ACIT, CHENNAI V. D.Jayaraman, CHENNAI

ITA 1398/CHNY/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8755 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Capital asset; Depreciation
• Section: 143(3); 54F; 142(1); 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . , . . , !' [BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1398/MDS/2013 / ASSESSMENT YEAR : 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE I CHENNAI VS. SHRI D. JAYARAMAN NO.14/A5, WASON STREET T. NAGAR CHENNAI 600 017 [PAN ACEPJ 0343 D] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI GURU BHASHYAM, JCIT /RESPONDENT BY : SHRI B. RAMAKRISHNAN, CA / DATE OF HEARING : 28-01-2015 / DATE OF PRONOUNCEMENT : 4-02-2015 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2009 -10, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS)- VI CHENNAI DATED 11.2.2013, PASSED IN APPEAL NO.225 /11-12, ALLOWING I.T.A.NO. 1398/13 :- 2 -: SECTION 54F DEDUCTION OF ` 1,42,90,574/-, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE A CT). 2. THE ASSESSEE/AN INDIVIDUAL IS ENGAGED IN CONSTRUC TION BUSINESS. HE HAD FILED HIS RETURN ON28.9.2009 DISC LOSING TOTAL INCOME OF ` 76,48,902/-. THE SAME WAS SUMMARILY PROCESSED. 3. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE RECEI VED AIR INFORMATION FOR EXAMINING THE ASSESSEES DEDUCTION CLAIM U/S 54F. THE ASSESSEE HAD SOLD TWO RESIDENTIAL PLOTS NAMELY NO.9., JANAKI NAGAR, A.R. STREET, VALASARAVAKKAM, CHENNAI-87 AND PLOT NO.204,213, LAKSHMI NAGAR, VALASARAVAKKAM CHENNAI-87 ON 20.2.20 09 AND 23.8.2008 FOR ` 1.16 CRORES AND 71 LAKHS, RESULTING IN LONG TERM CAPITAL GAINS OF ` 91.75 LAKHS AND ` 51,15,574/- RESPECTIVELY; TOTALLING TO ` 1,42,90,574/-. THE ASSESSING OFFICER FOUND THE AS SESSEE TO BE OWNING FIVE RESIDENTIAL PROPERTIES (I) FLAT NO.2, V IJI APARTMENTS, NO.34, PINJALA SUBRAMANIAN STREET, T. NAGAR, CHENNAI-17, ( II) NO.10 RAGAVIAH ROAD, T. NAGAR, CHENNAI-17, (III) NO.14/A5 WASON ST REET, T. NAGAR, CHENNAI, (IV) BALAJI PREMRAJ HOUSE PROPERTY LAND 2400 SQ FT BUILDING -1290 SQ FT. AND (V) DRP MAHESWARAN & UMA MAHESWARA N LAND 2400 SQ FT BUILDING 2900 SQ FT. AS ON 23.8.2008. H E HAD TRANSFERRED THIS FIRST PROPERTY TO HIS WIFE SMT. USHA JAYARAMAN ON 18.12.2008. I.T.A.NO. 1398/13 :- 3 -: THE SECOND RESIDENTIAL HOUSE STATED HEREINABOVE HAD BEEN LET OUT ON 23.8.2008. THE ASSESSEE PLEADED TO HAVE BEEN USIN G THIRD PROPERTY HEREINABOVE AS AN OFFICE. THE ASSESSING OFFICER QU OTED HIS CONSTRUCTION AGREEMENT FOR TREATING THE SAME AS A R ESIDENTIAL PROPERTY. A NOTICE WAS ALSO TAKEN OF THE FACT THAT THOUGH IT WAS CLAIMED AS OFFICE PREMISES, NO DEPRECIATION RELIEF HAD BEEN RA ISED. THE ASSESSEE FURTHER SUBMITTED THAT THE REMAINING TWO PROPERTIES WERE HAVING DILAPIDATED BUILDINGS AND THEIR NATURE WAS LAND O NLY. THE ASSESSING OFFICER REFERRED TO THEIR PURCHASE AGREEMENTS CAT EGORIZING THESE TWO PROPERTIES AS LAND AND BUILDING. ALL THESE FACTS LED HIM TO CONCLUDE THAT THE ASSESSEE OWNED MORE THAN ONE RESIDENTIAL PROPERTY AT THE TIME OF TRANSFERRING THE ORIGINAL ASSET ON 23.8.200 8. IT IS ALSO NOTICED THAT THE ASSESSING OFFICER FURT HER CONSIDERED SECTION 54F DEDUCTION CLAIMED QUA THE SA LE DEED EXECUTED N 20.2.2009 (SUPRA). HE CONCLUDED THAT THE ASSESS EE HAD FOUR RESIDENTIAL PROPERTIES (SUPRA) ON THE SAID DATE. IT WAS HELD THAT THE ASSESSEE IN ANY CASE HAD BEEN OWNING MORE THAN ONE RESIDENTIAL HOUSE AT THE TIME OF EXECUTING BOTH SALE DEEDS. TH IS MADE HIM TO DISALLOW SECTION 54F DEDUCTION CLAIMED IN THE REGU LAR ASSESSMENT FRAMED ON 29.12.2011. I.T.A.NO. 1398/13 :- 4 -: 4. THE ASSESSEE PREFERRED AN APPEAL. THE CIT(A) HAS ACCEPTED HIS CONTENTIONS AS UNDER: 2. AGGRIEVED WITH THIS DISALLOWANCE, THE ASSESSE E HAS COME UP IN APPEAL REPRESENTED BY SHRI B. RADHAKRISH NAN, FCA. THE WRITTEN ARGUMENTS FILED BY THE AR ARE EXT RACTED HERE: 'THE APPELLANT, AN INDIVIDUAL IS ENGAGED IN THE CONSTRUCTION BUSINESS. THE APPELLANT HAD FILED HIS RETURN OF INCOME ON 28/09/2009 FOR THE AY 2009-10 ADMITTING T OTAL INCOME OF RS.76,48,902/-. THE FACTS OF THE CASE ARE AS UNDER :- THE RETURN WAS PROCESSED U/S 143(1) AND A REFUND OF RS. 7,770/- HAS BEEN GRANTED VIDE THAT INTIMATION. THE RETURN WAS SELECTED FOR SCRUTINY U/S 143(2) BASED ON AIR INFORMATION AND NOTICE U/S 142(1) WAS ISSUED. THE ASSESSMENT WAS COMPLETED BY THE AO ON 29-12-2011 DISALLOWING THE EXEMPTION CLAIM MADE BY THE APPELLA NT U/S 54F AGAINST CAPITAL GAIN ON SALE OF TWO LONG TERM C APITAL ASSETS AMOUNTING TO RS.1,42,90,574/- (91,75,000 + 51,15,574) ON THE GROUND THAT THE ASSESSEE IS THE OWNER OF MORE THAN ONE RESIDENTIAL PROPERTY AT THE TIME OF S ALE OF THE CAPITAL ASSETS AT THE FOLLOWING PLACES: I. FLT NO. 2, VIJI APARTMENTS, PINJALA SUBRAMANIAM STREET, T. NAGAR, CHENNAI - 17 II. NO. 10, RAGAVIAH ROAD, T. NAGAR, CHENNAI - 17 III. NO. 14/A5, WASON STREET, T. NAGAR, CHENNAI - 17 IV. BALAJI PREMRAJ - HOUSE PROPERTY V. D. MAHESWARAN & UMA MEHESWARAN AGGRIEVED BY THE DISALLOWANCE OF EXEMPTION CLAIM MA DE U/S 54F THE APPELLANT HAS PREFERRED THIS APPEAL. THE APPELLANT SOLD ONE PIECE OF LAND AT LAKSHMI NAG AR, VALASARAVAKKAM ON 23-8-2008 FOR A CONSIDERATION OF RS. 70,00,000/- AND ADMITTED A CAPITAL GAIN OF RS.51,15,574/- ON THIS SALE. THEREAFTER THE APPELLANT ALSO SOLD AN OTHER PIECE OF LAND AT JANAKI NAGAR, VALASARAWAKKAM ON I.T.A.NO. 1398/13 :- 5 -: 20/02/2009 FOR A CONSIDERATION OF RS. 1,16,00,000/- AND ADMITTED A CAPITAL GAIN OF RS.91,75,000/- ON THIS SALE. THE APPELLANT CLAIMED DEDUCTION ULS.54F ON THE TOTAL CA PITAL GAINS OF RS.1,42,90,574/- BY ACQUIRING RESIDENTIAL HOUSE PROPERTY. BUT THE LEARNED ASSESSING OFFICER DISALLO WED THE CLAIM ON THE BASIS THAT THE APPELLANT IS THE OWNER OF MORE THAN ONE RESIDENTIAL PROPERTY AT THE TIME OF SALE O F BOTH ASSETS WITHOUT CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT ON THE OWNERSHIP OF OTHER ASSETS. THE APPELLANT HAS OFFERED THE FOLLOWING EXPLANATION S IN SUPPORT OF HIS EXEMPTION U/S.54F. I. HOUSE PROPERTY AT PINJALA SUBRAMANIAN ST., T-NAG AR HAS, BEEN SETTLED BY THE ASSESSEE IN FAVOUR OF MRS. USHA JAYARAMAN, WIFE OF THE ASSESSEE ON 18/12/2008 II. PROPERTY AT NO.L0, REQEVISH ROAD, T-NAGAR IS A LET OUT PROPERTY AND THE INCOME FROM SAME HAS BEEN OFFERED FOR TAX UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. III . PROPERTY AT NO. 14/A5; WASON STREET, T-NAGAR HAS BEEN USED AS OFFICE BY THE ASSESSEE AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE PREVI OUS ASSESSMENT YEARS. IV, THE PROPERTIES PURCHASED FROM BALAJI PREMRAJ AND MAHESWARAN & UMA MAHESWARAN IS FOR BUSINESS PURPOSE AND IT CONTAINS BUILDINGS AT DILAPIDATED STAGE AND ALSO THE POSSESSION OF SAME NOT HANDED OVER TO THE ASSESSEE DURING THE ASSESSMENT YEAR IN WHICH EXEMPTION U/S 5 4F HAS BEEN CLAIMED. BASED ON THE ABOVE IT IS MOST HUMBLY SUBMITTED THAT THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF EXEMPTION U/S 54F IS ERRONEOUS AND UNJUSTIFIED AND IT IS MOST HUMBLY PRAYED THAT THIS RESPECTFUL AUTHORITY MAY BE PLEASED TO DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOW ANCE MADE. 3. ON PERUSAL OF THE WRITTEN ARGUMENTS AND THE SUP PORTING DOCUMENTS FILED, IT CAN BE NOTICED THAT THE PROPERT IES PURCHASED FROM BALAJI PREMRAJ AND MAHESWARAN & UMA MAHESWARAN IS FOR BUSINESS PURPOSE THOUGH IT CONTAI NS BUILDINGS AT DILAPIDATED STAGE. IN VIEW OF THE ABO VE, IT IS HELD THAT THE ASSESSEE WAS OWNING ONLY ONE HOUSE AS ON THE I.T.A.NO. 1398/13 :- 6 -: DATE OF ACQUIRING SECOND RESIDENTIAL HOUSE AND ACCO RDINGLY, HE IS ELIGIBLE FOR DEDUCTION U/S 54F FROM THE CAPI TAL GAINS. THIS LEAVES THE REVENUE AGGRIEVED. 5. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE REL EVANT FINDINGS. FACTS OF THE CASE ALREADY STAND NARRATE D IN THE PRECEDING PARAGRAPHS. THE ASSESSING OFFICER HAS REJECTED SE CTION 54F DEDUCTION BY SPECIFICALLY POINTING OUT THAT ON 23.8.2008 AS W ELL AS 20.2.2009, THE ASSESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE. T HESE FINDINGS HAVE NOWHERE BEEN DEALT WITH ELABORATELY IN THE LOW ER APPELLATE ORDER. WE FIND THAT ASSESSEES WRITTEN SUBMISSIONS HAVE B EEN ACCEPTED WITHOUT DISCUSSING THE FACTS OR GIVING REASONS IN S UPPORT OF THE IMPUGNED CONCLUSION. SECTION 250(6) OF THE ACT EN VISAGES THAT THE CIT(A)S ORDER HAS TO STATE POINTS FOR DETERMINATI ON, DECISION THEREUPON AND REASONS IN SUPPORT. NO SUCH COMPLIAN CE IS FORTHCOMING FROM THE ORDER UNDER CHALLENGE. THE ASSESSEE ALSO FAILS TO CONTROVERT THIS FACTUAL POSITION. IN THESE CIRCUMSTANCES, WE DEEM IT APPROPRIATE THAT THE CIT(A) SHALL AGAIN HEAR THE CASE ON MERITS AND PASS A FRESH ORDER AS PER LAW. THE REVENUES GROUNDS ARE RESTOR ED BACK TO THE LOWER APPELLATE AUTHORITY. I.T.A.NO. 1398/13 :- 7 -: 6. THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED ON WEDNESDAY, THE 4 TH OF FEBRUARY, 2015, AT CHENNAI. SD/- SD/- ( . . ) (B.R. BASKARAN) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! '# / JUDICIAL MEMBER $! / CHENNAI %' / DATED: 4 TH FEBRUARY, 2015 RD '&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/0 / CIT(A) 6. -1'2 / GF