Smt T Leelavathi, Rajahmundry V. The ITO, Ward-4, Rajahmundry

ITA 151/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50303 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Keywords: Capital asset; Cost of acquisition
• Section: 54F; 2

Judgement Text

ITA NO151/VIZ/2011 T LEELAVATHI, RJY. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 151 /VIZAG/ 20 11 ASSESSMENT YEAR : 2007 - 08 SMT. T. LEELAVATHI RAJAHMUNDRY VS. ITO WARD - 4 RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.AAQPT 9277Q APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SMT. D. KOMALI KRISHNA, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE FACT S AND ALSO THE LAW APPLICABLE TO THE FACTS OF THE CASE. 2. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSIN G OFFICER IS NOT JUSTIFIED IN ASSESSING TO TAX A SUM OF RS.44,38,106 /- TOWARDS CAPITAL GAINS ON SALE OF LAND AT GACHIBOULI. 3. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSIN G OFFICER IS NOT JUSTIFIED IN DISALLOWING CLAIM FOR URBAN LAND CEILI NG TAX OF RS.5,78,292/- EQUIVALENT TO RS.6,03,890/- AFTER IND EXATION. 4. THE LD. CIT(A) IS NOT JUSTIFIED IN CONSIDERING THE CAPITAL GAINS AS EXEMPT UNDER THE PROVISIONS OF THE ACT: A. EITHER FOR THE REASON THAT THE LAND SOLD WAS AN AGR ICULTURAL LAND AND LAND PURCHASED WAS ALSO AN AGRICULTURAL LA ND. B. OR FOR THE REASON THAT THE APPELLANT HAS INVESTED T HE SALE PROCEEDS IN A RESIDENTIAL HOUSE. 5. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSIN G OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE EXPENDITURE OF RS. 78,207/- UNDER THE HEAD INCOME FROM BUSINESS. 6. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE A DDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.50,320/- BY TREATING THE AGRICULTURAL INCOME AS NON-AGRICULTURAL INCOME. 7. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF APPEAL HEARING . 2. THE GROUND NO.1 IS GENERAL IN NATURE AND NEEDS N O COMMENTS. GROUND NOS.2 TO 4 RELATE TO THE COMPUTATION OF CAPI TAL GAIN AND CLAIM OF ITA NO151/VIZ/2011 T LEELAVATHI, RJY. 2 EXEMPTION U/S 54F OF THE I.T. ACT. THE FACTS BORNE OUT FROM THE RECORD IN THIS REGARD ARE THAT THE ASSESSEE HAS RAISED A CLAI M OF EXEMPTION U/S 54F OF THE I.T. ACT WHILE FILING THE RETURN OF INCOME. WH ILE ASSESSEE WAS ASKED TO FILE THE DOCUMENT IN SUPPORT OF COST OF IMPROVEMENT CLAIMED FOR COMPUTATION AND THE CONSTRUCTION OF THE HOUSE, INSTEAD OF FILIN G THE EVIDENCE IN THIS REGARD ASSESSEE HAS TAKEN AN ALTERNATIVE PLEA THAT THE LAN D SOLD WAS AN AGRICULTURAL LAND. THEREFORE, NO CAPITAL GAIN TAX WOULD BE ATTR ACTED IN RESPECT OF SALE TRANSACTIONS. THE ASSESSING OFFICER WAS NOT CONVIN CED WITH THE EXPLANATIONS OF THE ASSESSEES AND HE DISALLOWED THE CLAIM OF THE EXEMPTION RAISED U/S 54F OF THE ACT AND ALSO THE ALTERNATIVE PLEA OF LOCATIO N OF AGRICULTURAL LAND SOLD AND COMPUTED THE CAPITAL GAIN AT RS.44,38,196/-. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) BUT DID NOT FIND FAVOUR WITH HIM. 4. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT AFTER THE SALE OF THE LAND ASSESSEE HAS PURCHASED ANOTHER LAND AND THERE AFTER CONSTRUCTED THE HOUSE THEREON. THE REVENUE AUTHORITIES WERE OF THE VIEW THAT THE COST OF LAND PURCHASED CA NNOT BE TAKEN INTO ACCOUNT WHILE ADJUDICATING THE ISSUE OF CLAIM OF EX EMPTION U/S 54F OF THE ACT FOR COMPUTING THE COST OF ACQUISITION OF A RESIDEN TIAL HOUSE. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 54F OF THE ACT WITH THE SUBMISSIONS THAT TO CLAIM AN EX EMPTION UNDER THIS SECTION, THE ASSESSEE IS REQUIRED TO PURCHASE ONE YEAR BEFOR E OR 2 YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE OR TO CONSTRUCT A RESI DENTIAL HOUSE WITHIN A PERIOD OF 3 YEARS AFTER THE DATE OF TRANSFER. IN T HE INSTANT CASE, ASSESSEE HAS PURCHASED THE LAND AND CONSTRUCTED THE RESIDENTIAL HOUSE THEREON WITHIN THE PRESCRIBED PERIOD. THEREFORE, THE ASSESSEE IS ENTI TLED FOR CLAIM OF EXEMPTION U/S 54F OF THE ACT. BEFORE THE ASSESSING OFFICER O N ILL ADVICE OF HIS PROFESSIONAL HE COULD NOT SUBMIT THE RELEVANT EVIDE NCE IN THIS REGARD AND HAS RAISED AN ALTERNATIVE CLAIM THAT LAND SOLD WAS AN A GRICULTURAL LAND AND AS SUCH IT WAS NOT A CAPITAL ASSET FOR THE PURPOSE OF COMPU TATION OF CAPITAL GAIN. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENT ION TO THE SALE DEED DATED 29.3.2007 THROUGH WHICH THE LAND WAS PURCHASED AND THE ELECTRICITY BILLS SHOWING THE COMPLETION OF CONSTRUCTION OF THE HOUSE . THE ELECTRICITY CONNECTION WAS OBTAINED ON 28.11.2007. WITH THESE DOCUMENTS ASSESSEE HAS ITA NO151/VIZ/2011 T LEELAVATHI, RJY. 3 TRIED TO ESTABLISH THAT AFTER THE SALE OF THE AGRIC ULTURAL LAND, THE ASSESSEE HAS PURCHASED THE LAND AND CONSTRUCTED A HOUSE THEREON OUT OF THE SALE PROCEEDS, THEREFORE, SHE IS ENTITLED FOR EXEMPTION U/S 54F OF THE ACT. IN SUPPORT OF HER CONTENTION THAT THE COST OF LAND IS ALSO TO BE TAKEN INTO ACCOUNT WHILE COMPUTING THE COST OF THE RESIDENTIAL HOUSE, HE INVITED OUR ATTENTION TO THE ORDERS OF THE TRIBUNAL IN THE CASE OF SHYAM SUNDER MUKHIJA VS. ITO 38 ITD 125 AND ADDL. CIT VS. NARENDRA MOHAN UNIYAL 34 SOT 152. 5. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THA T BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS WITHDRAWN THIS CLAIM AND HAS RAISED AN ALTERNATIVE PLEA THAT THE SOLD LAND WAS AN AGRICULT URAL LAND AND FALLS OUTSIDE THE MUNICIPAL LIMIT. BUT HE COULD NOT PLACE THE RE LEVANT EVIDENCE BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICE R WAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE AND COMPUTED THE CAPITAL GAIN . THE LD. D.R. FURTHER CONTENDED THAT BEFORE THE LOWER AUTHORITIES, NOTHIN G HAS BEEN PLACED ON RECORD TO ESTABLISH THAT AFTER THE SALE OF LAND ASS ESSEE HAS ACQUIRED THE LAND AND CONSTRUCTED THE HOUSE THEREON WITHIN A PRESCRIB ED PERIOD. MOREOVER, ONLY THE COST OF CONSTRUCTION IS TO BE ALLOWED AS E XEMPTION U/S 54F OF THE ACT. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF LOWER AUTHORITIES AND THE RELEVANT PROVIS IONS OF THE ACT, WE FIND THAT AS PER PROVISIONS OF SECTION 54F, ASSESSEE IS ENTIT LED FOR EXEMPTION UNDER THIS SECTION IF HE PURCHASES A RESIDENTIAL HOUSE ONE YEA R BEFORE OR 2 YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE OR CONSTRUCTE D A HOUSE WITHIN A PERIOD OF 3 YEARS AFTER THE SAID DATE. IN THAT CASE THE C APITAL GAIN IS TO BE COMPUTED AS PER THE PROVISIONS OF SECTION 54F OF THE ACT. F ROM A CAREFUL PERUSAL OF THE ORDER OF THE ASSESSING OFFICER, IT IS EVIDENT THAT WHILE FILING THE RETURN OF INCOME, ASSESSEE HAS CLAIMED THE EXEMPTION U/S 54F OF THE ACT BUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS INSTEAD OF PRE SSING THIS GROUND, HE HAS ADOPTED THE ALTERNATIVE GROUND THAT THE SALE OF LAN D WAS AN AGRICULTURAL LAND AND FALL OUTSIDE THE PURVIEW OF A CAPITAL ASSET. T HEREFORE, NO CAPITAL GAIN IS TO BE CHARGED TO TAX. NOW THE ASSESSEE HAS PLACED ALL RELEVANT EVIDENCE IN SUPPORT OF HIS CONTENTION THAT HE HAS ACQUIRED THE LAND AND CONSTRUCTED THE HOUSE THEREON WITHIN A SPECIFIED PERIOD. IF THAT B E THE CASE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 54F OF THE ACT. WE ALSO FIND SUPPORT FROM THE AFORESAID JUDGEMENTS OF THE TRIBUNAL. BUT THE EVID ENCE PLACED BEFORE US ITA NO151/VIZ/2011 T LEELAVATHI, RJY. 4 WERE FILED FIRST TIME AND IT WAS NOT VERIFIED BY TH E REVENUE AUTHORITIES. WE THEREFORE OF THE VIEW THAT THIS MATTER REQUIRES A F RESH ADJUDICATION IN THE LIGHT OF EVIDENCE FILED BEFORE US. WE ACCORDINGLY SET AS IDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE AFRESH. IF THE ASSESSEE SUCCEEDS IN PROV ING THAT HE HAS PURCHASED THE LAND AND CONSTRUCTED THE HOUSE THEREON WITHIN T HE PERIOD SPECIFIED U/S 54F OF THE ACT, HE SHOULD BE ALLOWED AN EXEMPTION U /S 54F OF THE ACT AND THE COST OF LAND AS WELL AS THE COST OF CONSTRUCTION SH OULD BE TREATED AS A COST OF RESIDENTIAL HOUSE ACQUIRED BY THE ASSESSEE WITHIN A SPECIFIED PERIOD. IN TERMS INDICATED ABOVE, THE MATTER IS RESTORED TO TH E FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 4.7.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 4 TH JULY, 2011 COPY TO 1 SMT. T. LEELAVATHI, D.NO.56 - 13 - 16 , VIDYANAGAR, RAJAHMUNDRY 2 ITO WARD - 4, RAJAHMUNDRY 3 THE CI T, RAJAHMUNDRY 4 THE CIT (A) , RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM