K.Venkata Ramaiah, Vijayawada V. THE ACIT, CIRCLE - 2(1), Vijayawada

ITA 133/VIZ/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89179 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: C SUBRAHMANIAM
• Keywords: Capital asset; Assessment record
• Section: 143(3); 54B; 54F; 263

Judgement Text

ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.133/VIZAG/2014 ASSESSMENT YEAR: 2009-10 SHRI KOGANTI VENKATA RAMAIAH D.NO.31-16-35 II CROSS ROAD, MACHAVARAM DOWN VIJAYAWADA ACIT, CIRCLE 2(1) VIJAYAWADA (APPELLANT) PAN NO: ACRPK 5122 C VS. (RESPONDENT) ASSESSEE BY: SHRI C.SUBRAHMANIAM, CA DEPARTMENT BY: SHRI R.K. SINGH, DR DATE OF HEARING: 02/03/15 DATE OF PRONOUNCEMENT: 04/03/15 ORDER PER SAKTIJIT DEY. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 27.03.2014 PASSED BY THE LEARNED CIT VIJAYAWADA UND ER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2009-10. 2. BRIEFLY THE FACTS ARE ASSESSEE AN INDIVIDUAL DERIV ES INCOME FROM EXECUTION OF CIVIL CONTRACTS. IN THE ASSE SSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED HIS RETURN O F INCOME ON 25.09.2009 DECLARING TOTAL INCOME OF RS.33,41,850 . DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER AFTER VE RIFYING THE BOOKS OF ACCOUNT AND OTHER INFORMATION SUBMITTED BY THE ASSESSEE NOTICED THAT DURING THE YEAR UNDER CONSIDERATI ON ASSESSEE HAS EXECUTED CONTRACTS RELATING TO MAINTENANCE WORK ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 2 OF 7 FOR LANCO KONKAPALLY POWER PRIVATE LIMITED AND CIVIL WORKS FOR LANCO INFRATECH. DURING THE YEAR ASSESSEE HAS EXE CUTED CONTRACT WORK FOR A GROSS VALUE OF RS.3,60,00,000. HE FURTHER NOTICED THAT THE ASSESSEE HAS SUB CONTRACTED A PORTION OF WORK TO THE TUNE OF RS.2,05,64,308 TO THIRD PARTIES. HOWEVER, ASSESSEE HAS NOT OFFERED ANY COMMISSION/ROYALTY ON THE WORKS SUB CONTRACTED TO THIRD PARTIES. AS OBSERVED BY THE ASSES SING OFFICER COMMISSION/ROYALTY ESTIMATED AT 2% ON ACCRUED BASIS ON THE SUB CONTRACTED WORK AMOUNTING TO RS.4,11,286 WA S ADDED TO THE RETURNED INCOME. ACCORDINGLY ASSESSMENT WA S COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ASSESSM ENT ORDER DATED 7.4.2011 ON A TOTAL INCOME OF RS.37,53,14 0. 3. THE LEARNED CIT VIJAYAWADA IN EXERCISE OF POWER UNDER SECTION 263 OF THE ACT CALLED FOR ASSESSMENT RECORDS O F THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR FOR VERIFIC ATION. AFTER EXAMINING THE SAME, HE WAS OF THE VIEW THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE A CT IS ERRONEOUS AND PREJUDICIAL TO THE INTER4EST OF THE REV ENUE BECAUSE OF TWO REASONS; FIRSTLY THE ASSESSING OFFICE R WITHOUT PROPERLY EXAMINING THE MATERIAL ON RECORD HAS ESTIMAT ED THE PROFIT AT 2% ON WORK GIVEN ON SUB CONTRACT BASIS AS CLA IMED BY THE ASSESSEE. THE 2 ND REASON IS ASSESSING OFFICER HAS NOT EXAMINED THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTI ON 54F FOR AN AMOUNT OF RS.11.00 LAKHS AS THE ASSESSEE HAS AVAILED EXEMPTION UNDER SECTION 54B OF THE ACT AGAINST THE CAPITA L GAIN ARISING OUT OF SALE OF AGRICULTURAL LAND. THOUGH THE ASSESSEE OBJECTED TO THE INITIATION OF THE PROCEEDINGS UNDER SECTI ON 263 BY SUBMITTING THAT THERE IS NO ERROR IN THE ASSESSMENT O RDER PASSED BY ASSESSING OFFICER WHILE ESTIMATING THE PROF IT FROM WORK SUB-CONTRACTED TO THIRD PARTIES, SIMILARLY THERE I S NO ERROR ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 3 OF 7 IN CLAIMING EXEMPTION UNDER SECTION 54F AS THERE IS NO RESTRICTION UNDER THE PROVISIONS OF THE ACT THAT ASSESSEE CANNOT CLAIM EXEMPTION UNDER SECTION 54F, IF HE CLAIMS DEDUC TION UNDER SECTION 54B. IT WAS SUBMITTED BY THE ASSESSEE WHEN THE ASSESSEE HAS DEPOSITED PUBLIC INVESTED, THE ENTIRE CAP ITAL GAIN IN ACCORDANCE WITH THE PROVISIONS CONTAINED UNDER SECTI ON 54B AND 54F, ASSESSEES CLAIM CANNOT BE REJECTED. 4. THE LEARNED CIT HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. AS FAR AS THE ISSUE OF ESTIMATION OF PROFIT ON CONTRACT WORK IS CONCERNED, THE LEARNED CI T WHILE SETTING ASIDE THE ASSESSMENT ORDER DIRECTED THE ASSESSIN G OFFICER TO EXAMINE THE ISSUE AND PASSED THE ASSESSMENT ORDER DE NOVO. SO FAR AS THE CLAIM OF EXEMPTION UNDER SECTIO N 54F IS CONCERNED, THE LEARNED CIT OBSERVED THAT SINCE THE SALE PROCEEDINGS OF AGRICULTURAL LAND WAS INVESTED FOR AC QUIRING THE ASSET OTHER THAN AGRICULTURAL LAND, ASSESSEE IS NOT ELI GIBLE FOR EXEMPTION UNDER SECTION 54F. WITH THE AFORESAID OBSER VATIONS THE IMPUGNED ASSESSMENT ORDER WAS SET ASIDE FOR DE NOV O ASSESSMENT. 5. AT THE OUTSET THE LEARNED AUTHORISED REPRESENTATIVE FAIRLY SUBMITTED BEFORE US THAT IN THE MEANTIME THE ASSES SING OFFICER HAS PASSED CONSEQUENTIAL ORDER IN PURSUANCE TO THE DIRECTIONS UNDER SECTION 263 OF THE ACT ON 30.5.2014. HE FURTHER SUBMITTED BEFORE US THAT AS FAR AS THE ISSUE RELA TING TO ESTIMATION OF PROFIT ON SUBCONTRACTED WORK IS CONCERNED , ASSESSING OFFICER HAS NOT MADE ANY VARIATION TO THE IN COME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER. IN OTHER WORDS, THOUGH SEPARATE ADDITION HAS BEEN MADE AS FAR AS ESTIM ATION OF PROFIT FROM WORKS CONTRACT IS CONCERNED. HOWEVER, L EARNED ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 4 OF 7 AUTHORISED REPRESENTATIVE SUBMITTED THAT AS FAR AS REJECTIO N OF ASSESSEES CLAIM UNDER SECTION 54F IS CONCERNED REFE RRING TO THE PROVISIONS CONTAINED UNDER SECTION 54B AND 54F, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE IS NO RESTRICTION FOR CLAIMING EXEMPTION UNDER SECTION 54F, I F THE CONDITIONS THEREIN FULFILLED IRRESPECTIVE OF THE FACT THAT ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54B. IN THIS CONT EXT HE RELIED UPON THE DECISION OF ACIT VS. SRI SATYANARAYA NA IN ITA NO.1192/HYD/2013 DATED 29.11.2013. THUS HE SUBMITTED THAT THE ASSESSEES CLAIM UNDER SECTION 54F SHOULD BE ALLO WED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE ORDER OF THE LEARNED CIT. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES A ND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIALS PLACED ON RECORD. AS FAR AS THE FIRST ISSUE RELATING TO CITS DIRECTIONS ON ESTIMATION OF PROFIT FROM WORK CONTR ACT BUSINESS, AS AGREED BY BOTH THE PARTIES, IT IS OF MERE ACADEMIC INTEREST AS IN THE CONSEQUENTIAL ORDER PASSED BY THE AS SESSING OFFICER IN PURSUANCE TO THE DIRECTIONS OF THE CIT UNDER SECTION 263 THE ASSESSING OFFICER HAS NOT MADE ANY VARIATION TO SUCH INCOME DETERMINED BY HIM IN THE ORIGINAL ASSESSMENT ORDER. THEREFORE, THE ONLY SURVIVING ISSUE ARISING FOR CONS IDERATION IS IN RELATION TO THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 54F. AS CAN BE SEEN FROM THE FACTS ON RECORD DURING THE RELEVANT PREVIOUS YEAR, ASSESSEE HAS SOLD AGRICULTURA L LAND FOR A CONSIDERATION OF RS.75.00 LAKHS. OUT OF THE SAID AMO UNT ASSESSEE INVESTED AN AMOUNT OF RS.61,91,151 IN PURCH ASING AGRICULTURAL LAND AND CLAIMED EXEMPTION UNDER SECTIO N 54B OF THE ACT. HOWEVER, IN PURCHASING AGRICULTURAL LAND, AN AMOUNT ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 5 OF 7 OF RS.11.00 LAKHS WAS DEPOSITED IN CAPITAL GAIN ACCOU NT SCHEME WITH SYNDICATE BANK, VIJAYAWADA WITHIN THE PRESCRIBED TIME LIMIT AND SUBSEQUENTLY THE SAID AMOUNT W AS UTILIZED FOR PURCHASE OF AN APARTMENT WITHIN A PERIOD O F TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET. THEREF ORE, THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT IN SO FAR AS INVESTMENT OF RS.11.00 LAKHS IN PURCHAS E OF FLAT IS CONCERNED. IN THE ORIGINAL ASSESSMENT ASSESSING OFFIC ER ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, IN THE ORD ER PASSED UNDER SECTION 263 OF THE ACT, LEARNED CIT OPINE D THAT AS THE SALE PROCEEDINGS OF AGRICULTURAL LAND WERE INV ESTED BY THE ASSESSEE FOR ACQUIRING THE ASSET OTHER THAN AGRICUL TURAL LAND, THE EXEMPTION CLAIMED UNDER SECTION 54F FOR AN AMOUNT OF RS.11.00 LAKHS IS NOT ALLOWABLE. 8. ON A PERUSAL OF SECTION 54B, IT IS EVIDENT THAT IF THE CAPITAL GAIN ARISING FROM SALE OF AGRICULTURAL LAND IS INVESTED IN PURCHASE OF AGRICULTURAL LAND, THEN THE ASSESSEE IS E LIGIBLE FOR EXEMPTION. SIMILARLY SECTION 54F PROVIDES THAT IF THE CA PITAL GAIN ARISING FROM TRANSFER OF LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE IS UTILIZED FOR PURCHASE OF A RE SIDENTIAL HOUSE, WITHIN A PERIOD OF TWO YEARS, THEN ASSESSEE WI LL BE ELIGIBLE FOR EXEMPTION UNDER SECTION 54F. ON A READIN G OF THE AFORESAID PROVISIONS, WE DO NOT FIND ANY RESTRICTION/C ONDITIONS IMPOSED THEREIN THAT IF AN ASSESSEE CLAIMS EXEMPTION U NDER SECTION 54B IS NOT ELIGIBLE TO CLAIM UNDER SECTION 54F. SIMILARLY, THERE IS NO RESTRICTION IMPOSED UNDER SECTIO N 54F THAT CAPITAL GAIN DERIVED FROM SALE OF AGRICULTURAL LA ND IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F. IN THE AFORE SAID VIEW OF THE MATTER, WE DO NOT FIND THE REASONING OF THE LEARN ED CIT TO BE IN ACCORDANCE WITH THE STATUTORY PROVISIONS, HENCE ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 6 OF 7 ACCEPTABLE. MOREOVER THE ITAT HYDERABAD BENCH IN THE CASE OF ACIT VS. SHRI SATYANARAYANA (SUPRA) WHILE DECIDING IDENTICAL NATURE OF DISPUTE HELD AS UNDER: 4. AFTER HEARING THE LEARNED DR, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LEARNED CIT(A ) AS IT WAS RIGHTLY HELD THAT ASSESSEE IS ENTITLED TO EXEMP TION UNDER BOTH SECTION 54B & 54F OF IT ACT AND THEY ARE NOT MUTUALLY EXCLUSIVE AND INDEPENDENT OF EACH OTHER. SIMILAR VIEW WAS TAKEN BY VARIOUS JUDICIAL FORUMS INCLUDING THAT OF COORDINATE BENCH, HYDERABAD IN TH E CASE SRI VENKATA RAMAN UMA REDDY VS. DCIT [2013] 32 TAXMANN 157 (HYD.) IN VIEW OF THE ABOVE, WE DO NOT SEE ANY MERIT IN REVENUE'S APPEAL AND ACCORDINGLY, GROU NDS ARE REJECTED. 9. THE RATIO LAID DOWN AS AFORESAID BY THE COORDINATE BENCH SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. THE L EARNED DEPARTMENTAL REPRESENTATIVE HAS NOT BROUGHT TO OUR NOTICE ANY DECISION CONTRARY TO THE AFORESAID VIEW EXPRESSED BY TH E COORDINATE BENCH. HENCE RESPECTFULLY FOLLOWING THE ORD ER OF THE COORDINATE BENCH, WE HOLD THAT THE ASSESSEE WILL BE E LIGIBLE FOR EXEMPTION UNDER SECTION 54F FOR THE AMOUNT OF RS.11.00 LAKHS INVESTED IN PURCHASE OF AN APARTMENT. ACCORDINGLY WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT ON THIS ISSUE AN D RESTORE THE ORDER OF THE ASSESSING OFFICER. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2015. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 4 TH MARCH,2015 ITA NO.133 OF 2014 K VENKATA RAMAIAH VIJAYAWADA PAGE 7 OF 7 PVV/SPS CAMP: VISAKHAPATNAM, COPY TO 1 SHRI KOGANTI VENKATA RAMAIAH, D.NO.31-16-35 II CROS S ROAD, MACHAVARAM DOWN VIJAYAWADA 2 ACIT CIRCLE 2(1) VIJAYAWADA 3 THE CIT VIJAYAWADA 4 THE DEPARTMENTAL REPRESENTATIVE ITAT VISAKHAPATNAM 5 GUARD FILE 6 BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM