G.V.Shiva Kumar Reddy, Hyd, Hyderabad V. ITO, Ward-6(3), Hyderabad, Hyderabad

ITA 1144/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6106 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Cost of acquisition; Reason to believe
• Section: 80C; 143(3); 54F; 148; 54

Judgement Text

1 ITA.NO.1144/HYD/2016 SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA.NO.1144/HYD/2016 ASSESSMENT YEAR 2008-2009 SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. PAN AEWPG1548M VS. THE INCOME TAX OFFICER WARD-6(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI A. SITARAMA RAO DATE OF HEARING : 22.02.2017 DATE OF PRONOUNCEMENT : 24.02.2017 ORDER PER G. PAVAN KUMAR, J.M. THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-6, HYDERABAD IN ITA.NO.1346/2014-15/CIT(A)-6 /16-17 DATED 26.05.2016 FOR THE A.Y. 2008-2009 PASSED UNDER SECTI ON 143(3) R.W.S.147 OF THE I.T. ACT, 1961. THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS : 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF TH E A.O. IN NOT ALLOWING THE DEDUCTION U/S.54 OF THE I.T. ACT AND I N ARRIVING AT THE CAPITAL GAIN AT RS.9,69,827. 2. THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT DERIVED ANY INCOME FROM HOUSE PROPERTY AND FURTHER ERRED IN CON FIRMING THE DETERMINATION OF THE RENT RECEIVED AT RS.1,43,861. 2 ITA.NO.1144/HYD/2016 SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. 2. AT THE TIME OF HEARING, THE LD. AUTHORISED REPRESENTA TIVE OF THE ASSESSEE SUBMITTED THAT THERE IS A DELAY OF 06 DAYS I N FILING THE APPEAL AND FILED AFFIDAVIT FOR CONDONATION OF DELAY. THE DELAY WAS DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE AND AR E NOT WILFUL. AND THE LD. D.R. HAS NO SERIOUS OBJECTIONS. ON PERUS AL OF THE AFFIDAVIT, WE FOUND THAT THERE IS A SUFFICIENT CAUSE AND REASONS FOR FILING THE APPEAL BELATEDLY AND WE CONDONE THE DELAY AND ADMIT TH E APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE A.Y. 2008-09 ON 21.04.2009 WITH INCOME FROM HOUSE PROPERTY RS.1,53,630 AFTER CLAIMING DEDUCTION UNDER SECTION 80C OF THE I.T. ACT. THE LD. A.O. FOUND THAT THE ASSESSEE HAS SOLD THE PROPERTY ON 10.08.2007 FOR A CONSIDERATION OF RS.15,64,860 WHICH WAS PURCHASED ON 30.10.2003 FOR RS.5 LAKHS AND AFTER CONSIDERING THE INDEXED COST OF ACQUISITION, THE LONG TERM CAPITAL GAINS WORKED OUT TO RS.9,69,827 WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME. THERE FORE, THE LD. A.O. HAVING REASON TO BELIEVE OF ESCAPEMENT OF INCOME ISSU ED NOTICE UNDER SECTION 148 OF THE ACT AND THE ASSESSEE FILED REPLY IN COMPLIANCE TO NOTICE REQUESTED TO TREAT THE RETURN OF INCOME FILED EA RLIER ON 21.04.2009. SUBSEQUENTLY, THE LD. A.O. ISSUED NOTICE U NDER SECTION 143(2) OF THE ACT. IN COMPLIANCE TO THE NOTICE, THE ASSE SSEE APPEARED BEFORE THE ASSESSING AUTHORITY AND AFTER DISCUSSION THE LD. A.O. FOUND THAT THE ASSESSEE HAS CLAIMED EXEMPTION OF LONG TERM CAP ITAL GAINS BY INVESTING IN PURCHASE OF RESIDENTIAL PROPERTY BUT THE A .O. POINTED OUT THAT THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 54 OF THE ACT AS HE IS OWNING MORE THAN 02 HOUSES AND REC EIVING RENTAL INCOME AS DISCLOSED UNDER INCOME FROM HOUSE PROPERT Y. THE LD. A.O. IS OF THE OPINION THAT THE ASSESSEE CANNOT MAKE A FRESH CL AIM AS NO SUCH CLAIM WAS MADE IN THE ORIGINAL RETURN OF INCOME AND A LSO THE ASSESSEE COULD NOT COMPLY THE CONDITIONS UNDER SECTION 54 OF THE ACT AND MADE 3 ITA.NO.1144/HYD/2016 SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. ADDITION OF LONG TERM CAPITAL GAINS OF RS.9,69,827. SI MILARLY, THE LD. A.O. ON PERUSAL OF FORM-26AS FIND THE RENTAL INCOME O FFERED BY THE ASSESSEE DIFFERS WITH INCOME IN FORM-26AS AND THE LD . A.O. WAS NOT SATISFIED WITH THE EXPLANATIONS IN RESPECT OF DIFFERENCE OF RENTAL INCOME UNDER THE HOUSE PROPERTY AND MADE ADDITION OF DIFFERE NTIAL INCOME OF RS.1,43,861 AND PASSED ORDER UNDER SECTION 143(3) R. W.S. 147 ON 23.01.2014. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE FILE D AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE L D. A.R. OF THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISS IONS MADE IN THE RE-ASSESSMENT PROCEEDINGS. THE LD. CIT(A) CONSIDE RED THE GROUNDS AND THE STATEMENTS OF THE LD. A.R. ON THE ISSUE OF CLAI M OF LONG TERM CAPITAL GAINS AND SATISFIED THAT ASSESSEE HAS SOLD THE RESIDENTIAL PROPERTY AND PURCHASED ANOTHER RESIDENTIAL PROPERTY A ND ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THE L D. CIT(A) ACCEPTED THE CORRECTNESS OF LAW AND THE TRANSACTION OF P URCHASE AND SALE OF PROPERTY BUT SINCE THE ASSESSEE COULD NOT SUBM IT THE DETAILS BEFORE THE A.O. IN RESPECT OF COMPUTATION OF LONG TERM CAPITAL GAINS, THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE A.O. WHEREA S, IN RESPECT OF DIFFERENCE IN THE RENTAL INCOME, THE LD. CIT(A) OBSERV ED THAT THE ASSESSEE SHALL OFFER THE INCOME UNDER INCOME FROM HO USE PROPERTY AND ENTITLED FOR STATUTORY DEDUCTION UNDER SECTION 24 OF THE AC T AND DIRECTED THE A.O. TO RE-COMPUTE THE INCOME FROM HOUSE PROPERTY A ND PARTLY ALLOWED THE APPEAL. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSE SSEE FILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. A. R. ARGUED THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE A. O. IRRESPECTIVE OF THE FACT THAT THE CIT(A) WAS SATISFIED WITH THE CORRECTNES S OF THE CLAIM AS DISCUSSED AT PARA 6.1 OF THE ORDER, WHERE PRIMA FA CIE THE CIT(A) 4 ITA.NO.1144/HYD/2016 SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. AGREED WITH THE ASSESSEES CONTENTIONS BUT CONFIRMED THE ADDITION. THE LD. A.R. FURTHER EMPHASIZES THAT THE PROVISIONS OF SECTI ON 54 OF THE ACT ENTITLE THE ASSESSEE TO SELL A RESIDENTIAL PROPERTY AND PURCHASE ANOTHER RESIDENTIAL PROPERTY AND THERE IS NO RESTRICTION AND SU PPORTED HIS ARGUMENTS WITH PAPER BOOK CONTAINING COPY OF RETURN OF INCOME, SALE DEEDS OF PURCHASE AND SALE OF RESIDENTIAL PROPERTY A ND WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A) AND PRAYED FOR A LLOWING THE EXEMPTION UNDER SECTION 54 OF THE ACT AND ALLOW THE APPE AL. CONTRA, THE LD. D.R. RELIED ON THE ORDERS OF THE CIT(A). 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATER IAL ON RECORD AND PROVISIONS OF LAW. THE SOLE CRUX OF THE ISSUE ARGUED BY THE LD. A.R. OF THE ASSESSEE ON THE CLAIM OF EXEMPTION UND ER SECTION 54 OF THE ACT WHICH WAS REJECTED BY THE A.O. ON THE GROUND TH AT ASSESSEE OWNS MORE THAN ONE HOUSE AND DENIED THE CLAIM. THE LD . CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT THE CLAIM UNDER S ECTION 54 OF THE ACT HAS NO RESTRICTION OF NUMBER OF HOUSES. IF ASS ESSEE SELLS A HOUSE AND PURCHASED ANOTHER RESIDENTIAL HOUSE, THE PROVISION S OF SECTION 54 ALLOWS DEDUCTION TO THAT EXTENT. THE STAND TAKEN BY THE A. O. THAT ASSESSEE OWNS MORE THAN ONE HOUSE IS APPLICABLE FOR THE CLAIM UNDER SECTION 54F OF THE ACT AND NOT FOR SECTION 54 OF THE ACT. THIS LEGAL POSITION WAS ACCEPTED BY THE LD. CIT(A) IN THE ORDER. HOWEVER, HE REJECTED ASSESSEES CONTENTIONS ON THE REASON THAT HE HA S NOT FURNISHED ANY EVIDENCE WITH REFERENCE TO THE CLAIM. THIS OPINION OF THE CIT(A) IS NOT CORRECT AS THE ISSUE OF CLAIM UNDER SECTION 54 OF THE ACT WAS EXAMINED BY THE A.O. BUT DENIED ON THE REASON ASSESSEE OWNS MORE THAN ONE HOUSE. THEREFORE, ACTION OF THE CIT(A) IN DEN YING THE CLAIM THAT INFORMATION WAS NOT FURNISHED IS NOT BORNE OUT OF FACTS. SINCE THE ASSESSEE HAS FURNISHED NECESSARY EVIDENCE BEFORE THE A.O. AND ISSUE OF INVESTMENT IN A NEW HOUSE IS NOT DISPUTED BY THE A.O., W E ARE OF THE 5 ITA.NO.1144/HYD/2016 SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. OPINION THAT ASSESSEE HAS SATISFIED THE CONDITIONS AS EN VISAGED IN PROVISIONS OF SECTION 54 OF THE ACT. ACCORDINGLY, WE S ET ASIDE THE LATER PART OF THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND A LLOW THE GROUNDS OF THE ASSESSEE. 7. IN RESPECT OF SECOND GROUND, SINCE THE LD. CIT(A) HAS REMITTED THE ISSUE TO THE FILE OF THE A.O. TO RE-COMPUTE T HE INCOME FROM HOUSE PROPERTY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A) AN D DISMISS THE GROUND OF THE ASSESSEE. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2017. SD/- SD/- (B. RAMAKOTAIAH) (G.PAVAN KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH FEBRUARY, 2017 VBP/- COPY TO 1. SHRI G.V. SHIVAKUMAR REDDY, HYDERABAD. C/O. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA S ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, WARD-6(3), I.T. TOWERS, A.C. GUARDS, HYDERABAD. 3. CIT(A)-6, HYDERABAD. 4. PR. CIT-6, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE