VIVEK JAIN, Jaipur V. DCIT, Jaipur

ITA 139/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9680 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHIVANGI SAMADHANI
• Keywords: Question of law
• Section: 54B; 54F; 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 139/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2012-13 SHRI VIVEK JAIN, JAIPUR CUKE VS. DCIT, CIRCLE-7, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACNPJ3952H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : MS. SHIVANGI SAMADHANI (CA) & SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA JHA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/11/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 08/12/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-III, JAIPUR DATED 16.12.2015 FOR ASSESSMENT YEAR 2012-13 WHEREIN THE ASSESSEE HAS CHALLENGED THE ACTION OF L D. CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXEMPTION OF RS. 30, 00,000/- CLAIMED U/S 54F OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THREE AGRICULT URE LANDS BELONGING ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 2 TO HIM FOR A SALE CONSIDERATION OF RS. 99,25,000. T HE ASSESSEE HAS PURCHASED ANOTHER AGRICULTURAL LAND AT A CONSIDERAT ION OF RS. 32,00,000/- FOR WHICH DEDUCTION U/S 54F HAS BEEN CL AIMED AND SAME WAS ALLOWED BY THE ASSESSING OFFICER AND IS NOT IN DISPUTE BEFORE US. THE ASSESSEE HAS ALSO PURCHASED A RESIDENTIAL PROPE RTY ON 23.05.2011 FOR A PURCHASE CONSIDERATION OF RS. 30,00,000/- IN THE NAME OF HIS WIFE, SMT. NIKITA JAIN, AND CLAIMED DEDUCTION U/S 54F OF THE ACT AND WHICH IS IN DISPUTE BEFORE US. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE CLAIMED U/S 54F O F THE ACT, 1961 MAY NOT BE DISALLOWED, AS THE PROPERTY WAS NOT OWNE D IN THE NAME OF ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE CONSIDERATION FOR SUCH PROPERTY WAS PAID OUT OF REPAYMENT OF ADVA NCE BELONGING TO THE ASSESSEE RECEIVED FROM NARVIK NIRMAN & FINANCI ARS PVT. LTD. AND IT WAS FURTHER SUBMITTED THAT THE NEW RESIDENTIAL HOUS E NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURCHASED EXCLUSIVELY IN HIS NAME. IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT PURCHASED THE NEW HOUSE IN THE NAM E OF A STRANGER AND ENTIRE INVESTMENT HAS COME OUT OF THE SOURCE OF THE ASSESSEE AND THERE WAS NO CONTRIBUTION FROM THE ASSESSEES WIFE. THE SUBMISSION OF THE ASSESSEE WAS CONSIDERED BUT NOT FOUND ACCEPTABL E TO THE ASSESSING OFFICER. AS PER ASSESSING OFFICER, THE PROPERTY WHI CH WAS SOLD WAS BELONGING TO THE ASSESSEE WHEREAS THE REINVESTMENT IN PROPERTY (RESIDENTIAL HOUSE) HAS BEEN MADE IN THE NAME OF SM T. NIKITA JAIN, WIFE OF THE ASSESSEE. IT WAS FURTHER HELD BY THE AO THAT SMT. NIKITA JAIN, WIFE OF THE ASSESSEE, IS HAVING HER PAN AND FILING HER RETURN OF INCOME WHICH IS ALSO ASSESSED TO TAX, THEREFORE, AS PER IN COME TAX PROVISIONS, ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 3 HUSBAND AND WIFE BOTH COULD NOT BE CONSIDERED AS SI NGLE ENTITY AND THE BENEFIT OF INVESTMENT MADE BY AN INDIVIDUAL ASSESSE E CANNOT BE GIVEN TO ANOTHER INDIVIDUAL ASSESSEE. THE AO FURTHER DRAW N REFERENCE TO THE PROVISIONS OF SECTION 54F OF THE ACT AND HELD THAT TO CLAIM DEDUCTION, THE INVESTMENT IN NEW ASSET SHOULD BE IN THE NAME O F ASSESSEE HIMSELF. IT WAS FURTHER HELD BY THE AO THAT IN ABSENCE OF TH E PERSONAL BALANCE SHEET OF THE ASSESSEE AND ABSENCE OF PROPER DOCUMEN TARY EVIDENCE, IT CANNOT BE ASCERTAINED WHETHER ASSESSEE DOES NOT OWN MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN NEW ASSET, ON THE DAT E OF TRANSFER OF THE ORIGINAL ASSET. ACCORDINGLY, FOR THESE TWO REASONS , THE CLAIM OF THE ASSESSEE U/S 54F OF THE I.T.ACT, 1961 WAS DISALLOWE D. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) AND SUBMITTED THAT THE PURCHASE OF A NEW RESIDENTIAL HOUSE HAS TO BE PURCHASED BY THE ASSESSEE. HOWEVER, IT IS NOT SPECIFICALLY REQUIRED UNDER THE LAW THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF ASSESSEE ONLY. IT WAS FURTHER CONTE NDED THAT LIBERAL CONSTRUCTION SHOULD BE GIVEN TO PROVISIONS OF SECTI ON 54F OF THE ACT AND IF SUBSTANTIVE REQUIREMENT ARE FULFILLED, BENEFIT G RANTED BY THE PARLIAMENT SHOULD NOT BE TAKEN AWAY FOR SMALL AND I RRELEVANT INCONSISTENCIES. FURTHER, THE ASSESSEE PLACED RELIA NCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. KAMAL W AHAL (351 ITR 4), WHEREIN, IN THE CONTEXT OF SECTION 54F OF THE ACT A ND PURCHASE OF HOUSE IN THE NAME OF ASSESSEES WIFE, IT WAS HELD THAT TH E NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURCHASED AND EXCLUSIVE LY IN HIS NAME. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF HON BLE MADRAS HIGH COURT IN CASE OF CIT VS. V. NATARAJAN (287 ITR 271) WHERE THE HOUSE ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 4 WAS PURCHASED IN THE NAME OF THE ASSESSEES WIFE, D EDUCTION UNDER SECTION 54 WAS ALLOWED. FURTHER, RELIANCE WAS PLACE D ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF LA TE GULAM ALI KHAN VS. CIT (165 ITR 228) WHEREIN IN THE CONTEXT OF SEC TION 54 OF THE ACT, IT WAS HELD THAT THE WORD ASSESSEE MUST BE GIVEN A W IDE AND LIBERAL INTERPRETATION SO AS TO INCLUDE HIS LEGAL HEIRS ALS O. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF HONBLE KARNATAKA HIGH CO URT IN THE CASE OF DIT VS. MRS. JENNIFER BHIDE (349 ITR 80) WHEREIN IT WAS HELD THAT WHERE THE ENTIRE CONSIDERATION HAS FLOWN FROM HER HUSBAND , MERELY BECAUSE EITHER IN THE SALE DEED OR IN THE BOND, HER HUSBAND S NAME IS ALSO MENTIONED, THE ASSESSEE CANNOT BE DENIED THE BENEFI T OF DEDUCTION U/S 54 AND 54EC OF THE ACT. FURTHER, RELIANCE WAS PLACE D ON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. RAVINDE R KUMAR ARORA (342 ITR 38) WHEREIN IN THE CONTEXT OF SECTION 54F OF TH E ACT, IT WAS HELD THAT WHERE THE ASSESSEE HAS INCLUDED THE NAME OF HI S WIFE AND THE PROPERTY HAS BEEN PURCHASED JOINTLY IN THE NAMES, I T WOULD NOT MAKE ANY DIFFERENCE AND THE CONDITIONS STIPULATED IN SEC TION 54F STAND FULFILLED. 8. THE LD. CIT(A) HOWEVER RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF KALYA VS. CIT (251 CTR 174) WHEREIN IN THE CONTEXT OF SECTION 54B OF THE ACT, IT WAS HELD THAT THE ASSESSEE WOULD NOT BE ENTITLED TO GET EXEMPTION FOR LAND PUR CHASE BY HIM IN THE NAME OF HIS SON AND DAUGHTER-IN-LAW. FURTHER IN THE SAID DECISION, IT WAS HELD THAT THE WORD ASSESSEE USED IN THE IT AC T NEEDS TO BE GIVEN A LEGAL INTERPRETATION AND NOT A LIBERAL INTERPR ETATION, AS IT WOULD TANTAMOUNT TO GIVING A FREE HAND TO THE ASSESSEE AN D HIS LEGAL HEIRS AND IT SHALL CURTAIL THE REVENUE OF THE GOVERNMENT, WHI CH THE LAW DOES NOT ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 5 PERMIT. FOLLOWING THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF KALYA, THE LD. CIT(A) UPHELD THE REJECTION OF CL AIM OF THE ASSESSEE U/S 54F OF THE ACT. 9. DURING THE COURSE OF HEARING, THE LD. AR REITERA TED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). FURTHER, LD . AR ALSO DRAWN OUR REFERENCE TO THE RECENT DECISION OF HONBLE RAJASTH AN HIGH COURT IN CASE OF SH. MAHADEV BALAI VS. ITO (D.B. ITA NO. 136/2017 & OTHERS DATED 07.11.2017) WHEREIN IN THE CONTEXT OF SECTION 54B, IT WAS HELD THAT WHERE THE INVESTMENT IS MADE IN THE NAME OF THE WIF E, THE ASSESSEE SHALL BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S 54B OF THE ACT. 10. IN THE SAID CASE, THE ASSESSEE HAS SOLD AGRICUL TURAL LAND AND PURCHASED ANOTHER AGRICULTURAL LAND IN THE NAME OF HIS WIFE AND CLAIMED DEDUCTION U/S 54B OF THE ACT. THE CO-ORDINATE BENCH VIDE ITS ORDER IN ITA NO. 333/JP/2016 DATED 26.12.2016 FOLLOWING THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF KALYA VS. CIT(SUPRA ) HAD DECIDED THE ISSUE AGAINST THE ASSESSEE AND HAS CONFIRMED THE DE NIAL OF DEDUCTION U/S 54B OF THE ACT. IN THE CONTEXT OF SAID FACTS, O N APPEAL BY THE ASSESSEE, THE HONBLE RAJASTHAN HIGH COURT HAS FRAM ED THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: WHERE LD. ITAT WAS JUSTIFIED IN DISALLOWING THE EX EMPTION U/S 54B OF THE ACT WITHOUT APPRECIATING THAT THE FUNDS UTILIZE D FOR THE INVESTMENT FOR PURCHASE OF THE PROPERTY ELIGIBLE U/S 54B BELON GED TO THE APPELLANT ONLY AND MERELY THE REGISTERED DOCUMENT WAS EXECUTE D IN THE NAME OF THE WIFE AND FURTHER THE WIFE HAD NOT SEPARATE SOUR CE OF INCOME. ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 6 11. THE HONBLE RAJASTHAN HIGH COURT, AFTER CONSIDE RING ITS EARLIER DECISION IN CASE OF KALYA VS. CIT(SUPRA) AND THE V ARIOUS OTHER DECISIONS OF HONBLE DELHI HIGH COURT, HONBLE MADRAS HIGH CO URT, HONBLE KARNATAKA HIGH COURT, HONBLE PUNJAB AND HARYANA HI GH COURT, AND HONBLE ANDHRA PRADESH HIGH COURT, AS ALSO RELIED U PON BY THE ASSESSEE, HAS HELD THAT IT IS THE ASSESSEE WHO HAS TO INVEST AND IT IS NOT SPECIFIED IN THE LEGISLATION THAT THE INVESTMENT IS TO BE IN THE NAME OF THE ASSESSEE AND WHERE THE INVESTMENT IS MADE IN TH E NAME OF WIFE, THE ASSESSEE SHALL BE ELIGIBLE FOR DEDUCTION AND HA S THUS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. THE RELEVANT FIN DINGS OF THE HONBLE RAJASTHAN HIGH COURT ARE CONTAINED AT PARA 7.2 AND 7.3 OF ITS ORDER WHICH ARE REPRODUCED AS UNDER:- 7.2 ON THE GROUND OF INVESTMENT MADE BY THE ASSESS EE IN THE NAME OF HIS WIFE, IN VIEW OF THE DECISION OF DELHI HIGH COURT IN SUNBEAM AUTO LTD. AND OTHER JUDGMENTS OF DIFFERENT HIGH COURTS, THE WORD USED IS ASSESSEE HAS TO INVEST, IT IS NOT SPECIFIED THAT IT IS TO BE IN THE NAME OF ASSESSEE. 7.3 IT IS TRUE THAT THE CONTENTIONS WHICH HAVE BEEN RAISED BY THE DEPARTMENT IS THAT THE INVESTMENT IS MADE BY THE AS SESSEE IN HIS OWN NAME BUT THE LEGISLATURE WHILE USING LANGUAGE HAS N OT USED SPECIFIC LANGUAGE WITH PRECISION AND THE SECOND REASON IS TH AT VIEW HAS ALSO BEEN TAKEN BY THE DELHI HIGH COURT THAT IT CAN BE I N THE NAME OF WIFE. IN THAT VIEW OF THE MATTER, THE CONTENTION RAISED B Y THE ASSESSEE IS REQUIRED TO BE ACCEPTED WITH REGARD TO SECTION 54B REGARDING INVESTMENT IN TUBEWELL AND OTHERS. IN OUR CONSIDERE D OPINION, FOR THE PURPOSE OF CARRYING ON THE AGRICULTURAL ACTIVITY, T UBEWELL AND OTHER ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 7 EXPENSES ARE FOR BETTERMENT OF LAND AND THEREFORE, IT WILL BE CONSIDERED A PART OF INVESTMENT AND SAME IS REQUIRED TO BE ACC EPTED. 12. IN LIGHT OF LEGAL PROPOSITION SO LAID DOWN BY T HE HONBLE RAJASTHAN HIGH COURT IN CASE OF MAHADEV BALAI (SUPRA), WHERE THE INVESTMENT IN THE NEW HOUSE PROPERTY HAS FLOWN FROM THE ASSESSEE, WHICH IS NOT IN DISPUTE IN THE INSTANT CASE, MERELY FOR THE REASON THAT THE NEW RESIDENTIAL HOUSE PROPERTY HAS BEEN PURCHASED BY TH E ASSESSEE IN THE NAME OF HIS WIFE, THE SAME CANNOT BE BASIS FOR THE DENIAL OF DEDUCTION CLAIMED U/S 54F OF THE ACT. 13. REGARDING THE SECOND CONDITION OF CLAIMING THE DEDUCTION U/S 54F, WHICH AS PER AO, THE ASSESSEE HAS NOT SUBSTANT IATED IN THE INSTANT CASE, WHICH REQUIRES THAT ASSESSEE DOES NOT OWN MOR E THAN ONE RESIDENTIAL HOUSE, OTHER THAN NEW ASSET, ON THE DAT E OF TRANSFER OF THE ORIGINAL ASSET., THE ASSESSING OFFICER HAS HELD THA T IT CANNOT BE ASCERTAINED IN ABSENCE OF PERSONAL BALANCE SHEET OF THE ASSESSEE AND IN ABSENCE OF ANY OTHER PROPER DOCUMENTARY EVIDENCE. 14. IT IS NOTED THAT DURING THE COURSE OF APPELLATE PROCEEDING BEFORE THE LD. CIT(A), THE ASSESSEE HAS CONTENDED THAT A C ONFIRMATION TO THE EFFECT THAT NOT MORE THAN ONE RESIDENTIAL HOUSE WAS FILED BEFORE THE AO WHICH WAS HOWEVER NOT ACCEPTED WITHOUT ANY COGENT R EASON. OUR REFERENCE WAS ALSO DRAWN TO AN AFFIDAVIT OF THE ASS ESSEE CONFIRMING THE SAID FACT WHICH WAS ALSO SUBMITTED AS CONFIRMING EV IDENCE BEFORE THE LD. CIT(A). THE LD. AR HAS CONTENDED THAT LD. CIT( A) HAS NOT DOUBTED THE SAID AFFIDAVIT AND HAS ALSO NOT CONFIRMED THE D ISALLOWANCE ON THE GROUND THAT IT COULD NOT BE VERIFIED AND IT WAS ACC ORDINGLY SUBMITTED THAT SINCE THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER OF LD. CIT(A), ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 8 THE CONTENTION SO RAISED BY THE ASSESSEE SHOULD BE ACCEPTED. THE LD DR FAIRLY SUBMITTED THAT THE LD CIT(A) HAS MAINLY RELI ED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF KALYA (SUPR A) AND HAS NOT OBJECTED TO THE CONFIRMATION AND AFFIDAVIT SO FILED BY THE ASSESSEE. WE HAVE GONE THROUGH THE AFFIDAVIT SO FILED BY THE ASS ESSEE AND ARE OF THE VIEW THAT THE SAME IS CLEAR AND SELF-EXPLANATORY WH EREIN THE ASSESSEE HAS CATEGORICALLY STATED THAT ON THE DATE OF PURCHA SE OF RESIDENTIAL PROPERTY, WHICH HAPPENS TO BE THE DATE PRIOR TO DAT E OF SALE OF THE ORIGINAL ASSET, HE DIDNT OWN ANY OTHER HOUSE OTHER THAN THE NEW ASSET. IN THAT VIEW OF THE MATTER, THE CONTENTION SO RAISE D BY THE LD AR IS ACCEPTED. 15. IN LIGHT OF ABOVE AND RESPECTFULLY FOLLOWING TH E DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF MAHADEV BAL AI, THE ASSESSEE IS HELD ELIGIBLE FOR DEDUCTION UNDER SECTION 54F IN RE SPECT OF RESIDENTIAL HOUSE PROPERTY PURCHASED IN THE NAME OF HIS WIFE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 08/12/2017. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/12/2017. * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: ITA NO. 139/JP/2016 SHRI VIVEK JAIN, JAIPUR, VS. DCIT, JAIPUR 9 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIVEK JAIN, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-07, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 139/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR