ITO, CHENNAI V. R.Aishwarya, CHENNAI

ITA 1120/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8135 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Capital asset; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO. 1120/MDS/2016. / ASSESSMENT YEAR : 2011-2012. THE INCOME TAX OFFICER, NON CORPORATE WARD 3(1) CHENNAI VS. SMT. R. AISHWARYA, NO.18, RAGHAVE VEERA AVENUE, POES GARDEN, CHENNAI 600 086. [PAN AEVPA2044K] ( / APPELLANT) ( /RESPONDENT) !' # $ / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. %& !' # $ /RESPONDENT BY : SHRI. M. KARUNAKARAN, ADVOCATE ' # ( ) /DATE OF HEARING : 21-12-2016 *+ # () /DATE OF PRONOUNCEMENT : 06-01-2017 ! / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: REVENUE IN THIS APPEAL IS AGGRIEVED ON THE DIRECT ION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TO ALLOW C REDIT OF =63,98,540/- AS A PART OF COST OF ACQUISITION/IMPR OVEMENT FOR CALCULATING CAPITAL GAINS. ITA NO. 1120/MDS/2016. :- 2 -: 2. FACTS APROPOS ARE THAT ASSESSEE HAD FILED A RETURN OF INCOME DISCLOSING AN INCOME OF =3,78,769/-. ASSESSEE HAD S OLD A PROPERTY ON 04.03.2011 FOR A SUM OF =3,20,00,000/-. THE SAID P ROPERTY WAS PURCHASED ON 01.02.2006. ASSESSEE COMPUTED LONG TER M CAPITAL GAIN ARISING FROM THE ABOVE TRANSACTION AS UNDER:- SALE CONSIDERATION : =3,20,00,000/- LESS: PURCHASE VALUE =1,48,00,000/- STAMP DUTY = 11,84,000/- REG. CHARGES = 1,48,100/- ------------------- =1,61,32,100/- COST OF IMPROVEMENT = 15,00,000/- ----------------- =1,76,32,100/- INDEXED COST OF ACQUISITION : =2,52,24,191/- INTEREST ON HOUSING LOAN : = 63,98,540/- --------------------- LONG TERM CAPITAL GAIN : = 3,77,269/- ---------------------- LD. ASSESSING OFFICER WAS OF THE OPINION THAT INTER EST OF =63,98,540/- ON THE HOUSING LOAN PAID BY THE ASSESSEE, FOR THE P ERIOD STARTING FROM THE DATE OF PURCHASE AND ENDING ON THE DATE OF SAL E OF PROPERTY COULD NOT BE ALLOWED AS COST OF ACQUISITION/IMPROVEMENT. AS PER LD. ASSESSING OFFICER INTEREST EXPENDITURE INCURRED DUR ING THE PERIOD OF ITA NO. 1120/MDS/2016. :- 3 -: CONSTRUCTION ALONE COULD BE CONSIDERED AS PART OF C OST. ACCORDING TO HIM, THEREAFTER IT TOOK THE CHARACTER OF REVENUE EX PENDITURE. THOUGH, THE ASSESSEE RELIED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ACIT VS. C. RAMABRAHMAM (2013) 57 SOT 0130, LD. ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE. HE REWOR KED THE CAPITAL GAIN EXCLUDING THE INTEREST ON HOUSING LOAN FROM THE COS T OF ACQUISITION/ COST OF IMPROVEMENT. 3. ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). RELIANCE WAS ONCE AGAIN PLAC ED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF C. RAMABRAHMAM (SUPRA). THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD A S UNDER AT PARA 7 OF HIS ORDER:- FROM THE PERUSAL OF THE WRITTEN SUBMISSIONS OF TH E APPELLANT, IT IS NOTICED THAT SHE HAS HEAVILY RELIE D ON THE DECISION OF THE HONOURABLE JURISDICTIONAL ITAT IN T HE CASE OF ACIT VS C. RAMABRAHMAM (2012) 27 TAXMAN. COM 104 TO SUBSTANTIATE HER CLAIM. IN THIS CASE, TH E HONOURABLE ITAT HAS HELD THAT SUCH INTEREST PAID ON THE HOUSING LOAN CAN BE INCLUDED WHILE COMPUTING CAPITAL GAINS. IN FACT, IN THE SAID CASE, THE TAXPAYER HAD CLAIMED THE INTEREST AS DEDUCTION, IN THAT YEAR'S WHEN THE ASSET WAS HELD B Y THE TAXPAYER AND STILL THE HONOURABLE TRIBUNAL HELD THAT THE INTEREST CAN BE CLAIMED AS COST OF ACQUISITION, ON THE REASONING THAT BOTH ARE UNDER DIFFERENT HEADS OF INCOME. HOWEVER, AS CONTENDED, I N THE PRESENT APPELLANT'S CASE, SHE HAD NOT CLAIMED T HE INTEREST AS DEDUCTION, IN THE YEARS WHEN THE ASSET WAS HELD BY HER. AS SUCH, IT WAS PLEADED THAT THE POSSIBILITY OF ANY DOUBLE DEDUCTION ON THIS SCORE D ID NOT ITA NO. 1120/MDS/2016. :- 4 -: ARISE AT ALL. I FIND FORCE IN THE ABOVE SUBMISSIONS OF THE APPELLANT AND THE CASE LAW RELIED UPON BY. IT IS RI GHTLY HELD THAT THE DEDUCTION U/S 24(B) AND COMPUTATION O F CAPITAL GAINS UNDER SECTION 48 ARE COVERED BY DIFFE RENT HEADS OF INCOME, I.E., INCOME FROM HOUSE PROPERTY A ND CAPITAL GAINS. BOTH OF THE PROVISIONS DO NOT EXCLUD E THE OTHER. DEDUCTION U/S 24(B) IS CLAIMED WHEN CONCERNED ASSESSEE DECLARES INCOME FROM HOUSE PROPERTY, WHEREAS, THE COST OF THE SAME ASSET IS TA KEN INTO CONSIDERATION WHEN IT IS SOLD AND CAPITAL GAIN S ARE COMPUTED UNDER SECTION 48. THE INTEREST PAID ON THE LOAN TAKEN FOR ACQUIRING THE ASSET IS AN EXPENDITUR E IN ACQUIRING THE ASSET. SINCE BOTH THE PROVISIONS ARE ALTOGETHER DIFFERENT, I AM OF THE CONSIDERED VIEW T HAT THE APPELLANT IS ENTITLED TO INCLUDE THE INTEREST A MOUNT AT THE TIME OF COMPUTING CAPITAL GAINS UNDER SECTIO N 48 OF THE ACT. IN THE LIGHT OF THIS OBSERVATION, THE AO IS DIRECTED TO ALLOW THE CREDIT OF RS.63, 98, 540/-AS COST OF ACQUISITION WHILE CALCUL ATING THE CAPITAL GAINS. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN ITS FAVOUR. 4. NOW BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DEPARTMENT HAD NOT ACCEPTED THE DECISION OF CO- ORDINATE BENCH IN THE CASE OF C. RAMABRAHMAM (SUPRA). 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGL Y SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. THE CO-ORDINATE BENCH IN THE CASE OF C. RAMABRAHMAM (SUPRA) HAD HELD AS UNDER AT PARA 8 OF ITS ORDER:- 8. WE HAVE CONSIDERED SUBMISSIONS OF BOTH PARTIES A T LENGTH AND ALSO PERUSED THE RELEVANT FINDINGS OF THE ASSESSING OFFI CER AS WELL AS ITA NO. 1120/MDS/2016. :- 5 -: CIT(A). REGARDING THE ISSUE OF CAPITAL GAINS, IT TR ANSPIRES THAT THERE IS HARDLY ANY DISPUTE THAT THE ASSESSEE HAD AVAILED TH E LOAN FOR PURCHASING THE PROPERTY IN QUESTION. SINCE THE ASSE SSEE HAD SHOWN THE INCOME UNDER THE HEAD HOUSE PROPERTY, HE PREFERRE D TO RAISE THE CLAIM OF DEDUCTION UNDER SECTION 24(B) OF THE ACT , WHICH READS AS UNDER : (B) WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUC TED, REPAIRED, RENEWED OR RECONSTRUCTED WITH BORROWED CA PITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL: THERE IS NO QUARREL THAT SINCE THE ASSESSEES CLAIM OF DEDUCTION WAS UNDER THE STATUTORY PROVISIONS; THEREFORE, HE SUCCE EDED IN GETTING THE SAME. HOWEVER, AFTER THE PROPERTY WAS SOLD, HE ALSO CHOSE TO INCLUDE THE INTEREST AMOUNT WHILE COMPUTING CAPITAL GAINS U NDER SECTION 48 OF THE ACT, WHICH READS AS UNDER: 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION43 RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO: AFTER PERUSING THE ABOVE SAID PROVISIONS, WE ARE OF THE OPINION THAT DEDUCTION UNDER SECTION 24(B) AND COMPUTATION OF CA PITAL GAINS UNDER SECTION 48 OF THE ACT ARE ALTOGETHER COVERED BY D IFFERENT HEADS OF INCOME I.E., INCOME FROM HOUSE PROPERTY AND CAPI TAL GAINS. FURTHER, A PERUSAL OF BOTH THE PROVISIONS MAKES IT UNAMBIGUO US THAT NONE OF THEM EXCLUDES OPERATION OF THE OTHER. IN OTHER WORD S, A DEDUCTION UNDER SECTION 24(B) IS CLAIMED WHEN CONCERNED ASSESSEE DE CLARES INCOME FROM HOUSE PROPERTY, WHEREAS, THE COST OF THE SAM E ASSET IS TAKEN INTO CONSIDERATION WHEN IT IS SOLD AND CAPITAL GAINS ARE COMPUTED UNDER SECTION 48. WE DO NOT HAVE EVEN A SLIGHTEST DOUBT T HAT THE INTEREST IN QUESTION IS INDEED AN EXPENDITURE IN ACQUIRING THE ASSET. SINCE BOTH PROVISIONS ARE ALTOGETHER DIFFERENT, THE ASSESSEE I N THE INSTANT CASE IS CERTAINLY ENTITLED TO INCLUDE THE INTEREST AMOUNT A T THE TIME OF COMPUTING CAPITAL GAINS UNDER SECTION 48 OF THE AC T. THEREFORE, THE CIT(A) HAS RIGHTLY ACCEPTED THE ASSESSEES CONTENTI ON AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, QUA THIS GROUND, WE UPHOLD THE ORDER OF THE CIT(A). ITA NO. 1120/MDS/2016. :- 6 -: CO-ORDINATE BENCH HAS CLEARLY HELD THAT AN ASSESSEE IS ENTITLED TO INCLUDE INTEREST IN THE CAPITAL COST WHILE COMPUTIN G CAPITAL GAINS U/S.48 OF THE ACT. JUDICIAL DISCIPLINE REQUIRES US TO FOL LOW THE ORDER OF A CO- ORDINATE BENCH UNLESS IT COULD BE DEMONSTRATED THAT THE VIEW TAKEN WAS CONTRARY TO A PROVISION OF LAW. THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) IN THE CASE BEFORE US HAD FOLLOWED TH E DECISION OF CO- ORDINATE BENCH. WE CANNOT THEREFORE INTERFERE WIT H THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED ON FRIDAY, THE 6 TH DAY OF JANUARY, 2017, AT CHENNAI. SD/- ( . ) (G. PAVAN KUMAR) $ % / JUDICIAL MEMBER SD/- ( . ) (ABRAHAM P. GEORGE) & % / ACCOUNTANT MEMBER ,' / CHENNAI - / DATED: 06 JANUARY, 2017. KV . # %(/0 10 ( / COPY TO: 1 . !' / APPELLANT 3. 2( () / CIT(A) 5. 056 %(7 / DR 2. %& !' / RESPONDENT 4. 2( / CIT 6. 68 9' / GF