Jamal Ahmad, Gorakhpur V. ITO, Ward - 2(2), Gorakhpur

ITA 112/VNS/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9006 (ITAT-VARANASI)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH GIDWANI
• Keywords: Capital asset; Fair market value
• Section: 54F; 55A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH ‘SMC’ VARANASI [Through Virtual Hearing] BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA No.112/Vns/2019 Assessment Year 2009-10 The Income Tax Officer, Ward 2(2), Gorakhpur Vs. Jamal Ahmad, Prop Onyx Traders, Bank Road, Gorakhpur PAN –ABKPA 1356N (Respondent) (Appellant) Shri Subhash Chand, Advocate Appellant by Shri Harish Gidwani, DR Respondent by 07/02/2022 Date of hearing 11/02/2022 Date of pronouncement O R D E R This is an appeal filed by the assessee against the order of ld. CIT(A), Gorakhpur dated 04.02.2019. 2. The ld. AR at the outset invited my attention to additional grounds of appeal and submitted that these additional grounds are legal in nature and are coming out of the facts available on record and therefore which may be admitted and be decided first. Explaining the additional grounds, the ld. AR submitted that this is a case of tax on long term capital gain the sales consideration of which has been determined on the basis of valuation report by DDO and it was submitted that reference to DVO in this case was not required as the difference in sales consideration and circle value was less than 15% + Rs.25,000/- as per Rule 111AA of I.T. Rules 1962 and therefore the reference to DVO was illegal 2 ITA No.112/Vns/2019 and in view of above it was submitted that because of difference between the actual sales consideration and stamp valuation the reference was void ab initio. 3. The ld. DR did not object to the admission of additional ground of appeal and therefore the additional ground was admitted and counsel was asked to proceed with his arguments. 4. The ld. AR took us to Rule 111AA and read the same and submitted that for the purpose of determining as to whether a particular case can be referred to DVO both conditions of 15% and Rs.25,000/- are necessary and if both the conditions are considered then the reference was illegal. 5. The ld. DR on the other hand, submitted that both the conditions are not to be considered as the word 15% and Rs.25,000/- as referred to in sub clause 1 of clause (b) of section 55A clearly states that out of these two the higher amount has to be considered. 6. I have heard the rival parties and have perused the material placed on record. I find that Rule 111AA relates to the amounts as referred to sub clause (i) of clause (b) Section 55A which reads as under: “55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer— (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is at variance with its fair market value; (b) in any other case, if the Assessing Officer is of opinion— (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf ; or 3 ITA No.112/Vns/2019 (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do,” 7. From the analysis of above provision for making reference to valuation officer it is apparent that in sub clause (i) of clause (b) of Section 55A there is clear mention of word or and there is no mention of word and therefore only the higher of the difference as mentioned in Rule 111AA has to be considered and therefore the argument of the ld. AR is not justified and therefore additional grounds of appeal are dismissed. 8. Regarding the regular grounds of appeal, I find that though the ld. counsel has not argued on such grounds but from the grounds of appeal taken by assessee, it is apparent that assessee had spent a certain amount out of long term capital gain towards construction of new house and for eligible for exemption u/s. 54F of the Act. From the order of Assessing Officer and ld. CIT(A), I find that out of long term capital gain of Rs.13,62,909/-, the assessee has been allowed exemption u/s. 54F to the extent of Rs.10.00 lacs as before the filing of date of return of income, the assessee had spent only this amount. Whereas from the submission made to ld. CIT(A) I find that assessee took specific grounds there since the construction of the house was started and ultimately huge amount was spent after the date of filing of return and therefore he was eligible for exemption u/s. 54F for the full amount of construction as he was eligible to construct the house with in the period of three years from the date of sale. I find that the ld. CIT(A) did not consider this argument of the assessee and held that since he has not deposited the balance amount in the capital gain account therefore he was not eligible for the amount after the date of filing of return. I find that this logic of ld. CIT(A) is not as per law as the requirement of the law is to make investment of the long term capital gain towards construction of house within the period of three years. I find that it is undisputed fact that assessee had started construction towards new house before the filing of return of income, therefore, I remit the matter back to Assessing Officer to examine the 4 ITA No.112/Vns/2019 further amounts spent by assessee on the construction of house for the purpose of allowing exemption u/s. 54F of the Act. Therefore, Ground No.3 is allowed for statistical purposes. 9. In the result, appeal filed by the assessee is allowed for statistical proposes. (Order pronounced in the open court on 11/02/2022 in accordance with Rule 34(4) of the I.T.A.T. Rules.) Sd/- (T.S. Kapoor) Accountant Member Aks – Dtd. 11/02/2022 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File