B.Nirmala , Hyderabad V. Income Tax Officer, Ward-11(1), Hyderabad

ITA 1182/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8055 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 18-03-2019
• Assessment Year: 2004-2005
• Appeal Filed On: 06-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: A V RAGHURAM
• Section: 143(3); 54F; 148; 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1181/HYD/18 2004-05 SMT. B. NIRMALA, HYDERABAD [PAN: AZGPB0204L] INCOME TAX OFFICER, WARD-11(1), HYDERABAD 1182/HYD/18 2004-05 FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SHRI NILANJAN DEY, DR DATE OF HEARING : 18-03-2019 DATE OF PRONOUNCEMENT : 18-04-2019 O R D E R BOTH ARE ASSESSEES APPEALS FOR THE AY. 2004-05. IT A NO. 1181/HYD/2018 IS AGAINST THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 254 OF THE INCOME TAX ACT [ACT] AND ITA NO. 1182/HYD/2018 IS AGAINST THE ORDER OF CIT(A) U/S. 1 54 OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE AY. 20 04-05 ON 11-11-2011, IN RESPONSE TO NOTICE U/S. 148 OF THE ACT ADMITTING CAPITAL GAIN OF RS. 5,25,384/- AND CLAIMED D EDUCTION U/S. 54F OF THE ACT FOR RS. 8,25,920/-. SCRUTINY ASSE SSMENT WAS COMPLETED U/S. 143(3) R.W.S. 147 OF THE ACT ON 31 -03-2004 I.T.A. NOS. 1181 & 1182/HYD/2018 :- 2 -: ASSESSING THE LONG TERM CAPITAL GAIN AT RS. 38,00,484 /-. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO DIRE CTED THE ASSESSING OFFICER TO CALCULATE THE CAPITAL GAIN BASED O N THE VALUE OF THE LAND SURRENDERED BY THE ASSESSEE IN THE DEVELOPMENT AGREEMENT WITH A BUILDER. 2.1. WITH REGARD TO ASSESSEES CLAIM OF DEDUCTION U/S . 54F OF THE ACT, THE CIT(A) GRANTED PARTIAL RELIEF BY HOLDING THA T GROUND AND FIRST FLOORS WERE COMMERCIAL, WHEREAS THE SECOND FLOOR WAS A RESIDENTIAL AREA AND THAT THE ASSESSEE WAS ELIGIBLE F OR DEDUCTION U/S 54F ON SUCH RESIDENTIAL PROPERTY. FURTH ER AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE THE ITAT, WHICH REMITTED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO ADOPT THE COST OF THE CONSTRUCTION OF THE FLOOR AREAS SURRENDERED TO ASSESSEE BY THE DEVELOPER AS THE CONSIDERATION FOR THE LAND TRANSFERRE D BY THE ASSESSEE TO THE DEVELOPER. CONSEQUENTLY, ORDER U/S. 1 43(3) R.W.S. 254 OF THE ACT WAS PASSED, BY ADOPTING COST OF CONSTRUCTION OF THE BUILDING IN 2003-04 AT RS. 500/- FO R THE SQ. FT. THEREAFTER, ASSESSING OFFICER PROCEEDED TO CONSID ER THE CLAIM OF DEDUCTION U/S. 54F OF THE ACT AND OBSERVING T HAT THE BUILDING CONSTRUCTED WAS A COMMERCIAL COMPLEX AND NO T A RESIDENTIAL BUILDING AND THAT THE ASSESSEES SHARE IN TH E BUILDING AS PER THE DEVELOPMENT AGREEMENT WAS COMMERCI AL, HE HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S. 54F OF THE ACT. ACCORDINGLY, ASSESSING OFFICER DISALLOWED THE CLAIM U/S. 54F AND BROUGHT THE CAPITAL GAIN TO TAX. I.T.A. NOS. 1181 & 1182/HYD/2018 :- 3 -: 2.2. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), STATING THAT THE ISSUE OF DEDUCTION U/S. 54F HAS REACHED FINALITY IN THE EARLIER ROUND OF LITIGATION WHEREIN THE CIT(A) HAD HELD THAT TWO FLATS IN THE SECOND FLOOR ARE RESIDENTIAL IN NATURE AND THEREFORE, ASSESSEE WAS ELIGIBLE FOR DEDUCTION U /S. 54F OF THE ACT. IT WAS SUBMITTED THAT THE ISSUE BEFORE THE TRIB UNAL DURING THE EARLIER PROCEEDINGS WAS ONLY WITH REGARD TO COST OF CONSTRUCTION TO BE ADOPTED AND THEREFORE, THE FINDINGS OF CIT(A) HAD ATTAINED FINALITY AND THE ASSESSING OFFICER COULD NOT HAVE RE-VISITED THE ISSUE IN THE ORDER PASSED CONSEQUENT TO TH E ORDER OF ITAT. 3. TAKING NOTE OF THE SAME, THE CIT(A) PASSED ORDER U/ S. 154, MODIFYING THE EARLIER ORDER OF CIT(A), HOLDING THAT THE BUILDING AS A COMMERCIAL BUILDING AND THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 54F OF THE ACT. AF TER TAKING THE SAME INTO CONSIDERATION, APPEAL OF THE ASSESSEE AGA INST THE ASSESSMENT ORDER U/S. 143(3) R.W.S. 254 OF THE ACT WAS DISMISSED. 3.1. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL BOTH AGAINST THE ORDER U/S. 154 AND ALSO THE APPELLATE OR DER AGAINST THE ASSESSMENT ORDER U/S. 143(3) R.W.S. 254 OF THE ACT. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A ), IN THE EARLIER PROCEEDINGS HAD CONSIDERED THE ISSUE AT LE NGTH AND HAD HELD THE FLATS ON THE SECOND FLOOR TO BE RESIDENTIAL FLATS AND HAD DIRECTED TO ALLOW THE DEDUCTION U/S. 54F OF THE ACT IN RESPECT OF THE SAME. HE SUBMITTED THAT BY VIRTUE OF THE O RDER I.T.A. NOS. 1181 & 1182/HYD/2018 :- 4 -: U/S. 154 OF THE ACT, THE CIT(A) HAS RE-VISITED THE ISSUE AND REVIEWED THE ORDER, WHICH IS NOT PERMISSIBLE IN LAW. IT IS SUBMITTED THAT ONLY A MISTAKE APPARENT FROM RECORD COULD BE MODIFIED U/S. 154 OF THE ACT AND THE CIT(A) BY REVIEWI NG THE ORDER, HAS EXCEEDED THE JURISDICTION U/S. 154 OF THE ACT. 5. LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER O F CIT (A) AND SUBMITTED THAT THE BUILDING WAS A COMMERCIAL BUILDING AND THEREFORE, THE ASSESSEE COULD NOT HAVE RE CEIVED THE RESIDENTIAL FLATS THEREFROM AND ASSESSEES CLAIM U /S. 54F ITSELF WAS ERRONEOUS AND THE CIT(A) IN THE EARLIER PR OCEEDINGS HAD DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTI ON WITHOUT CONSIDERING THE FACTS PROPERLY. IT IS SUBMITTED TH AT THE CIT(A) HAS THEREFORE CORRECTLY RECTIFIED THE SAID MISTAK E U/S. 154 AND THE SAME IS SUSTAINABLE. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, I FIND THAT THE CIT(A) IN THE EARLIER PROCEEDIN GS HAD HELD THAT THE PROPERTY ON THE SECOND FLOOR TO BE RESIDENTIAL P ROPERTY. THE ASSESSING OFFICER IN THE SECOND ROUND OF LITIGAT ION HAD OBSERVED THAT THE ENTIRE BUILDING IS A COMMERCIAL BUILD ING AND THEREFORE, HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION U/S. 54F OF THE ACT. THE CIT (A) THEREFORE, RECTIFIED TH E EARLIER ORDER U/S. 154 ON THE BASIS OF THE FINDINGS OF ASSESS ING OFFICER. NO DOUBT, U/S. 154 OF THE ACT, ONLY MISTAKES APPARENT F ROM RECORD CAN BE RECTIFIED AND IF AN ORDER U/S. 154 HAS TO BE PASSED AFTER LONG DRAWN ARGUMENTS, THEN, IT CANNOT BE S AID THAT THERE IS A MISTAKE APPARENT FROM RECORD. HOWEVER , EXCEPT FOR RELYING ON THE EARLIER ORDER OF THE CIT ()A), THE ASSESSEE HAS I.T.A. NOS. 1181 & 1182/HYD/2018 :- 5 -: BROUGHT ON RECORD ANY EVIDENCE TO DEMONSTRATE THAT THE TWO UNITS ON SECOND FLOOR OF THE BUILDING WERE RESIDENTIAL UNITS. ON THE CONTRARY, AO HAS BROUGHT ON RECORD THAT THE ENTIRE BU ILDING WAS A COMMERCIAL BUILDING AND THE ASSESSEE WAS ENTITL ED TO OFFICE SPACE ON SECOND FLOOR OF THE BUILDING. THUS, CLEARLY, IT WAS FACTUALLY INCORRECT TO HOLD THAT THE ASSESSEE HAS RE CEIVED TWO RESIDENTIAL UNITS. AN ERRONEOUS FINDING OF FACT IS UNDISPUTEDLY AN ERROR APPARENT FROM RECORD RECTIFIABLE U/S 154 OF THE ACT. THEREFORE, ACCORDING TO ME, THE ORDER U/S. 154 IS SUSTAINABLE. THUS, THE ASSESSEES APPEAL IS ALLOWED. 6.1. IN VIEW OF THE APPEAL IN ITA NO. 1182/HYD/2018 , HOLDING THE ORDER U/S. 154 OF THE ACT AS SUSTAINABLE, THE ORDER AGAINST THE ASSESSMENT ORDER U/S. 143(3) R.W.S. 254 OF THE AC T IS ALSO HELD TO BE SUSTAINABLE. HENCE THIS APPEAL OF THE ASSES SEE IS ALSO DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2019 SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 18 TH APRIL, 2019 TNMM/PVV COPY TO : 1. SMT. B. NIRMALA, C/O. A.V. RAGHU RAM & P. VINOD, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. INCOME TAX OFFICER, WARD-11(1), HYDERABAD. 3. CIT (APPEALS)-5, HYDERABAD. 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.