIONS OF SUB - SEC.(4) OF SEC.54F, WE NOTE THAT THIS ISSUE IS NOW SETTLED BY THE DECISIONS OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF FAT IMA BAI VS. ITO REPORTED IN (2009) 32 DTR (KAR) 243 AND IN THE CASE OF SMT.VRINDA P.ISSAC (SUPRA). THE HON BLE HIGH COURT IN THE CASE OF FATIMA BAI (SUPRA) HAS HELD IN PARAGRAPHS 7 TO 12 AS UNDER: 7. THE S. 54(1) DECLARES THAT WHEN THE ASSESSEE SELLS ANY LONG - TERM CAPITAL ASSET, THE AS SESSEE SHOULD PURCHASE THE BUILDING WITHIN ONE YEAR BEFORE THE TRANSFER OR WITHIN TWO ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 7 OF 9 YEARS AFTER THE TRANSFER BY INVESTING CAPITAL GAINS. IN WHICH EVENT THE ASSESSEE WILL NOT BE LIABLE FOR CAPITAL GAIN TAX. 8. THE S. 54(2) DECLARES THAT WITHIN ONE YEAR F ROM THE DATE OF TRANSFER IF THE CAPITAL GAIN IS NOT INVESTED IN PURCHASE OF BUILDING, HE SHOULD DEPOSIT THE AMOUNT IN THE 'CAPITAL GAIN ACCOUNT SCHEME OR ELSE THE ASSESSEE SHOULD INVEST THE CAPITAL GAINS BEFORE FILING OF RETURN WITHIN THE PERMITTED PERIOD UNDER S. 139. IN WHICH EVENT, THE ASSESSEE WILL NOT BE LIABLE TO PAY CAPITAL GAIN TAX. 9. THE S. 139(4) DECLARES THAT THE ASSESSEE SHOULD FILE RETURNS WITHIN THE TIME PRESCRIBED, IF HE FAILS TO FILE RETURNS, HE MAY FILE RETURNS FOR ANY PREVIOUS YEAR AT A NY TIME BEFORE EXPIRY OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR. 10. IN THE INSTANT CASE, THE DUE DATE FOR FILING OF RETURN IS 30TH JULY, 1988. UNDER S. 139(4) THE ASSESSEE WAS ENTITLED TO FILE RETURN IN THE EXTENDED TIME, WHICH IS WITHIN 31ST MARCH, 1990. 11. THE EXTENDED DUE DATE UNDER S. 139(4) WOULD BE 31ST 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 PU RCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIOD OF S. 54(2) I.E., BEFORE 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, UTILISED THE CAPITAL GAINS F OR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATE UNDER S. 139(4). THE CONTENTION OF THE 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. ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 8 OF 9 12. THE GAUHATI HIGH COURT IN CIT VS. RAJESH KUMAR JALAN (2006) 206 CTR (GAU) 361 : (2006) 286 ITR 274 (GAU) HAS TAKEN A SIMILAR VIEW THAT THE TIME - LIMIT FOR DEPOSIT UNDER THE SCHEME OR UTILISATION CAN BE MADE BEFORE THE DUE DATE FOR FILING OF RETURNS UNDER S. 139(4). THUS IT IS CLEAR THAT IF THE ASSESSEE HAS UTILISED THE ENTIRE CAPITAL GAIN BY PURCHASE OF A HOUSE OR CONSTRUCTION OF THE NEW HOUSE WITHIN THE STIPULATED PERIOD, THE BENEFIT OF SEC.54F CANNOT BE DENIED. THIS VIEW HAS BEEN REAFFIRMED BY THE HON'BLE JURISDIC TIONAL HIGH COURT IN THE CASE OF SMT.VRINDA P.ISSAC (SUPRA). ACCORDINGLY, IF THE ASSESSEE HAS CONSTRUCTED THE NEW HOUSE AND UTILISED THE SALE PROCEEDS AND CAPITAL GAIN WITHIN THE PERIOD OF LIMITATION AS PROVIDED U/S 54F, THEN THE CLAIM OF THE ASSESSEE U/S 54F CANNOT BE DENIED. 9. AS REGARDS THE OBJECTIONS OF THE AUTHORITIES BELOW IN RESPECT OF THE ASSESSEE OWNING MORE THAN TWO RESIDENTIAL HOUSES AND UTILISATION OF THE SALE PROCEEDS FOR CONSTRUCTION OF NEW HOUSE, WE FIND THAT THE ASSESSEE HAS PRODU CED RELEVANT RECORD IN SUPPORT OF THE CLAIM ALONG WITH AFFIDAVIT . P RIMA FACIE IT APPEARS THAT T HE RESIDENTIAL HOUSE AT KILPAUK, CHENNAI WAS DEMOLISHED ON 18/5/2007 AND THERE AFTER , CONSTRUCTION WAS COMPLETED BY 2/9/2009 AS PER THE CERTIFICATE ISSUED BY TH E CORPORATION OF CHENNAI. FURTHER, THE ASSESSEE HAS ALSO PRODUCED THE CERTIFICATE OF C HARTERED ENGINEER, CONFIRMATION LETTER ISSUED BY THE DEMOLISHER OF THE PROPERTY AS WELL AS BANK ACCOUNT DETAILS ALONG ITA NO . 1 052/ BANG/20 1 3 SMT.SELVI VENKATASUBRAMANI. PAGE 9 OF 9 WITH DETAILS OF THE CONTRACTOR WHO HAS CARRIED OUT THE CONSTRUCTION WORK. SINCE THESE EVIDENCES WERE NOT EXAMINED BY THE AUTHORITIES BELOW, THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN THE INTEREST OF JUSTICE, WE ADMIT THE ADDITIONAL EVIDENCE AND SET ASIDE THE ISSUE TO THE RECORD O F THE AO TO VERIFY THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM AND THEN DECIDE THE ISSUE AS PER LAW AND IN THE LIGHT OF THE OBSERVATIONS MADE BY US. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PUR POSES. PRON OUNCED IN THE OPEN COURT ON 07 TH OCTOBER , 201 5 . S D/ - S D/ - (JASON P BOAZ ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE