Manthravadi Vidyavathi, Visakhapatnam V. The Deputy Commissioner of Income Tax, (International Taxation), Visakhapatnam

ITA 145/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6612 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SUBBA RAO
• Keywords: Capital asset
• Section: 54F; 142(1); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 145 & 146 / VIZ /201 8 (ASST. YEAR : 20 0 9 - 1 0 ) 1 MANTHRAVADI VIDYAVATHI, C/O K.S.M.K. MURTHY, D.NO. 39 - 4 - 5/1/2, SECTOR - 4, MURALI NAGAR , VISAKHAPATNAM. PAN NO. AVSPM 1370 Q VS. DCIT (INTERNATIONAL TAXATION) , VISAKHAPATNAM. 2 MANTHRAVADI SIVAKAMA SUNDAR, C/O K.S.M.K. MURTHY, D.NO. 39 - 4 - 5/1/2, SECTOR - 4, MURALI NAGAR, VISAKHAPATNAM. PAN NO. AVSPM 1372 N (APPELLANT S ) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI D.V. SUBBA RAO SR. DR DATE OF HEARING : 2 1 / 0 7 /201 9 . DATE OF PRONOUNCEMENT : 02 / 0 8 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE APPEAL S BY THE DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 10 , HYDERABAD , BOTH DATED 05 /0 3 /201 8 FOR THE ASSESSMENT YEAR 2 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) 2009 - 10 . SINCE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. FACTS OF ITA NO. 145/VIZ/2018 , IN BRIEF, ARE THAT THE ASSESSEE IS A NON - RESIDENT IS HAVING IMMOVABLE PROPERTY ADMEASURING SITE OF 541 SQ.YDS. ALONG WITH TILED HOUSE AT SURVEY NO.1008, D.NO. 7 - 5 - 24 SITUATED AT MAITREYA NAGAR LAYOUT , VISAKHAPATNAM. THE PROPERTY WAS GIVEN FOR DEVELOPMENT ON 60:40 BASIS TO M/S. MSR LIFE CARE SERVICES PVT. LTD., VISAKHAPATNAM ALONG W I T H HER HUSBAND . THE SAID DOCUMENT WAS REGISTERED BEFORE SRO, VISAKHAPATNAM VIDE DOCUMENT NO. 2785/08, DATED 21/07/2008 FOR RS. 2,23,44,500/ - . SUBSEQUENTLY , A RECTIFICATION DEED WAS ENTERED ON 25/02/2009 , AS PER WHICH THE TOTAL LAND GIVEN FOR CONSTRUCTION IS 991.11 SQ.YDS. , OUT OF WHICH THE ASSESSEE AND HER HUSBAND WILL GET SIX FLATS WITH BUILT UP AREA OF 14610 SQ.FT. AS PER THE DOCUMENT , THE SALE PRICE OF THE 40% OF THE LAND IS RS. 49,55,560/ - . NO TAX WAS DEDUCTED BY THE BUYER AND THE ASSESSEE WHO IS A NON - RESIDENT HAS ALSO NOT FILED HER RETURN OF INCOME FOR THE A.Y. 2009 - 10. THEREFORE, CASE OF THE ASSESSEE WAS REOPENED . A NOTICE U/SEC. 143(2) & 142(1) DATED 16/05/2016 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THAT , ASSESSEE VIDE LETTER DATED 30/05/2016 FURNISHED THE RELEVANT INFORMATION FROM TIME TO TIME AS CALLED FOR BY THE ASSESSING OFFICER. 3 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) 3 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT ON VERIFICATION OF THE INFORMATION FURNISHED AND THE RETURN OF INCOME FILED, ASSESSEE HAS BEEN A S KED TO SUBSTANTIATE FOR CLAIM OF EX E MPTION U/SEC. 54 IN RESPECT OF SALE PROCEEDS RECEIVED BY HER . IN RESPONSE TO THAT, L D.AR SUBMITTED BEFORE THE ASSESSING OFFICER THAT IN THIS CASE, THE ASSESSEE HAS CONSTRUCTED RESIDENTIAL FLATS WITHIN A PERIOD OF THREE YEARS THROUGH BUILDER AND SUCH FLATS ARE HANDED OVER FOR OCCUPATION BY FEBRUARY, 2011 . A FTER TAKING POSSESSION OF THE COMPLETED FLATS , THE ASSESSEE SOLD FLAT NO. 502 ON 28/02/2011 WHICH SHOWS THAT THE ASSESSEE CONSTRUCTED THE RESIDENTIAL FLATS WITHIN THREE YEARS FROM THE SALE AND HENCE ELIGIBLE FOR CLAIM OF EXEMPTION U/SEC. 54. THE ASSESSING OFFICER AFTER CONSIDERING THE ABOVE EXPLANATION HAS NOTED TH A T ON VERIFICATION OF THE INFORMATION FURNISHED , BUILDING COMPLETION CERTIFI CATE ISSUED BY THE BU ILDER WAS SHOWN AS 01/11 /2011, HOWEVER, THE ASSESSEE HAS ENTERED INTO A DEVELOPMENT AGREEMENT ON 21/07/20 0 8 AND THE BUILDING HAS TO BE COMPLETED WITHIN THREE YEARS FROM THE DATE OF AGREEMENT I.E. ON OR BEFOR E 20/07/2011 TO AVAIL EXEMPTION U/SEC.54. SINCE THE ASSESSEE HAS NOT COMPLETED THE CONSTRUCTION WITHIN THE STIPULATED PERIOD, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION MADE U/SEC. 54 OF THE ACT . 4 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) 5. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 6 . LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ASSESSEE HAS T RANS F ERRED THE CAPITAL ASSET TO THE BUILDER. ACCORDING TO THE AGREEMENT, BUILDING HAS TO BE COMPLETED WITHIN A PERIOD OF THREE YEARS AND THE BUILDER ALSO COMPL E TED THE CONSTRUCTION WITH IN THE SAID PERIOD AND OBTAINED COMPLETION CERTIFICATE ON 0 1/11/2011 DUE T O NON - COMPLETION OF SOME MINOR REPAIR WO RKS , THEREFORE, SUBMITTED THAT ASSESSEES CLAIM U/SEC. 54 CANNOT BE DENIED. HE RELIED ON THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF PR. CIT & ANO. VS. DILIP RANJREKAR [(2019) 177 DTR (KAR.) 158] AND ALSO THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SARDARMAL KOTHARI [(2008) 302 ITR 286] . 7 . ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. THE ASSESSEE IS A NON - RESIDENT ALONG WITH HER HUSBAND ENTERED INTO A DEVELOPMENT AGRE E MENT ON 21/07/2008 AND AS PER THE AGREEMENT, CONSTRUCTION OF THE BUILDING HAS TO BE COMPLETED WITHIN A PERIOD OF THREE YEARS. IN THIS CASE , THE ASSESSEE HAS CLAIMED THAT CAPITAL GAINS ARISING ON ACCOUNT OF TRANSFER OF THE CAPITAL ASSET , IS EXEMPT U/SEC. 54 OF THE ACT. THE ASSESSING 5 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE BUILDING COMPLETION CERTIFICATE ISSUED BY THE BUILDER THE DATE OF COMPLETION WAS SHOWING AS 01/11/2011, THEREFORE, CONSTRUCTION OF THE BUILDING WAS NOT COMPLETED WITHIN A PERIOD OF THREE YEARS, HENCE , EXEMPTION CLAIMED U/SEC. 54 IS DENIED. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSIN G OFFICER THAT THE BUILDER HAS ALREADY HANDED - OVER THE F L A TS FOR OCCUPATION BY FEBRUARY, 2011 AND ONE OF THE FLAT ALLOTTED TO THE ASSESSEE HAS BEEN SOLD ON 28/02/2011, THEREFORE, CONSTRUCTION IS COMPLETED WITHIN THE STIPULATED PERIOD AND SUBMITTED THAT ASSESSEE IS ELIGIBLE FOR EX E MPTION U/SEC. 54 OF THE ACT. NEITHER ASSESSING OFFICER NOR LD. CIT(A) HAS NOT BEEN ACCEPTED THE EXPLANATION OF THE ASSESSEE. BEFORE US, THE ASSESSEE HAS REITERATED T HE SAME AND FURTHER SUBMITTED T H A T THERE ARE SOME MINOR REPAIR WORKS, HENCE , THERE IS A DELAY IN OBTAINING THE COMPLETION CERTIFICATE, THEREFORE ON THAT COUNT, EXEMPTION CLAIMED CANNOT BE DENIED. WE FIND THAT ASSESSEE HAS TRANSFERRED THE LAND TO THE BUILDER AND THE BUILDER HAS TO CONSTRUCT THE B UILDING WITHIN A PERIOD OF THREE YEARS . IN THIS CASE , ACCORDING TO THE CERTIFICATE SUBMITTED BY THE BUILDER, THE COMPLETION OF THE CONSTRUCTION IS SHOWN AS 01/11/2011. ACCORDING TO THE ASSESSING OFFICER, THE BUILDING HAS TO BE COMPLETED ON OR BEFORE 20/07/2011. THERE IS A DELAY NEAR ABOUT FIVE MONTHS AS PER THE COMPLETION CERTIFICATE SUBMITTED BY THE BUILDER. INSOFAR AS ARGUMENT OF THE ASSESSEE IS 6 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) CONCERNED, ASSESSEE HAS RECEIVED FLAT ON 20/02/2011 , THE SAME IS SOLD TO THE THIRD PARTY, NOWHERE NEITHER ASSESSING OFFICER NOR LD.CIT(A) HAS CONSIDERED THE SUBMISSION OF THE ASSESSEE. BOTH THE AUTHORIT I ES BELOW PROCEEDED ONLY ON THE BASIS OF COMPLETION CERTIFICATE PRODUCED BY THE BUILDER AND DENIED THE EXEMPTION CLAIMED BY THE ASSESSEE . UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT SIMPLY THERE IS A DELAY ON THE PART OF THE BUILDER IN NON - COMPLETING THE CONSTRUCTION ON ACCOUNT OF MINOR REPAIRS AND OBTAINED COMPL ETION CERTIFICATE SUBSEQUENTLY , CANNOT A GROUND TO DENY THE CLAIM OF EXEMPTION U/SEC. 54 OF THE ACT. IN THIS CONTEXT, THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DILIP RANJREKAR (SUPRA) HAS OBSERVED THAT THE INVESTMENT IS MADE IN A NEW PROPERTY AND THE CONSTRUCTION WAS COMPLETED WITHIN A PERIOD OF THREE YEARS AS NARRATED IN SECTION 54 OF THE ACT, THE DELAY WAS NOT BE CA U SE OF THE ASSESSEE AND IS BEYOND HIS CONTROL AND UPHELD THE ORDER OF T HE T RIBUNAL. IN THE CASE OF SARDARMAL KOTHARI (SUPRA) , THE HON'BLE MADRAS HIGH COURT HAS OBSERVED THAT ASSESSEE HAVING PURCHASED LAND BY INVESTING THE CAPITAL GAINS AND CONSTRUCTED RESIDENTIAL HOUSE AND ALSO PRODUCED COMPLETION CERTIFICATE FROM THE MUNICI PAL AUTHORITY, EXEMPTION U/SEC. 54F COULD NOT BE DENIED ON THE GROUND THAT THE CONSTRUCTION WAS NOT COMPLETED WITHIN THE SPECIFIED PERIOD . KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND 7 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) ALSO BY FOLLOWING THE JUDGMENTS OF THE HON'BLE KARNATAKA & MADRAS HIGH COURTS , WE ARE OF THE OPINION THAT ASSESSEES CLAIM U/SEC. 54 CANNOT BE DENIED. HENCE , THE ORDER PASSED BY THE LD.CIT(A) IS CANCELLED AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE EXEMPTION CLAIMED BY THE ASSESSEE U/SEC. 54 OF TH E ACT. THUS, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. 10 . SO FAR AS ITA NO.146/VIZ/2018 IS CONCERNED, THE FACTS INVOLVED IN THIS APPEAL IS SIMILAR TO THE FACTS OF ITA NO. 145/VIZ/2018 , THEREFORE OUR DECISION IN ITA NO. 145/VIZ/2018 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. 11 . IN THE RESULT, APPEAL S FILED BY THE ASSESSEES ARE ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 2 N D DAY OF AUGUST , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 2 N D AUGUST , 201 9 . VR/ - 8 ITA NO. 145 & 146 /VIZ/2018 ( MANTHRAVADI VIDYAVATHI & ANO. ) COPY TO: 1. THE ASSESSEE A) MANTHRAVADI VIDYAVATHI B) MANTHRAVADI SIVAKAMA SUNDAR BOTH ARE RESID ING AT C/O K.S.M.K. MURTHY, D.NO. 39 - 4 - 5/1/2, SECTOR - 4, MURALI NAGAR, VISAKHAPATNAM . 2. THE REVEN UE DCIT (INTERNATION AL TAXATION), VISAKHAPATNAM. 3. THE CIT (IT & TP), HYDERABAD. 4. THE CIT(A) - 10, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.