Smt Y S Mythily , Bangalore V. The Income Tax Officer Ward-3(2)(1), Bangalore

ITA 1324/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4868 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Opportunity of being heard; Valuation report
• Section: 54F; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I TA NO S . 1323 & 1324 / BANG/2 0 1 7 (ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 ) SMT.Y.S.MYTHILY, NO.8, 3 RD MAIN, 5 TH CROSS, BEML LAYOUT 5 TH STAGE, RAJARAJESHWARINAGAR, BENGALURU - 560098. VS. APPELLANT INCOME - TAX OFFICER WARD - 3( 2) ( 1 ), BENGALURU. RESPONDENT APPELLANT BY : SHRI H.GURUSWAMY, ITP RESPONDENT BY : SHRI C.H.SUNDAR RAO, CIT(DR). DATE OF HEARING : 31 /0 1 /2018 DATE OF PRONOUNCEMENT : 13 / 0 4 /201 8 O R D E R PER I NTURI RAMA RAO, AM : THESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AGAINST DIFFERENT ORDERS OF THE PRINCIPAL COMMISSIONER OF INCOME - TAX, BENGALURU - 3, BENGALURU, PASSED U/S 263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. 2. SINCE COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS, WE PROCEED TO DISPOSE OF THE SAME VIDE THIS COMMO N ORDER. FOR THE SAKE OF CLARIT Y AND CONVEN IENCE, FACTS RELEVANT TO ASSESSMENT YEAR 2007 - 08 (ITA NO.1323/BANG/2017) ARE STATED HEREIN: BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CAPITAL GAINS . ON RECEIPT OF INFO RMATION THAT THE APPELLANT HAD SOLD 5 FLATS FOR A CONSIDERATION OF RS.63,23,000/ - DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 200 7 - 08 ACQUIRED ON ENTERING INTO JOINT ITA NO S . 1323 & 1324 /BANG/20 17 PAGE 2 OF 5 DEVELOPMENT AGREEMENT (JDA) WITH M/S.DWARAKA BUILDERS AND DEVELOPERS IN RESPECT OF PROPERTY BEARING MUNICIPAL NO.22, 3 RD CROSS, SULTANPALYA, BENGALURU, THE AO ISSUE D NOTICE U/S 148 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME. IN RESPONSE TO SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 24/09/ 2014 DECLARING SHORT TERM CAPITAL LOSS OF RS.3,05,200/ - AND EXEMPTION U/S 54F OF RS.18,04,400/ - IN RESPECT OF LONG TERM CAPITAL GAIN , AS THE AMOUNT WAS INVESTED IN THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE SITUATED AT NO.7 & 8, BEML LAYOUT 3 RD MAIN, 5 TH CR OSS, 5 TH STAGE, RAJARAJESHWARI NAGAR, BENGALURU. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE AO ACCEPTING THE RETURN ED INCOME . 3. SUBSEQUENTLY, THE LD.CIT ISSUED SHOW CAUSE NOTICE U/S 263 DATED 25/08/2016 PROPOSING TO REVISE THE ASSESSMENT AS THE CONSIDERATION WAS NOT DEPOSITED IN CAPITAL GAINS SCHEME BEFORE DUE DATE FOR FILING RETURN OF INCOME AND THEREFORE PROPOSED TO DISALLOW THE CLAIM U/S 54F ON THE GROUND THAT NO SALE CONSIDERATION WAS NOT DEPOSITED IN CAPITAL GAINS OF THE S CHEME NOR INVESTED IN THE NEW RESIDENTIAL HOUSE BEFORE DUE DATE FOR FILING RETURN OF INCOME. TO COME TO THIS CONCLUSION, THE LD.CIT PLACED RELIANCE ON THE REPORT OBTAINED FROM THE CHARTERED ENGINEER AND REGISTERED VALUER WHEREIN IT WAS STATED THAT IT WAS ASSUMED THAT DATE OF COMMENCEMENT OF CONSTRUCTION WAS IN MARCH 2008 AND THE COMPLETION WAS IN MARCH 2011. IN RESPONSE TO SAID SHOW CAUSE NOTICE, THE ASSESSEE HAD FILED OBJECTIONS STATING THAT THOUGH COMPLETION OF NEW HOUSE WAS BEYOND THE PERIOD OF 3 YEARS , BUT AMOUNT WAS TOTALLY INVESTED IN CONSTRUCTION OF NEW HOUSE BEFORE DUE DATE OF FILING RETURN OF INCOME. IT WAS FURTHER SUBMITTED THAT COMPLETION OF HOUSE WAS NOT A CRITERIA TO ALLOW EXEMPTION U/S 54F. IT IS SUFFICIENT IF SALE CONSIDERATION IS INVESTED IN NEW RESIDENTIAL PROPERTY. IN SUPPORT OF THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMBANDAM UDAYKUMAR (2012) (345 ITR 389) AND CIT VS. SMT.B.S.SHANTHAKUMARI (233 TAXMAN 347) (KAR) . THUS IT WAS SUBMITTED THAT THAT PROPOSED REVISION WAS NOT VALID . THE LD.CIT, VIDE ORDER DATED 28/03/2017 PASSED U/S 263 REJECTED THE CONTENTIONS AND HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION ITA NO S . 1323 & 1324 /BANG/20 17 PAGE 3 OF 5 U/S 54F AS THE AMOUNT UNDER CONSIDERATION WAS NEITHER DEP OSITED IN CAPITAL GAINS DEPOSIT SCHEME NOR INVESTED IN THE RESIDENTIAL HOUSE BEFORE DUE DATE FOR FILING RETURN OF INCOME. ACCORDINGLY, THE ASSESSMENT WAS SET ASIDE TO THE AO TO EXAMINE ABOVE ASPECTS AND ALLOW DEDUCTION IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. BEING AGGRIEVED BY THE ABOVE ORDER, THE ASSESSEE IS BEFORE US IN THE PRESENT APPEAL RAISING THE FOLLOWING GROUNDS OF APPEAL: ITA NO S . 1323 & 1324 /BANG/20 17 PAGE 4 OF 5 5. IT WAS CONTENDED THAT THE BASIS OF ORDER OF REVISION U/S 263 IS THE VALUER S REPORT WHEREIN DATE OF COMMENCEMENT OF CONSTRUCTION WAS ASSUMED AS MARCH 2008 AND COMPLETION OF THE HOUSE WAS STATED AS MARCH 2011. THUS, IT IS STATED THAT VALUER S REPORT CANNOT FORM BASIS TO COME TO CONCLUSION THAT THE AMOUNT WAS NOT INVESTED IN THE NEW RESIDENTIAL PROPERTY BEFORE DUE DATE OF FILING OF RETURN OF INCOME AS IT IS APPARENT FROM VALUER S REPORT ITSELF THAT THE DATE OF CONSTRUCTION AND COMPLETION OF NEW HOUSE WAS ASSUMED BUT NOT BASED ON ANY EVIDENCE. IT WAS FURTHER SUBMITTED THAT THE REQUIR EMENT OF SECTION 54F STANDS FULFILLED IF THE AMOUNT IS INVESTED IN NEW HOUSE BEFORE DUE DATE OF FILING RETURN OF INCOME AND IN SUPPORT OF THIS CONTENTION, HE RELIED ON THE JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K.RAMACHANDRA RA O (277 CTR 522)(KAR). LEARNED AR OF THE ASSESSEE FURTHER CONTENDED THAT ISSUE OF EXEMPTION U/S 54F WAS EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IT CANNOT BE SAID THAT THERE WAS NO ENQUIRY BY THE AO INTO THIS ASPECT. THEREFORE, E XERCISE OF POWER OF REVISION BY THE LD.CIT U/S 263 WAS NOT JUSTIFIED. 6. ON THE OTHER HAND, LD.CIT(DR) PLACED RELIANCE ON THE ORDER OF THE LD.CIT. 7. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL IS WH ETHER THE LD.CIT WAS JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER BY EXERCISE OF POWER OF REVISION VESTED WITH HIM U/S 263 OF THE ACT. THE BASIS FOR REVISION ORDER U/S 263 IS THE VALUATION REPORT OBTAINED FROM THE REGISTERED VALUER WHEREIN IT WAS STATE D THAT DATE OF COMMENCEMENT OF CONSTRUCTION OF NEW HOUSE WAS ASSUMED TO BE MARCH 2008. BASED ON THIS INFORMATION, THE LD.CIT HAD COME TO THE CONCLUSION THAT NO SALE CONSIDERATION WAS DEPOSITED EITHER IN THE CAPITAL GAINS ACCOUNT DEPOSIT SCHEME NOR SPENT I N THE CONSTRUCTION OF NEW HOUSE BEFORE DUE DATE FOR FILING THE RETURN OF INCOME. THEREFORE, HE ITA NO S . 1323 & 1324 /BANG/20 17 PAGE 5 OF 5 CONCLUDED THAT THE ASSESSEE WAS NOT ENTITLED TO RELIEF U/S 54F. FROM MERE PERUSAL OF THE VALUER S REPORT, IT IS CLEAR THAT THE DATE OF COMMENCEMENT OF CONSTRUCT ION AS WELL AS DATE OF COMPLETION OF CONSTRUCTION WAS ASSUMED AND NOT BASED ON ANY CONCRETE EVIDENCE. THEREFORE, IN ABSENCE OF ANY CONCRETE EVIDENCE, THE LD.CIT CANNOT COME TO CONCLUSION THAT THE ASSESSEE HAD NOT INVESTED SALE CONSIDERATION IN THE NEW PRO PERTY BEFORE DATE OF FILING OF RETURN OF INCOME. FURTHERMORE, IN THE LIGHT OF THE DECISIONS OF THE JURISDICTIONAL HIGH COURT CITED SUPRA, IT IS SUFFICIENT TO CLAIM EXEMPTION U/S 54F IF THE ENTIRE SALE CONSIDERATION IS INVESTED IN THE NEW RESIDENTIAL PROPER TY. IT IS NOT REQUIREMENT OF LAW THE COMPLETION OF HOUSE PROPERTY SHOULD BE WITHIN PERIOD OF THREE YEARS FROM THE DATE OF SALE . FURTHERMORE, IT IS NOT THE CASE OF THE LD.CIT THAT THE AO HAD NOT CAUSED NECESSARY ENQUIRIES DURING THE COURSE OF ASSESSMENT P ROCEEDINGS ON THIS ASPECT. THEREFORE, IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT WAS NOT JUSTIFIED IN EXERCISING POWER OF REVISION U/S 263. HENCE, WE SET ASIDE THE ORDER PASSED BY THE LD.CIT(A) U/S 263. IN THE RESULT, T HE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 IS ALLOWED. 8. FOR PARITY OF REASONS, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 IS ALSO ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH APRIL , 2018 SD/ - SD/ - ( SUNIL KUMA R YADAV ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 13 / 0 4 /201 8 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALO RE