Sumathi Gedupudi, Hyderabad V. Addl.CIT., Range-13, Hyderabad

ITA 1403/HYD/2014

• Counselvise Citation: 140322514 RSA 2014
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Capital asset
• Section: 263; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER ITA NO.1403/HYD/2014 : ASSESSMENT YEAR 2009 - 10 S MT SUMATHI GEDUPUD I HYDERABAD (PAN AGMPG 6429 K ) V/S. ADDL. COMMISSIONER OF INCOME - TAX RANGE - 13 , HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M .CHANDRAMOULESWARA RAO RESPONDENT BY : SHRI D.SUDHAKAR RAO CIT - DR DATE OF HEARING 28.4.2015 DATE OF PRONOUNCEMENT 01.05.2015 O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 200 9 - 10 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX I, HYDERABAD. 2. GROUNDS OF APP EAL OF THE ASSESSEE ARE AS UNDER - 1. THE REVISIONARY ORDER U/S. 263 IS ERRONEOUS AND BAD BOTH ON FACTS AND IN LAW. 2. ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CA S E, THE LD. COMMISSIONER OF INCOME - TAX HAS ERRED IN ASSUMING THE JU R I S DI C TION U/S. 263 OF THE IT ACT 1961 IN AS MUCH AS THE ASSESSMENT OR DE R D ATED 16.12.2011 IS NEI T HER ERRONEOUS NOR IT IS PREJU D I C I A L INTEREST OF THE REVENUE. I TA NO. 1403/H YD/20 14 S MT. SUMATHI GEDUPUDI , HYDERABAD 2 3. ON THE FACTS AND IN TH E CIR C UMSTANCES OF THE CA S E, THE LD. COMMISSIONER OF INCOME - TAX HAS ER R ED IN RESTRICTING THE EX C EPTI O N G RANTED U/S. 54F TO THE EXTENT OF R S .1,04, 51,312/ - WHICH IS THE AMOUNT OUT THE SALE CONSIDERATION UTILIZED IN THE ACQUISITION OF A RESIDENTIAL HOUSE IGNORING THE FACT THAT THE APPELLANT HAS ALSO UTILISED AN AMOUNT OF RS.45,45,885/ - IN THE AC QUISITION OF SAME RESIDENTIAL HOUSE EVEN THOUGH THIS AMOUNT WAS BORROWED FROM A BANK. HE IS NOT JUSTIFIED IN IGNORING THE FACT THAT THE AMOUNT THE COST OF THE RESIDENTIAL HOUSE IS TO BE DEDUCTED U/S. 54F. 4. O N THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME - TAX HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTED THE DEDUCTION AND TO RESTRICT THE DEDUCTION U/S. 54F TO RS.1,04,51,312/ - . THE LD. COMMISSIONER OF INCOME - TAX IS NOT JUSTIFIED IN DIRECTING THE ASSESSING OF FICER TO COMPLETE THE RE - ASSESSMENT CONTRARY TO THE PROVISIONS OF 54F AS THE CONDITIONS IS THAT THE COST OF NEW HOU S E ACQUIRED SHOULD NOT BE LESS THAN THE AMOUNT OF NET SALE CON S I D ERATION RECEIVED ON TH E TRANSFER OF THE LONG TERM CAPITAL ASSET AND SHOULD HAVE BEEN IN C U R RED WITHIN THE STIPULATED TIME. 5. ON THE FACTS AND IN TH E CIR C UM S TANCES O F THE C ASE, THE LD. COMMISSIONER OF INCOME - TAX HAS ER R ED IN NO T A P PRECIATING THE FACT THAT THE ADDL. CIT , R A N G E 13, HYDERABAD BEIN G THE ASSESSING OFFICER HAS CORR E CT LY CONSIDER THE P R O V IS I ON S OF SEC T ION 54F AND THEREFORE THE ASSESSMENT ORDER CANNOT BE TERMED AS ERRONEOUS. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS FIL E D RETURN DECLARING INCOME OF RS .13,81,375, A FTER CLAIMING DEDUCTION UN D ER S.54F OF THE ACT. THE ASSESSMENT WAS F R AMED UN D ER S.143(3) ACCEPTING THE RETURNED INCOME OF TH E ASSESSEE. TH E COMMISSIONER OF INCOME - TAX IN REVISIONAL PROCEEDINGS UN D ER S.263 OF THE AC T HAS DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION UN D ER S.54F BY RESTRICTING THE DEDUCTION CLAIMED TO RS.1,04,51,312 AND A S AN AMOUN T OF RS.45,45,855 HAS TO BE DISALLOWED REPRESENTIN G BANK LOAN USED IN TH E PURCHASE OF HOU S E BY TH E ASSESSEE . THE LEARNED I TA NO. 1403/H YD/20 14 S MT. SUMATHI GEDUPUDI , HYDERABAD 3 COUN S EL FOR THE ASSESSEE SUBM I T TED THAT T HE ASSESSEE HAS INVESTED A SUM OF R S .1,49,97,000 IN THE PURCHASE OF HOUSE. OUT OF THE TOTAL INVESTMENT MADE IN TH E ACQUISITION OF HOU S E PROPERTY, THE ASSESSEE HAS UTILI S ED AN AMO U N T OF R S .45,45, 8 55 BY AVAILING HOUSING LOAN FROM KOTAK MAHINDRA BANK AND THE BALANCE AMOUNT OF INVESTMENT WAS F R OM THE DIRECT RE C EIPTS F R OM TH E SALE OF SHARES. THE COMMISSIONER IN THE ORDER UN D ER S.263 HAS TR E ATED THE ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE TO THE EXTENT OF DEDUCTION UN D ER S.54F OF RS.45,45,855 BEIN G THE BANK L O AN UTILI S ED IN TH E ACQUISITION OF THE HOU S E. TH E LEARNED C OUN S EL FOR THE ASSESSEE SUBMI T TED T H A T THE ISSUE IS COVERED IN F A VOUR OF THE ASSESSEE WITH SERIES OF DECI S ION S IN C LU D IN G TH OSE OF THE HYDERABAD BENCH OF T HE TRIBUNAL IN J.V.KRISHNA RAO V/S. DY. COMMISSIONER OF INCOME - TAX ( 24.TAXMANN.COM.104 ) ; MUNNIR KHAN V/S. ITO(41 SOT 504) (HYD) ; PUSPA D E VI TIBREWALA V/S. ITO (DATED 22.3.2013 IN ITA NO1733/HYD/2011 FOR ASSESSMENT YEAR 2007 - 08) ; AND THE DECISION OF DELHI B ENCH OF TRIBUNAL IN KAPIL KUMAR A G ARWAL V/S. ACIT( DATED 16.7.2013 IN ITA NO.2975/DELH I /2013 FOR ASSESSMENT YEAR 2 0 09 - 10), BESIDES THE DECISION OF K ERALA HIGH C OU R T IN ITO V/S. K. C.GOPALAN (107 TAXMAN 591). HE ALSO RELIED ON THE DECISION OF THE APEX COU R T IN THE CA S E OF MALABAR INDUSTRIAL CO . LTD. V.S,. CIT (243 ITR 83) , WHEREIN IT WAS HELD THAT THE COMMISSIONER CANNOT EXERCISE JURI S DI C T I ON U ND ER S.263 MERELY BECAU S E HIS VI E W IS DIFFERENT F R OM TH A T OF THE ASSESSING OFFICER. HE SU B MI T TED THAT T HERE IS NO E R ROR IN TH E O R DER O F TH E ASSESSING OFFICER IN ACCEPTING THE CL A IM O F TH E ASSESSEE UN D ER S.54F AND THE ORDER WAS NO T PREJU D I CI AL TO TH E IN T ERESTS OF THE REVENUE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSED THE SUBMI S SION S O F THE LEARNED COUN S EL FOR THE ASSESSEE . HE REFERRED TO THE RELEVANT PROV I SION S OF S.54F OF THE ACT IN SUPPORT OF THE C ASE OF THE R E VENU E THAT THE SALE PROCEEDS OF AN ASSET HAVE TO I TA NO. 1403/H YD/20 14 S MT. SUMATHI GEDUPUDI , HYDERABAD 4 BE INVESTED IN THE SPECIFIED ASSET WITHIN THE STIPULAT E D TIME IN ORDER TO CLAIM DEDUCTION UN D ER S.54F OF THE ACT. HE SUBMI T TED THAT THE ASSESSEE HAS INV E STED A SUM OF RS.1,04, 51,312 O UT O F THE SALE PROC E EDS F R OM SHARES OF RS. 1,63,45,644 AND TH E R E FORE , THE COMMISSIONER WAS JU S TIFIED IN DIRECTING THE ASSESSING OFFICER TO REDO THE ASSESSMENT BY N OT ALLO W IN G DEDUCTION UN D ER S.54F ON THE AMOUNT OF R S .45,45,855 IN VE STED BY THE ASSESSEE BY AVAILING THE HOUSING LOAN FROM THE B A NK. HE SUBMI T TED T HAT THE HYDERABAD BENCH TRIBUNAL IN SMT.V. KUMUDA V / S . DCIT (135 ITD 116) HAS DECIDED SIMILAR ISSUE O N SIMILA R FACTS IN F A VOUR O F THE RE VENU E . HE RELIED ON THE ORDER OF THE COMMISSIONER PASSED UNDER S.263 OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMI S SIONS CAREFULLY AND ALSO PERUSED THE ORD E R S OF THE ASSESSING OFFICER AND THE COMMISSIONER. WE FIND T H A T THE B A SIC FACTS O F THE C A S E ARE NO T IN DISPUTE. THE ASSESSEE HAS INVESTED A S UM OF R S .1,04,5 1 ,31 2 OUT OF THE SALE PROCEEDS OF THE SHARES WITHIN THE STIPULATED PERIOD. THE BALANCE A M OUN T OF RS .45,4 5 ,855 WAS INV E STED IN TH E PU R CH A S E OF HOU S E BY TH E ASSESSE E BY AVAILING HOUSING LOAN F R OM KOTAK M AHIN D RA BANK LTD. WE FIND THAT THE ISSUE BEFORE US WITH REGARD TO GRANT OF DEDUCTION/EX E MPTION UN D ER S .54F OF THE AC T WITH RE G ARD TO THE AMOUNT IN VE STED IN THE PU R CHA S E OF SPECIFIED A S SETS WITHIN THE STIPUL A TED TI ME BY AVAILING LOAN FROM THE BANK, IS COVERED IN F A VOUR O F TH E ASSESSEE WITH SERIES OF DECISION S CITED ON BEHALF OF THE ASSESSEE BEFORE US. IN J.V.KRISHNA RAO (SUPRA) , IT WAS HELD BY T HE HYDERABAD BENCH O F TH E TRIBUNAL THAT THE CAPITAL GAINS EARNED BY THE ASSESSEE CAN B E UTILI S ED FOR OTH E R PU R PO SES, AND AS L ONG AS THE ASSESSEE FULFILS THE CON D IT I ON OF IN VE STMENT OF THE EQU I VALENT AMOUNT IN TH E AS S ET QUALIFYING FOR RELI E F UN D ER S.54F, BY SECURING THE MONEY SPENT OUT OF THE CAPITAL GAIN S F R OM OTHER SOU R CES A VAILABLE TO IT, EITHER BY BORROW ING O R OTHERWISE, I T I S ELIGIBLE FOR I TA NO. 1403/H YD/20 14 S MT. SUMATHI GEDUPUDI , HYDERABAD 5 RELIEF UN D ER S.54F IN RESP E CT OF TH E ENTIRE AMOUN T OF CAPI T AL GAINS REALISED. IT WAS HELD THAT IN TH E CIRCUMSTANCES, THERE IS MERIT IN TH E CON T ENTION OF THE ASSESSEE THAT IN AS MUCH A S T HEY HAVE MADE DEPOSI T S OF TH E AMOUN TS EQUIVALENT TO TH E CAPITAL GAIN S REALIZED IN THE C APITAL GAINS INVESTMENTS SCHEME , EVEN THOUGH P A RT OF THOSE CAPITAL GAINS HAVE BEEN UTILI S ED FOR OTHER PU R PO S ES, BORROWING AMOUNT EQUIVALENT TO SUCH UTILI S ED FUNDS, TH E Y ARE ENTITLED TO RELIEF UN D ER S.54F AS ULTIMATELY THE ASSESSEE DEPOSI T ED THE REQUISITE AMOUNTS IN TH E C APITAL GAINS INVESTMEN TS SCHEME FOR EXEMPTION UN D ER S.54F WITHIN THE TIME STIPUL A TED BY THE STATUTE. IN MUNNIR KHAN V/S. ITO (SUPRA), HYDERABAD BEN C H O F TH E TRIBUNAL HELD THAT I T WAS NO T NE C ESSARY TH A T THE SAME FUN D MUST BE USED FOR THE PURCHASE OF NEW RESIDENTIAL HOUSE AND THAT N EITHER LAW NO R ANY CIRCULAR REQUIRES ESTABLISHING DIRECT NEXUS BETWEEN THE AMOUN T RECEIVED ON SALE AND UTILIZATION IN THE PU R CH AS E OF R ESIDENTIAL HO U SE FOR THE PURPOSE O F S.54F AND OTHER RELEVANT PROVI S ION S . TH E TRIBUNAL HELD THAT SIN C E MONEY HAS NO COLOUR, ALL THAT IS REQUIRED IS COMPLIANCE WITH THE CON D ITION S OF INVESTMENT WITHIN STIPULATED TIME. IN PUSPA DEVI TIBREWALA (SUPRA), HYDERABAD TRI B UNAL H A S DECIDED THE ISSUE IN F A VOUR O F THE ASSESSEE AND HAS CITED CBDT CIRCULAR NO.667 DATED 18.10.1993 IN SUPPORT OF ITS DECISION. OTHER DECISION S CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE A L S O SUPPORT THE CA S E OF THE ASSESSEE. 6. WE FIND IN THE FACTS OF THE PRESENT CASE THAT IT IS NO T DISPU T E D THAT THE ASSESSEE HAS IN F A CT DEPOSITED THE TOTAL AMOUNT OF R S .1,49, 9 7, 000 IN THE PU R CHA S E OF THE RESIDENTIAL HOU S E DURING THE STIPULATED PERIOD. MERELY BECAUSE THE ASSESSEE HAS AVAIL ED A BANK LOAN OF RS .4 5,45, 855 AND HAS INV E STED IN TH E PURCHASE OF THE RESIDENTIAL HOUSE, IT CANNOT BE DENIED EXEMPTION UNDERS.54F OF THE ACT. THE FACT THAT M ONEY TO THAT EXTENT HAS NOT COME DIRECTLY F ROM THE SALE PROC E EDS OF THE ORIGINAL ASS E T RECEIVED B Y THE ASSESSEE , IS I TA NO. 1403/H YD/20 14 S MT. SUMATHI GEDUPUDI , HYDERABAD 6 NO T DECISIVE OF THE ISSUE. THE FACT REMAINS THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON THE SALE OF THE ORIGINAL ASSET OWNED BY IT WAS INVESTED IN THE PURCHASE OF THE RESIDENTIAL ASSET WITHIN THE STIPULATED TIME, PARTLY FROM THE SALE PROCEEDS OF THE ORIGINAL ASSET DIRECTLY AND PARTLY FROM THE BORROWED AMOUNT. THE ASSESSEE HAS FULFILLED ALL THE CON D ITION S OF INVESTMENT OF THE EQUI VA LENT AMOUNT OF THE SALE PRO C EEDS IN TH E PU R CH AS E OF RESIDENTIAL HOU S E QUALIFYING FOR RELI E F UN D ER S.54F, BY INVESTING THE MONEY OUT OF THE SALE PROCEEDS OF THE ORIGINAL ASSET AVAILABLE WITH IT OR BY BORROWING FROM THE BANK. W E FIND THAT THE DECISION OF THE HYDERABAD TRIBUNAL IN SMT.V.KUMUDA V/S. DC I T (SUPRA) RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTA TIVE RELATES TO A DECISION IN THE MISCELLANE OUS APPLI CA TION PREFERRED BY THE ASSESSEE . AT ANY RATE, IT IS CL E AR THAT TWO VIEWS ARE POSSIBLE ON THIS ISSUE BEFORE US, AND THE VIEW TAKEN BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW AND COULD NO T B E SAID TO BE A PERVERSE VIEW. THE ISSUE OF GRANTING DEDUCTION/EXEMP TI ON UN D ER S.54F ON THE BORROWED MONEY CAN AT B E ST BE CALLED A DEBATABL E ISSUE. IN OU R CON S I D ERED VIEW, TH E ASSESSING OFFICER HAS TAKEN A POSSIBLE V IEW PERMITTED UN D ER LAW, AND IS AS PER THE SERIES OF DECI S ION S O F DIFFERENT BENCHES OF TH E TRIBUNAL. IT COULD NO T B E SAID THAT THE ORDER O F THE ASSESSING OFFICER WAS ERRONEOU S OR PREJU D I C I A L TO TH E IN T ERESTS OF THE REVENUE. IN THI S V I EW OF TH E MAT TER, WE HOLD TH A T THE COMMISSIONER WAS NO T JU S TIFIED IN S E T TING ASIDE THE ASSESSMENT FRAMED UN D ER S.143(3), AS THE ORD E R O F THE ASSESSING OFFICER COULD NO T B E SAID TO B E ERRONEOUS AND PREJU DI CIAL TO TH E INTERESTS OF THE R E VENU E . ACCORD I NGLY, THE I S SUE IS DECIDED IN F A VOUR O F THE ASSESSEE AND THE ORDER OF THE COM MISSIONER PASSED UN D ER S. 263 OF TH E A C T IS CANCELLED, ALLOWING THE GROUNDS OF THE ASSESSEE IN THIS APPEAL. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. I TA NO. 1403/H YD/20 14 S MT. SUMATHI GEDUPUDI , HYDERABAD 7 ORDER PRONOUNCED IN THE COURT ON 1 ST MAY , 2015 SD/ - SD/ - ( P.M.JAGTAP ) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT D T/ - 1 ST MAY, 201 5 COPY FORWARDED TO: 1. S MT SUMATHI GEDUPUDI, C/O. SHRI M. CHANDRA MOULESWARA RAO, CHARTERED ACCOUNTANT C - 3 SKY LARK APARTMENT , OPP TO SKYLINE THEATRE, BASHEERBAGH, HYDERABAD 500 029. 2 . ADDL . COMMISSIONER OF INCOME - TAX RANGE 13 , HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) I HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S