ACIT, CHENNAI V. Shri D. Ravikumar, CHENNAI

ITA 140/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96348 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: N SABAPATHY
• Keywords: Opportunity of being heard; Cost of acquisition
• Section: 143(3); 54F; 142(1); 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , !' . ' # $ , % $& BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.140/MDS/2014 % ' '(' / ASSESSMENT YEAR : 2007-2008 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE IV, CHENNAI VS. SHRI. D. RAVIKUMAR, NO.31,FLOWER STREET, SAIDAPET, CHENNAI 600 015. [PAN ADPPR 2237J] ( / APPELLANT) ( /RESPONDENT) )* + , / APPELLANT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. -.)* + , /RESPONDENT BY : SHRI. N. SABAPATHY, ADVOCATE # ' + / / DATE OF HEARING : 28-10-2015 01( + / / DATE OF PRONOUNCEMENT : 06-11-2015 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI DAT ED 02.09.2013 IN ITA NO.123/09-10(A)-V, FOR THE ASSESSMENT YEAR 2 007-2008 PASSED ITA NO.140/MDS/2014. :- 2 -: UNDER SECTIONS 143(3) AND 250 OF THE INCOME TAX ACT (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 2.1 THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW EXEMPTION TO THE ASSESSEE UNDER SEC.54F OF THE I.T. ACT, 1961 . 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ASSESSEE WAS THE OWNE R OF MORE THAN ONE RESIDENTIAL PROPERTY ON THE DATE OF TRANSF ER OF THE ORIGINAL ASSET. 2.3 HAVING REGARD TO PROVISO (A) (I) TO SEC 54F(1 ), THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO UPHELD THE ACTION OF THE ASSESSING OFFICER IN NEGAT IVING THE CLAIM OF THE ASSESSEE UNDER SEC.54F OF THE I.T. ACT 1961. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL HAVING INCOME FROM BUSINESS OF PARTNERS HIP, RENTAL INCOME FROM FOUR PROPERTIES AND INTEREST ON FIXED DEPOSITS FILED RETURN OF INCOME ON 31.03.2007 DISCLOSING TOTAL INCOME OF <5, 49,500/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCOR DINGLY NOTICE U/S.143(2) AND 142(1) WERE SERVED ON THE ASSESSEE. IN RESPONSE TO THE NOTICES, THE LD. AUTHORISED REPRESENTATIVE HAS APPEARED IN THE ASSESSMENT PROCEEDINGS AND FILED EVIDENCES TO SUPPO RT THE COMPUTATION OF INCOME AND ALSO CAPITAL GAIN WORKING STATEMENT ALONGWITH DEEDS AND POWER OF ATTORNEY IN SALE OF P ROPERTIES. THE ASSESSEE DURING THE FINANCIAL YEAR 2006-2007 HAS SO LD THE PROPERTY FOR ITA NO.140/MDS/2014. :- 3 -: <40,00,000 UNDER GENERAL POWER OF ATTORNEY AND ACCO RDINGLY LONG TERM CAPITAL GAIN AFTER CONSIDERING THE INDEX COST OF ACQUISITION WORKED OUT TO <26,28,898/-. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS UTILIZED ABOVE SALE CONSIDERATION FOR THE PURCHASE OF LAND AND BUILDING AND PAID ADVANCE OF <27,50,000/- AND ALLEGED THAT THERE IS NO CAPITAL GAINS AS HE REINVESTED THE SALE PROCEEDS IN PURCHAS E OF RESIDENTIAL PROPERTY. AT THE TIME OF HEARING THE ASSESSEE COUL D NOT PRODUCE ANY EVIDENCE IN RESPECT OF INVESTMENT WHICH DISQUALIFIE D HIM FROM CLAIMING EXEMPTION U/S.54 OF THE ACT AND ACCORDINGLY THE ASS ESSING OFFICER ASSESSED LONG TERM CAPITAL GAINS TO TAX WITH ASSES SED INCOME OF <31,86,711/- AND RAISED DEMAND. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER U/S .143(3) OF THE ACT DATED 29.12.2009, THE ASSESSEE FILED AN APP EAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI. T HE LD. AUTHORISED REPRESENTATIVE IN THE APPELLATE PROCEEDINGS SUBMITT ED THAT THE ASSESSEE IS IN RECEIPT OF REMUNERATION AS PARTNER, INTEREST ON CAPITAL FROM FIRM AND HOUSE PROPERTY INCOME INCLUDING INCOM E FROM COMMERCIAL PROPERTIES. THE ASSESSEE HAS PURCHASED LAND AND BUILDING WITHIN THE SAME FINANCIAL YEAR VIDE DOCUMENT NO.776 /2007, DATED 28.03.2007 FOR <30,00,000/- AND CLAIMED EXEMPTION U /S.54 AND PRODUCED COPY OF SALE DEEDS AND DETAILS OF RENTAL I NCOME FROM NEW PROPERTY OFFERED IN THE ASSESSMENT YEAR 2008-09 AND PRAYED FOR ITA NO.140/MDS/2014. :- 4 -: DELETION OF ADDITION MADE BY THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER HEARING THE SUBMISSIONS AND ALSO VERIFIED THE SALE DEED COPIES AND CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER AND THE SAME WAS FURNISH ED VIDE LETTER NO.ACITBC4/REMAND/07-08/2013-14, DATED 23.07.2013 W ERE THE LD. ASSESSING OFFICER MENTIONED THAT THE ASSESSEE HAS N OT PRODUCED COPIES OF DOCUMENTS IN THE ASSESSMENT PROCEEDINGS T HOUGH THE SALE IS FINALIZED IN THE SAME FINANCIAL YEAR AND ASSESSEE I S NOT ELIGIBLE TO CLAIM EXEMPTION OF LONG TERM CAPITAL GAIN. AS PER THE P ROVISIONS OF SECTION 54F(1) OF THE ACT THE ASSESSEE IS HAVING MORE THAN ONE RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF ORIGINAL ASSET AND OFFERED RENTAL INCOME FOR TAXATION UNDER THE HEAD INCOME FROM HOU SE PROPERTY. THE LD.CIT(A) WAS SATISFIED THAT ASSESSEE HAS UTILIZE D THE SALE PROCEEDS IN PURCHASING THE NEW PROPERTY BELONGS TO HIS BROTHER BY REGISTERED SALE DEED. CONSIDERING THE ABOVE FACTS AND DOCUMENTARY EVIDENCE DIRECTED THE ASSESSING OFFICER TO GRANT EXEMPTION AND ALLOWE D THE APPEAL IN FAVOUR OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TA X (APPEALS), THE REVENUE FILED AN APPEAL BEFORE THE T RIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE COM MISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE DEDUCTIO N U/S.54F WITHOUT CONSIDERING THE PROVISIONS OF SEC 54F (1)(A) (I) OF THE ACT WHEREIN ON ITA NO.140/MDS/2014. :- 5 -: THE DATE OF SALE OF PROPERTY NOT MORE THAN ONE RES IDENTIAL PROPERTY SHOULD BE OWNED BY THE ASSESSEE AND THERE IS NO CLARITY WHETHER THE ASSESSEE IS HAVING RESIDENTIAL PROPERTY OR COMMERC IAL PROPERTY WHERE INCOME IS OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND PRAYED FOR ALLOWING THE REVENUE APPEAL. 6. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIV E FOR ASSESSEE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND VEHEMENTLY ARGUED THAT THE CLAIM OF T HE ASSESSEE IS AS PER LAW AND COMMISSIONER OF INCOME TAX (APPEALS) HA S RIGHTLY CONSIDERED THE EXEMPTION. 7. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH PARTIES, OR DERS OF LOWER AUTHORITIES AND ALSO MATERIAL PERUSED ON RECO RD. THE ASSESSEE BEFORE ASSESSING OFFICER HAS CLAIMED DEDUCTION U/S. 54 OF THE ACT AND WAS NEGATIVATED BY THE ASSESSING OFFICER AS NO MAT ERIAL EVIDENCE WAS PRODUCED FOR PURCHASE OF PROPERTY AND LD. ASSESSING OFFICER HAS ALSO RECORDED THAT ASSESSEE HAS HOUSE PROPERTY INCOME FR OM FOUR PROPERTIES. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE CLAIMED EXEMPTION U/S.54F OF THE ACT, THE LD. CIT(A) BASED ON DOCUMENTARY EVIDENCE GRANTED DEDUCTION U/S54F IN SPITE OF THE OBJECTIONS OF THE LD.AO THAT ASSESSEE IS NOT ELIGIB LE TO CLAIM EXEMPTION OF LONG TERM CAPITAL GAIN AS PER THE PROVISIONS OF SEC. 54(F)(1) OF THE ITA NO.140/MDS/2014. :- 6 -: ACT, IF THE ASSESSEE IS HAVING MORE THAN ONE RESIDE NTIAL HOUSE CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERT Y ON THE DATE OF TRANSFER. SINCE THERE IS NO CLARITY IN THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) TO THIS EFFECT, WE HEREBY SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REMIT THE ISSUE IN DISPUTE TO THE FILE OF THE ASSESSING OFFICER TO VER IFY THE ISSUE AFRESH AND PASS THE ORDER ON MERITS AFTER PROVIDING ADEQUA TE OPPORTUNITY OF BEING HEARD BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.140/MDS/2014 IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON FRIDAY, THE 6 TH DAY OF NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ' # $ ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 2 / DATED:06.11.2015 KV 3 + -%/45 65(/ / COPY TO: 1 . )* / APPELLANT 3. # 7/ () / CIT(A) 5. 5':; -%/% / DR 2. -.)* / RESPONDENT 4. # 7/ / CIT 6. ;<' = / GF