P.Sankaran, CHENNAI V. ITO, CHENNAI

ITA 1167/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8581 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Bonafide belief; Cost of acquisition; Benefit of exemption
• Section: 143(3); 50C; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' . # , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.1167/MDS/2016 ( / ASSESSMENT YEAR: 2009-10) MR. P.SANKARAN, 177/248, PYCROFTS ROAD, CHENNAI-600 014. VS THE INCOME TAX OFFICER, WARD-IX(4), CHENNAI. PAN: AAGPS0209M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT /DATE OF HEARING : 11 TH JULY, 2016 /DATE OF PRONOUNCEMENT : 15 TH SEPTEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 13, CHENNAI DATED 27.01.2016 IN ITA NO.66/CIT(A)-13 /2009- 10 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LI MITATION OF 33 DAYS. AT THE TIME OF HEARING, LEARNED AUTHORI ZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS UNDE R THE BONAFIDE BELIEF THAT HE HAS HANDED OVER THE FILE TO HIS REPRESENTATIVE TO PURSUE THE APPEAL, BUT IN FACT BY OVERSIGHT HE HAS FAILED TO DO SO. IT WAS THEREFORE ARGUED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ASSESSEE SHOULD NOT BE 2 ITA NO.1167/MDS/2016 MADE TO SUFFER FOR HIS INADVERTENT MISTAKE. WITH T HE ABOVE SUBMISSION, THE LEARNED AUTHORIZED REPRESENTATIVE P LEADED THAT THE DELAY OF 33 DAYS IN FILING THE APPEAL MAY BE CONDONED. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSED TO THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE. AFTER HEARING BOTH SIDES , WE ARE OF THE OPINION THAT THE DELAY IN FILING THE APPEAL BY THE ASSESSEE SHOULD BE CONDONED AND ACCORDINGLY, WE PRO CEED TO HEAR THE APPEAL. 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS A PPEAL; HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSI NG OFFICER TOWARDS LONG TERM CAPITAL GAINS BY WITHDRAW ING THE EXEMPTION UNDER SECTION 54 OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON THE BUSINESS OF PETROL BUNK IN THE NAME OF M/S.SARATHY SERVICE STATION. THE ASSESSEE FILE D HIS 3 ITA NO.1167/MDS/2016 RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.09.2009 DECLARING INCOME OF ` 2,51,184/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143( 2) WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF SCRUT INY PROCEEDINGS, IT WAS NOTICED BY THE LEARNED ASSESSIN G OFFICER THAT THE ASSESSEE HAD SOLD A HOUSE PROPERTY AT KODA IKANAL ON 25.04.2008 AS REFLECTED IN THE AIR. THE SAME WAS NOT REFLECTED IN HIS RETURN OF INCOME. ON QUERY, THE AS SESSEE FURNISHED THE SALE DEED AND COMPUTED HIS LONG TERM CAPITAL GAIN CLAIMING THE BENEFIT OF EXEMPTION UNDER SECTIO N 54 OF THE ACT AS FOLLOWS:- SALE OF PROPERTY AS PER SECTION 50C : RS.30,00,000 INDEXED COST OF ACQUISITION : 11,58,276 LONG TERM CAPITAL GAIN RS. 18,41,724 LESS: EXEMPTION UNDER SECTION 54 RS. 18,41,7246 LONG TERM CAPITAL GAIN RS. NIL IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE LEARNED ASSESSING OFFICER THAT HE HAD CONSTRUCTED A RESIDEN TIAL HOUSE AT SOMANGALAM VILLAGE, KANCHEEPURAM DISTRICT WITHIN A 4 ITA NO.1167/MDS/2016 PERIOD OF THREE YEARS FROM THE DATE OF THE SALE OF LAND AND FURNISHED THE PROOF OF THE SAME ALONG WITH THE VALU ATION REPORT AND OTHER RELEVANT DOCUMENTS. THE LEARNED A SSESSING OFFICER AFTER EXAMINING THE PARTICULARS FURNISHED B Y THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE I S NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT BECAUSE HE HAS NOT DEPOSITED THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOUNT AS PER SECTION 54 (2) OF THE ACT IN A NATIONALIZED BANK ACCOUNT BUT HAD DEPOSITED ONLY IN HIS REGULAR SAVINGS ACCOUNT. ACCORDINGLY, HE TAXED THE AMOUNT OF RS.18,41,724/- UNDER THE HEAD LONG TERM CAPITAL G AIN. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE BY O BSERVING AS UNDER:- HOWEVER, IN THE INSTANT CASE ASSESSEE IS A PETROL B UNK OWNER AND RUNS THE BANK IN THE NAME OF M/S. SARATHI SERVICE STATION WHO IS SUPPOSED TO BE AWARE THAT ME RE TECHNICAL BREACH OR A LAPSE WILL NOT MAKE ASSESSEE ELIGIBLE FOR HIS CLAIM OF EXEMPTION UNDER SECTION 5 4. IN THE INSTANT CASE, THE CAPITAL GAIN WAS NOT DEPOSITE D IN THE CAPITAL GAIN ACCOUNT SCHEME OF A NATIONALIZED B ANK HOWEVER, THE SAME WAS DEPOSITED IN HIS REGULAR BANK ACCOUNT ONLY. THUS, THE ASSESSEE HAS NOT DEPOSITED THE CAPITAL GAIN THAT AROSE ON ACCOUNT OF SALE OF PROPE RTY IN ANY CAPITAL GAIN ACCOUNT SCHEME OF A NATIONALIZED B ANK AS SPECIFIED IN SECTION 54(2). FOR CLAIMING EXEMPTI ON 5 ITA NO.1167/MDS/2016 U/S.54(1) & 54(2) HAS TO BE FULFILLED AND IN THIS C ASE THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS U/S.54(2) . THEREFORE, I CONFIRM THE ADDITION MADE BY THE ASSES SING OFFICER WITHDRAWING THE EXEMPTION U/S.54 OF THE IN COME TAX ACT, 1961. THE GROUND OF THE APPEAL IS DISMISSE D. 6. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE REITERATED HIS ARGUMENTS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BY STATING THA T THE ASSESSEE HAD COMMITTED ONLY A TECHNICAL BREACH BUT HAD FULFILLED THE OTHER CONDITIONS LAID DOWN UNDER SECT ION 54 OF THE ACT BY CONSTRUCTING A RESIDENTIAL HOUSE WITHIN THRE E YEARS FROM THE DATE OF SALE OF HIS IMMOVABLE PROPERTY. H E FURTHER RELIED IN THE DECISION OF CHENNAI BENCH OF THE TRIB UNAL IN THE CASES OF SHRI MADHUVAN PRASAD VS. ITO IN ITA NO.2485/MDS/2004 AND IN THE CASE OF SHRI A.C.SYAM S UNDAR VS. JCIT IN ITA NO.2279/MDS/2015 DATED 06.05.2016 A ND THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF M OTILAL PADAMPAT SUGARMILL CO.LTD. VS. STATE OF UTTAR PRADE SH & ORS. REPORTED IN 118 ITR 326 (SC). 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE . 6 ITA NO.1167/MDS/2016 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE D ECISION OF SHRI MADHUVAN PRASAD VS. ITO, SUPRA THE CHENNAI BEN CH OF THE TRIBUNAL HAS ALLOWED THE BENEFIT OF SECTION 54 OF THE ACT BECAUSE THE ASSESSEE HAD FULFILLED ALL THE CONDITIO NS PRESCRIBED UNDER SECTION 54 OF THE ACT BARRING THE DEPOSIT OF THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOU NT AS PRESCRIBED UNDER SECTION 54(2) OF THE ACT. IN THAT DECISION RELIANCE WAS ALSO PLACED IN THE DECISION OF HONBLE APEX COURT IN THE CASE OF MOTILAL PADAMPAT SUGARMILL CO. LTD. VS. STATE OF UTTAR PRADESH & ORS WHEREIN IT WAS HELD TH AT THUS THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS OFTEN SAID THAT EVERYONE IS PRESUMED TO KNOW THE LA W, BUT THAT IS NOT A CORRECT STATEMENT THERE IS NO SUCH MA XIM KNOWN TO THE LAW. IN THE GIVEN CASE BEFORE US ALSO, IT IS NOT DISPUT ED THAT THE ASSESSEE HAD NOT FULFILLED THE CONDITIONS PRESCRIBED UNDER SECTION 54 OF THE ACT BARRING THE DEPOSIT OF THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOUNT. MOR EOVER, THE FACTS REVEAL THAT THE ASSESSEE HAD DEPOSITED TH E ENTIRE SALE PROCEEDS IN HIS SAVINGS BANK ACCOUNT MAINTAINE D WITH 7 ITA NO.1167/MDS/2016 NATIONALIZED BANK OUT OF WHICH HE HAS CONSTRUCTED H IS HOUSE. THE ONLY SMALL LACUNA ASSESSEE HAD MADE IS THAT THE ASSESSEE THOUGH HAD PLACED THE ENTIRE SALE PROCEEDS IN THE NATIONALIZED BANK HE HAS NOT TRANSFERRED THE SAME I N THE CAPITAL GAIN SCHEME ACCOUNT. CONSIDERING THESE FA CTS OF THE CASE AND THE DECISIONS OF THE TRIBUNAL AND THE HON BLE APEX COURT CITED ABOVE, WE ARE OF THE CONSIDERED VIEW TH AT FOR THIS SMALL TECHNICAL LAPSE OF THE ASSESSEE, THE BENEFIT OF SECTION 54 SHOULD NOT BE DENIED. SECTION 54 OF THE ACT IS A BENEFICIAL PROVISION AND A BENEFICIAL INTERPRETATION HAS TO BE MADE AS FAR AS POSSIBLE FOR GIVING BENEFIT TO THE ASSESSEE. THE ASSESSEE HAD PROCEEDED TO COMPLY WITH THE PROVISION S OF SECTION 54 OF THE ACT BUT HAS ONLY MADE A SMALL TEC HNICAL BREACH WHICH WE ARE OF THE CONSIDERED VIEW SHOULD N OT DISENTITLE THE ASSESSEE FOR THE BENEFIT OF SECTION 54 OF THE ACT. THEREFORE, WE HEREBY DIRECT THE LEARNED ASSESSING O FFICER TO GRANT THE BENEFIT OF SECTION 54 OF THE ACT TO THE A SSESSEE AND ACCORDINGLY DELETE THE ADDITION MADE BY HIM WHICH W AS FURTHER SUSTAINED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS). 8 ITA NO.1167/MDS/2016 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH SEPTEMBER , 2016 SD/- SD/- ( ! ' . # ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 15 TH SEPTEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF