Ramesh Kumar Gomathi, CHENNAI V. ITO, CHENNAI

ITA 1396/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4835 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 11-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Valuation report
• Section: 143(3); 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.1396/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) MS. RAMESH KUMAR GOMATHI, C/O. S.SRIDHAR, A.S. SRIRAMAN, ADVOCATES, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. VS THE INCOME TAX OFFICER, NON CORPORATE WARD 1(2), CHENNAI PAN: AFCPG8053L ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT /DATE OF HEARING : 11.04.2017 ! /DATE OF PRONOUNCEMENT : 27.04.2017 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-2, CHENNAI DATED 31.03.2016 IN ITA NO. 195/CIT(A)-2/20 13-14 FOR THE ASSESSMENT YEAR 201-12 PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. 2 ITA NO.1396/MDS/2016 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED BY GRANTING ONLY PART RELIEF WHEN THE ASSESSEE WAS ENT ITLED FOR THE ENTIRE CLAIM OF DEDUCTION U/S. 54F OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2011-12 ON 30.09.2011 ADMITTING INCOME OF RS.8,57,0 20/-. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S.143(3)3 OF THE ACT ON 25.02.2014, WHEREIN THE LD.AO COMPUTED THE LONG TER M CAPITAL GAIN OF THE ASSESSEE AT RS.63,10,803/-. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD JOINTLY SOLD PRO PERTY ALONG WITH HER MOTHER AND BROTHER, AND HER SHARE IN THE S ALE PROCEEDS WORKED OUT TO RS.69,34,674/- OUT OF WHICH RS.68,64, 325/- WAS DEPOSITED IN HER SAVINGS BANK ACCOUNT MAINTAINED WI TH INDIAN OVERSEAS BANK. THE ASSESSEE HAD CLAIMED THE LAND S OLD BY HER TO BE AGRICULTURAL LAND. HOWEVER THE LD.AO HELD IT TO BE NON- AGRICULTURAL LAND BECAUSE THE ASSESSEE HAD SOLD A P ART OF THAT 3 ITA NO.1396/MDS/2016 LAND IN THE YEAR 2008 AS RESIDENTIAL PLOT, THE LAND WAS CLASSIFIED AS RESIDENTIAL FROM 01.08.2007 BY THE TAMIL NADU RE GISTRATION DEPARTMENT AND THE LAND WAS WITHIN 3 KMS. FROM TENK ASI PANCHAYAT THE POPULATION OF WHICH WAS 12000 AS PER 2001 CENSUS. ACCORDINGLY, THE LD.AO HELD THAT THE LAND SOLD BY THE ASSESSEE CANNOT BE TREATED AS AGRICULTURAL LAND. T HEREAFTER THE ASSESSEE CLAIMED DEDUCTION U/S.54F OF THE ACT BY ST ATING THAT SHE HAD CONSTRUCTED A RESIDENTIAL HOUSE WITHIN THE STIPULATED PERIOD PROVIDED UNDER THE ACT. SINCE THE ASSESSEE HAD NOT PRODUCED THE DETAILS OF PURCHASE OF LAND AND CONSTR UCTION COST OF THE RESIDENTIAL HOUSE THE LD.A.O REJECTED THE CLAIM OF THE ASSESSEE AND WORKED OUT THE TAXABLE CAPITAL GAIN AT RS.63,10,803/-. 5. ON APPEAL BEFORE THE LD.CIT(A), IT WAS ESTABLISH ED BY THE ASSESSEE THAT SHE HAD CONSTRUCTED A RESIDENTIAL HOU SE ON THE LAND PURCHASED BY HER WITHIN THE STIPULATED PERIOD PROVIDED UNDER THE ACT. HOWEVER, THE LD.CIT(A) FURTHER OBSE RVED THAT THE ASSESSEE HAD NOT DEPOSITED THE SALE PROCEEDS IN THE CAPITAL GAINS SCHEME ACCOUNT AS PER THE PROVISION OF THE AC T AND SINCE SHE HAD UTILIZED ONLY RS.3 LAKHS FOR THE CONSTRUCTI ON OF THE HOUSE 4 ITA NO.1396/MDS/2016 BEFORE THE EXPIRY OF THE PERIOD STIPULATED UNDER TH E ACT FOR DEPOSITING THE SALE PROCEEDS IN THE CAPITAL GAIN SC HEME ACCOUNT, THE LD.CIT(A) GRANTED RELIEF U/S.54F OF THE ACT TO THAT EXTENT. 6. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASS ESSEE IS NOW IN APPEAL BEFORE US. THE LD.AR SUBMITTED BEFOR E US THAT THE ASSESSEE HAS DEPOSITED RS.68,64,325/- OUT OF HE R SHARE IN THE TOTAL SALE PROCEEDS OF RS.69,34,674/- IN THE SA VINGS BANK ACCOUNT MAINTAINED WITH INDIAN OVERSEAS BANK WHICH IS A NATIONALIZED BANK. THE LD.AR FURTHER SUBMITTED THA T FROM THE SAVINGS BANK ACCOUNT MAINTAINED WITH IOB THE ASSESS EE HAD MADE PAYMENT TO THE CONTRACTOR MR.POOLIKANNU FOR CO NSTRUCTION OF HER HOUSE AND THE AMOUNT WAS NOT WITHDRAWN OR US ED FOR ANY OTHER PURPOSES. THE LD.A.R FURTHER ARGUED SINCE IT WAS ONLY A MINOR TECHNICAL FLAW FOR FAILING TO INTIMATE THE BA NK AUTHORITIES TO CLASSIFY HER BANK DEPOSIT UNDER THE CAPITAL GAIN S CHEME ACCOUNT THE LAPSE MAY BE CONDONED BECAUSE THERE IS NO LOSS TO THE REVENUE. THE LD.AR ALSO POINTED OUT THE DECISI ON OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE SHRI P. S ANKARAN IN ITA NO.1167/MDS/2016, ORDER DATED 15.09.2016, WHERE IN ON THE IDENTICAL SITUATION THE IDENTICAL TECHNICAL BREACH WAS CONDONED. 5 ITA NO.1396/MDS/2016 IT WAS THEREFORE PLEADED THAT IN THE CASE OF THE AS SESSEE ALSO THE DECISION RENDERED BY THE CHENNAI BENCH OF THE TRIBU NAL IN THE CASE OF SHRI P. SANKARAN CITED SUPRA MAY BE FOLLOWE D AND ACCORDINGLY RELIEF MAY BE GRANTED. THE LD. DR VEHE MENTLY OPPOSED TO THE SUBMISSION OF THE LD.AR AND ARGUED I N SUPPORT OF THE ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. WE FIND MERIT IN THE SUBM ISSION OF THE LD.AR. ON PERUSING THE ORDER CITED BY THE LD. AR WE FIND THAT THE FACTS IN THE CASE OF THE ASSESSEE IS IDENTICAL. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL CITED BY THE L D.AR IS REPRODUCED HEREIN BELOW FOR REFERENCE: IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE LEARNE D ASSESSING OFFICER THAT HE HAD CONSTRUCTED A RESIDENTIAL HOUSE AT SOMANGALAM VILLAGE, KANCHEEPURAM DISTRICT WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF THE SALE OF LAND AND F URNISHED THE PROOF OF THE SAME ALONG WITH THE VALUATION REPORT A ND OTHER RELEVANT DOCUMENTS. THE LEARNED ASSESSING OFFICER AFTER EXAMINING THE PARTICULARS FURNISHED BY THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION UNDER SECTION 54 OF THE ACT BECAUSE HE HAS NOT DEPOSITED THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOUNT AS PER SECTION 54 (2) OF THE ACT IN A NATIONALIZED BANK ACCOUNT BUT HAD D EPOSITED ONLY 6 ITA NO.1396/MDS/2016 IN HIS REGULAR SAVINGS ACCOUNT. ACCORDINGLY, HE TAX ED THE AMOUNT OF RS.18,41,724/- UNDER THE HEAD LONG TERM CAPITA L GAIN. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE BY O BSERVING AS UNDER:- HOWEVER, IN THE INSTANT CASE ASSESSEE IS A PETROL BUNK OWNER AND RUNS THE BANK IN THE NAME OF M/S. SARATHI SERVICE STATION WH O IS SUPPOSED TO BE AWARE THAT MERE TECHNICAL BREACH OR A LAPSE WILL NO T MAKE ASSESSEE ELIGIBLE FOR HIS CLAIM OF EXEMPTION UNDER SECTION 54. IN THE INSTANT CASE, THE CAPITAL GAIN WAS NOT DEPOSITED IN THE CAPITAL GAIN ACCOUNT SCHEME OF A NATIONALIZED BANK HOWEVER, THE SAME WAS DEPOSITED IN HIS REGULA R BANK ACCOUNT ONLY. THUS, THE ASSESSEE HAS NOT DEPOSITED THE CAPITAL GA IN THAT AROSE ON ACCOUNT OF SALE OF PROPERTY IN ANY CAPITAL GAIN ACCOUNT SCH EME OF A NATIONALIZED BANK AS SPECIFIED IN SECTION 54(2). FOR CLAIMING EX EMPTION U/S.54(1) & 54(2) HAS TO BE FULFILLED AND IN THIS CASE THE ASSE SSEE HAS NOT FULFILLED THE CONDITIONS U/S.54(2). THEREFORE, I CONFIRM THE ADDI TION MADE BY THE ASSESSING OFFICER WITHDRAWING THE EXEMPTION U/S.54 OF THE INCOME TAX ACT, 1961. THE GROUND OF THE APPEAL IS DISMISSED. 6. ________________________________________________ __ _________________________________________________ 7. ________________________________________________ __ _________________________________________________ 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE DECISION OF S HRI MADHUVAN PRASAD VS. ITO, SUPRA THE CHENNAI BENCH OF THE TRIB UNAL HAS ALLOWED THE BENEFIT OF SECTION 54 OF THE ACT BECAUS E THE ASSESSEE HAD FULFILLED ALL THE CONDITIONS PRESCRIBED UNDER S ECTION 54 OF THE ACT BARRING THE DEPOSIT OF THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOUNT AS PRESCRIBED UNDER SECTION 54(2) O F THE ACT. IN THAT DECISION RELIANCE WAS ALSO PLACED IN THE DECIS ION OF HONBLE APEX COURT IN THE CASE OF MOTILAL PADAMPAT SUGARMIL L CO.LTD. VS. STATE OF UTTAR PRADESH & ORS WHEREIN IT WAS HEL D THAT THUS THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS 7 ITA NO.1396/MDS/2016 OFTEN SAID THAT EVERYONE IS PRESUMED TO KNOW THE LA W, BUT THAT IS NOT A CORRECT STATEMENT THERE IS NO SUCH MAXIM KNOW N TO THE LAW. IN THE GIVEN CASE BEFORE US ALSO, IT IS NOT DISPUTE D THAT THE ASSESSEE HAD NOT FULFILLED THE CONDITIONS PRESCRIBE D UNDER SECTION 54 OF THE ACT BARRING THE DEPOSIT OF THE SALE PROCE EDS IN THE CAPITAL GAIN SCHEME ACCOUNT. MOREOVER, THE FACTS REVEAL THAT THE ASSESSEE HAD DEPOSITED THE ENTIRE SALE PROCEEDS IN HIS SAVINGS BANK ACCOUNT MAINTAINED WITH NATIONALIZED BANK OUT OF WHICH HE HAS CONSTRUCTED HIS HOUSE. THE ONLY SMALL LACUNA A SSESSEE HAD MADE IS THAT THE ASSESSEE THOUGH HAD PLACED THE ENT IRE SALE PROCEEDS IN THE NATIONALIZED BANK HE HAS NOT TRANSF ERRED THE SAME IN THE CAPITAL GAIN SCHEME ACCOUNT. CONSIDER ING THESE FACTS OF THE CASE AND THE DECISIONS OF THE TRIBUNAL AND THE HONBLE APEX COURT CITED ABOVE, WE ARE OF THE CONSI DERED VIEW THAT FOR THIS SMALL TECHNICAL LAPSE OF THE ASSESSEE , THE BENEFIT OF SECTION 54 SHOULD NOT BE DENIED. SECTION 54 OF THE ACT IS A BENEFICIAL PROVISION AND A BENEFICIAL INTERPRETATIO N HAS TO BE MADE AS FAR AS POSSIBLE FOR GIVING BENEFIT TO THE A SSESSEE. THE ASSESSEE HAD PROCEEDED TO COMPLY WITH THE PROVISION S OF SECTION 54 OF THE ACT BUT HAS ONLY MADE A SMALL TECHNICAL B REACH WHICH WE ARE OF THE CONSIDERED VIEW SHOULD NOT DISENTITLE THE ASSESSEE FOR THE BENEFIT OF SECTION 54 OF THE ACT. THEREFORE , WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO GRANT THE B ENEFIT OF SECTION 54 OF THE ACT TO THE ASSESSEE AND ACCORDING LY DELETE THE ADDITION MADE BY HIM WHICH WAS FURTHER SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). SINCE ON THE IDENTICAL ISSUE ON THE EARLIER OCCAS ION, WE HAVE HELD THAT THE TECHNICAL BREACH OF NOT DIRECTIN G THE BANK AUTHORITIES TO CLASSIFY THE SAVINGS BANK DEPOSIT UN DER THE CAPITAL GAIN SCHEME ACCOUNT WILL NOT DISENTITLE T HE CLAIM OF DEDUCTION U/S.54/54F OF THE ACT, IN THE CASE OF THE ASSESSEE 8 ITA NO.1396/MDS/2016 ALSO THE SAME DECISION WILL HOLD GOOD. ACCORDINGLY WE HEREBY DIRECT THE LD.AO TO GRANT PROPORTIONATE DEDUCTION U /S.54F(1)(B) OF THE ACT WITH RESPECT TO THE INVESTMENT MADE BY T HE ASSESSEE FOR PURCHASE OF THE LAND AND CONSTRUCTION OF THE RE SIDENTIAL HOUSE AMOUNTING RS.65 LAKHS AGAINST THE LONG TERM C APITAL GAIN OF RS.63,10,803/- AND SALE PROCEEDS OF RS.69,34,674 /-. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 27 TH APRIL, 2017. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) ' #$ /JUDICIAL MEMBER #$ / ACCOUNTANT MEMBER %' /CHENNAI, &# /DATED 27 TH APRIL, 2017 JR # () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF