K.Govindarajalu, CHENNAI V. ITO, CHENNAI

ITA 1389/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7857 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N RENGARAJ
• Assessee Lawyers: ANAND DEVKUMAR
• Section: 143(3); 54F; 54; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.1389/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) MR. K.GOVINDARAJALU, 24/71, RAJIV GANDHI NAGAR, 1 ST STREET, KOLATHUR, CHENNAI-600 099. VS THE INCOME TAX OFFICER, SALARY WARD-IV(3), CHENNAI. PAN: AHFPG3165J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. ANANDDEVKUMAR, C.A /RESPONDENT BY : MR. N.RENGARAJ, CIT /DATE OF HEARING : 29 TH NOVEMBER, 2016 /DATE OF PRONOUNCEMENT : 8 TH DECEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, CHENNAI DATED 17.03.2016 IN C.NO.2(1)/263/PCIT-5/ NCR-16/2 015-16 PASSED UNDER SECTION 263 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S IN HIS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FO LLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 25.03.2014 PASSED BY THE LEARNED ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT BY HOLDING THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER 2 ITA NO.1389/MDS/2016 SECTION 54/54F OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SALARIED EMPLOYEE FILED HIS RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2011-12 ON 12.09.2012 ADMITTING TO TAL INCOME OF ` 42,38,179/- WHICH INCLUDES LONG TERM & SHORT TERM CAPITAL GAIN. THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICE UNDER SECTION 143(2) WAS ISSUED ON 06.08.2012. THER EAFTER THE LEARNED ASSESSING OFFICER HAS COMPLETED THE ASS ESSMENT ON 25.03.2014 UNDER SECTION 143(3) OF THE ACT, WHER EIN HE ALLOWED THE DEDUCTION OF ` 41,46,200/- CLAIMED UNDER SECTION 54F OF THE ACT. HOWEVER, THE LEARNED PRINCIPAL COMM ISSIONER OF INCOME TAX VIDE HIS ORDER DATED 17.03.2016 BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT SET ASIDE THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT BY HOLDING IT TO BE ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF THE REVENUE SINCE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 54/54F OF THE ACT. 4. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ENTIRE ISSUE RELATING TO THE CAP ITAL GAIN WAS 3 ITA NO.1389/MDS/2016 ANALYZED BY THE LEARNED A.O AND GRANTED DEDUCTION T O HIM UNDER SECTION 54 OF THE ACT FOR RS.41,46,200/- BECA USE THE ASSESSEE HAD REINVESTED THE SALE OF HIS NEWLY CONST RUCTED RESIDENTIAL BUILDING VIDE JOINT VENTURE AGREEMENT I N A NEW RESIDENTIAL HOUSE. HE THEREFORE PLEADED THAT THE OR DER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX MAY BE SET ASIDE. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CARE FULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE AS PRESENTED BY THE LEARNED ASSESSING OFFICER IN HI S ORDER, IT IS APPARENT THAT THE ASSESSEE IS AN INDIVIDUAL WHO HAD ENTERED INTO A JOINT VENTURE AGREEMENT ON 11.04.201 0 AND A SUPPLEMENTARY JOINT VENTURE AGREEMENT ON 02.02.2011 , WHEREIN, IN LIEU OF HIS LAND SURRENDERED TO THE JOI NT VENTURE PARTNER, HE WAS ALLOTED 50% OF THE UNDIVIDED SHARE IN THE 4 ITA NO.1389/MDS/2016 LAND AND 50% OF THE NEWLY CONSTRUCTED BUILT UP AREA . THEREAFTER, THE ASSESSEE SOLD HIS PORTION OF THE BU ILT UP AREA AND UNDIVIDED INTEREST IN THE LAND AND COMPUTED THE LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN AND F URTHER CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT FOR HAVING REINVESTED THE SALE PROCEEDS IN A RESIDENTIAL PROPE RTY FOR RS.64,00,000/-. THE LEARNED ASSESSING OFFICER AFTER VERIFYING THE VALUERS REPORT ESTIMATED THE COST OF CONSTRUCT ION OF THE NEW ASSET OF THE ASSESSEE AT RS.41,46,200/- AND AC CORDINGLY GRANTED THE BENEFIT OF DEDUCTION UNDER SECTION 54 O F THE ACT FOR RS.41,46,200/-. THESE FACTS ARE NOT DISPUTED BY BOTH THE PARTIES AND THE LD.D.R COULD ALSO NOT SUCCESSFULLY CONTROVERT TO THESE FACTS. AFTER OVERALL EXAMINATION OF THE T RANSACTIONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LE ARNED ASSESSING OFFICER BECAUSE THE ASSESSEE HAD DISCLOSE THE LONG TERM CAPITAL GAIN WITH RESPECT TO THE CONSIDER ATION RECEIVED TOWARDS TRANSFER OF HIS RESIDENTIAL PROPER TY IN THE JOINT VENTURE AND RIGHTLY CLAIMED DEDUCTION U/S.54 OF THE ACT AND ALSO HAD DISCLOSED THE SHORT TERM CAPITAL GAIN ARISING OUT OF THE SALE OF THE ALLOTTED BUILD UP AREA POSSESSED AS PER THE 5 ITA NO.1389/MDS/2016 JOINT VENTURE AGREEMENT. THEREFORE, WE ARE OF THE C ONSIDERED VIEW THAT THE ORDER OF THE LEARNED PRINCIPAL COMMIS SIONER OF INCOME TAX UNDER SECTION 263 IS DEVOID OF MERIT. HE NCE, WE HEREBY SET ASIDE THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX PASSED UNDER SECTION 263 OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 8 TH DECEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 8 TH DECEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF