A Manogna, Hyderabad V. Income Tax Officer, Ward-8(1), Hyderabad

ITA 1281/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5149 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 16-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Section: 54F; 131; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S . R IF A UR R AH MAN , ACCOUNTANT M EMB E R I.T.A. NO. 1 281 /H YD /201 8 ASSESSMENT YEAR: 20 08 - 09 SMT. A. MANOGNA, HY DERABAD [PAN: A BQP A 4258F ] VS THE INCOME TAX OFFICER, WARD - 8 ( 1 ) HYDERABAD ( APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS, A R FOR REVENUE : S HRI NILANJAN D EY, DR DATE OF HEARING : 1 6 - 0 1 - 201 9 DATE OF PRONOU NCEMENT : 30 - 0 1 - 201 9 O R D E R PER S MT. P . M A D H AVI DEVI , J .M. : T HIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE C OMMISSIONER OF INCOM E TAX (APPEALS) - 6 , HYDERABAD, DATED 1 9 - 0 2 - 2 01 8 . A S SESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 6, HYDERABAD ('CIT(A)') IN SUSTAINING THE OBSERVATIONS OF THE LD. ASSESSING OFFICER (' AO') PROPOSING TO ASSESS I NCOME FROM LONG TERM C A PITAL GAINS IN THE A Y 2011 - 12 IS WHOLLY ERRONEOUS AND UNSU STAINABLE IN FACTS AS WELL AS IN LAW. 2. THE CIT(A) ERRED IN NOT FOLLOWING THE ORDER PASSED BY THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD ('ITAT') IN ITA NO. IT A . NO . 1 281 / HYD / 201 8 : - 2 - : 993/ H / 2005 DATED 5.8.2016 M E RELY ON THE PREMISE THAT THERE WAS NO RULING OF THE SUPR EME COURT AVAILABLE AND THAT NO DECISION IN FAVOUR OF THE DEPARTMENT WAS BROUGHT TO THE NOTICE OF THE IT AT. 3. THE CIT (A) FAILED TO NOTE THAT THE ITAT, BENCH HAD IN ITS OR DER DATED 05.08.2016 CON CL U DED THE ISSUE RAISED BY THE AO AND THE CIT(A) IN FAVOUR OF THE APPELLANT WHICH HAD ATTAINED FINALITY AND THEREFORE THE CIT(A) ERRED - IN CONFIRMING THE ORDER PASSED BY THE AO. 4. THE CIT (A) FAILED TO NOTE THAT THE AO HAD NO JURI SDICTION TO PASS AN ORDER P R OPOSING FOR THE ASSESSMENT IN A Y 2011 - 12 IN TH E ASSESSMENT PROCEEDINGS FOR A Y 2008 - 09 AND THEREFORE GROSSLY ERRED IN SUSTAINING THE OBSERVATIONS MADE BY THE AO. 5. WITHOUT PREJUDICE TO ANY OF THE AFORESAID GROUNDS THE CIT(A) FAILED TO NOTE THAT SUBSE C TI O N (4) OF SEC. 54F USES THE WORD 'CONSTRUCTION' AND NOT 'CONSTRUCTED' AND THEREFORE ERRED IN HOLDING THAT THE APPELLANT HAD NOT COMPLIED WITH THE CONDITIONS LAID D OWN IN SEC. 54F OF THE IT ACT . 6. ANY OTHER GROUND(S) THAT MAY ARISE AT THE TIME OF HEARI NG . 2. BR IEF FACTS OF THE CASE ARE THAT, THE ASSESSEE , AN INDIVIDUAL , FILED HER RETURN OF INCOME FOR THE AY. 20 08 - 09 ON 30 - 0 7 - 20 08 DECLARING INCOME OF RS. 1,220/ - . T HE CASE WAS SELECT ED FOR SCRUTINY UNDER CASS AND ACCORDI NGLY ASSESSMENT WAS COMPLETED U /S . 1 43(3) OF THE INCOME TAX ACT [ACT] DT. 30 - 12 - 201 0 . 2.1. D URING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER CALLED FOR CERTAIN INFORMATION WHICH WAS FURNISHED BY THE ASSESSEE AND IT WAS OBSERVED THAT T HE ASSESSEE HAS SOLD SHARE S FOR A T OTAL CONS IDERATION OF RS. 5,00,00,224/ - ON 29 - 11 - 2007 AND HAS ARRIVED AT CAPITAL GAINS OF RS. 4,71,52,450/ - . AFTER MEETING THE EXPENDITURE FOR PURCHASE OF PLOT, REGISTRATION FEES AND EXPENDITURE TOWARDS DEVELOPMENT, BALANCE AMOUNT OF RS . IT A . NO . 1 281 / HYD / 201 8 : - 3 - : 1,46,00, 00 0/ - WAS DEP OSITED WI TH SBI, BALANAGAR BRANCH UNDER CA PITAL GAINS ACCOUNT SCHEME AND ASSESSEE HAD PUT TO USE THE ENTIRE CAPITAL GAINS ARIS ING OUT O F SALE OF SHARES , BY 30 - 11 - 2010. 2.2. ASSESSING OFFICER OBSERVED THAT DURING THE COURSE OF SCRUTINY PR OC EEDINGS, AS SESSEE HAS FURNISHED BA NK STATEM ENTS AND CAPITAL GAIN ACCOUNT, WHICH SHOW S THAT AS ON 30 - 11 - 2010, ENTIRE AMOUNT WAS WIT HDRAWN FROM THE BANK FOR CONSTRUCTION OF A RESIDENTIAL HOUSE. AN INSPECTION WAS CONDUCTED BY THE DEPARTMENT ( OFFICE ) ON 06 - 12 - 2010 AND IT WAS FOUND THAT THE CONSTRUCTION OF HO USE IS IN PROGRESS AND IT IS ONLY IN PRELIMINARY STAGE, WHEREIN ONLY PILLARS HAVE BEEN LAID AND EVEN ROOF WAS NOT LAID. T HEREFORE, ASSESSEE WAS SUMMONED U/S. 131 OF THE ACT, WHEREIN ASSESSEE CONFIRM ED TH E STAGE OF CONSTRUCTION OF THE BUIL DING. ASSESSING OF FICE R OBSERVED TH AT AS PER THE PROVISIONS OF SECTION 54F, ASSESSEE SHOULD HAVE COMPLETED THE CONSTRUCTION WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER , WHEREAS ASSESSEE S CONSTRUCTION WAS NO T COMPLETED WITHIN THE STIPULATED TIME . T HERE FORE , HE OBSERVED T HAT DE DUCTION U/S. 54F IS NOT ALLOWABLE . H OWEVER, HE OBSERVED THAT THE SAME IS TO BE BROUGHT TO TAX IN THE Y EAR IN WHICH THE PERIOD OF THREE YEARS EX PIRE S AND THEREFORE, HE HE LD THAT THE CAPI TA L GAINS ARE TO BE BROUGHT TO TAX IN THE A Y. 2011 - 12. 2. 3 . A GGRIEVED, ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A) . M EANWHILE, THE ASSESSMENT FOR THE AY. 2011 - 12 WAS IT A . NO . 1 281 / HYD / 201 8 : - 4 - : RE - OPENED AND THE ISSUE OF CAPITAL GAINS AND EXE MPTION U/S. 54 F WAS CONSIDERED BY THE ASSESSING OFFI CER AND THE MATTER TRAVELLED UPTO ITAT. T HE CO - ORDINATE BENCH IN I TA NO. 993/HYD/2005 , VIDE ORDER DT. 05 - 08 - 2016, UPHELD THE FINDINGS OF CIT(A) THAT ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54F SINCE THE ENTIRE CAPITA L GAINS HA VE ALREADY BEEN UT ILISED BY THE ASSESSEE BY THE END OF THE THREE Y EAR PERI OD. MEAN WHILE, CIT(A) CAME TO DISPOSE OF THE APPEAL FOR THE RELEVANT ASSESSMENT YEAR BEFORE US I.E., AY. 2008 - 09 AND HELD THAT ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S. 5 4F OF THE ACT AND UP HELD THE FINDINGS OF ASSESSING OFFICER THAT CAPITAL GAINS ARE TO BE BROUGHT TO TAX IN THE AY. 2011 - 12 . T HEREFO RE, HE C ONFIRMED T HE ASSESSMENT ORDER. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. WE FIND THAT THE ISSUE AS TO WHE TH ER THE CAPITAL GAINS ARISE IN AY. 2011 - 12 AND WHE THE R ASSESSEE IS EL IGIBLE FOR DEDUCTION U/S. 54F HAS BEEN CONSIDERED BY THE ITA T IN ASSESSEE S OWN CAS E FO R THE AY. 2011 - 12 AND IT HAS BEEN HELD THAT ASSESSEE IS ELIGIBLE FOR EXE MPTION U/S. 54F OF THE ACT. I T HA S NOT BEEN BROUGHT TO OU R NOTICE BY THE LD.DR THAT THERE HAS BEEN ANY CHALLENGE TO THE ORDER OF THE ITAT FOR THE AY. 2011 - 1 2 A ND THEREFORE, THE OR DER OF THE ITAT HAS BECOME FINAL. S INCE THE ITAT HAS AL READY GIVEN A FINDING , IT IS NOT OPEN TO CIT(A) T O TAKE ANY OTHER VIEW AT THIS STAGE AND TO H O LD THAT THE ENT I RE CAPITAL GAINS ARE TO BE TAXED IN THE AY. 2011 - 12 , BECAUSE CONSTRUCTI ON O F THE RESIDENTIAL H OUSE IS NOT COMPLETED WITHIN THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER. IT A . NO . 1 281 / HYD / 201 8 : - 5 - : T HEREFORE, WE SE T ASIDE THE ORDER O F CIT(A) AND ALLOW THE GROUNDS RAISED BY ASSESSEE . 4. IN THE RE SULT, THE APPEAL OF THE ASSESSEE IS A LLOWED . OR D ER P RO NOU NCED IN THE OPEN COU RT ON 30 TH JANUARY , 201 9 SD/ - SD / - ( S. RIFAUR RAHMAN ) ( P. MADHAV I DEVI ) ACCO UNTAN T MEMBE R JUDICIAL MEMBER HYDERABAD, DATED 30 TH JANUARY , 201 9 TNMM IT A . NO . 1 281 / HYD / 201 8 : - 6 - : C OPY T O : 1. SM T. A. M ANOGNA, C/O. S EKHAR & C O., 133/4, RAS HTRAPATHI ROAD, SECUN DERABAD. 2 . T HE INC OME T A X OFFICER, WARD - 8 ( 1 ) , HYDERA BA D. 3 . CIT(A) - 6 , HYDERABAD . 4 . PR. CIT - 6 , HYDERABAD. 5 . D.R. ITA T, HYD ERA BA D. 6 . GUARD FILE. S.NO . DETAILS DATE 1 DRA FT DICTATED ON 16 - 0 1 - 1 9 2 DRAFT PLACED BEFORE AUTHOR 1 7 - 0 1 - 1 9 3 DRAFT PROPOSED & P LACED BE FORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 7 F ILE SENT TO BENCH CLE RK 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A. R. 10 DA TE OF DISPATCH OF ORDER