ACIT, CIR-I, Siliguri, Siliguri V. Mrs Harmeet Kaur, Siliguri

ITA 1482/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1498 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 25-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 03-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Period of limitation; Question of law; Cost of acquisition
• Section: 143(3); 50C; 54F; 54; 139

Judgement Text

1 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI A.T.VARKEY, JM & SHRI M.BALA GANESH, AM ] I.T.A NO. 1482/KOL/20 14 ASSESSMENT YEAR : 2011-1 2 A.C.I.T., CIR-1, -VS- MRS. HARMEET KAUR SILIGURI (PAN : AFUPK 9262 M] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : G. MALLIKARJUNA, C IT, DR FOR THE RESPONDENT : SHRI SUBHASH AGARWAL, A DVOCATE DATE OF HEARING : 25.05.2017. DATE OF PRONOUNCEMENT : 24.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JALPAIGURI [ IN SHORT THE LD CITA] IN APPEAL NO. 22/CIT(A)/SLG/2014-15 DATED 08.05.2014 AGAINST THE ORDER PASSED BY THE ACIT, CIRCLE-1, SILIGURI [ IN SHORT THE LD. AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 31 .03.2014 FOR THE ASST YEAR 2011-12. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE LEVY OF LONG TERM CAPITA L GAINS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL AND HAD FILED HIS RETURN OF INCOME FOR THE ASST YEAR 2011-12 ON 20.3. 2012 DECLARING TOTAL TAXABLE INCOME OF RS 55,36,080/- COMPRISING OF INCOME FROM OTHER SOURCES AMOUNTING TO RS 7,36,080/- AND CAPITAL GAINS OF RS 48,00,000/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD AO OBSERVED THAT THE ASSESSEE H AD SOLD COMMERCIAL PROPERTY 2 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 ON 4.2.2011 TO PRAYAG INFOTECH HI-RISE LTD, KOLKATA FOR A CONSIDERATION OF RS 6 CRORES AND THAT THE SAME WERE REINVESTED IN PURCHAS E OF A READY BUILT H.P. FLAT AT DELHI ON 24.5.2012 FOR RS 1,55,88,863/- AND A PLOT OF LAND MEASURING 1000 SQ.YARDS AT PEARLS CITY, MOHALI , SECTOR 100 FOR RS 2,54,80,000/- ON 23.5.2012. THE ASSESSEE AFTER CLAIMING DEDUCTION U/S 54F OF TH E ACT IN THE RETURN OFFERED CAPITAL GAINS OF RS 48,00,000/- IN THE RETURN OF IN COME AND PAID TAXES ACCORDINGLY. THE LD AO OBSERVED THAT THE DATE OF SALE OF OLD PRO PERTY WAS ON 4.2.2011 AND ASSESSEE HAD NOT SUBMITTED ANY PROOF OF HAVING DEPO SITED HER CAPITAL GAIN PROCEEDS IN SPECIFIED BANK ACCOUNT (CAPITAL GAINS ACCOUNT SC HEME) NOR WAS IT SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE L D AO OBSERVED THAT THE ASSESSEE PURCHASED TWO NEW CAPITAL ASSETS OF WHICH ONE IS A FLAT AND ANOTHER IS A PLOT OF LAND AT MOHALI. BOTH WERE PURCHASED AFTER A PERIOD OF ONE YEAR FROM THE DATE OF SALE SO THE ASSESSEE WAS LIABLE TO DEPOSIT THE AMOUNT IN THE CAPITAL GAINS ACCOUNT SCHEME AS PER SECTION 54F OF THE ACT WHICH WAS NOT DONE IN THE INSTANT CASE. HE FURTHER OBSERVED THAT THE FLAT WAS PURCHA SED ON 24.5.2012 FOR WHICH FULL PAYMENT OF CONSIDERATION WAS COMPLETED ON 16.6.2012 AND PLOT OF LAND WAS ALLOTTED ON 23.5.2012 FOR WHICH FULL CONSIDERATION WAS PAID ON 18.5.2012. FOR WANT OF DEPOSIT IN CAPITAL GAINS ACCOUNT SCHEME, TH E LD AO CONCLUDED THAT THE ASSESSEE HAD NOT FULFILLED THE BASIC CONDITIONS FOR CLAIMING OF EXEMPTION U/S 54F(4) OF THE ACT. HE OBSERVED THAT THE ASSESSEE IN THE INSTANT CASE HAD DEPOSITED THE SALE CONSIDERATION IN THE NORMAL BANK ACCOUNT M AINTAINED BY HIM INSTEAD OF SPECIFIED BANK ACCOUNT. MOREOVER, THE DUE DATE OF F ILING THE RETURN U/S 139(1) OF THE ACT WAS 31.7.2011 BUT THE ASSESSEE FILED HIS RE TURN ONLY ON 20.3.2012 AND TILL THAT DATE, THE AMOUNT WAS KEPT BY THE ASSESSEE IN T HE NORMAL SAVINGS BANK ACCOUNT. BASED ON THESE OBSERVATIONS, THE LD AO DENIED THE B ENEFIT OF DEDUCTION U/S 54F OF THE ACT AMOUNTING TO RS 4,10,68,863/- ( 1,55,88,863 +2,54,80,000). THE LD AO FURTHER OBSERVED THAT THE SALE CONSIDERATION VALUE ADOPTED BY THE STAMP VALUATION 3 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 AUTHORITY WAS RS 9,60,80,616/- AND WHEREAS THE ASSE SSEE HAD DECLARED ONLY RS 6,00,00,000/-. ACCORDINGLY, BY INVOKING THE PROVIS IONS OF SECTION 50C OF THE ACT, HE REPLACED THE SALE CONSIDERATION FIGURE AT RS 9,6 0,80,616/- AS AGAINST RS 6,00,00,000/- AND AFTER GIVING DEDUCTION TOWARDS IN DEXED COST OF ACQUISITION AT RS 1,41,31,137/-, HE COMPUTED LONG TERM CAPITAL GAINS AT RS 8,19,49,479/-. 4. THE LD. CIT(A) OBSERVED THAT THE CAPITAL GAINS A CCOUNT WAS OPENED BY THE ASSESSEE ON 28.2.2010 WHICH WAS INFORMED TO THE LD AO DURING THE ASSESSMENT PROCEEDINGS. A COPY OF THE SUBMISSION OF THE ASSESS EE INTIMATING THIS FACT TO THE LD AO VIDE LETTER DATED 14.11.2013 WAS FILED DURING TH E APPELLATE PROCEEDINGS. THE ASSESSEE PLEADED THAT THE DUE DATE OF FILING THE RE TURN HAD TO BE AS PER SECTION 139(4) OF THE ACT AND NOT SECTION 139(1) OF THE ACT AND IN THE INSTANT CASE THE ASSESSEE HAD DULY DEPOSITED THE NET CONSIDERATION I N THE CAPITAL GAIN ACCOUNT SCHEME WITHIN THE DUE DATE PRESCRIBED U/S 139(4) OF THE ACT AND HENCE THE ASSESSEE SHOULD NOT BE DENIED THE BENEFIT OF DEDUCTION U/S 5 4F OF THE ACT. THE ASSESSEE PLACED RELIANCE IN THIS REGARD ON THE DECISION OF T HE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS JAGRITI AGARWAL RE PORTED IN (2011) 339 ITR 610 (P&H) WHEREIN IT WAS HELD THAT : THE SALE OF THE ASSET HAVING BEEN TAKEN PLACE ON 13 .1.2006, FALLING IN THE PREVIOUS YEAR 2006-07, THE RETURN COULD BE FILED BE FORE THE END OF THE RELEVANT ASSESSMENT YEAR 2007-08, I.E 31.3.2007 . THUS, SEC TION 139(4) OF THE ACT PROVIDES THE EXTENDED PERIOD OF LIMITATION AS AN EX CEPTION TO SECTION 139(1) OF THE ACT. SUB-SECTION (4) IS IN RELATION TO THE TI ME ALLOWED TO AN ASSESSEE UNDER SUB-SECTION (1) TO FILE RETURN. THEREFORE, S UCH PROVISION IS NOT AN INDEPENDENT PROVISION, BUT RELATES TO TIME CONTEMPL ATED UNDER SUB-SECTION (1) OF SECTION 139. THEREFORE, SUB-SECTION (4) HAS TO BE READ ALONG WITH SUB- SECTION (1). SIMILAR IS THE VIEW TAKEN BY THE DIV ISION BENCH OF THE KARNATAKA AND GAUHATI HIGH COURTS IN FATIMA BAI (2009) 32 DTR 243 AND RAJESH KUMAR JALAN (2006) 286 ITR 274 (GAUHATI) RESPECTIVE LY. IN VIEW OF THE ABOVE, WE FIND THAT DUE DATE FOR FURNISHING THE RET URN OF INCOME AS PER SECTION 139(1) OF THE ACT IS SUBJECT TO THE EXTENDED PERIOD PROVIDED UNDER SUB-SECTION (4) OF SECTION 139 OF THE ACT. CONSEQUENTLY, THE QUESTION OF LAW IS ANSWERED 4 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THUS, THE PRESENT APPEAL IS DISMISSED. THE LD CITA BY PLACING RELIANCE ON THE AFORESAID JU DGMENT DIRECTED THE LD AO TO CALL FOR THE DETAILS OF INVESTMENT MADE IN PURCHASE OF HOUSE PROPERTY IN SUBSEQUENT YEARS AND BRING TO TAX THE AMOUNT WHICH HAS NOT BEE N INVESTED IN PURCHASE OF HOUSE PROPERTY AND ACCORDINGLY ALLOWED THE APPEAL O F THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN FACT AND IN LAW, IN CANCELLING THE ASSESSMENT ORDER WITHOUT CONSIDERING THE IMPLICATION OF SECTION 50C OF THE I.T. ACT, 1961, O N THE BASIS OF WHICH THE VALUE SALE CONSIDERATION DECLARED BY THE ASSESSEE AT 6,00,00,000/- HAD BEEN REJECTED BY THE ASSESSING OFFICER WHO ADOPTED THE S ALE VALUE AT RS. 9,60,80,616/- AS ASSESSED BY THE REGISTERING AUTHOR ITY. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW, IN ALLOWING EXEMPTION U/S 54F BY TREATING THE DUE DATE AS SPECIFIED U/S 139(4) OF THE I.T. ACT, 1961, AND NOT AS SPECIFIED IN SECTION 139(1) OF THE I.T. ACT, 1961 IN VIOLATION OF THE DE CISION OF THE APEX COURT IN PRAKASH NATH KHANNA VS. CIT (2004) 266 ITR 1 (SC). 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR A LTER THE GROUNDS OF APPEAL, IF ANY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FO R THE SAKE OF BREVITY. AT THE OUTSET, THE LD AR FAIRLY CONCEDED THAT THERE IS NO DISPUTE ON THE ADOPTION OF SALE CONSIDERATION OF RS 9,60,60,816/- (AS AGAINST RS 6 ,00,00,000/- DECLARED BY THE ASSESSEE) IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 50C OF THE ACT. HENCE THE GROUND NO. 1 RAISED BY THE REVENUE DESERVES TO BE A LLOWED. BUT WE HOLD THAT THE SAID DEEMED SALE CONSIDERATION WOULD BE RELEVANT ON LY FOR THE PURPOSE OF SECTION 48 OF THE ACT AS IS VERY CLEAR FROM THE LANGUAGE OF SECTION 50C OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 50C OF THE ACT ARE REPRODUCED BELOW:- SECTION 50C SPECIAL PROVISIONS FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES . 5 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEIGN LAND OR BUILD ING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AU THORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSE SSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. 5.1. HENCE IT IS VERY CLEAR THAT THE DEEMED VALUE O F CONSIDERATION AS PER STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY I S RELEVANT ONLY FOR THE PURPOSE OF SECTION 48 OF THE ACT AND CANNOT BE EXTENDED TO OTHER SECTIONS OF THE ACT. WE HOLD THAT THE LD AO IS JUSTIFIED IN ADOPTING THE SA LE CONSIDERATION ON SALE OF OLD COMMERCIAL PROPERTY AT RS 9,60,60,816/- AS AGAINST RS 6,00,00,000/- . HOWEVER, THE SAME WOULD NOT CONTRIBUTE ANYTHING TO THE EXCHE QUER AS ADMITTEDLY THE ASSESSEE HAD REINVESTED THE PART OF THE NET SALE CO NSIDERATION IN ANOTHER PROPERTY AND CLAIMED DEDUCTION U/S 54F OF THE ACT. WE FIND THAT THE PROVISIONS OF SECTION 54F OF THE ACT ARE AS BELOW:- SECTION 54F CAPITAL GAIN ON TRANSFER OF CERTAIN C APITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), W HERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, TH E CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AN D THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE Y EARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE IN INDIA (HEREAFTE R IN THIS SECTION REFERRED TO AS THE NEW ASSET) , THE CAPITAL GAIN SHALL BE DEALT WI TH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SA Y, - (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTIO N 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET C ONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPIT AL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PRO PORTION AS 6 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDER ATION , SHALL NOT BE CHARGED UNDER SECTION 45: PROVIDED.. ** ** ** EXPLANATION,- FOR THE PURPOSE OF THIS SECTION,- 'NET CONSIDERATION', IN RELATION TO THE TRANSFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRE D WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER.' 5.2. HENCE THE LANGUAGE OF SECTION 54F EXPLAINING T HE MEANING OF NET CONSIDERATION IS VERY CLEAR EXPECTING AN ASSESSEE TO REINVEST ONLY THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE AND NOT THE DEEMED VALUE OF CONSIDERATION U/S 50C OF THE ACT. WE HOLD THAT THE DEEMING FICTI ON AS PROVIDED IN SECTION 50C OF THE ACT IN RESPECT OF THE WORDS FULL VALUE OF C ONSIDERATION IS TO BE APPLIED ONLY TO SECTION 48 OF THE ACT AND THEREFORE, MEANING OF FULL VALUE OF CONSIDERATION AS REFERRED TO IN EXPLANATION TO SECTION 54F(1) OF THE ACT IS NOT GOVERNED BY THE MEANING OF THE WORDS FULL VALUE OF CONSIDERATION AS MENTIONED IN SECTION 50C OF THE ACT. WE HOLD THAT THE PROVISIONS OF SECTION 54 F OF THE ACT ARE TO BE LOOKED INDEPENDENTLY BY IGNORING SECTION 50C OF THE ACT. W E FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CHANDRAKALA D EVI BANSAL VS ITO IN ITA NO. 2481/KOL/2005 DATED 20.4.2007 HAD ALSO ENDORSED THIS VIEW. 5.3. WE HOLD THAT THE LD CITA HAD RIGHTLY RELIED ON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS JAGRITI AGARWAL REPORTED IN (2011) 339 ITR 610 (P&H) THAT EVEN IF THE ASSESSEE HAD DEPOSITED THE NET SA LE CONSIDERATION IN CAPITAL GAIN ACCOUNT SCHEME WITHIN THE DUE DATE PRESCRIBED U/S 139(4) OF THE ACT FOR REINVESTMENT IN ANOTHER PROPE RTY, THEN THE ASSESSEE SHOULD BE TREATED AS HAVING SATISFIED THE BASIC CONDITIONS OF CLAIMING DEDUCTION U/S 54F OF THE ACT. IN THE INSTANT CASE, THE ASSESSEE HAD FIL ED HIS RETURN OF INCOME ON 7 ITA NO.1482/KOL/2014 MRS. HARMEET KAUR A.YR.11-12 20.3.2012 WHICH IS WELL WITHIN THE TIME LIMIT PRESC RIBED U/S 139(4) OF THE ACT AND IT IS NOT IN DISPUTE THAT BEFORE THE DATE OF FILING OF SUCH RETURN, THE ASSESSEE HAD DULY DEPOSITED THE SALE CONSIDERATION IN CAPITAL GA INS ACCOUNT SCHEME. HENCE THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S 54F OF THE ACT FOR THE REINVESTMENT MADE IN THE NEW PROPERTY. HOWEVER, WE FIND THAT T HERE WAS NO OCCASION FOR THE LD AO TO LOOK INTO THE TOTAL AMOUNT OF REINVESTMENT MA DE BY THE ASSESSEE IN NEW PROPERTY IN TERMS OF SECTION 54F OF THE ACT. HENCE WE DEEM IT FIT AND APPROPRIATE , IN THE INTEREST OF JUSTICE AND FAIR PLAY , TO REMAN D THIS ISSUE TO THE FILE OF THE LD AO FOR THE LIMITED PURPOSE OF EXAMINATION OF REINVESTM ENT OF RS 6 CRORES (ACTUAL SALE CONSIDERATION RECEIVED) IN NEW RESIDENTIAL PROPERTY AND RE-COMPUTE THE LONG TERM CAPITAL GAINS ACCORDINGLY. HENCE THE GROUNDS RA ISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 24.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-1, SILIGURI 2. MRS. HARMEET KAUR 3..C.I.T.(A)-SILIGURI 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S