B.Rajasekaran, Salem V. ITO, Salem

ITA 1215/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8767 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAHADEVAN
• Assessee Lawyers: G BASKAR
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1215/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 SHRI B. RAJASEKARAN, 7/9, CHINNAIAH PILLAI STREET, MARAVANERI, SALEM 636 007. PAN : AAEHB 1157 R V. THE INCOME TAX OFFICER, WARD I(4), NO.3, GANDHI ROAD, SALEM 636 007. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI G. BASKAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI SAHADEVAN, JCIT 1 / 2% / DATE OF HEARING : 08.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 05.08.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DA TED 28.02.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE ALONG WITH HIS FAMILY MEMBERS SOL D A PROPERTY BY 2 I.T.A. NO.1215/MDS/14 NAME PALACE THEATRE MEASURING 46124 SQ.FT. FOR A TO TAL CONSIDERATION OF ` 4,61,62,020/- DURING THE YEAR UNDER CONSIDERATION. THE MARKET VALUE OF THE PROPERTY FOR THE PURPOSE OF CAPITAL GAIN WAS FIXED AT ` 5,86,14,700/- UNDER SECTION 50C OF THE INCOME-TAX A CT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. CO UNSEL, THE ASSESSEE WAS IN RECEIPT OF 1/4 TH SHARE OF PROCEEDS FROM THE SALE OF THE LAND. ACCORDING TO THE LD. COUNSEL, THE PROPERTY WAS OFFE RED FOR SECURITY FOR A BANK LOAN. WHEN THERE WAS DEFAULT IN REPAYME NT OF LOAN, THE ASSESSEE CLEARED THE ENTIRE DUE AND TOOK POSSESSION OF THE BUILDING. ACCORDING TO THE LD. COUNSEL, THE PROPER TY BELONGS TO ASSESSEE AND HIS BROTHER LATE B. RADHAKRISHNAN. IT IS AN ANCESTRAL PROPERTY FOR BOTH. THE ASSESSEE CLEARED BANK DEBTS ON THE FAMILY PROPERTY. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE SHOULD BE GIVEN EXEMPTION UNDER SECTION 54 OF THE A CT IN RESPECT OF THE ENTIRE CLAIM. 3. ON THE CONTRARY, SHRI SAHADEVAN, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE AND HIS BROTHER LATE RADHAKRISHNAN OFFERED THE PROPERTY IN QUESTION AS S ECURITY FOR AVAILING THE LOAN. IN FACT, THE LOAN COULD NOT BE REPAID AND THE ASSESSEE PAID THE ENTIRE AMOUNT AND REDEEMED THE PR OPERTY FROM 3 I.T.A. NO.1215/MDS/14 THE BANK LOAN. THE ASSESSEE CLAIMED THE ENTIRE PAY MENT OF ` 52,50,000/- AS EXEMPTED UNDER SECTION 54 OF THE ACT . ACCORDING TO THE LD. D.R., THE PROPERTY IN QUESTION BELONGED TO ASSESSEE AND HIS BROTHER IN EQUAL SHARE. THE ASSESSEE PAID THE AMOUNT FOR REDEEMING OF HIS OWN SHARE AND HIS BROTHERS SHARE. AT THE BEST, WE CAN SAY THAT THE ASSESSEE HAS PURCHASED THE HOUSE B ELONGING TO HIS BROTHER LATE RADHAKRISHNAN TO THE EXTENT OF ` 26,00,000/-. IN RESPECT OF ANOTHER HALF SHARE OF THE PROPERTY, IT R EMAINS WITH THE ASSESSEE AND THE ASSESSEE HAS REPAID THE LOAN AND R EDEEMED THE PROPERTY, THEREFORE, ACCORDING TO THE LD. D.R., THE SHARE WHICH BELONGED TO THE ASSESSEE CANNOT BE CONSTRUED AS PUR CHASED / INVESTMENT IN THE RESIDENTIAL HOUSE. AT THE BEST, THE INVESTMENT CAN BE WITH REGARD TO THE SHARE OF HIS BROTHER AT ` 26,00,000/-, THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIG HTLY RESTRICTED THE CLAIM AT ` 26,00,000/-. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMED EXEMPTION FOR ` 52,00,000/- IN RESPECT OF REPAYMENT OF LOAN TO THE BANK CLAIMING THAT IT IS AN INVESTMENT IN TH E PROPERTY. IT IS AN ADMITTED FACT THAT THE PROPERTY IS AN ANCESTRAL HOU SE OF THE 4 I.T.A. NO.1215/MDS/14 ASSESSEE AND HIS BROTHER. THE SAME WAS OFFERED AS SECURITY FOR AVAILING THE LOAN. WHEN THE LOAN COULD NOT BE REPA ID, THE SAME WAS REDEEMED BY THE ASSESSEE BY PAYING A SUM OF ` 52,50,000/-. THE ASSESSEE NOW CLAIMS EXEMPTION UNDER SECTION 54 OF T HE ACT FOR THE AMOUNT OF ` 52,50,000/-. THE CIT(APPEALS) FOUND THAT THE ASSES SEE IS ENTITLED TO HALF SHARE IN THE PROPERTY, THEREFOR E, REPAYMENT OF LOAN WITH REGARD TO HALF THE AMOUNT CANNOT BE CONSTRUED AS INVESTMENT OR PURCHASE OF PROPERTY. AT THE BEST, IT CAN BE CONST RUED AS PURCHASE OF PROPERTY WITH REGARD TO HALF SHARE OF THE PROPER TY BELONGING TO THE ASSESSEES BROTHER LATE RADHAKRISHNAN. THE ASSESSE E APPEARS TO HAVE OBTAINED HIS BROTHERS SHARE FROM HIS BROTHER S WIFE AND SONS ON RELINQUISHING THEIR RIGHTS IN THE JOINT PROPERTY FOR A CONSIDERATION OF ` 26,00,000/-. THEREFORE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE INVESTMENT HAS TO BE RESTRICTED ON LY TO ` 26,00,000/-. IN RESPECT OF OTHER SHARE, NAMELY, THE SHARE BELONG ING TO THE ASSESSEE, THE PAYMENT WAS MADE TO THE BANK ONLY FOR THE PURPOSE OF REDEEMING THE PROPERTY AND IT CANNOT BE CONSTRUE D AS INVESTMENT. THEREFORE, THIS TRIBUNAL DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5 I.T.A. NO.1215/MDS/14 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 5 TH AUGUST, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 5 TH AUGUST, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A), SALEM 4. 1 92 /CIT, SALEM 5. 7: -2 /DR 6. ;( < /GF.