Bhartur Ramaswamy Vijayendra, Bangalore V. Commissioner Of Income Tax (Appeals)- 3, Bangalore

ITA 151/BANG/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0747 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-09-2020
• Assessment Year: 2016-2017
• Appeal Filed On: 03-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH BENGALURU
• Assessee Lawyers: S RAGHAVENDRA RAO L
• Keywords: Capital asset; Opportunity of being heard; Benefit of exemption
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER ITA NO. 151 /BANG /20 20 ASSESSMENT YEAR : 2016-17 SHRI. BHARTUR RAMASWAMY VIJAYENDRA, NO.001, AMBAR APARTMENT, NO.03, BERLIE STREET, LANGFORD TOWN, BENGALURU 560 025. PAN : A BNPV 1032 B VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1), BENGALURU. APPELLANT RESPONDENT REVENUE BY : SHRI. MANJEET SINGH, ADDL. CIT(DR)(ITAT), BENGALURU ASSESSEE BY : SHRI. S RAGHAVENDRA RAO L , CA DATE OF HEARING : 0 8 . 0 6 .20 20 DATE OF PRONOUNCEMENT : 12 . 0 6 .20 20 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - 3, BENGALURU, DATED 03.12.2019 FOR ASSESSMENT YEAR 2016-17. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: ITA NO. 2498/BANG/2017 PAGE 2 OF 6 1. THE APPELLANT FILED HIS RETURN OF INCOME ON 28-02-2018 DECLARING AN INCOME OF RS. 1,78, 97,540. 2. DURING THE FINANCIAL YEAR 2015-16 THE APPELLANT SOLD HIS RESIDENTIAL SITE FOR RS.1,31,67,000 ON 28-082015, 130000 EQUITY SHARES OF FICUS PAX LIMITED FOR RS.2,40,50,000 AND CLAIMED THE BENEFIT OF EXEMPTION U/S 54F AGAINST THE PURCHASE OF A VILLA ON 16-07-2015 FOR RS 1,48,49,300. 3. THE APPELLANT SUBMITTED ALL DOCUMENTS AND INFORMATION CALLED FOR AND FURNISHED A WRITTEN SUBMISSION WITH COMPLETE DETAILS OF CALCULATION. 4. THE ORDER OF THE LEARNED ASSESSING OFFICER, IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LEARNED ASSESSING OFFICER HAS ERRED IN CONCLUDING THAT THE APPELLANT HAS NOT COMPLIED WITH THE CONDITIONS LAID DOWN IN SECTION 54F TO CLAIM THE EXEMPTION THEREUNDER. HENCE THE ADDITION OF RS. 2,28,31,262 DISALLOWING THE EXEMPT ION CLAIMED U/S 54F DESERVES TO BE DELETED AND EXEMPTION CLAIMED U/S 54F RESTORED. 6. THE L EARNED ASSESSING OFFICER FAILED TO NOTE THAT SECTION 54F DOESN'T TALK ABOUT THE PAYMENT FOR PURCHASE BEING MADE. IT ONLY TALKS ABOUT BUYING OR CONSTRUCTING. PAYMENT MADE TO BUY/CONSTRUCT DOES NOT MATTER. 7. INVESTMENT IN NEW RESIDENTIAL UNIT MADE THOUGH CHAITHANYA PROJECTS PRIVATE LIMITED AND IT'S A GENERAL PRACTICE IN INDIA THAT THE PURCHASE OF FLAT/VILLA FROM ANY DEVELOPER WILL HAVE SALE DEED AS WELL AS CONSTRUCTION AGREEMENT. AND THE DATE OF SALE DEED WAS 16/07/2015, WHICH IS WELL WITHIN THE PROVISIONS OF SECTION 54F. 8. THE LEARNED ASSESSING OFFICER HAS THOROUGHLY MISCONSTRUED THAT PAYMENTS MADE FOR CONSTRUCTION CONCLUDE THE COMPLETION OF CONSTRUCTION AND DISALLOWED THE EXEMPTION CLAIM ED U/S 54F. HE FAILED TO APPRECIATE WHAT IS ENVISAGED IN SECTION 54F IS THE DATE OF COMPLETION OF CONSTRUCTION OR DATE OF PURCHASE ITA NO. 2498/BANG/2017 PAGE 3 OF 6 AND NOT THE DATE OF PAYMENTS TO CONSTRUCT OR BUY. HENCE THE DISALLOWANCE OF EXEMPTION CLAIMED U/S 54F DESERVES TO BE DELETED AND EXEMPTION CLAIMED RESTORED. 9. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED, AND JUSTICE RENDERED. 3. IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT AS PER PARA 4.3 OF THE ORDER OF CIT(A), LEARNED CIT(A) HAS OBSERVED THAT AS PER SALE DEED DATED 16.07.2015, THE VILLA PURCHASED BY THE ASSESSEE WAS ALREADY COMPLETED. HE ALSO POINTED OUT THAT PARA 4.2 OF THE SALE DEED IS REPRODUCED BY LEARNED CIT(A) IN WHICH IT IS STATED THAT THE DEVELOPERS HAVE COMPLETED THE CONSTRUCTION AND HAVE DELIVERED THE PURCHASERS ACTUAL, PHYSICAL, VACANT POSSESSION OF SCHEDULE C VILLA AND BEFORE TAKING THE POSSESSION, THE PURCHASERS HAVE INSPECTED AND SATISFIED AS TO COMPLETION OF ALL THE WORKS IN SCHEDULE A PROPERTY INCLUDING IN THE SCHEDULE C VILLA. HE SUBMITTED THAT AS PER AVERMENT IN THE SALE DEED, IT IS CLEAR THAT IT IS A CASE OF PURCHASE OF PROPERTY AND NOT CONSTRUCTION OF THE PROPERTY AND HENCE, LEARNED CIT(A) IS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE AS PER PARA 5.1 OF HIS ORDER ON THIS BASIS THAT IT IS A CASE OF THE CONSTRUCTION OF THE PROPERTY ACQUIRED BY THE ASSESSEE AND SINCE CONSTRUCTION IS REQUIRED TO BE WITHIN PRESCRIBED TIME AFTER THE DATE OF SALE OF THE CAPITAL ASSET ON WHICH CAPITAL GAIN HAS ARISEN AND IN THE PRESENT CASE, THE CONSTRUCTION IS BEFORE THE DATE OF TRANSFER, DEDUCTION IS NOT ALLOWABLE TO THE ASSESSEE UNDER SECTION 54F OF THE INCOME TAX ACT, 1961. HE SUBMITTED THAT SINCE IT IS A CASE OF THE PURCHASE OF THE PROPERTY, THEN THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F IS ALLOWABLE. 4. AS AGAINST THIS, LEARNED DR OF THE REVENUE SUBMITTED THAT IN PARAS 5.0 AND 5.1 OF HIS ORDER, IT IS NOTED BY LEARNED CIT(A) THAT THE RESIDENTIAL HOUSE ITA NO. 2498/BANG/2017 PAGE 4 OF 6 WAS ACQUIRED BY THE ASSESSEE IN HIS NAME JOINTLY WITH HIS DAUGHTER AND THEREFORE, EVEN IF DEDUCTION IS ALLOWABLE TO THE ASSESSEE UNDER SECTION 54F OF THE INCOME TAX ACT, 1961, THEN ALSO, DEDUCTION CAN BE ALLOWED TO THE EXTENT OF 50% OF INVESTMENT IN NEW PROPERTY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY THE AO IN PARA 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS SOLD 1 RESIDENTIAL SITE FOR RS.131.67 LAKHS ON 28.08.2015 AND THE ASSESSEE HAS ALSO SOLD 1,30,000 EQUITY SHARES FOR RS.240.50 LAKHS AND ALTHOUGH NO DATE OF SALE IS MENTIONED BY THE AO IN THIS PARA OF THE ASSESSMENT ORDER REGARDING SALE OF SHARES BUT IN PARA 4.0 OF HIS ORDER, IT IS NOTED BY LEARNED CIT(A) THAT ASSESSEE HAD ALSO SOLD SOME EQUITY SHARES DURING THE YEAR UNDER CONSIDERATION. IN PARA 4.2 OF HIS ORDER, IT IS NOTED BY LEARNED CIT(A) THAT DATE OF SALE DEED OF NEW ASSET IS 16.07.2015 AND DATE OF COMPLETION OF CONSTRUCTION AS CLAIMED BY THE ASSESSEE IS 13.06.2016 AND DATE OF COMPLETION CERTIFICATE ISSUED BY BBMP IS 04.02.2017. IN PARA 4.3 OF HIS ORDER, LEARNED CIT(A) HAS NOTED THAT DATE OF COMPLETION IS ACTUALLY 16.07.2015 AND IN THIS REGARD, HE HAS REPRODUCED PARA 4.2 OF THE SALE DEED. IN PARA 4.4 ALSO, IT IS STATED THAT THE VILLA WAS COMPLETED ON 16.07.2015. IN PARA 4.6 OF HIS ORDER, LEARNED CIT(A) HAS NOTED THAT THE CAPITAL GAIN HAS ARISEN ON ACCOUNT OF TRANSFER OF SITE / SALE OF SHARES ON 28.08.2015 / 30.09.2015. HE HAS REPRODUCED THE PROVISIONS OF SECTION 54F ALSO IN PARA 4.6 OF HIS ORDER IN WHICH IT IS PRESCRIBED THAT DEDUCTION UNDER SECTION 54F IS ALLOWABLE IF THE ASSESSEE HAS PURCHASED WITHIN A PERIOD OF ONE YEAR PRIOR OR 2 YEARS AFTER THE DATE OF TRANSFER OF OLD ASSET OR WITHIN A PERIOD OF 3 YEARS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE. BOTH THE AUTHORITIES BELOW HAVE DECIDED THE ISSUE AGAINST THE ASSESSEE ON THIS BASIS THAT IT IS A CASE OF CONSTRUCTION OF RESIDENTIAL PROPERTY AND SINCE THE CONSTRUCTION WAS BEFORE THE DATE OF SALE OF OLD ASSETS ON WHICH CAPITAL GAIN HAS ARISEN, DEDUCTION IS NOT ITA NO. 2498/BANG/2017 PAGE 5 OF 6 ALLOWABLE UNDER SECTION 54F OF THE INCOME TAX ACT, 1961. BUT WE HAVE SEEN THAT AS PER PARA 4.2 OF THE SALE DEED REPRODUCED BY LEARNED CIT(A) IN PARA 4.3 OF HIS ORDER, THE ASSESSEE HAS BEEN REFERRED TO AS PURCHASER. CONSIDERING THIS AND OTHER RELEVANT FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT IT IS A CASE OF PURCHASE OF RESIDENTIAL HOUSE PROPERTY WHICH WAS PURCHASED ON 16.07.2015 AS NOTED BY LEARNED CIT(A) IN PARA 4.3 OF HIS ORDER AND THE DATE OF SALE / TRANSFER OF THE CAPITAL ASSET ON WHICH THE CAPITAL GAIN HAS ARISEN IS 28.08.2015 / 30.09.2015 AND THEREFORE, THE PURCHASE OF RESIDENTIAL HOUSE IS WITHIN THE PERIOD OF ONE YEAR BEFORE THE DATE OF TRANSFER AND THEREFORE, DEDUCTION UNDER SECTION 54F IS ALLOWABLE. 6. NOW THE QUESTION IS THIS AS TO WHAT EXTENT THE DEDUCTION IS ALLOWABLE TO THE ASSESSEE BECAUSE THIS IS A FACT NOTED BY LEARNED CIT(A) IN PARA 5.0 OF HIS ORDER THAT THE RESIDENTIAL HOUSE WAS ACQUIRED BY THE ASSESSEE JOINTLY WITH HIS DAUGHTER. NOW THE QUESTION IS HOW MUCH AMOUNT WAS INVESTED BY THE ASSESSEE AND HOW MUCH AMOUNT WAS INVESTED BY HIS DAUGHTER FOR ACQUIRING THIS NEW RESIDENTIAL HOUSE PROPERTY. AS PER PARA 5.1 OF HIS ORDER, LEARNED CIT(A) HAS HELD THAT EVEN IF DEDUCTION IS ALLOWED TO THE ASSESSEE UNDER SECTION 54F OF THE INCOME TAX ACT, 1961, THE DEDUCTION ALLOWABLE CANNOT BE MORE THAN 50% OF INVESTMENT IN THE NEW ASSET AND HE HAS ALSO STATED THAT SINCE THE ENTIRE EXEMPTION IS ALREADY BEEN DISALLOWED IN THE PRESENT CASE, THIS ISSUE IS NOT BEING DISCUSSED FURTHER. UNDER THESE FACTS, WE FEEL IT PROPER TO RESTORE BACK THIS ASPECT OF THE MATTER TO THE FILE OF LEARNED CIT(A) FOR THE PURPOSE OF DECIDING BY WAY OF SPEAKING AND REASONED ORDER ABOUT THE QUANTUM OF DEDUCTION ALLOWABLE IN THE PRESENT CASE UNDER SECTION 54F AFTER FINDING OUT THESE FACTS AS TO WHAT IS THE AMOUNT OF INVESTMENT MADE BY THE ASSESSEE IN THE NEW HOUSE AND WHAT IS THE AMOUNT OF INVESTMENT MADE BY HIS DAUGHTER IN THE SAID NEW HOUSE AS THE DAUGHTER OF THE ASSESSEE IS A JOINT HOLDER. WE HAVE ITA NO. 2498/BANG/2017 PAGE 6 OF 6 ALREADY HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54F IN THE FACTS OF THE PRESENT CASE BECAUSE THIS IS A CASE OF PURCHASE OF NEW RESIDENTIAL HOUSE AND NOT A CASE OF CONSTRUCTION OF A NEW HOUSE BUT REGARDING THE QUANTUM OF DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 54F, WE RESTORE THE MATTER TO THE FILE OF CIT(A) FOR A FRESH DECISION BY WAY OF SPEAKING AND REASONED ORDER AS PER LAW, AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( BEENA PILLAI ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 12 TH JUNE, 2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.