Swamy Naidu Ugapathy, Coimbatore V. ITO, Coimbatore

ITA 1184/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68878 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A ARJUNARAJ
• Section: 143(3); 54B; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.1184/MDS/2013 ASSESSMENT YEAR : 2009-10 SHRI SWAMY NAIDU UGAPATHY B-101, ELYSIUM VISTARA MAHATMA GANDHI ROAD AVARAMPALAYAM COIMBATORE - 6 VS THE INCOME TAX OFFICER WARD II(2) COIMBATORE [PAN ABKPY 2507K ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A. ARJUNARAJ, CA RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 04-12-2013 DATE OF PRONOUNCEMENT : 05-12-2013 O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME- TAX (APPEALS)-I, COIMBATORE, DATED 3.5.2013, PASSED IN APPEAL NO. 374/11-12, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A.NO. 1184/13 :- 2 -: 2. IN THE COURSE OF HEARING, ONLY ARGUMENT ADVANCED B Y THE ASSESSEE IS THAT THE ASSESSING OFFICER AS WELL AS T HE CIT(A) HAVE WRONGLY REJECTED HIS CLAIM UNDER SECTION 54 FOR INV ESTING ENTIRE CAPITAL GAINS IN PURCHASE OF A HOUSE ONLY ON THE GROUND THA T THE SAME WAS DONE IN THE NAME OF HIS WIFE AND SON. IT HAS BEEN ARGUED BY ASSESSEE THAT MERELY FOR THIS REASON, THE IMPUGNED CLAIM OF ` 19,81,174/- COULD NOT HAVE BEEN DECLINED IN THE LIG HT OF CASE LAW CIT VS V. NATARAJAN [2007]287 ITR 271(MAD) AND CIT VS K AMAL WAHAL [2013] 351 ITR 4(DELHI). 3. THE REVENUE HAS CHOSEN TO SUPPORT THE CIT(A)S ORDE R REJECTING THE ASSESSEES CLAIM AFORESAID IN THE LI GHT OF CASE LAW OF JAI NARAYAN VS ITO [2008] 306 ITR 335(P&H) AND PRAKASH VS ITO [2008] 173 TAXMAN 311(BOM.) AT NAGPUR BENCH. 4. THE ASSESSEE IS AN INDIVIDUAL. ON 3.9.2009, HE HAD FILED HIS RETURN DECLARING INCOME OF ` 3,27,114/-. IN THE COURSE OF SCRUTINY THE ASSESSING OFFICER NOTICED THAT IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD SOLD HIS HOUSE PROPERTY FOR ` 35 LAKHS LEADING TO COMPUTATION OF LONG TERM CAPITAL GAINS OF ` 17,36,768/-. HE FURTHER CAME ACROSS ASSESSEES CLAIM U/S 54 ON THE GROUN D THAT FROM SALE PROCEEDS AFORESAID, HE HAD PURCHASED A FLAT IN CO IMBATORE IN THE I.T.A.NO. 1184/13 :- 3 -: NAMES OF HIS WIFE SMT.THENMOZHI AND SON SHRI S.U.R AJARAJAN. WE FIND FROM THE ASSESSMENT ORDER DATED 30.12.2011 THA T THE ASSESSING OFFICER DID NOT AGREE WITH THE ASSESSEES CLAIM MA INLY ON THE GROUND THAT THE NEW FLAT HAD BEEN PURCHASED NOT IN ASSESS EES NAME AND OBSERVED THAT ASSESSEES WIFE AND SON HAD APPLIED FOR LOAN FROM LIC HOUSING FINANCE IN THEIR OWN NAMES AND ASSESSEE WA S ONLY A CO- APPLICANT. FURTHER, HE FOUND THAT THE ASSESSEES WIFE HAD ALSO CLAIMED DEDUCTION U/S 24 OF THE ACT. ACCORDINGLY, THE ASS ESSING OFFICER DENIED ASSESSEES CLAIM OF EXEMPTION AND ADDED THE IMPUGNE D CAPITAL GAINS IN HIS INCOME. 5. THE CIT(A) HAS AFFIRMED THE FINDINGS OF THE ASSESSI NG OFFICER. THEREFORE, THE ASSESSEE IS IN APPEAL. 6. WE HAVE HEARD BOTH PARTIES, PERUSED THE CASE FILE A S WELL AS THE JUDICIAL PRECEDENTS QUOTED HEREINABOVE. THERE IS NO DISPUTE BETWEEN THE PARTIES SO FAR AS THE BASIC REQUIREMEN T OF THE IMPUGNED CLAIM IS CONCERNED I.E THE ASSESSEE HAD INVESTED CAPITAL GAINS IN PURCHASE OF NEW HOUSE, THOUGH IN THE NAMES OF HIS W IFE AND SON (SUPRA). ACCORDINGLY, ONLY ISSUE SURVIVES FOR OUR CONSIDERATION IS AS TO I.T.A.NO. 1184/13 :- 4 -: WHETHER THE ASSESSEES CLAIM U/S 54F HAS BEEN RIG HTLY DENIED BY BOTH THE AUTHORITIES MERELY ON THE GROUND THAT NEW ASSET HAD BEEN PURCHASED IN THE NAMES OF HIS WIFE AND SON. IN THI S BACKDROP, WE FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS V. NATARAJAN (SUPRA) IN AN EXEMPTION CLAIMED U/S 54, HAS HELD THAT IN CASE AN ASSESSEE PURCHASES A HOUSE IN THE NAME OF HIS WIFE, THE SAME CANNOT BE DECLINED. SIMILARLY, THE HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT VS KAMAL WAHAL (SUPRA) HAS GONE A STEP FURTHER I.E IN SUCH A CASE AN ASSESSEE CAN VERY WELL PURCHASE A NEW AS SET IN THE NAME OF WIFE OR ANY OF HIS FAMILY MEMBER, BUT NOT A STRA NGER OR A PERSON UNCONNECTED WITH HIM. WE DEEM IT APPROPRIATE TO RE PRODUCE THE SAME AS UNDER: 9. IT THUS APPEARS TO US THAT THE PREDOMINANT JUDI CIAL VIEW, INCLUDING THAT OF THIS COURT, IS THAT FOR THE PURPO SES OF SECTION 54F, THE NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT I T SHOULD BE PURCHASED EXCLUSIVELY IN HIS NAME. IT IS MOREOVER T O BE NOTED THAT THE ASSESSEE IN THE PRESENT CASE HAS NOT PURCH ASED THE NEW HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCONNECTED WITH HIM. HE HAS PURCHASED IT ONLY IN T HE NAME OF HIS WIFE. THERE IS ALSO NO DISPUTE THAT THE ENTIRE INVESTMENT HAS COME OUT OF THE SALE PROCEEDS AND TH AT THERE WAS NO CONTRIBUTION FROM THE ASSESSEE'S WIFE. IN OUR VIEW, THE AFORESAID CASE LAW SUPPORTS THE ASS ESSEES CASE SO FAR AS HIS CLAIM U/S 54 IS CONCERNED. I.T.A.NO. 1184/13 :- 5 -: 7. COMING TO THE CASE LAW QUOTED BY THE REVENUE, IT AP PEARS THAT THE HON'BLE BOMBAY HIGH COURT(SUPRA) HAD COME ACROSS A CASE WHEREIN THE NEW ASSET HAD BEEN PURCHASED IN THE NAM E OF THE ADOPTED SON OF THE CONCERNED ASSESSEE. THEIR LORD SHIPS HAVE OBSERVED THAT THE SAID UNITIZATION OF CAPITAL GAINS WAS A MEANS ADOPTED FOR TRANSFER OF ASSET BY FATHER TO HIS SON WHICH WAS NOT ACCEPTED U/S 54 OF THE ACT. SO FAR AS THIS CASE L AW IS CONCERNED, IN OUR OPINION, THIS GOES CONTRARY TO THE DICTUM OF HO N'BLE DELHI HIGH COURT(SUPRA). IN THESE CIRCUMSTANCES, THE CASE LAW OF HON'BLE SUPREME COURT [1973] 88 ITR 192 CIT VS VEGETABLE PR ODUCTS LTD. HOLDING THAT WHEN THERE IS DIVERGENCE OF OPINIONS B ETWEEN THE DECISIONS OF VARIOUS HIGH COURTS, THE ONE FAVOURING THE ASSESSEE HAS TO BE ADOPTED, APPLIES IN THE PRESENT CASE. THEREF ORE, WE HOLD THAT THE IMPUGNED UTILIZATION OF CAPITAL GAINS IN THE NA MES OF ASSESSEES WIFE AND SON DESERVES TO BE ACCEPTED FOR THE PURPO SE OF SECTION 54F. 8. THIS LEAVES US WITH THE OTHER CASE LAW RELIED UPON BY THE REVENUE OF JAI NARAYAN (SUPRA). A PERUSAL OF THE S AME REVEALS THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT DID NOT FOL LOW THE CASE LAW OF JURISDICTIONAL HIGH COURT IN PARA I.E 12 287 ITR 27 1(SUPRA)WHILE DEALING WITH A CLAIM U/S 54B OF THE ACT. IN OUR CONSIDERE D OPINION, BASED ON I.T.A.NO. 1184/13 :- 6 -: THE SETTLED CANNONS OF JUDICIAL PRECEDENCE, WE HAVE TO FOLLOW THE HON'BLE JURISDICTIONAL HIGH COURTS CASE LAW AND NO T THE CASE LAW OF P&H HIGH COURT (SUPRA). 9. IN VIEW OF OUR ABOVE DISCUSSION, WE HOLD THAT THE ASSESSEE DESERVES TO GRANT RELIEF SO FAR AS HIS CLAIM OF EXE MPTION U/S 54F IS CONCERNED. 10. ASSESSEES APPEAL IS, THEREFORE, ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 05 TH OF DECEMBER, 2013, AT CHENNAI (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 05 TH DECEMBER, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR