Manjula D Shah, Hyderabad, Hyderabad V. ITO, Ward-6(3), Hyderabad, Hyderabad

ITA 1155/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3089 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 11-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: LAXMINIVAS SHARMA
• Keywords: Deduction for capital gain; Period of limitation; Cost of acquisition; Time period of passing order
• Section: 54F; 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETRA RAVI, JUDICIAL MEMBER ITA.NO.1154/HYD/2015 ASSESSMENT YEAR 2005-2006 SMT. NEENA N. DHAROD HYDERABAD 500 001. PAN ACNPD7876L VS. THE INCOME TAX OFFICER WARD-6(3) HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.1155/HYD/2015 ASSESSMENT YEAR 2005-2006 SMT. MANJULA D. SHAH HYDERABAD 500 001. PAN AKAPM4682Q VS. THE INCOME TAX OFFICER WARD-6(3) HYDERABAD. (APPEL LANT) (RESPONDENT) ITA.NO.1156/HYD/2015 ASSESSMENT YEAR 2005-2006 SMT. NIRMALA BEN S HIVJI SHAH, HYDERABAD - 001. PAN ADAPN5288J VS. THE INCOME TAX OFFICER WARD-6(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. LAXMINIVAS SHARMA FOR REVENUE : MR. M. SITARAM DATE OF HEARING : 1 7 .02.2016 DATE OF PRONOUNCEMENT : 19 .02.2016 2 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. ORDER PER S.S. VISWANETRA RAVI, J.M. THE ABOVE APPEALS ARE FILED BY THE ASSESSEES AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A)-4, HY DERABAD DATED 03.07.2015. THE ASSESSEES ARE FAMILY MEMBERS AND CO-OWNERS OF PROPERTIES. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THE APPEALS ARE HEARD TO GETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDE R. FOR THE SAKE OF BREVITY, THE FACTS INVOLVED IN ITA.NO.1154/H/2015 FOR THE A.Y. 2005-2006 ARE AS UNDER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL FILED HER RETURN OF INCOME FOR THE A. Y. 2005- 06 ON 01.08.2005 DECLARING INCOME OF RS.5,29,877. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEES HAS PURCHASED A PROPERTY AND SOLD THE PRO PERTY FOR THE SAME VALUE. HENCE, THE ASSESSEE HAS NOT ADM ITTED CAPITAL GAINS ON THE TRANSACTION. HOWEVER, ON VERIF ICATION OF THE RECORDS FOR A.Y. 2004-05, IT WAS OBSERVED TH AT THE PROPERTY IN QUESTION WAS PURCHASED IN ORDER TO CLAI M EXEMPTION U/S. 54. SINCE, THE PROPERTY ON WHICH EXEMPTION U/S. 54 WAS SOLD WITHIN 3 YEARS THE COST OF THE PROPERTY IS TO BE REDUCED BY THE AMOUNT OF CAPITAL GAIN EXEMPTION CLAIMED. ACCORDINGLY, A NOTICE U/S. 148 W AS ISSUED ON 26.03.2010, WHICH WAS SERVED ON 20.04.201 0. IN RESPONSE, THE ASSESSEE'S AR VIDE ORDER SHEET NOT ING 3 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. DATED 21.12.2010 REQUESTED TO TREAT THE RETURN FILE D ON 01.08.2005 MAY BE TREATED AS RETURN FILED IN RESPON SE TO NOTICE U/S, 148. 2.1. DURING THE ASSESSMENT PROCEEDINGS, A.O. FOUND THAT IN THE A.Y. 2004-05, THE ASSESSEE HAS SO LD A HOUSE PROPERTY ALONG WITH FIVE OTHER CO-OWNERS, THE ASSESSEES SHARE OF CAPITAL GAIN WAS RS.34,03,603. THE ASSESSEE ALONG WITH SIX CO-OWNERS HAVE INVESTED IN A HOUSE PROPERTY BY INVESTING RS.1,95,00,000 TOWARDS COST OF HOUSE AND RS. 26,32,520 TOWARDS STAMP DUTY, TOTA LING TO RS.2,21,32,520. THE ASSESSEE'S SHARE OF INVESTM ENT IS RS.36,88,753. THE ASSESSEE CLAIMED CAPITAL GAINS EXEMPTION OF RS.34,03,603 UNDER SECTION 54 IN THE A Y 2004-05 STATING THAT THE SALE PROCEEDS WERE INVESTE D IN ACQUIRING NEW HOUSE. DURING THE RELEVANT YEAR, THE NEW HOUSE PROPERTY ON WHICH EXEMPTION U/S. 54 WAS CLAIM ED WAS SOLD FOR RS. 1,95,00,000 AND THE ASSESSEE'S SHA RE OF SALE RECEIPT IS RS, 32,50,000. A.O. OBSERVED THAT S INCE THE ASSESSEE HAS CLAIMED CAPITAL GAIN EXEMPTION OF RS.34,03,603, THE SAME WAS TO BE REDUCED FROM COST OF ACQUISITION AS PER THE PROVISIONS OF SEC. 54 (1) (I I) OF THE IT ACT, 1961 AND WORKED OUT THE SHORT TERM CAPITAL GAI N ON SALE OF HOUSE AS UNDER : SALE CONSIDERATION RS. 32,50,000 LESS: COST OF ACQUISITION (36,88,753-34,03,603) RS. 2,85,150 ------------------ STCG RS. 29,64,850 ------------------ 4 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. 2.2. THUS, THE A.O. ADDED AN AMOUNT OF RS.29,64,850 TO THE INCOME RETURNED. AGGRIEVED, BY THE ORDER OF THE A.O. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) ON 18.08.2011 WITH A DELAY OF 6 MONTHS 12 DA YS ALONG WITH CONDONATION PETITION. THE LD. CIT(A) VID E HIS ORDER RECEIVED ON 18.08.2012 DISMISSED THE ASSESSE E'S APPEAL WITHOUT ADJUDICATING THE MATTER ON MERITS ST ATING THAT THE DELAY IN FILING OF APPEAL DOES NOT DESERVE TO BE CONDONED. THE ITAT VIDE ORDER ITA NO. 1591/HYD/2012 DATED 07.11.2013 REMITTED THE ISSUE TO CIT(A) TO EX AMINE THE ISSUE AFRESH AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE LD. CIT(A) ISSUED A NOTICE OF HEARING DATE D 29.06.2015 AND THE ASSESSEE MADE A WRITTEN SUBMISSI ON, STATING THE FACT THAT THE SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONORABLE ITAT VIDE O RDER ITA.NO.179/HYD/2014 DATED 05.09.2014 IN CASE OF MR. NILESH DHAROD, WHO WAS ALSO A CO-OWNER OF THE PROPE RTY. THE ASSESSEE CONTENDED THAT SHE PURCHASED FIRST AND SECOND PROPERTY WITHIN THE SPECIFIED PERIOD PERMISS IBLE UNDER SECTION 54(1) (I.E., WITHIN TWO YEARS FROM TH E DATE OF FIRST SALE) TO CLAIM THE EXEMPTION. BUT THE LD. CIT (A) WITHOUT CONSIDERING THE FACT THAT THE PURCHASE OF T HE SECOND PROPERTY WAS MADE WITHIN SPECIFIED TIME LIMI T UNDER SECTION 54, PASSED THE IMPUGNED ORDER TREATIN G THE INCOME CHARGEABLE TO TAX AS PER THE PROVISIONS OF S ECTION 54F(3), WHEREAS, ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54 OF THE I.T. ACT, 1961. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN SECOND APPEAL BE FORE US. 5 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. 2.3. SINCE, THE FACTS AND CIRCUMSTANCES IN CASE OF OTHER ASSESSEES ARE ALSO SIMILAR, THEY ARE NOT REPR ODUCED AGAIN FOR SAKE OF BREVITY. 3. THE LD. A.R. WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE LD. CIT(A), CONTENDED THAT ASSESSEE S DISPOSED OF THE PROPERTY AND PURCHASED A SECOND PRO PERTY WITHIN LIMITATION PERIOD OF TWO YEARS AND ALSO RELI ED ON THE ORDER ON IDENTICAL ISSUE PASSED BY THE COORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF ANOTHER CO-OW NER MR. NILESH DHAROD, HYDERABAD VS. ITO, WARD-6(3), HYDERABAD IN ITA.NO.179/HYD/2014 DATED 05.09.2014. 4. THE LD. D.R. ON THE OTHER HAND, CONTENDED THAT THE ASSESSEES DID NOT BRING TO THE NOTICE OF A .O. THAT AFTER DISPOSING OF THE PROPERTY, THE ASSESSEES ALON G WITH FIVE OTHERS PURCHASED A SECOND PROPERTY AND ALSO SUBMITTED THAT IT IS A QUESTION TO BE DECIDED BY TH IS TRIBUNAL AS TO WHETHER SECTION 54F IS APPLICABLE OR NOT TO THE FACTS ON HAND. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT TH E UNDISPUTED FACTS OF THE CASE ARE THAT, THE ASSESSEE S PURCHASED A PROPERTY AT ROAD NO.7, BANJARA HILLS RE LEVANT TO A.Y. 2004-05 AND DUE TO SOME REASONS THAT PROPER TY WAS SOLD AT THE SAME PRICE. AGAIN, DURING THE SAME ASSESSMENT YEAR, THE ASSESSEES PURCHASED ANOTHER PROPERTY ALONG WITH 5 OTHERS AT ROAD NO.12, BANJARA HILLS, HYDERABAD AND CLAIMED CAPITAL GAIN EXEMPTION UNDER 6 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. SECTION 54. THE ASSESSEES CONTENTIONS ARE THAT, D ISPOSING OF THE PROPERTY WHICH IS SITUATED AT ROAD NO.7, BANJARAHILLS AND PURCHASING ANOTHER PROPERTY IS ALS O WITHIN THE STIPULATED TIME I.E., TWO YEARS. THEREFO RE, THE ASSESSEES ALONG WITH OTHERS ARE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 54. IN SUPPORT OF ITS CONTE NTION, THE LD. A.R. RELIED ON THE ORDER OF THE B BENCH O F THE COORDINATE BENCH OF THIS TRIBUNAL DATED 05.09.2014 IN ITA.NO.179/HYD/2014 IN THE CASE OF NILESH DHAROD, HYDERABAD VS. ITO, WARD-6(3), HYDERABAD WHEREIN THE ASSESSEE THEREIN IS SAID TO BE THE CO-OWNER OF THE ASSESSEE IN PURCHASING THE PROPERTIES AT ROAD NO.7 AND 12, BANJARAHILLS. WHILE CONSIDERING THE SAME SET OF FAC TS ON MERITS, THE TRIBUNAL HELD THAT THE INVESTMENT IN TH E SECOND PROPERTY IS WITHIN THE PERIOD OF TWO YEARS F ROM THE DATE OF SALE OF THE ORIGINAL ASSET. THEREFORE, THE ASSESSEE THEREIN WHO IS A CO-OWNER OF THE ASSESSEE HEREIN WA S ENTITLED TO CLAIM EXEMPTION UNDER SECTION 54 OF THE ACT. FOR THE SAKE OF BETTER UNDERSTANDING, THE RELEVANT PORTION AT PARA-11 IS REPRODUCED AS UNDER : 11. SO FAR AS MERITS OF THE ISSUE IS CONCERNED, LD. AR SUBMITTED THAT AFTER SALE OF ORIGINAL ASSET ON 28.05.2003 IN WHICH ASSESSEE'S SHARE OF CAPITAL GAI N WAS RS.31,41,007, ASSESSEE ALONG WITH OTHERS PURCHASED A RESIDENTIAL HOUSE AT ROAD NO. 12, BANJARA HILLS ON 27.02.2004 FOR RS.1,95,00,000. HOWEVER, FOR RELIGIO US AND SENTIMENTAL REASONS. THE SAID HOUSE WAS SOLD FO R RS.1,95,00,000 ON 30.11.2004, IN WHICH ASSESSEE'S S HARE WAS RS. 32,50,000. IT WAS STATED THAT ASSESSEE AGAI N MADE INVESTMENT OF HIS SHARE IN SALE PROCEED IN A RESIDENTIAL HOUSE AT PLOT NO.1092, ROAD NO. 45, JUB ILEE HILLS ON 01.05.2005 PURCHASED FOR A CONSIDERATION OF RS.2,05,07,445 IN THE NAME OF HIS WIFE SMT. NEENA 7 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. DHAROD AND SON MAYUR DHAROD. THUS, IT WAS SUBMITTED THAT SINCE INVESTMENT AT ROAD NO. 45, JUBILEE HILLS WAS MADE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET, ASSESSEE WOULD STILL BE ENTITLED FO R EXEMPTION U/S 54 OF THE ACT. HAVING CONSIDERED THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE F ACTS AND MATERIALS ON RECORD WE FIND FORCE IN THEM. THER E IS NO DISPUTE THAT ASSESSEE HAS MADE INVESTMENT IN THE NE W PROPERTY AT ROAD NO.45, JUBILEE HILLS. IT IS ALSO B ORNE OUT FROM FACTS ON RECORD THAT INVESTMENT IN THE SECOND PROPERTY IS WITHIN THE PERIOD OF TWO YEARS FROM THE DATE OF SALE OR ORIGINAL ASSET. THAT BEING THE CASE, ASSESS EE WILL BE ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE A CT. SO FAR AS AD'S OBJECTIONS WITH REGARD TO PURCHASE OF T HE PROPERTY IN THE NAME ASSESSEE'S WIFE IS CONCERNED, THE SAME IN OUR VIEW IS TOTALLY IRRELEVANT AND UNTENABL E. IN ANY CASE OF THE MATTER, SINCE WE HAVE ALREADY HELD THAT PROCEEDING INITIATED UNDER SECTION 147 IS INVALID, THIS ISSUE HAS BECOME MERELY OF ACADEMIC INTEREST. 6. SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE ARE SIMILAR AND PROPERTY INVOLVED THEREIN ARE ONE A ND THE SAME, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH OF B BENCH OF THIS TRIBUNAL IN THE CASE OF MR. NILESH DHAROD, HYDERABAD VS. ITO, WARD-6(3), HYDERA BAD (CITED SUPRA), THE GROUNDS RAISED ON THE ISSUE BY T HE ASSESSEES ARE ALLOWED. 8. IN TWO OF THE CO-SHARERS ABOVE, ONE OF THE CONTENTION WAS THAT PROCEEDINGS U/S 147 WERE INITIA TED SECOND TIME ON SAME SET OF FACTS AND REOPENING WAS BAD IN LAW. THIS ISSUE WAS ALSO CONSIDERED AND ALLOWED IN FAVOUR OF ASSESSEE IN THE ABOVE REFERRED CASE OF MR . NILESH THAROD AND FOLLOWING THE SAME, WE HAVE TO HOLD THAT PROCEEDINGS INITIATED UNDER SECTION 147 ARE BAD IN LAW AND CONSEQUENTIAL ORDERS ARE TO BE CANCELLED. AS WE ADJUDICATED THE ISSUE ON MERITS, NO SEPARATE FINDIN G IS 8 ITA.NOS.1154, 1155 & 1156/H/2015 SMT. NEENA N. DHAROD & OTHERS, HYDERABAD. GIVEN IN THESE TWO APPEALS. SUFFICE TO SAY THE ADDI TION MADE BY AO DOES NOT SURVIVE EITHER WAY. 7. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2016. SD/- SD/- (B. RAMAKOTAIAH) (S.S. VISWANETRA RAVI ) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 19 TH FEBRUARY, 2016 VBP/- COPY TO : 1. SMT. NEENA N. DHAROD, 402, 4 TH FLOOR, MOGULS COURT, BASHEERBAGH, HYDERABAD 500 001 . 2. SMT. MANJULA D. SHAH, 402, 4 TH FLOOR, MOGULS COURT, BASHEERBAGH, HYDERABAD 500 001. 3. SMT. NIRMALA BEN SHIVJI SHAH, 402, 4 TH FLOOR, MOGULS COURT, BASHEERBAGH, HYDERABAD 500 001 4 . THE INCOME TAX OFFICER, WARD - 6(3), HYDERABAD. 5 . THE COMMISSIONER OF INCOME TAX (APPEALS) - 4 , 3 RD FLOOR ANNEXE, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 6 . THE COMMISSIONER OF INCOME TAX - 6, HYDERABAD. 7 . D.R. ITAT A BENCH, HYDERABAD. 8 . GUARD FILE