DCIT, Pune V. Shri Prakash Shivanarayan Bhootra, Pune

ITA 1143/PUN/2012

• Counselvise Citation: 114324514 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K OJHA
• Assessee Lawyers: VIPIN GUJRATHI
• Keywords: Source of fund
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1143/PN/2012 (ASSESSMENT YEAR : 2008-09) DY. COMMISSIONER OF INCOME TAX CIRCLE 3, PUNE . APPELLANT VS. SHRI PRAKASH SHIVANRAYAN BHOOTRA OFFICE NO. 601, 6 TH FLOOR, B-4, UNIT C, PRIDEKUMAR SENATE, SENAPATI BAPAT ROAD, PUNE - 16 PAN : ABBPB2933K . RESPONDENT DEPARTMENT BY : MR. K. K. OJHA ASSESSEE BY : MR. VIPIN GUJRATHI DATE OF HEARING : 29-07-2013 DATE OF PRONOUNCEMENT : 28-08-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 30.01.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 24.12.2010 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL, ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE SOLITARY ISSUE RELATES TO ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 54 OF THE ACT IN RELATION TO LONG TERM CAPI TAL GAIN ARISING ON SALE OF A RESIDENTIAL HOUSE. 3. BRIEFLY PUT THE RELEVANT FACTS CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF I NCOME FOR ASSESSMENT YEAR 2008-09 DECLARING TOTAL INCOME AT NIL WHICH INTER-A LIA CONTAINED LONG TERM ITA NO.1143/PN/2012 A.Y. 2008-09 CAPITAL GAIN ON SALE OF A RESIDENTIAL HOUSE SITUATE D AT PRABHAT ROAD, SHIVAJINAGAR, PUNE FOR A CONSIDERATION OF RS.47,00, 000/-. THE ASSESSEE SOLD THE SAID PROPERTY ON 06.06.2007 AND THE LONG TERM C APITAL GAIN WAS COMPUTED AT RS.35,56,572/-. THE SAID CAPITAL GAIN WAS CLAIME D AS EXEMPT UNDER SECTION 54(1) OF THE ACT ON THE GROUND THAT ASSESSEE PURCHA SED A NEW RESIDENTIAL HOUSE ON 15.06.2006 FOR A TOTAL CONSIDERATION OF RS .57,61,010/-. THE NEW RESIDENTIAL PROPERTY COMPRISED OF FLAT NOS. C-2/601 & C-2/602 IN SHIVNANDAN TOWERS, AT SOMESWARWADI, PUNE AND THE TOTAL AMOUNT INVESTED WAS RS.56,10,000/-. THE ASSESSEE CONTENDED THAT SINCE T HE AMOUNT OF CAPITAL GAIN I.E. RS.35,56,572/- WAS LESSER THAN THE COST OF THE NEW RESIDENTIAL PROPERTY PURCHASED, THE ENTIRE CAPITAL GAIN WAS EXEMPT WITHI N THE MEANING OF SECTION 54(1) OF THE ACT. 4. SECTION 54 OF THE ACT PRESCRIBES FOR EXEMPTION F ROM LEVY OF TAX ON CAPITAL GAINS WHERE THE ASSESSEE INVESTS THE LONG T ERM CAPITAL GAIN IN PURCHASE OF NEW ASSET WITHIN A PERIOD OF ONE YEAR B EFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OR IN CONSTRUCTION OF NEW ASSET WI THIN A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. IN THIS CASE, ASSESSEE CONTENDED THAT THE DATE OF TRANSFER OF THE ORIGINAL ASSET WAS 06.06.2007 AND THE DATE OF PURCHASE OF THE NEW ASSET WAS 15.06.200 6, AND, THUS, THE PURCHASE OF THE NEW ASSET I.E. RESIDENTIAL PROPERTY WAS WITHIN A PERIOD OF ONE YEAR BEFORE THE TRANSFER OF THE ORIGINAL ASSET, AND THE COST OF INVESTMENT IN THE NEW ASSET WAS MORE THAN THE CAPITAL GAIN EARNED OF RS.35,56,572/-, THE ENTIRE CAPITAL GAIN WAS EXEMPT UNDER SECTION 54(1) OF THE ACT. 5. THE ASSESSING OFFICER HAS DECLINED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE CAPITAL GAIN EARNED ON THE SALE OF THE ORIGINAL ASSET WAS NOT APPROPRIATED TOWARDS THE PURCHASE OF A NEW ASSET IN ASMUCH AS THE NEW ASSET WAS PURCHASED PRIOR TO THE DATE OF SALE OF THE ORIG INAL ASSET AND THEREFORE IT WAS A CASE WHERE THE PAYMENT TOWARDS PURCHASE OF NE W ASSET WAS MADE ITA NO.1143/PN/2012 A.Y. 2008-09 FROM SOURCES OTHER THAN THE SALE PROCEEDS OF THE OR IGINAL ASSET. ACCORDING TO THE ASSESSING OFFICER, THERE WAS NO IDENTITY BETWEE N THE SALE PROCEEDS OF THE ORIGINAL ASSET AND THE INVESTMENT MADE TOWARDS PURC HASE OF THE NEW ASSET AND THUS ASSESSEES CLAIM FOR EXEMPTION UNDER SECTI ON 54(1) OF THE ACT WAS DENIED. 6. THE CIT(A) HAS HOWEVER ALLOWED THE CLAIM OF THE ASSESSEE BY PRIMARILY RELYING ON THE DECISION OF THE HYDERABAD BENCH OF T HE TRIBUNAL IN THE CASE OF MUNEER KHAN VS. ITO, 41 SOT 504 (HYD) AND ALSO THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. P S PASRICHA (2009) ITA NO. 1825 OF 2009 (BOM). AGAINST THE AFORESAID, REVE NUE IS IN APPEAL BEFORE US. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS PRIM ARILY REITERATED THE REASONING ADOPTED BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER WHICH WE HAVE ALREADY NOTED ABOVE AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. NOTABLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE HA S NOT BROUGHT OUT ANY DECISION CONTRARY TO THOSE RELIED UPON BY THE CIT(A ) IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. 8. THE OBJECTION OF THE ASSESSING OFFICER THAT THER E WAS NO IDENTITY BETWEEN THE SALE PROCEEDS OF THE ORIGINAL ASSET AND THE INVESTMENT IN THE NEW ASSET HAS BEEN SPECIFICALLY DEALT WITH THE HYDERABA D BENCH OF THE TRIBUNAL IN THE CASE OF MUNEER KHAN (SUPRA) WHERE IT IS HELD TH AT IT IS NOT NECESSARY THAT THE SAME FUND MUST BE USED IN PURCHASING OF TH E NEW RESIDENTIAL HOUSE AND NEITHER THE LAW NOR DOES ANY CIRCULAR REQ UIRING THE IDENTITY OF THE AMOUNT RECEIVED ON SALE AND UTILIZATION FOR PUR POSES OF SECTION 54F AND OTHER RELEVANT PROVISIONS. SINCE LAW PERMITS IN VESTMENT IN A NEW PROPERTY EVEN BEFORE SALE OF PROPERTY COVERED BY SE CTION 54, THE LAW DOES NOT CONTEMPLATE THE IDENTITY OF FUNDS ON SALE FOR ITS INVESTMENT. ITA NO.1143/PN/2012 A.Y. 2008-09 SINCE MONEY HAS NO COLOUR, ALL THAT IS REQUIRED IS COMPLIANCE WITH THE CONDITION OF INVESTMENT WITHIN THE SPECIFIED TIME. 9. IN-FACT, SIMILAR OBJECTION IN THE CONTEXT OF 54( 2) OF THE ACT WAS CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF P S PASRICHA (SUPRA) AND THE RELEVANT PORTION OF THE JUDGEMENT H AS BEEN ALSO REPRODUCED BY THE CIT(A) IN PARA 3.5.1, WHICH READS AS UNDER : - 9. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM CAR EFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES AND PROVISIONS OF SECTION 54 OF THE ACT, WE FIND THAT ASSESSEE HAS INITIALLY UTILIZED THE SALE PROCEEDS ON SALE OF ITS RESIDENTIAL FLAT IN COMMERCIAL PROPERTIES AND LATER ON HE PURCHASED TWO RESIDENTIAL FLATS WITHIN A PERIOD SPECIFIED IN SUB- SECTION (2) OF SECTION 54 OF THE ACT, AND THESE FACTS ARE NOT DISPUTED BY THE REVENU E. THE REVENUES MAIN DISPUTED IS THAT THE SALE PROCEEDS WERE UTILIZED FO R PURCHASE OF A COMMERCIAL PROPERTY AND RESIDENTIAL HOUSE WAS PURCHASED OUT OF THE FUNDS OBTAINED FROM DIFFERENT SOURCES, AS SUCH, THE IDENTITY OF HEADS H AS BEEN CHANGED. WE DO NOT FIND MUCH FORCE IN THIS ARGUMENT AS THE REQUIREMENT OF SECTION 54 IS THAT THE ASSESSEE SHOULD ACQUIRE A RESIDENTIAL HOUSE WITHIN THE PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFE R TOOK PLACE. NOWHERE, IT HAS BEEN MENTIONED THAT THE SAME FUNDS MUST BE UTIL IZED FOR THE PURCHASE OF THE ANOTHER RESIDENTIAL HOUSE. THE REQUIREMENT OF T HE LAW IS THAT, THE ASSESSEE SHOULD PURCHASE A RESIDENTIAL HOUSE WITHIN THE SPECIFIED PERIOD AND SOURCE OF FUNDS IS QUITE IRRELEVANT. 10. SINCE THE ASSESSEE HAS PURCHASED THE RESIDENTIA L HOUSE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, ITS CLAIM IS NOT HIT BY SUB-SECTION (2) OF SECTION 54 OF THE ACT. WE, THEREFORE, ARE OF THE VIEW THAT ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54(1) OF THE A CT. 10. AS PER THE PARITY OF REASONING LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF P S PASRICHA (SUPRA), THE OBJE CTION OF THE ASSESSING OFFICER THAT THERE SHOULD BE IDENTITY BETWEEN THE S ALE PROCEEDS OF ORIGINAL ASSET AND INVESTMENT MADE TOWARDS THE NEW ASSET FOR THE PURPOSES OF ALLOWING EXEMPTION UNDER SECTION 54 OF THE ACT IS Q UITE MISPLACED. AS OBSERVED BY THE HONBLE BOMBAY HIGH COURT, THERE IS NO REQUIREMENT IN SECTION 54 OF THE ACT THAT THE SAME FUNDS MUST BE U TILIZED FOR THE PURCHASE OF NEW ASSET. THE REQUIREMENT OF LAW IS TO THE EFFECT THAT ASSESSEE OUGHT TO HAVE ITA NO.1143/PN/2012 A.Y. 2008-09 PURCHASED THE RESIDENTIAL HOUSE WITHIN THE SPECIFIE D PERIOD WHICH IN THE PRESENT CASE IS FULFILLED AND THE SOURCE OF FUNDS I S QUITE IRRELEVANT. FOR THE AFORESAID REASONS, WE HEREBY AFFIRM THE ORDER OF TH E CIT(A), AND THE REVENUE FAILS. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 28 TH AUGUST, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE