L.P.Lakshmanan, CHENNAI V. DCIT, Madurai

ITA 1516/CHNY/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77291 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Revised return
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNALA BENCH, CHEN NAI . , ! '! ! #, $ % BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . I.T.A. NO. ASSESSMENT YEAR #& APPELLANT '(#& RESPONDENT 1516/MDS/2011 2007-08 SHRI L.P.LAKSHMANAN, 32, L.P. HOUSE, VENKATACHALAM CHETTIAR STREET, KOTTAIYUR-630 106 [PAN: AAGPL 2852 B] THE DCIT, CIRCLE-II, MADURAI 1517/MDS/2011 2007-08 L.P.LAKSHMANAN,(HUF) 32, L.P. HOUSE, VENKATACHALAM CHETTIAR STREET, KOTTAIYUR-630 106 [PAN: AABHL 4944 B] THE ITO, WARD-II(1), KARAIKUDI 1551/MDS/2011 2007-08 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-II, MADURAI SHRI L.P.LAKSHMANAN, 32, L.P. HOUSE, VENKATACHALAM CHETTIAR STREET, KOTTAIYUR-630 106 [PAN: AAGPL 2852 B] ASSESSEE BY : SHRI S.SRIDHAR, ADVOCATE REVENUE BY : SHRI SHAJI P.JACOB, ADDL.CIT / DATE OF HEARING : 02-04-2014 / DATE OF PRONOUNCEMENT : 30-05-2014 ) / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL IN ITA NO.1516/MDS/2011 FOR THE ASSESSM ENT YEAR (AY) 2007-08 HAS BEEN FILED BY THE ASSESSEE IN THE STATUS OF ITA NOS. 1516, 1517 & 1551/MDS/2011 2 INDIVIDUAL. THE REVENUE HAS FILED CROSS-APPEAL IN THE SAID CASE. THE APPEAL IN ITA NO.1517/MDS/2011 FOR THE AY.2007- 08 HAS BEEN FILED BY THE ASSESSEE IN THE STATUS OF HUF. T HE APPEALS HAVE BEEN FILED AGAINST THE ORDER OF COMMISSIONER O F INCOME TAX(APPEALS)-I, MADURAI DATED 06-06-2011 RELEVANT T O THE AY. 2007-08 IN THE RESPECTIVE CASES. SINCE COMMON ISSU ES ARE INVOLVED IN ALL THE APPEALS, THE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. I.T.A. NOS. 1516 & 1551/MDS/2011: 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE F ILED HIS ORIGINAL RETURN OF INCOME FOR THE AY.2007-08 ON 02- 11-2007 DECLARING HIS TOTAL INCOME AS ` 6,44,920/-. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 31-03-20 08 ADMITTING TOTAL INCOME AS ` 6,74,160/-. THE ASSESSEE FILED SECOND REVISED RETURN OF INCOME ON 18-11-2009 DECLARING INCOME OF ` 6,74,160/-. THE ASSESSEE HAD SOLD CERTAIN LAND IN PORUR ON 05-0 7-2006 FOR A CONSIDERATION OF ` 5.17 CRORES. THE NET LONG TERM CAPITAL GAIN ON THE SAID TRANSACTION WAS COMPUTED AS ` 5,15,64,400/-. HOWEVER, IN NONE OF THE RETURNS, THE ASSESSEE OFFERED ANY INCOM E FROM LONG ITA NOS. 1516, 1517 & 1551/MDS/2011 3 TERM CAPITAL GAINS. THE ASSESSEE CLAIMED THE ENTIR E LONG TERM CAPITAL GAIN AS EXEMPT ON ACCOUNT OF : I. INVESTMENT IN REC BONDS ` 50.00 LAKHS EXEMPT U/S.54EC OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT); II. INVESTMENT IN RESIDENTIAL PROPERTY ` 87,31,588/- EXEMPT U/S.54F OF THE ACT; III. DEPOSITS IN IDBI BANK ` 50.00 LAKHS FOR CONSTRUCTION OF RESIDENTIAL HOUSE EXEMPT U/S.54F OF THE ACT. IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD CLAIMED EXEMPTION U/S.54EC ONLY. IT WAS IN THE SECOND REVI SED RETURN, THE ASSESSEE CLAIMED FURTHER EXEMPTION U/S.54F ON ACCOU NT OF INVESTMENT IN RESIDENTIAL PROPERTY AND DEPOSITS IN IDBI BANK. THE ASSESSING OFFICER DIS-ALLOWED THE EXEMPTIONS CLAIME D BY THE ASSESSEE AND BROUGHT TO TAX THE ENTIRE LONG TERM CA PITAL GAINS. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASS ESSEE FOR THE FOLLOWING REASONS: I. INVESTMENT IN REC BONDS WAS MADE BEYOND THE TIME LIMIT PRESCRIBED U/S.54EC. THE LONG TERM CAPITAL ASSET WAS SOLD ON 05-07-2006. THE BONDS WERE ITA NOS. 1516, 1517 & 1551/MDS/2011 4 PURCHASED ON 21-03-2007 I.E., AFTER THE PERIOD OF S IX MONTHS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET; II. RESIDENTIAL PROPERTY AT MADURAI WAS PURCHASED B Y THE ASSESSEE ON 10-03-2006 I.E., MUCH PRIOR TO THE TRAN SFER OF LONG TERM CAPITAL ASSET. III. THE AMOUNT DEPOSITED IN IDBI BANK DOES NOT QUA LIFY FOR EXEMPTION U/S.54F. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29-12-2009 , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS ). THE CIT(APPEALS) VIDE IMPUGNED ORDER ACCEPTED THE CLAIM OF THE ASSESSEE WITH RESPECT TO INVESTMENT MADE IN REC BON DS U/S.54EC AND AMOUNT UTILIZED FOR PURCHASE OF RESIDE NTIAL PROPERTY AT MADURAI U/S.54F. HOWEVER, WITH REGARD TO THE D EPOSITS IN IDBI BANK, THE CIT(APPEALS) UPHELD THE VIEW OF THE ASSES SING OFFICER. NOT SATISFIED WITH THE ORDER OF CIT(APPEALS), BOTH, THE ASSESSEE AND THE REVENUE HAVE COME IN APPEAL BEFORE THE TRIB UNAL. 3. SHRI S.SRIDHAR, APPEARING ON BEHALF OF THE ASSES SEE SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN NOT GR ANTING THE BENEFIT TO THE ASSESSEE FOR DEPOSITING THE AMOUNT ` 50.00 LAKHS IN ITA NOS. 1516, 1517 & 1551/MDS/2011 5 IDBI BANK. THE SAID AMOUNT WAS UTILIZED BY THE ASSE SSEE TOWARDS THE CONSTRUCTION OF RESIDENTIAL PROPERTY AT MADURAI . 4. ON THE OTHER HAND, SHRI SHAJI P.JACOB, APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN ALLOWING EXEMPTION OF ` 87,31,588/- U/S.54F. THE CIT(APPEALS) HAS NOT TAKEN INTO CONSIDERATION THE FACT THAT THE ASSESSEE HAS ADMITTED INCOME UNDER THE HEAD INCOME FROM HOUSE P ROPERTY FROM PROPERTIES SITUATED AT A) GANESH TOWERS, 90, R.K.SALAI, CHENNAI; AND B) LP KARAIKUDI THE LD.COUNSEL FOR THE ASSESSEE CONTROVERTING THE S UBMISSIONS OF THE LD.DR SUBMITTED THAT THE ASSESSEE OWNS ONLY ONE RESIDENTIAL HOUSE AT KARAIKUDI PRIOR TO THE ACQUISITION OF NEW RESIDENTIAL PROPERTY AT MADURAI. THE PROPERTY SITUATED AT GANE SH TOWERS, 90, R.K.SALAI, CHENNAI IS A COMMERCIAL PROPERTY. THE P ROVISIONS OF SECTION 54F PUTS RESTRICTION ONLY WITH RESPECT TO R ESIDENTIAL HOUSE AND NOT THE COMMERCIAL PROPERTY. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ITA NOS. 1516, 1517 & 1551/MDS/2011 6 ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IN A PPEAL IS CLAIMING EXEMPTION U/S.54F FOR THE DEPOSITS MADE IN IDBI BANK LTD. THE CONTENTIONS OF THE ASSESSEE IS THAT THE A MOUNT WAS UTILIZED FOR THE CONSTRUCTION OF RESIDENTIAL PROPER TY AT MADURAI. WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS MADE BY TH E LD.COUNSEL FOR THE ASSESSEE. THE AMOUNT DEPOSITED IN IDBI BAN K LTD. FOR CONSTRUCTION OF RESIDENTIAL PROPERTY DOES NOT QUALI FY FOR EXEMPTION U/S.54F. THE AMOUNT HAS TO BE INVESTED IN THE SPEC IFIED CAPITAL GAINS DEPOSIT ACCOUNT SCHEME FOR CLAIMING EXEMPTIO N UNDER THE ACT. THE CIT(APPEALS) HAS RIGHTLY POINTED OUT THAT SINCE THE ASSESSEE HAS NOT INVESTED THE AMOUNT IN SPECIFIED A CCOUNT HE IS NOT ELIGIBLE TO CLAIM BENEFIT U/S.54F. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER FOR DIS- ALLOWING THE CLAIM OF THE ASSESSEE WITH REGARD TO T HE DEPOSITS MADE IN IDBI BANK. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 6. THE REVENUE HAS ASSAILED THE ORDER OF CIT(APPEAL S) ON THE GROUND THAT EXEMPTION U/S.54F HAS BEEN GRANTED TO T HE ASSESSEE DESPITE THE FACT THAT THE ASSESSEE OWNS TWO PROPERT IES FROM WHICH THE ASSESSEE HAS ADMITTED INCOME UNDER THE HEAD IN COME FROM ITA NOS. 1516, 1517 & 1551/MDS/2011 7 HOUSE PROPERTY. FOR CLAIMING EXEMPTION U/S.54F, T HE RESTRICTION IS WITH REGARD TO OWNERSHIP OF RESIDENTIAL HOUSE AND N OT COMMERCIAL PROPERTY. THE RELEVANT EXTRACT OF PROVISIONS OF SE CTION 54F ARE RE- PRODUCED HEREIN BELOW: SECTION 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB -SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HI NDU UNDIVIDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LO NG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SE CTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PER IOD OF ONE YEAR BEFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DA TE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERR ED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN T HE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CA PITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGE D UNDER SECTION 45: [PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTIO N SHALL APPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR ITA NOS. 1516, 1517 & 1551/MDS/2011 8 (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER T HAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPER TY'.] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, [***] [***] 'NET CONSIDERATION', IN RELATION TO THE TRAN SFER 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 REDU CED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER. (2) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIOD OF [TWO YEARS] AFTER THE DATE OF THE TRANSFER OF THE ORIGINAL ASSE T, OR CONSTRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESI DENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD 'INC OME FROM HOUSE PROPERTY', OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A), OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1), SH ALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' RE LATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WHICH SUCH R ESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED. ITA NOS. 1516, 1517 & 1551/MDS/2011 9 A PERUSAL OF RELEVANT EXTRACT OF PROVISIONS OF SECT ION 54F MAKES IT ABUNDANTLY CLEAR THAT THE RESTRICTION IS WITH RESPE CT TO RESIDENTIAL PROPERTY AND NOT THE COMMERCIAL PROPERTY. THE LD.C OUNSEL FOR THE ASSESSEE HAS STATED THAT THE PROPERTY SITUATED AT R .K.SALAI, CHENNAI IS A COMMERCIAL PROPERTY. THUS, THE ASSESS EE QUALIFIES FOR CLAIMING DEDUCTION U/S.54F. AS FAR AS THE ACQUISITION OF PROPERTY AT MADURAI PR IOR TO THE TRANSFER OF LONG TERM CAPITAL GAINS IS CONCERNED, T HE PROVISIONS OF SECTION MAKES IT UNAMBIGUOUSLY CLEAR THAT THE AS SESSEE CAN PURCHASE RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE Y EAR BEFORE THE DATE OF TRANSFER OF CAPITAL ASSET. IN THE PRESENT CASE, THE ASSESSEE HAD TRANSFERRED THE LONG TERM CAPITAL ASSET ON 05-0 7-2006. THE RESIDENTIAL PROPERTY AT MADURAI WAS REGISTERED IN T HE NAME OF ASSESSEE ON 10-03-2006. THUS, THE ASSESSEE PURCHASE D RESIDENTIAL HOUSE WITHIN THE TIME LIMIT AS PRESCRIB ED UNDER THE ACT. 7. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (APPEALS) ON THE ISSUE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF MERIT. ITA NOS. 1516, 1517 & 1551/MDS/2011 10 I.T.A. NO. 1517/MDS/2011: 8. THE APPEAL HAS BEEN FILED BY THE ASSESSEE IN THE STATUS OF HUF. THE ASSESSEE HAD SOLD LAND AT PORUR, CHENNAI FOR A CONSIDERATION OF ` 2,26,87,500/- AND COMPUTED LONG TERM CAPITAL GAIN AS ` 2,25,69,666/-. THE ASSESSEE DEPOSITED ` 50.00 LAKHS IN REC BONDS ON 31-03-2007. NO FURTHER INVESTMENT WAS MADE AND THE ASSESSEE DID NOT OFFER THE BALANCE AMOUNT I.E., ` 1,75,69,466/- FOR ASSESSMENT IN ITS RETURN OF INCOME. THE ASSESS ING OFFICER VIDE ORDER DT.04-12-2009 BROUGHT TO TAX, THE SAID AMOUNT OF ` 1.75 CRORES AS LONG TERM CAPITAL GAIN. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) VIDE ORDER DT.06-06-2011 DISMISSED THE APPEAL OF THE ASSESSEE, AS THE ASSESSEE WAS NOT ABLE TO SHOW ANY INVESTMENT MADE F ROM THE LONG TERM CAPITAL GAIN AND CLAIM EXEMPTION PERMISSI BLE UNDER THE ACT. 9. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFO RE THE TRIBUNAL AGAINST THE ORDER OF CIT(APPEALS). EVEN B EFORE US, THE LD.COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO SH OW AS TO HOW THE ASSESSEE IS ENTITLED FOR FURTHER RELIEF ON LONG TERM CAPITAL ITA NOS. 1516, 1517 & 1551/MDS/2011 11 GAINS. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNE D ORDER. THE APPEAL OF THE ASSESSEE IS DISMISSED BEING DEVOID OF MERIT. 10. IN THE RESULT ALL THE THREE APPEALS ARE DISMISS ED. ORDER PRONOUNCED ON FRIDAY, THE 30 TH MAY, 2014 AT CHENNAI. SD/- SD/- ( . ) ('! ! #) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER (VIKAS AWASTHY) $ / JUDICIAL MEMBER /CHENNAI, ! /DATED: 30 TH MAY, 2014 TNMM !' # $% &% /COPY TO: 1. '( /APPELLANT 2. #)'( /RESPONDENT 3. * () /CIT(A) 4. * /CIT 5. %-. # / /DR 6. .0 1 /GF