DCIT, Mysore V. Sri.B.B. Shankar, Hassan

ITA 1317/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63759 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNDERA RAJAN
• Assessee Lawyers: RAMPRIYADAS
• Keywords: Capital asset; Valuation report
• Section: 54F; 147; 131; 148; 139

Judgement Text

PAGE 1 OF 9 ITA NO.131 7/BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1317/BANG/2011 (ASST. YEAR 2007-08) THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, MYSORE. VS SHRI B B SHANKAR, KUMVARAHALLI P.O., VIA YESLUR, SAKALESHPUR TALUK, HASSAN 573137. PA NO.BKSPS3058K (APPELLANT) (RESPONDENT) DATE OF HEARING : 15.10.2012 DATE OF PRONOUNCEMENT : 19.10.2012 APPELLANT BY : SHRI SUNDERA RAJAN, JCIT RESPONDENT BY : SHRI RAMPRIYADAS, C.A. OR DER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTMENT IS DIREC TED AGAINST THE ORDER OF THE CIT(A)-VI, BANGALORE DATED 14/10/2 011. THE RELEVANT ASSESSMENT YEAR IS 2007-2008. 2. THE GROUNDS OF APPEAL RAISED READ AS FOLLOWS:- I) THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE ASS ESSEE HAD INVESTED MAJOR PORTION OF THE SALE PROCEEDS BEF ORE THE DATE OF FILING OF RETURN AS THERE IS PROOF THAT THE ASSESSEE STARTED CONSTRUCTION ONLY IN THE F.Y.2008-0 9. PAGE 2 OF 9 ITA NO.131 7/BANG/2011 2 II) THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE CONSTRUCTION OF THE HOUSE WAS COMPLETED BEFORE THE DATE ON WHICH THE ASSESSEE FILED HIS RETURN I.E. ON 6/11 /2008 ON THE BELIEF THAT THE SECOND PERMISSION FROM THE G RAM PANCHAYAT WAS OBTAINED TO COMPLETE THE HOUSE AND NOT TO BEGIN THE CONSTRUCTION OF THE HOUSE. III) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE ASSESSEE OBTAINED PERMISSION FROM THE GRAM PANCHAYAT FOR HOUSE CONSTRUCTION ONLY ON 8/7/2008 AND NO CONSTRUCTION CAN START BEFORE OBTAINING PERMISSI ON FROM THE STATUTORY AUTHORITIES. IV) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT IT IS IMPOSSIBLE TO CONSTRUCT A 4194 SQ FT HOU SE IN 4 MONTHS I.E. BEFORE 6/11/2008 (THE DATE OF FILING OF RETURN). V) THE LEARNED CIT(A) ERRED IN CONCLUDING THAT RS.49,17,000/- WAS INVESTED BEFORE THE DATE OF FILI NG OF RETURN ON 6/11/2008 BASED ON THE VALUATION REPORT F ROM CIVIL ENGINEER WITHOUT GIVING AN OPPORTUNITY TO THE AO. VI) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE ASSESSEE DID NOT INVEST ANY AMOUNT OF THE S ALE PROCEEDS IN THE CAPITAL GAINS ACCOUNTS SCHEME BEFOR E THE DUE DATE UNDER SECTION 139(1) AS REQUIRED BY 54F(4). VII) THE LEARNED CIT(A) ERRED IN RELYING ON THE CASE OF N IPUN MEHROTRA V ACIT REPORTED IN 297 ITR (AT) 110 (2008) . 3. THE FACTS IN BRIEF ARE AS UNDER:- THE ASSESSEE IS AN INDIVIDUAL. HE IS AN AGRICULT URIST. IN THE COURSE OF SEARCH PROCEEDINGS IN THE CASE OF SHRI S K SRINIVASA AND OTHERS ON 31.1.2008, IT TRANSPIRED THAT THE ASSESSEE HAD SOLD 3.37 ACRES OF LAND FOR A TOTAL CONSIDERATION OF RS.51,02,500/- AS PER SALE A GREEMENT DATED 25/10/2005 TO SRI S K SRINIVASA. THE ASSESSEE ADMI TTED IN THE STATEMENT RECORDED UNDER SECTION 131 DATED 1/4/2008 THAT HE H AD PURCHASED THE ABOVE SAID LAND DURING 1981 AT A COST OF RS.5000/- PER ACRE AND SOLD IT TO SRI PAGE 3 OF 9 ITA NO.131 7/BANG/2011 3 S K SRINIVASA. SINCE NO RETURN WAS FILED BY THE ASS ESSEE FOR THE ASSESSMENT YEAR 2007-08, NOTICE WAS ISSUED UNDER SECTION 148 OF THE ACT. THEREAFTER, RETURN OF INCOME WAS FILED ON 6/11/2008 DECLARING A TOTAL INCOME OF RS.1,69,088/- UNDER THE HEAD LONG TERM CAPITAL GAI NS. THE ASSESSEE DECLARED AN INCOME OF LONG TERM CAPITAL GAINS OF RS .1,69,039/- ON THE SALE OF LAND AMOUNTING TO RS.52,00,000/- AFTER CLAIMING AN EXEMPTION OF RS.48,14,186/- UNDER SECTION 54F OF THE ACT. THE A SSESSMENT ORDER WAS COMPLETED UNDER SECTION 143 RWS 147 OF THE ACT VIDE ORDER DATED 10/12/2010 WHEREIN THE CLAIM OF EXEMPTION UNDER SEC TION 54F OF THE ACT WAS DENIED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT COMPLETED THE CONSTRUCTION OF THE HOUSE BEFORE THE TIME STIPULATED UNDER SECTION 139(1) NOR HAD HE COMPLETE D THE CONSTRUCTION BEFORE FILING THE RETURN BELATEDLY ON 6/11/2008. AC CORDING TO THE ASSESSING OFFICER, IT IS STIPULATED UNDER SECTION 54F(4) THAT UNUTILIZED OF THE SALE PROCEEDS HAS TO BE DEPOSITED BEFORE THE DATE OF FIL ING OF THE RETURN UNDER SECTION 139(1) IN THE CAPITAL GAINS ACCOUNTS SCHEME IN ANY AUTHORIZED BANK TO AVAIL THE EXEMPTION UNDER SECTION 54F OF THE ACT . 4. AGGRIEVED BY THE DENIAL OF EXEMPTION UNDER SECTI ON 54F OF THE ACT, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY. 5. BEFORE THE FIRST APPELLATE AUTHORITY IT WAS SUBM ITTED THAT THE ASSESSEE IS A SENIOR CITIZEN AND CONSTRUCTED THE RE SIDENTIAL HOUSE WITHIN THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL PR OPERTY AND SINCE THE ENTIRE SALE CONSIDERATION WAS INVESTED, HE WAS ELIG IBLE FOR EXEMPTION UNDER PAGE 4 OF 9 ITA NO.131 7/BANG/2011 4 SECTION 54F OF THE ACT. THE ASSESSEE ALSO SUBMITTE D THE DETAILS REGARDING THE BUILDING CONSTRUCTION, PERMISSION OBTAINED IN F ORM 44 DATED 9/10/2006. FURTHER, RELYING ON THE ORDER OF THE TRIBUNAL IN THE CASE OF NIPUN MEHROTRA V ACIT REPORTED IN 297 ITR (AT) 110, IT WAS CONTEND ED THAT THE ASSESSEE HAD MADE INVESTMENT WITHIN THE DUE DATE OF FILING O F THE RETURN OF INCOME UNDER SECTION 139, WHICH INCLUDES 139(4) AND NOT NE CESSARILY UNDER SECTION 139(1) ONLY, THEREFORE, THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 54F. 6. THE CIT(A) FOR HIS REASONING MENTIONED IN PARA 3.3 OF HIS IMPUGNED ORDER, ALLOWED EXEMPTION 54F OF THE ACT. T HE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED BELOW FOR READY REFERENCE:- (A) CAPITAL GAINS AROSE ON 4.5.2006 FOR F.Y.2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08. (B) THE APPELLANT STARTED CONSTRUCTION OF THE HOUSE BY OBTAINING PERMISSION FROM THE GRAM PANCHAYAT ON 9/10/2006 BY SUBMITTING APPLICATION ON 27/9/2006. (C) THE HOUSE WAS CONSTRUCTED WITHIN THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL PROPERTY. (D) THE ASSESSING OFFICER HERSELF HAS CERTIFIED THAT THE HOUSE WAS COMPLETED BY 26/3/2009 EVEN IF IT WAS NOT COMPLETED BY 6/11/2008. (E) AS MUCH AS RS.49,17,000/- WAS INVESTED BY THE DATE OF FILING OF THE RETURN AS AGAINST THE TOTAL INVESTMENT OF RS.55,43,750/- AS PER THE VALUATION REPORT FROM THE CIVIL ENGINEER, EXCLUDING THE LAND COST OF RS.2,15,622/-. (F) THE HONBLE JURISDICTIONAL BANGALORE TRIBUNAL HAS HELD IN THE CASE OF NIPUN MEHROTRA V ACIT, REPORTED IN 297 ITR (AT) 110 (2008) THAT UNDER SECTION 54F OF THE I T ACT, 1961, THE ASSESSEE HAS PAGE 5 OF 9 ITA NO.131 7/BANG/2011 5 TO UTILIZE THE NET CONSIDERATION FOR THE PURCHASE O R CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139. THERE IS NO MENTION OF ANY SUB SECTION OF SECTION 139. ONE CANNOT INTERPRET THAT SECTION 139 MENTIONED SHOULD BE READ AS SECTION 139(1). IN THE ABOVE JUDGMENT, THE HONBLE TRIBUNAL HAS EVEN QUOTED THE PROVISIONS OF SECTION 54F WHEREIN WITHIN THE BRACKETS SECTION 139(1) IS MENTIONED. EVEN AFTER NOTICING THE SAME, THE HONBLE TRIBUNAL HAS MADE THE DISTINCTION ON TWO ISSUES:- (I) IF IT IS UTILIZED FOR PURCHASE OF CONSTRUCTION, IT SHOULD BE WITHIN THE TIME ALLOWED UNDER SECTION 139. (II) IF IT IS INVESTED IN CAPITAL GAINS ACCOUNT, THE LIMITATION OF 139(1) APPLIES. IN THE INSTANT CASE, ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2007-08. TIME ALLOWED TO FILE THE RETURN UNDER SECTION 139(1) WAS UP TO 31/7/2007. HOWEVER, UNDER SECTION 139(4), THEY WERE PERMITTED TO FILE THE RETURN UP TO 31.3.2009. BEFORE 31.3.2009, THE APPELLANT HAS UTILIZED THE SALE PROCEEDS FOR CONSTRUCTION OF THE RESIDENTIAL HOUSE WHICH WAS COMPLETED BEFORE 26.3.2009 AND MAJOR PORTION AMOUNTING TO RS.49,17,000/- OUT OF THE TOTAL INVESTMENT OF RS.55,43,750/- WAS INVESTED MUCH BEFORE 6/11/2008, THE DATE OF FILING THE RETURN. SINCE THE APPELLANT HAD FURNISHED DETAILS BEFORE THE ADIT AND THE ASSESSING OFFICER, ABOUT THE HOUSE CONSTRUCTION AND THEY DID NOT HAVE MORE THAN ONE HOUSE AS ON THAT DATE, THEY WERE ENTITLED FOR CLAIMING DEDUCTION UNDER SECTION 54F SINCE THE ENTIRE AMOUNT WAS INVESTED BEFORE THE TIME ALLOWED UNDER SECTION 139 THOUGH NOT BEFORE THE TIME ALLOWED PAGE 6 OF 9 ITA NO.131 7/BANG/2011 6 UNDER SECTION 139(1), IN VIEW OF THE HONBLE JURISDICTIONAL TRIBUNAL JUDGMENT CITED BY THE APPELLANT IN THE CASE OF NIPUN MEHROTRA V ACIT 297 ITR (AT) 110 (2008), BANGALORE BENCH. IN VIEW OF THE SAME, FOLLOWING THE HONBLE JURISDICTIONAL TRIBUNAL JUDGMENT ON THE ISSUE, IT I S HELD THAT ASSESSING OFFICER SHALL GIVE DEDUCTION UNDER SECTION 54F ON THE AMOUNT INVESTED ON THE CONSTRUCTION OF THE HOUSE AMOUNTING TO RS.49,17,000/- INVESTED BEFORE 6/11/2008. 7. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 8. THE LEARNED DR RELIED ON THE ORDER OF THE ASSES SING OFFICER AND THE GROUNDS RAISED HEREIN ABOVE. 9. THE LEARNED AR ON THE OTHER HAND SUPPORTED THE FINDING/CONCLUSION OF THE CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. IN THE INSTANT CASE, THE DUE DATE FOR F ILING THE RETURN OF INCOME UNDER SECTION 139(1) WAS ON OR BEFORE 31/7/2007. H OWEVER, UNDER SECTION 139(4), THE ASSESSEE WAS ENTITLED TO FILE THE RETUR N UP TO 31/3/2009. THE ASSESSEE HAD UTILIZED THE SALE PROCEEDS FOR CONSTRU CTION OF HOUSE, WHICH WAS COMPLETED BEFORE 26/3/2009 (WHICH IS NOT IN DISPUTE ). THE MAJOR PORTION AMOUNTING TO RS.49,17,000/- OUT OF THE TOTAL INVEST MENT OF RS.55,43,750/- WAS INVESTED MUCH BEFORE 6/11/2008, THE DATE OF FIL ING THE RETURN. SINCE THE ENTIRE AMOUNT WAS INVESTED BEFORE THE TIME ALLO WED UNDER SECTION 139, THOUGH NOT UNDER THE TIME ALLOWED UNDER SECTION 139 (1), IN VIEW OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF FA THIMA BAI V ITO REPORTED IN 32 DTR (KAR.) 243 AND THE TRIBUNAL ORDER IN THE CASE OF NIPUN MEHROTRA V PAGE 7 OF 9 ITA NO.131 7/BANG/2011 7 ACIT REPORTED IN 297 ITR (AT) 110, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 54F OF THE ACT. 10.1 THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE MENTIONED CASE HELD THAT IT IS SUFFICIENT FOR THE ASSESSEE TO UTILIZE THE CAPITAL GAINS FOR THE PURCHASE OF A FLAT BEFORE THE EXTENDED DUE DATE UNDER SECTION 139(4) OF THE ACT. THE RELEVANT FINDING OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE SUPRA READS AS FOLLOWS:- THE SECTION 54(1) DECLARES THAT WHEN THE ASSESSEE SELLS ANY LONG TERM CAPITAL ASSET, THE ASSESSEE SHOULD PUR CHASE THE BUILDING WITHIN ONE YEAR BEFORE THE TRANSFER OR WITHIN TWO YEARS AFTER THE TRANSFER BY INVESTING CAPITAL G AINS. IN WHICH EVENT THE ASSESSEE WILL NOT BE LIABLE FOR CAPITAL GAIN TAX. THE SECTION 54(2) DECLARES THAT WITHIN ONE YEAR FROM THE DATE OF TRANSFER IF THE CAPITAL GAIN IS NOT INVESTE D IN PURCHASE OF BUILDING, HE SHOULD DEPOSIT THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME OR ELSE THE ASSESSEE SHOULD INVEST THE CAPITAL GAINS BEFORE FILING OF RE TURN WITHIN THE PERMITTED PERIOD UNDER SECTION 139. IN W HICH EVENT, THE ASSESSEE WILL NOT BE LIABLE TO PAY CAPITA L GAIN TAX. THE SECTION 139(4) DECLARES THAT THE ASSESSEE SHOUL D FILE RETURNS WITHIN THE TIME PRESCRIBED, IF HE FAILS TO FILE RETURNS, HE MAY FILE RETURNS FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE EXPIRY OF ONE YEAR FROM THE END OF RELEV ANT ASSESSMENT YEAR. IN THE INSTANT CASE, THE DUE DATE FOR FILING OF RET URN IS 30 TH JULY, 1988. UNDER SECTION 139(4) THE ASSESSEE WAS ENTITLED TO FILE RETURN IN THE EXTENDED TIME, WHICH IS WITHIN 31 ST MARCH, 1990. PAGE 8 OF 9 ITA NO.131 7/BANG/2011 8 THE EXTENDED DUE DATE UNDER SECTION 139(4) WOULD BE 31 ST MARCH, 1990. THE ASSESSEE DID NOT FILE THE RETURN WITHIN THE EXTENDED DUE DATE, BUT FILED THE RETURN ON 27 TH FEB.,2000. HOWEVER, THE ASSESSEE HAD UTILIZED THE ENTIRE CAPITAL GAINS BY PURCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIOD OF SEC.54(2) I.E., BEF ORE THE EXTENDED DUE DATE FOR RETURN UNDER SECTION 139. TH E ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RETURN UNDER SECTION 139(4). BUT, HOWEVER, UTILIZE D THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATE UNDER SECTION 139(4). THE CONTEN TION OF THE REVENUE THAT THE DEPOSIT IN THE SCHEME SHOUL D HAVE BEEN MADE BEFORE THE INITIAL DUE DATE AND NOT THE EXTENDED DUE DATE IS AN UNTENABLE CONTENTION. THE GAUHATI HIGH COURT IN CIT V RAJESH KUMAR JALAN (2006) 206 CTR (HAU) 361; (2006) 286 ITR 274 (GAU) HAS TAKEN A SIMILAR VIEW THAT THE TIME LIMIT FOR DE POSIT UNDER THE SCHEME OR UTILIZATION CAN BE MADE BEFORE THE DUE DATE FOR FILING OF RETURNS UNDER SECTION 139(4) . 10.2 THE BANGALORE BENCH OF THE TRIBUNAL IN THE CA SE CITED SUPRA HAS HELD THAT SINCE THE ASSESSEE HAD UTILIZED THE SALE CONSIDERATION BEFORE THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(4) O F THE ACT, THE ASSESSEE WAS ENTITLED EXEMPTION UNDER SECTION 54F OF THE ACT . IN THE LIGHT OF THE ABOVE JUDGMENT OF THE HONBLE HIGH COURT AND THE OR DER OF THE BANGALORE BENCH OF THE TRIBUNAL, WE HOLD THAT THE CIT(A) IS J USTIFIED IN GRANTING EXEMPTION UNDER SECTION 54F OF THE ACT. THEREFORE, THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. PAGE 9 OF 9 ITA NO.131 7/BANG/2011 9 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF OCTOBER, 2012 SD/- SD/- (JASON P BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.