Shanthi Vijaya Kumar, CHENNAI V. ITO, CHENNAI

ITA 1353/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8731 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 17-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: D ANAND
• Keywords: Gift; Cost of acquisition
• Section: 54F; 148; 54

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL , C/SMC BENCH, CHENNAI . , ! BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1353/MDS/2016 ( / ASSESSMENT YEAR: 2007-08) MRS. SHANTHI VIJAYA KUMAR, 9, SOMASUNDARAM STREET, T.NAGAR, CHENNAI - 600 017. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD-2(1), CHENNAI. PAN: AKQPK2337N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. D.ANAND, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 20 TH JUNE, 2016 /DATE OF PRONOUNCEMENT : 23 RD AUGUST, 2016 / O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)- 2, CHENNAI DATED 09.03.2016 IN ITA NO.209/CIT(A) -2/2013- 14 PASSED UNDER SECTION143(3) R.W.S. 147 & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL, HOWEVER THE CRUXES OF THE ISSUES ARE AS FOL LOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD DENIED THE EXEMPTION OF R S. 19,50,000/- UNDER SECTION 54 OF THE ACT SINCE IT WA S THE SECOND HOUSE ACQUIRED BY THE ASSESSEE. 2 ITA NO.1353 /MDS/2016 II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN NOT ADJUDICATING THE ISSUE WITH RESPE CT TO RESTRICTING THE CLAIM OF ADDITIONAL EXPENDITURE ON INTERIORS TO RS.2,00,000/- AS AGAINST RS.3,98,200/- CLAIMED BY THE ASSESSEE . III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD DISALLOWED THE CLAIM OF ADDITIONAL PAYMENT OF ` 7,00,000/- MADE BY THE ASSESSEE TO HER SISTER AS COST OF ACQUISITION. IV) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD DISALLOWED THE EXPENDITURE OF ` 54,747/- TOWARDS CORPORATION TAX . V) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO ADJUDICATE A SPECIFIC GROUND WITH REG ARD TO EXPENSES INCURRED BY THE ASSESSEE TOWARDS STAMP DUT Y ` 24,320/-, LEGAL FEES OF ` 20,000/- AND INCIDENTAL CHARGES ` 4,000/- WHILE ARRIVING AT THE COST OF ACQUISITION OF ASSET FOR COMPUTATION OF CAPITAL GAINS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HER RETURN OF INCOME ON 31.01.2013 DECLARING INCOME OF RS.14,600/- PURSUANT TO NOTICE ISSUED UND ER SECTION 148 OF THE ACT ON 21.12.2012. THE NOTICE UN DER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE B ECAUSE SHE HAS NOT DISCLOSED CAPITAL GAINS ARISING OUT OF THE SALE OF HER IMMOVABLE PROPERTY. 3 ITA NO.1353 /MDS/2016 GROUND NO.III) : COST OF ACQUISITION: 4. THE ASSESSEE OWNED RESIDENTIAL PLOT NO.9, SOMASUNDARAM STREET, T.NAGAR, CHENNAI-17. THE PROPE RTY WAS ORIGINALLY PURCHASED BY THE ASSESSEES MOTHER S MT. PRABAVATHY ON11.2.1974. AFTER THE DEMISE OF SMT. PRABAVATHY ON 11.4.1978, THE ASSESSEE ALONG WITH FO UR OTHER LEGAL HEIRS BECAME THE OWNER OF THE PROPERTY. SUBSE QUENTLY, ON 05.08.2006, THREE OF THE CO-OWNERS EXECUTED A RE LEASE DEED IN FAVOUR OF THE ASSESSEE VIDE DOCUMENT NO.1897/2006 DATED 5.8.2006 VIZ., MR. K.KOTHANDARAM AN (FATHER OF THE ASSESSEE), MS.P.SENTHAMARAI ( SISTE R OF THE ASSESSEE) AND MR. ARUN KOTHANDARAMAN (BROTHER OF T HE ASSESSEE) AGAINST PAYMENT OF RS.10,00,000/-. ON T HE SAME DAY, VIDE DOCUMENT NO.1908/2006 ALL THE LEGAL HEIRS OF THE FOURTH CO-OWNER OF THE PROPERTY LATE SHRI ASHOK KOTHANDARAMAN (BROTHER OF THE ASSESSEE) VIZ. N.K.UM A ASHOK, N.A.SWETHA PRABHA REDDY, AND N.A.PREETHAM PRABHA REDDY AGAINST PAYMENT OF RS.15,00,000/-. THE ASSESSEE ALSO CLAIMED TO HAVE PAID AN ADDITIONAL AM OUNT OF RS.7,00,000/- TO MS.SENTHAMARAI (SISTER OF THE ASS ESSEE) ON 2.8.2007 / 12.10.2007 FOR ACQUIRING THE PROPERTY. I N ORDER TO 4 ITA NO.1353 /MDS/2016 SUBSTANTIATE HER CLAIM, THE ASSESSEE ALSO PRODUCED A RECEIPT SIGNED BY MS.SENTHAMARAI AND ALSO THE BANK STATEMEN T FOR WITHDRAWAL OF CASH. HOWEVER, THE LEARNED ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT SHE HAS PAID RS.7.00 LAKHS TO HER SISTER AS ADDITIONAL COST OF ACQUIRING THE PROPERTY; HE OPINED THAT AT THE MOST IT COULD B E A GIFT GIVEN TO THE SISTER OF THE ASSESSEE. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY AGREEING WITH HIS VIEW AND ALSO BY RELYI NG ON THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT HE HELD THE PAYMENT TO BE UNJUSTIFIED AND EXCESSIVE. 6. BEFORE ME, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS PAID THE AMOUNT OF RS.7.00 LAKHS ONLY FOR ACQUIRING THE PROPERTY AND THEREFORE IT SHOULD BE ALLOWED AS COST OF ACQUISITION. 5 ITA NO.1353 /MDS/2016 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED IN SUPPORT OF THE ORDERS OF T HE REVENUE. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM T HE FACTS OF THE CASE, IT IS APPARENT THAT THE ASSESSEE HAS MADE PAYMENT OF RS.7.00 LAKHS TO HER SISTER AND THE SAME IS NOT IN DISPUTE. THE CLAIM OF THE ASSESSEE IS THAT THE PAYMENT OF RS .7.00 LAKHS IS TOWARDS COST OF ACQUIRING THE PROPERTY WHI LE AS THE REVENUE IS OF THE BELIEF THAT THE PAYMENT IS EXCESS IVE, UNJUSTIFIED OR A GIFT. CONSIDERING THE FACTS AND C IRCUMSTANCES OF THE CASE, I DO NOT FIND THE PROPOSITION OF THE R EVENUE TO BE JUSTIFIED. THERE WOULD BE MANY FACTORS LEADING TO T HE SETTLEMENT OF FAMILY PROPERTIES DUE TO WHICH PAYMEN TS WILL BE MADE IN ORDER TO AVOID LITIGATION AND ILL FEELINGS AMONGST RELATIVES. MOREOVER THE REVENUE CANNOT SIT ON JUDGM ENT OVER THE NATURE OF PAYMENT THE ASSESSEE HAD MADE WHEN TH ERE ARE ENOUGH EVIDENCE TO PROVE THE SAME AND IN THE ASSESSEES CASE THE FACT THAT THERE WAS A FAMILY SE TTLEMENT IS CLEAR. FURTHER IN THE GIVEN CASE, THE ASSESSEE HAS ALSO 6 ITA NO.1353 /MDS/2016 PRODUCED THE RECEIPT FROM HER SISTER FOR HAVING REC EIVED RS.7.00 LAKHS FROM HER. FOR THE ABOVE STATED REASON S, I AM OF THE CONSIDERED VIEW THAT THE AMOUNT OF RS.7.00 LAKH S PAID BY THE ASSESSEE TO HER SISTER SHOULD BE TREATED AS THE COST OF ACQUISITION OF THE PROPERTY. IT IS ORDERED ACCORDIN GLY. GROUND NO.IV) PAYMENT OF CORPORATION TAX: 9.1 THE ASSESSEE HAD CLAIMED TO HAVE INCURRED TRANS FER EXPENSES OF RS.54,787/- BEING THE PROPERTY TAX PAID BY HER. SHE HAD PRODUCED THE DOCUMENTARY EVIDENCE OF THE RE CEIPT DATED 17.06.2006 ISSUED BY CHENNAI CORPORATION TO J USTIFY HER CLAIM. HOWEVER, THE LEARNED ASSESSING OFFICER D ISALLOWED THE CLAIM OF THE ASSESSEE BY RELYING IN THE DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SAS HOTEL PVT.LTD., REPORTED IN 124 TAXMAN 663, WHEREIN IT WAS HELD THAT URBAN LAND TAX AND OTHER TAXES PAID WOULD NEITHER FORM PART OF COST OF ACQUISITION NOR EXPENDITURE IN CURRED IN CONNECTION WITH TRANSFER OR IMPROVEMENT OF LAND. 9.2 ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) UPHELD THE ORDER OF THE LEARNED ASSESSING OFFICER. 7 ITA NO.1353 /MDS/2016 9.3 ON PERUSING THE ISSUE, I DO NOT FIND ANY MERIT IN THE ORDER OF THE REVENUE ON THIS ISSUE. THE ASSESSEE HA S PAID RS.54,787/- ON 17.06.2006 IN ORDER TO ASSERT HER R IGHT ON THE PROPERTY WHEN HER SHARE TOWARDS PAYMENT OF THE TAX WOULD BE ONLY 1/5 TH OF RS.54,787/-. 4/5 TH OF RS.54,787/- I.E. RS.43,830/- IS THE AMOUNT PAYABLE BY THE OTHER FOUR LEGAL HEIRS OF THE PROPERTY WHICH THE ASSESSEE HAS PAID. THEREFORE, PAYMENT MADE TO THE EXTENT OF RS.43,830/- SHOULD BE TAKEN AS THE COST OF ACQUISITION OF THE PROPERTY. IT IS O RDERED ACCORDINGLY. GROUND NO.I) : DEDUCTION U/S.54 OF THE ACT : 10.1 THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTI ON 54 OF THE ACT FOR HAVING ACQUIRED TWO FLATS FROM THE P ROMOTER @ RS.19,50,000/- EACH AGGREGATING TO RS.39,00,000/-. THE LEARNED ASSESSING OFFICER DISALLOWED RS.19,50,000/- BECAUSE AS PER SECTION 54F OF THE ACT DEDUCTION IS ALLOWABL E ONLY WITH RESPECT TO ONE FLAT. ON APPEAL, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LEA RNED 8 ITA NO.1353 /MDS/2016 ASSESSING OFFICER BY RELYING ON VARIOUS DECISIONS C ITED IN HIS ORDER. 10.2 BEFORE US, THE LEARNED AUTHORIZED REPRESENT ATIVE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SMT. V.R.KARPAGAM, REPORTED IN 373 ITR 127 WHEREIN IT WA S HELD THAT BOTH THE HOUSES SHOULD BE ASSESSED AS ONE UNIT EVEN THOUGH THEY ARE DIFFERENT FLATS AND ACCORDINGLY THE ASSESSEE WOULD BE ENTITLED FOR THE BENEFIT OF SECTION 54 OF THE ACT. 10.3 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, ARGUED BY RELYING IN THE ORDER OF THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) WHEREIN HE DISTINGUISHED THE AFORE SAID ISSUE BY STATING THAT IN THAT CASE ALL THE FIVE FLATS ALLOTTED TO THE ASSESSEE HAD A S INGLE DOOR NUMBER. 10.4 AFTER HEARING BOTH SIDES, I AM OF THE VIEW T HAT THE DECISION CITED BY THE LEARNED AUTHORIZED REPRESENTA TIVE SQUARELY COVERS THE ISSUE BECAUSE BOTH THE FLATS AL LOTTED TO 9 ITA NO.1353 /MDS/2016 THE ASSESSEE ARE IN THE SAME COMPLEX AND COULD BE U SED AS ONE RESIDENTIAL HOUSE. THEREFORE, RELYING ON THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT, I HEREBY DIR ECT THE LEARNED ASSESSING OFFICER TO GRANT THE BENEFIT OF S ECTION 54F OF THE ACT FOR RS.39,00,000/- BEING THE COST OF ACQ UISITION OF BOTH FLATS TREATED AS ONE UNIT. GROUND NO.V) NON- ADJUDICATION OF SPECIFIC GROUND WITH REGARD TO EXPENSES INCURRED BY THE ASSESSEE TOWARDS STAMP DUTY ` `` ` 24,320/-, LEGAL FEES OF ` `` ` 20,000/- AND INCIDENTAL CHARGES ` `` ` 4,000/-: 11 BEFORE US THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAD FA ILED TO CONSIDER THE EXPENSES INCURRED BY THE ASSESSEE TOWA RDS STAMP DUTY PAID FOR EXECUTING THE LEASE DEED AMOUNT ING TO RS.24,320/-, LEGAL FEE AMOUNTING TO RS.20,000/- AND INCIDENTAL EXPENSES OF RS.4000/-. SINCE THIS ISSUE IS RAISED BEFORE US FOR THE FIRST TIME, I HEREBY REMIT BACK T HE MATTER TO THE FILE OF THE LEARNED ASSESSING OFFICER IN ORDER TO VERIFY WHETHER THE ASSESSEE HAS INCURRED SUCH EXPENSES AND IF FOUND SO, TREAT THE SAME AS COST OF ACQUISITION OF THE ASSET 10 ITA NO.1353 /MDS/2016 AND ACCORDINGLY GRANT DEDUCTION WHILE COMPUTING THE CAPITAL GAINS. GROUND NO. II) : NOT ADJUDICATING THE ISSUE BY THE LD.CIT(A) WITH RESPECT TO RESTRICTING THE CLAIM OF ADDITIONAL EXPENDITURE ON INTERIORS TO RS.2,00,000/ - AS AGAINST RS.3,98,200/- CLAIMED BY THE ASSESSEE. 12. THE LD.AR SUBMITTED BEFORE US THAT THE LD.CIT(A ) OMITTED TO ADJUDICATE THE ISSUE IN HIS ORDER. THE LD.A.R FU RTHER SUBMITTED THAT THE ASSESSEE HAD INCURRED THE EXPEND ITURE OF RS. 3,98,200/- AND THE LD.A.O WAS NOT JUSTIFIED IN RESTRICTING THE CLAIM OF EXPENDITURE TO RS. 2,00,000/-. THE LD. D.R ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDER OF THE RE VENUE AND PLEADED THAT THE SAME MAY BE CONFIRMED. AFTER HEARI NG BOTH THE PARTIES I AM OF THE CONSIDERED VIEW THAT THIS I SSUE SHOULD ALSO BE REMITTED BACK TO THE FILE OF THE LD.A.O BEC AUSE THE SAME IS NEITHER CONSIDERED BY THE LD.CIT(A) NOR EXA MINED BY THE LD.A.O ELABORATELY. ACCORDINGLY I HEREBY REMIT BACK THE MATTER TO THE FILE OF THE LD.A.O FOR FRESH CONSIDER ATION. 11 ITA NO.1353 /MDS/2016 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD AUGUST, 2016 SD/- ( . ) ( A.MOHAN ALA NKAMONY ) # / ACCOUNTANT MEMBER % /CHENNAI, & /DATED 23 RD AUGUST, 2016 SOMU () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) 0 /DR 6. /GF .