Dr.S.Rajesh, Salem V. ACIT, Salem

ITA 1261/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96093 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 11-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 26-05-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Assessee Lawyers: G BASKAR
• Keywords: Valuation report
• Section: 54F

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHENNAI . , , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1261/MDS./2015 ( / ASSESSMENT YEAR :2004-05) DR.S.RAJESH, 2/32,VIJAYARAGAVACHIAR ROAD, KUMARASAMYPATTI, SALEM 636 007. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. PAN AFPPR 8610 B ( /APPELLANT) ( !' / RESPONDENT ) # $ / APPELLANT BY : MR.G.BASKAR,ADVOCATE !' # $ / RESPONDENT BY : MR.A.B.KOLI,JCIT, D.R % & # ' ( / DATE OF HEARING : 11 .09.2015 ) # ' ( /DATE OF PRONOUNCEMENT : 29.09.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: 2 ITA NO.1209 /MDS/2015 THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I8, CHENNAI, P ASSED U/S.143(3)/153A OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, DOCTOR BY PROFESSION AND ASSOCIATED WIT H M/S.SAVEETHA MEDICAL AND EDUCATIONAL TRUST GROUP, WAS SEARCHED U /S.132 OF THE ACT ON 13.08.2007. IN RESPONSE TO NOTICE ISSUED U/S .153A(A) OF THE ACT, HE FILED HIS INCOME-TAX RETURN DECLARING TOTAL INCOME AS ` 3,60,827/-. FINALLY THE ASSESSMENT WAS COMPLETED ON 31.12.2009 VIDE ORDER PASSED U/S.143(3)/153A OF THE ACT. THE O NLY ISSUE DEALT IN THE ASSESSMENT ORDER BY THE LD.A.O IS DENIAL OF EXE MPTION U/S.54F OF THE ACT. THE ASSESSEE HAS SOLD A RESIDENTIAL PLOT OF LAND ON 29.09.2003 FOR THE SALE CONSIDERATION OF ` 15 LAKHS. THE LONG TERM CAPITAL GAINS ON THE SALE OF RESIDENTIAL PLOT WORKE D OUT TO ` 8,13,544/-. THE ASSESSEE HAD CLAIMED EXEMPTION U/S.54F OF THE A CT BY INVESTING THE ENTIRE SALE CONSIDERATION ON A NEW RESIDENTIAL HOUSE IN THE FOLLOWING MANNER I.E., ON A RESIDENTIAL PLOT PURCHA SED WITHIN ONE YEAR PRIOR TO THE DATE OF SALE FOR ` 21,80,991/- AND BY CONSTRUCTING A 3 ITA NO.1209 /MDS/2015 RESIDENTIAL HOUSE INCURRING COST OF ` 41.84 LAKHS. THE ASSESSEE HAD ALSO SUBMITTED VALUATION REPORT AND COMPLIED WITH T HE CONDITIONS PRESCRIBED UNDER THE ACT FOR CONSTRUCTING THE RESID ENTIAL HOUSE WITHIN THE STIPULATED PERIOD FOR CLAIMING DEDUCTION AGAINS T THE LONG TERM CAPITAL GAINS. HOWEVER, ON PERUSING THE VALUATION R EPORT, THE LD. A.O CAME TO A CONCLUSION THAT THE CONSTRUCTION OF THE N EW RESIDENTIAL HOUSE WAS COMPLETED BEYOND THE STIPULATED PERIOD SP ECIFIED UNDER THE ACT, THEREFORE HE DENIED EXEMPTION U/S.54F OF T HE ACT AND ASSESSED THE LONG TERM CAPITAL GAINS TO TAX AND RAI SED THE DEMAND. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME T AX (APPEALS) AND SUBMITTED CASE LAWS AND CBDT CIRCULAR IN SUPPOR T OF HIS CASE. THE LD. CIT(A) AFTER PERUSING THE SUBMISSIONS MADE BEFORE THE LD.A.O, WRITTEN SUBMISSIONS FILED IN THE COURSE OF THE APPELLATE PROCEEDINGS AND THE VALUATION REPORT FILED BY THE A SSESSEE, CAME TO A CONCLUSION THAT THE CONSTRUCTION OF HOUSE WAS COMPL ETED BEYOND 28.09.2006, IE., THE PERIOD OF THREE YEARS SPECIFIE D UNDER THE ACT AND THEREFORE UPHELD THE ORDER OF THE ASSESSING OFFICER . 4 ITA NO.1209 /MDS/2015 4. FURTHER AGGRIEVED BY THE ORDER OF THE LD. CIT ( A), THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. THE LD.A.R SUBMITTED BEFORE US THAT THE DENIAL OF EXEMPTION U/S.54F OF THE ACT IS BAD IN LAW SINCE THE ASSESSEE HAD INVESTED THE ENTIRE SALE CONSIDERA TION IN CONSTRUCTION OF THE RESIDENTIAL HOUSE WITHIN IN THE SPECIFIED PERIOD UNDER THE ACT BY INCURRING EXPENDITURE OF ` 41,84,487/- WHEREAS THE LONG TERM CAPITAL GAINS WORKS OUT TO ONLY ` 8,13,544/-. IT WAS FURTHER SUBMITTED THAT AS PER THE PROVISIONS OF THE SECTION 54F OF THE ACT, THE ASSESSEE HAS PURCHASED THE RESIDENTIAL PLOT OF LAND ON 21.04.2003 FOR ` 21,80,991/-, WHICH IS WITHIN ONE YEAR PRIOR TO DATE OF SALE OF THE PROPERTY AND THEREAFTER IMMEDIATELY STARTED THE CON STRUCTION OF THE RESIDENTIAL HOUSE. AS PER THE VALUATION REPORT, MA JOR CONSTRUCTION WORK HAS BEEN COMPLETED, PENDING MARGINAL WORK WHIC H FALLS AFTER THE STIPULATED TIME WHEREAS THE MAXIMUM INVESTMENT WAS MADE IN THE RESIDENTIAL HOUSE BEFORE 28.09.2006 IE., WITHIN THR EE YEARS FROM THE DATE OF SALE OF THE ORIGINAL ASSET. IT WAS FURTHER ARGUED THAT THE PROVISIONS OF THE SECTION 54F OF THE ACT OUGHT TO B E APPLIED LIBERALLY AND BENEFIT CANNOT BE DENIED FOR COMPLETING THE LEF T OUT WORK 5 ITA NO.1209 /MDS/2015 EXCEEDING THE TIME LIMIT WHICH IS NEGLIGIBLE. ON T HE OTHER HAND LD. D.R VEHEMENTLY SUPPORTED THE ORDERS OF THE REVENUE AND ARGUED THAT SINCE THE PERIOD OF CONSTRUCTION HAS EXCEEDED MORE THAN THREE YEARS, THE EXEMPTION UNDER THE PROVISIONS OF SECTIO N 54F CANNOT BE ALLOWED, AND THE APPEAL OF THE ASSESSEE MAY BE DISM ISSED. 5. AFTER HEARING THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSING THE MATERIALS PLACED ON RECORD AND CASE LAWS CITED BY THE LD.A.R, I AM OF THE OPINION THAT THE ASSESSEE HAS COMPLIED WI TH THE PROVISIONS OF THE ACT BY INVESTING IN THE RESIDENTIAL HOUSE WI THIN THE STIPULATED TIME LIMIT PRESCRIBED U/S.54F OF THE ACT FOR CLAIMI NG THE EXEMPTION. SECTION 54F OF THE ACT IS A BENEFICIAL PROVISION TO THE ASSESSEE AND HENCE IT HAS TO BE INTERPRETED LIBERALLY, MOREOVER THOSE PROVISIONS OF THE ACT ARE AIMED FOR PROMOTING CONSTRUCTION OF RES IDENTIAL PROPERTY WITHIN THE COUNTRY. THE ONLY ISSUE IN THIS APPEAL I S WHETHER THE RESIDENTIAL PROPERTY WAS CONSTRUCTED WITHIN THREE Y EARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET OR OTHERWISE. IT IS APPARENT FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS COMPLIED WI TH THE PROVISIONS OF THE ACT I.E., PURCHASED THE PLOT OF LAND FOR CON STRUCTION ON 6 ITA NO.1209 /MDS/2015 21.04.2003 FOR ` 21,80,991/-, WHICH IS WITHIN ONE YEAR PRIOR TO DATE OF SALE OF THE PROPERTY AND THEREAFTER IMMEDIATELY BEG UN THE CONSTRUCTION OF THE RESIDENTIAL HOUSE. ALL MOST THE ENTIRE CONSTRUCTION OF THE RESIDENTIAL HOUSE WAS COMPLETED WORKS WITHIN THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL ASSET BY INCURRING AN EXPENDITURE OF ` 41,84,487/- WHICH IS MORE THAN THE AMOUNT REALIZED ON THE SALE OF THE ORIGINAL ASSET. IT IS ALSO APPARENT FROM THE FA CTS OF THE CASE THAT THE GROUND FLOOR WAS COMPLETED BEFORE THE TIME LIMI T OF THREE YEARS I.E. 28.09.2006 AND SUBSTANTIAL PORTION OF FIRST FL OOR WAS ALSO COMPLETED BEFORE THE PERIOD OF THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL ASSET. IT IS HELD BY THE HONBLE ITAT HYDERABAD BENCH IN THE CASE OF NARASIMHA RAJU VS. ASSISTANT COMMISSION ER OF INCOME TAX IN ITA NO.234/HYD./2012 REPORTED IN 143 ITD 586 THAT ONCE THE ASSESSEE DEMONSTRATES THAT THE CONSIDERATION RECEIV ED ON TRANSFER HAS BEEN INVESTED EITHER PURCHASING RESIDENTIAL HOU SE OR IN CONSTRUCTING A RESIDENTIAL HOUSE EVEN THOUGH THE TR ANSACTIONS ARE NOT COMPLETE IN ALL RESPECTS AS REQUIRED UNDER THE LAW THAT WOULD NOT DISENTITLE THE ASSESSEE FROM AVAILING BENEFIT U/S. 54F OF THE ACT. IN THE PRESENT CASE BEFORE US, THE ASSESSEE HAS COMPLE TED THE 7 ITA NO.1209 /MDS/2015 CONSTRUCTION OF GROUND FLOOR AND FIRST FLOOR BEFORE THE SPECIFIED PERIOD AND THUS COMPLIED WITH THE PROVISIONS OF THE SECTIO N 54F OF THE ACT. THEREFORE, I HEREBY DIRECT THE LD. AO TO ALLOW THE CLAIM OF EXEMPTION U/S.54F OF THE ACT. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 29 TH SEPTEMBER, 2015 AT CHENNAI. SD /- ( . ) (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER K S SUNDARAM. * # !'+, -,' /COPY TO: 1. /APPELLANT 2. !' /RESPONDENT 3. % .' ( )/CIT(A) 4. % .' /CIT 5. ,/ 0 !'1 /DR 6. 0 2 3 & /GF