Ashok Kumar Wadhwa, New Delhi V. ACIT Circle-39(1), New Delhi

ITA 114/DEL/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2910 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 07-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM
• Assessee Lawyers: RAJ KR. GUPTA
• Keywords: Benefit of exemption; TDS; Set aside; Capital Gains
• Section: 54; 6; 139; 54F; 139(1); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.114/DEL./2020 ASSESSMENT YEAR: 2016-17 SHRI ASHOK KUMAR WADHWA, C/O- RAJ KUMAR & ASSOCIATES L-7A (LGF), SOUTH EXTENSION, PART-II, NEW DELHI VS. ACIT, CIRCLE-39(1), NEW DELHI PAN :AAKPW0189J (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 07/11/2019 PASSED BY THE LEARNED CIT(APPEALS)-13, N EW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2016- 17 RAISING FOLLOWING GROUNDS: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, RS.2,62 ,88,000/- BEING THE AMOUNT INVESTED FOR PURCHASE OF NEW RESIDENTIAL HOUSE ON 12.04.2017 I.E. WITHIN THE SPECIFIED PERIOD OF TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET BEING PLOT, SOLD ON 15.04.15, SHOULD BE HELD AS ELIGIBLE FOR CALCULATING THE DEDUCTION U /S. 54F WHILE CALCULATING THE TAXABLE LTCG ON SALE OF SAID PLOT. APPELLANT BY SHRI RAJ KR. GUPTA, CA & SHRI J.P. SHARMA, CA RESPONDENT BY MRS. ALKA GAUTAM, SR. DR DATE OF HEARING 22.02.2021 DATE OF PRONOUNCEMENT 02.03.2021 2 ITA NO.114/DEL./2020 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, INDEXED COST OF EXPENSES INCURRED IN CONSTRUCTION/IMPROVEMENT OF RS .2,02,500/- MADE IN F.Y. 2001-02 SHOULD BE ALLOWED AS A DEDUCTI ON FOR COMPUTING THE TAXABLE LTCG ON SALE OF RESIDENTIAL P LOT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A DOCTOR BY PROFESSION AND FILED RETURN OF INCOME ON 05/06/2017, DECLARING INCOME OF 31,81,320/-. IN THE RETURN OF INCOME FILED, THE ASSESSEE CLAIMED DEDUCTION/EXEMPTION UNDER SECT ION 54F AGAINST CAPITAL GAIN ON SALE OF PROPERTY. THE RETUR N OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND STATUTORY NOTICES UNDER INCOME-TAX ACT, 1961 (IN SH ORT THE ACT) WERE ISSUED AND COMPLIED WITH. THE SCRUTINY ASSESSM ENT WAS COMPLETED ON 26/12/2018 WHEREIN THE DEDUCTION/EXEMP TION UNDER SECTION 54F WAS DENIED. ON FURTHER APPEAL, TH E LEARNED CIT(A) UPHELD THE DENIAL OF DEDUCTION UNDER SECTION 54F OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE TH E INCOME TAX APPELLATE TRIBUNAL (IN SHORT THE TRIBUNAL) BY WAY OF GROUNDS REPRODUCED ABOVE. 3. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONF ERENCING FACILITY AND FILED PAPER-BOOK AND OTHER DOCUMENTS E LECTRONICALLY. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT GROUND NO. 2 OF THE APPEAL WAS NOT PRESSED BY THE ASSESSEE AND A CCORDINGLY SAME IS DISMISSED AS INFRUCTUOUS. 4. IN GROUND NO.1 THE ASSESSEE HAS CONTESTED THAT INV ESTMENT IN PURCHASE OF THE NEW RESIDENTIAL HOUSE AMOUNTING TO 2,62,88,000/- SHOULD BE ALLOWED A DEDUCTION UNDER S ECTION 54F OF THE ACT. 4.1 THE FACTS IN BRIEF QUA THE ISSUE-IN-DISPUTE ARE TH AT THE ASSESSEE ALONG WITH ONE CO-OWNER SOLD A RESIDENTIAL PLOT SITUATED 3 ITA NO.114/DEL./2020 IN GURGAON ON 15/04/2015 FOR A SUM OF 6,26,23,000/-. THE ASSESSEE HAD 50% OWNERSHIP OF THE PLOT. THE ASSESSE E DEPOSITED SALE PROCEEDS OF THE PLOT IN A SAVING BANK ACCOUNT MAINTAINED WITH AXIS BANK. SUBSEQUENTLY, THE ASSESSEE PURCHASE D A RESIDENTIAL HOUSE AT ROHINI DELHI FOR A SUM OF 2,48,00,000/- ON 12/04/2017 UNDER HIS FULL OWNERSHIP. THE DUE DATE O F THE FILING OF THE RETURN OF INCOME IN THE CASE OF THE ASSESSEE WAS ON 31/07/2016, WHICH WAS EXTENDED TO 05.08.2016, BUT T HE ASSESSEE FILED RETURN OF INCOME BELATEDLY ON 05/06/ 2017 IN TERMS OF SECTION 139(4) OF THE ACT. IN THE RETURN OF INCO ME FILED, THE ASSESSEE CLAIMED DEDUCTION/EXEMPTION UNDER SECTION 54F OF THE ACT. THE LEARNED ASSESSING OFFICER AFTER EXAMINING THE SUBMISSION OF THE ASSESSEE SHOW CAUSED TO THE ASSES SEE THAT HE WAS NOT ENTITLED FOR THE BENEFIT OF EXEMPTION/DEDUC TION DUE TO THE REASON THAT THE SALE CONSIDERATION WAS NOT DEPOSITE D IN BANK ACCOUNT MAINTAINED AS PER CAPITAL GAIN ACCOUNTS SC HEME BEFORE THE DUE DATE OF THE FILING OF RETURN OF INCOME UNDE R SECTION 139(1) OF THE ACT I.E. 05.08.2016. THE ASSESSEE SUBMITTED THAT HE WAS NOT AWARE THE PROVISIONS OF DEPOSITING IN THE CAPI TAL GAIN SCHEME ACCOUNT, HOWEVER, INVESTMENT IN THE NEW RES IDENTIAL PROPERTY AS REQUIRED UNDER SECTION 54F HAD BEEN DON E WITHIN TWO YEARS FROM THE SALE OF THE RESIDENTIAL PLOT AND, TH EREFORE, IN SUBSTANCE HE HAS COMPLIED WITH THE PROVISIONS OF TH E SECTION. IN THE ASSESSMENT ORDER PASSED, THE ASSESSING OFFICER DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE. THE LD. CIT(A) E XPLAINED THAT WHEN THE PROVISIONS OF THE LAW ARE CLEAR AND THERE IS NO AMBIGUITY, THE ASSESSEE CANNOT INVOKE LEGISLATIVE I NTENT OF THE PROVISIONS AND HELD AS UNDER: 4 ITA NO.114/DEL./2020 4.3.2 A PERUSAL OF THE SAME CLEARLY BRINGS OUT THA T THE CAPITAL GAINS WHICH IS NOT APPROPRIATED BY PURCHASING A NEW ASSET , SHALL BE DEPOSITED BEFORE FURNISHING SUCH RETURN, NOT LATER THAN THE DUE DATE APPLICABLE FOR FURNISHING RETURN OF INCOME UNDER SU BSECTION (1) OF SECTION 139, IN AN ACCOUNT IN SUCH BANK OR INSTITUT ION AS MAY BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WITH ANY S CHEME NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE. IN THE CASE OF THE APPELLANT, HE DEPOSITED THE PROCEEDS IN THE SAVINGS ACCOUNT AND NOT THE CAPITAL GAINS ACCOUNT SCHEME AND INVESTED IN TH E NEW PROPERTY TWO YEARS LATER ON 12.04.2017. AS AGAINST THE DUE D ATE I.E. 31.07.2016 (WHICH WAS EXTENDED TO 05.08.2016), THE APPELLANT FILED HIS RETURN U/S 139(4) AS A BELATED RETURN ON 05.06. 2017. THUS, THE APPELLANT HAS VIOLATED THE BENEFICIAL PROVISIONS, E NABLING PROVISIONS AND THUS, THE CHARGING PROVISION. ACCORDINGLY, THE ADDITION OF RS. 2,66,96,000/- UNDER THE HEAD LONG TERM CAPITAL GAI NS MADE BY DISALLOWING THE CLAIM U/S 54 OF THE INCOME TAX ACT, 1961 IS HEREBY CONFIRMED. 4.2 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAS MADE INVESTMENT IN THE RESIDE NTIAL HOUSE WITHIN THE SPECIFIED PERIOD OF TWO YEARS FROM THE D ATE OF THE SALE OF THE PROPERTY AND THEREFORE, HE HAS SUBSTANTIALLY COMPLIED WITH THE PROVISION OF SECTION 54F(1) AND, THEREFORE, DEDUCTION/EXEMPTION SHOULD BE ALLOWED TO THE ASSESS EE. IN SUPPORT OF THE CONTENTION, HE RELIED ON THE DECISIO N OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K. RAMA CHANDRA RAO, 56 TAXMANN.COM 163 (KARNATAKA). HE ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SMT. VASTALA ASTHANA, (2019) 110 TAXMANN. COM 173 (DEL. TRIB.) 4.3 THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LOWER AUTHORITIES. 4.4 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN CASE OF LTCG FR OM SALE OF PROPERTY DEDUCTION U/S. 54F IS AVAILABLE IN RESPECT OF PAYMENT TOWARDS PURCHASE OF NEW RESIDENTIAL HOUSE UP TO DUE DATE OF 5 ITA NO.114/DEL./2020 FILLING RETURN OF INCOME PRESCRIBED U/S. 139 WHICH INCLUDES SECTION 139(4) OF THE ACT. THE SEC. 54F(1) PROVIDES THAT, IF NEW HOUSE IS PURCHASED WITHIN A PERIOD OF 1 YEAR PRIOR OR WITHIN 2 YEARS AFTER THE DATE OF TRANSFER OF THE PROPERTY, T HE ASSESSEE WILL BE ENTITLED FOR EXEMPTION U/S. 54F. THE SALE OF PL OT TOOK PLACE ON 15.04.2015 HENCE THE INVESTMENT IN NEW HOUSE WAS TO BE DONE ON OR BEFORE 14.04.2017. THE ASSESSEE MADE INVESTMENT IN NEW HOUSE ON 12.04.2017, I.E., WITHIN 02 YEARS AND WITH IN THE TIME ALLOWED U/S. 54F(1). THESE FACTS ARE UN-DISPUTED. I N THIS CASE, THE ITR WAS FILED ON 05.06.17 U/S. 139(4) WHILE THE PER IOD U/S. 139(1)WAS ORIGINALLY UPTO 31.07.16, WHICH WAS EXTEN DED UPTO 05.08.16. THE BENEFIT HAS BEEN DENIED ONLY FOR REAS ON THAT ASSESSEE WAS REQUIRED TO DEPOSIT THE SALE CONSIDERA TION IN SPECIFIED CAPITAL GAIN BANK DEPOSIT SCHEMES UP TO 0 5.08.2016 I.E. TIME ALLOWED U/S. 139(1)) OF THE ACT AND SINCE HE FAILED TO DO SO, HE HAS BEEN HELD AS NOT ELIGIBLE FOR EXEMPTION U/S. 54F. 4.5 IN OUR OPINION, SEC. 54F(1) IS A MANDATORY AND SUB STANTIVE PROVISION WHILE SEC. 54F(4) IS ONLY A PROCEDURAL SE CTION PROVIDING ONLY THE PROCEDURAL REQUIREMENTS. IN CASE, THE MAND ATORY AND SUBSTANTIVE PROVISION STANDS SATISFIED, THE ASSESSE E SHOULD BE ELIGIBLE FOR BENEFIT U/S. 54F. IN THIS CASE, IT IS UNDISPUTED THAT THE ASSESSEE SATISFIED THE MANDATORY AND SUBSTANTIVE RE QUIREMENTS OF SEC. 54F(1) BY PURCHASING THE NEW RESIDENTIAL HOUSE WITHIN A PERIOD OF 02 YEARS FROM THE DATE OF SALE OF PLOT. UNDER THESE FACTS, NO DIS-QUALIFICATION WOULD ARISE ON ACCOUNT OF NON- DEPOSIT OF SALE CONSIDERATION IN SPECIFIED CAPITAL GAIN BANK DEPOSI T SCHEMES U/S. 54F(4). MOREOVER, THE ASSESSEE HAD DEPOSITED THE SA LES 6 ITA NO.114/DEL./2020 CONSIDERATION IN SAVING BANK ACCOUNT, INSTEAD OF CA PITAL GAIN ACCOUNT. 4.6 THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. K RAMACHANDRA RAO (SUPRA) HAS HELD THAT WHERE THE, ASSESSEE HAS INVESTED ENTIRE SALE CONSIDERATION IN CONSTRUCT ION OF A RESIDENTIAL HOUSE WITHIN 03 YEARS FROM THE DATE OF TRANSFER, HE COULD NOT BE DENIED EXEMPTION U/S. 54F ON GROUND TH AT HE DID NOT DEPOSIT SAID AMOUNT IN CAPITAL GAIN ACCOUNT SCH EME BEFORE DUE DATE PRESCRIBED U/S. 139(1) OF THE ACT. 4.7 IN THE CASE OF SMT. VASTALA ASTHANA (SUPRA), THE TRIBUNAL HELD THAT IN CASE OF LTCG FROM SALE OF PROPERTY DED UCTION U/S. 54F WOULD BE AVAILABLE IN RESPECT OF PAYMENT TOWARD S PURCHASE OF NEW RESIDENTIAL HOUSE UPTO DUE DATE OF FILLING RETU RN OF INCOME PRESCRIBED U/S. 139 WHICH INCLUDES SECTION 139(4) O F THE ACT. 4.8 RESPECTFULLY FOLLOWING THE FINDING OF THE HONBLE HIGH COURT (SUPRA) IN THE TRIBUNAL (SUPRA), WE SET ASIDE THE F INDING OF THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION/EXEMPTION UNDER SECTION 54F OF THE ACT IN ACCORDANCE WITH LAW. 5. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS AC CORDINGLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH, 2021 SD/- SD/- (AMIT SHUKLA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 ND MARCH, 2021. RK/- (DTDS) COPY FORWARDED TO: 7 ITA NO.114/DEL./2020 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI