Shri Mohamed Ilyas, Bangalore V. ACIT, Bangalore

ITA 140/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0625 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: H A K RAO
• Keywords: Depreciation
• Section: 54F

Judgement Text

PAGE 1 OF 7 ITA NO.140/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A' BEFORE SHRI K P T THANGAL, VICE PRESIDENT AND SHRI N L KALRA, A.M. ITA NO.140/BANG/09 (ASST. YEAR 2005-06) SHRI MOHAMMED ILYAS, 01-A/B, LLYODYS WILL, 9/6, LLODYS'S ROAD, COOKES TOWN, BANGALORE-5. - APPELLANT VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-8(1), BANGALORE. - RESPONDENT APPELLANT BY : SHRI H A K RAO RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER N L KALRA : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF LEARNED CIT(A)-V, BANGALORE DATED 4TH DECEMBER, 2009. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- I) THE ORDER OF THE ASSESSING OFFICER IN RESTRICTING THE BENEFIT U/S 54F TO RS.98,46,728/- IS AGAINST LAW, FACTS OF THE CASE AND WEIGHT OF EVIDENCES. PAGE 2 OF 7 ITA NO.140/BANG/2009 2 II) THE LEARNED OFFICER FAILED TO APPRECIATE THE CIRCUMSTANCES OF THE PAYMENT OF RS.30 LAKHS PAID TO MR. C C BABY WHO HAD SETTLED THE PROPERTY EARLIER IN FAVOUR OF HIS SON MR. JACOB B CHAVARA, THE VENDOR, FOR ABSOLVING THE VENDOR (SETTLEE) FROM THE PIOUS OBLIGATION DUTIES EXPECTED OF A SON WHICH IS ATTACHED TO THE IMMOVABLE PURCHASED AND HOLDING IT AS NOT A PAYMENT FOR 'HOUSE' PURCHASED. III) THE APPELLANT PRAYS THAT HE MAYBE PERMITTED TO ADDUCE FURTHER EVIDENCES AT THE TIME OF HEARING OF THIS APPEAL. 3. THE ASSESSEE CLAIMED DEDUCTION U/S 54F TO THE EXTENT OF RS.1,28,46,728/-. THE DETAILS AS SUBMITT ED BEFORE THE ASSESSING OFFICER ARE AS UNDER:- COST OF THE HOUSE RS.80,00,000 REGISTRATION CHARGES RS. 7,97,825 AMOUNT PAID FOR PURCHASE OF MOVABLES FROM MR. C C BABY, FATHER OF JACOB B CHAVARA RS.30,00,000 LEGAL FEES TO HOLLA & HOLLA RS. 1,00,000 AMOUNT SPENT ON CONSTRUCTION UPTO 31.07.2005 RS. 9,48,903 TOTAL RS.1,28,46,728 4. IN REPLY TO THE LETTER, THE ASSESSEE SUBMITTED T HAT RS.30 LAKHS WAS GIVEN TO SHRI C C BABY, FATHER OF SH RI JACOB B CHAVERA. SHRI C C BABY HAS JOINED AS CONFIRMING PA RTY IN THE PAGE 3 OF 7 ITA NO.140/BANG/2009 3 SALE DEED. AS PER THE ASSESSING OFFICER, THE CONSI DERATION PAID WAS OF RS.80 LAKHS. THE ASSESSING OFFICER THEREFOR E EXCLUDED THE SUM OF RS.30 LAKHS FROM THE CLAIM OF DEDUCTION U/S 54F FROM THE AMOUNT IF THE AMOUNT HAS BEEN PAID AGAINST MOVABLE ASSETS. 5. THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) HAS MENTIONED THAT THE ASSESSEE IN THE STATEMENT OF FACTS HAS ADMITTED THAT THE AMOUNT WAS PAID FOR SALE OF CERTAIN MOVABLES. ACCORDINGLY, THE LEAR NED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. BEFORE US, THE LEARNED AR DREW OUR ATTENTION TO THE SETTLEMENT DEED AVAILABLE AT PAGE 15 TO 24 OF T HE PAPER BOOK. THE LEARNED AR DREW OUR ATTENTION TO PAGE 19 OF THE PAPER BOOK IN WHICH IT IS MENTIONED THAT THE SCHEDU LE PROPERTY WAS SETTLED IN FAVOUR OF THE SETTLEE FOR HIS OWN US E AND ENJOYMENT AND THE SETTLEE WAS TO CARRY OUT THE DUTIE S EXPECTED OF HIM TO DO. BY THIS DEED OF SETTLEMENT MADE ON 22 ND MARCH, 2000, SHRI C C BABY SETTLED THE PROPERTY IN THE NAME OF HIS SON. THE ASSESSEE HAS PURCHASED THIS PROPERTY. THE LEARNED AR DREW OUR ATTENTION TO THE DECISION OF THE COCHIN BENCH IN THE CASE OF DCIT V INTERNATIONAL BUSINESS SERVICES GROUP P. LTD. 314 ITR (AT) 114. THE LEARNED AR DREW OUR ATT ENTION TO THE PORTION IN WHICH IT HAS BEEN HELD THAT FURNITUR E AND FIXTURES PROVIDED BY THE ASSESSEE IN THE HOUSE PROPE RTY FORMED PAGE 4 OF 7 ITA NO.140/BANG/2009 4 PART OF THAT HOUSE PROPERTY AND COULD NOT BE TREATED AS A SEPARATE CLASS OF ASSETS. 7. ON THE OTHER HAND, THE LEARNED DR DREW OUR ATTENTION TO PAGE 20 OF THE PAPER BOOK FILED BY THE LEARNED AR. THE SETTLER SETTLED THE PROPERTY ABSOLUTELY AND MADE THE SETTLEE AS THE ABSOLUTE OWNER. IT WAS THEREFORE SU BMITTED THAT THE PROPERTY WAS SETTLED BY SHRI C C BABY IN THE NAME OF MR. JACOB B CHAVERA ABSOLUTELY. THE DEDUCTION OF RS .30 LAKHS CANNOT BE GIVEN. THE LEARNED DR RELIED ON THE DECI SION OF THE DELHI HIGH COURT IN THE CASE OF ASHOK SOI V CIT 273 ITR 165. 8. WE HAVE HEARD BOTH THE PARTIES. IN THE INSTANT CASE, THE FACTS ARE NOT CLEAR. THE ASSESSEE ON ONE HAND SAYING THAT THE AMOUNT HAS BEEN PAID IN RESPECT OF MOVABLE ASSETS AND ON THE OTHER HAND IS ALSO CONTENDING THAT THE AMOUN T WAS PAID BECAUSE THE PARTY FROM WHICH THE ASSESSEE PURCHASED THE PROPERTY WAS REQUIRED TO CARRY OUT THE DUTY EXPECTED H IM TO DO. IN ORDER TO ACQUIRE THE PROPERTY, A SUM OF RS.3 0 LAKHS WAS PAID TO SHRI C C BABY. THE CASE LAW RELIED ON BY THE LEARNED AR IS NOT APPLICABLE. IN THAT CASE, THE ISSUE WAS ALL OWING THE DEPRECIATION ON FURNITURE AND FIXTURES. IN THAT CA SE, GUESTHOUSE WAS LET OUT WITH FURNITURE AND FIXTURES. UNDER THAT CIRCUMSTANCE, IT WAS OBSERVED THAT FURNITURE AND FI XTURES FORMED PART OF THE HOUSE PROPERTY. IF THE ASSESSEE GIVES ON RENT THE FURNITURE AND FIXTURES SEPARATELY, THEN DEP RECIATION PAGE 5 OF 7 ITA NO.140/BANG/2009 5 CAN BE ALLOWED SEPARATELY. AS PER SECTION 54F OF TH E I T ACT, ONE HAS TO CONSIDER THE COST OF THE NEW ASSET FOR D ETERMINING THE DEDUCTION U/S 54F. COST OF THE ASSET MEANS THE AMOUNT INCURRED BY AN ASSESSEE FOR ACQUIRING THE ASSET THOU GH COST IS NOT DEFINED U/S 54F OF THE I T ACT. THE WORD 'ACT UAL COST' HAS BEEN DEFINED IN SECTION 43 OF THE I T ACT. 'ACTUAL COST' AS PER THE DEFINITION CONTAINED IN SECTION 43 IS THE ACTUA L COST OF THE ASSET TO THE ASSESSEE REDUCED BY THAT PORTION OF THE COST THEREOF, IF ANY, HAS BEEN MADE DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY. IF THE SETTLER HAS SETTL ED THE PROPERTY FOR THE USE AND ENJOYMENT OF THE SETTLEE AND DID NOT PERMIT HIM TO TRANSFER THAT PROPERTY THEN THE AMOUNT IF ANY RECEIVED FOR PERMITTING SUCH TRANSFER WILL BE A FAC TOR TO BE CONSIDERED FOR ASCERTAINING THE COST OF THE NEW ASS ET. WE ARE NOT AWARE ABOUT THE MARKET VALUE OF THE PROPERTY. N ONE OF THE AUTHORITIES BELOW HAVE EXAMINED EITHER THE PURCHASE R OR THE SELLER TO ASCERTAIN THE PURPOSE FOR WHICH THE SUM O F RS.30 LAKHS WAS GIVEN TO MR. C C BABY. IN VIEW OF THE DISPUTED FACTS, WE ARE NOT IN A POSITION TO DECIDE THE ISSUE BECAUSE T HE PURPOSE FOR WHICH THE SUM OF RS.30 LAKHS HAS BEEN PAID IS N OT CLEAR FROM THE FACTS COLLECTED BY THE LOWER AUTHORITIES. IN CASE THE SUM HAS BEEN PAID AGAINST MOVABLE ASSETS THEN THE S AME CANNOT BE CONSIDERED AS PART OF THE COST OF THE NEW ASSET. DEDUCTION U/S 54F IS AVAILABLE FOR THE ACQUISITION OF A RESID ENTIAL HOUSE. A RESIDENTIAL HOUSE IS A HOUSE IN WHICH A PERSON CAN RESIDE AND WILL INCLUDE THE NECESSARY MOVABLE ASSETS WHICH ARE ATTA CHED TO THE PAGE 6 OF 7 ITA NO.140/BANG/2009 6 BUILDING. HENCE, FOR ASCERTAINING THE CORRECT FACT S, THE ISSUE IS RESTORED BACK ON THE FILE OF THE AO. THE ASSESSEE WILL PLACE NECESSARY FACTS BEFORE THE AO SO AS TO ENABLE THE AO TO DECIDE THE PURPOSE FOR WHICH THE SUM OF RS.30 LAKHS WAS PAID. 9. ANOTHER FACTOR WHICH IS WEIGHING IN OUR MIND IN RESTORING THE MATTER BACK TO THE AO IS THAT IN CASE THE ASSESSEE HAS PAID THE SUM OF RS.30 LAKHS WITHOUT AN Y CONSIDERATION THEN IT WILL BECOME AN INCOME IN THE HANDS OF THE RECIPIENT AS PER SECTION 56(1)(V). IN CASE THE AMO UNT HAS BEEN PAID AGAINST THE MOVABLE ASSET THEN THE SURPLUS REA LIZED AGAINST THE MOVABLE ASSET WILL BE TAXABLE AS CAPITAL GAIN I N THE HANDS OF THE RECIPIENT. IN CASE THE ASSESSEE HAS DISCHARGED THE BURDEN OF PERFORMING DUTY BY THE SELLER THEN THE AMOUNT PAID WILL BE WITHOUT ANY LEGAL OBLIGATION CAST ON THE ASSESSEE AN D THE RECIPIENT WILL BE LIABLE TO BE TAXED U/S 56(1)(V). HENCE, THE FINDING OF FACT IS NECESSARY NOT ONLY FOR THE PURPOSE S OF DEDUCTION U/S 54F IN THE CASE OF THE ASSESSEE BUT A LSO FOR THE PURPOSES OF ASCERTAINING THE TAXABILITY IN THE HANDS OF THE RECIPIENT ALSO. THE ASSESSEE IN THE INSTANT CASE H AS NOT PLACED ANY EVIDENCE TO SHOW AS TO WHY THE MONEY WAS PAID TO T HE FATHER OF THE SELLER. ONLY CONTENTION HAS BEEN RAIS ED WITHOUT ANY EVIDENCE. A CONTENTION CANNOT BE A SUBSTITUTE O F THE EVIDENCE AND FOR GIVING A FINDING; ONE HAS TO ASCER TAIN THE FACTS NOT ONLY FROM THE PAYEE BUT ALSO FROM THE RECIPIENT A LSO. HENCE THE ISSUE OF ALLOWABILITY OF RS.30 LAKHS FOR COMPUTA TION OF PAGE 7 OF 7 ITA NO.140/BANG/2009 7 DEDUCTION U/S 54F IS RESTORED BACK ON THE FILE OF T HE ASSESSING OFFICER. 10. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 9TH OCTOBER, 2009. SD/- SD/- (K P T THANGAL) (N L KALRA) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DTD.09/10/2009 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT( A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF, ITAT, NEW DELHI. MSP/30.9. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.