DCIT, Bangalore V. Smt. Meghana Sanmant, Vasco-da-Gama

ITA 1537/BANG/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8517 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 01-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G. KAMALADAR
• Assessee Lawyers: SHEETHAL
• Keywords: Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 54F; 143(1)

Judgement Text

ITA.1537/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.1537/BANG/2014 (ASSESSMENT YEAR : 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION) BENGALURU .. APPELLAN T V. SMT. MEGHANA SAMANT, E-3, DRAMILA APARTMENTS, MANGALORE HILL, VASCO-DA-GAMA 403711 .. RESPONDEN T PAN : AFXPS7323A ASSESSEE BY : SMT. SHEETHAL, ADVOCATE REVENUE BY : SHRI. G. KAMALADAR, STANDING COUNSEL HEARD ON : 20.02.2017 PRONOUNCED ON : 23.02.2017 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A) IV, BENGALURU, DT.17.10.2014, FOR THE ASSESSMENT Y EAR 2011-12. 02. SMT. MEGHANA SAMANT , THE ASSESSEE, IS A NON-R ESIDENT INDIVIDUAL HAVING INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AN D OTHER SOURCES. DURING THE YEAR, SHE DERIVED INCOME FROM SALE OF SH ARES AS CAPITAL GAINS , ON WHICH SHE CLAIMED DEDUCTIONS OF ; RS. 50 LAKHS ON THE INVESTMENT MADE IN REG BONDS & RS. 96.95 LAKHS D EDUCTION U/S. ITA.1537/BANG/2014 PAGE - 2 54F WHICH CONSISTED OF AN INVESTMENT MADE, JOINTLY WITH HER SPOUSE, IN A RESIDENTIAL FLAT BETWEEN 03.8.2010 & 08.10.2010 AT RS.19.28 LAKHS & RS.78,00,000 , THE UNUTILISED SU M , DEPOSITED IN THE CAPITAL GAINS ACCOUNT AS ON THE DUE DATE OF FIL ING OF RETURN. THE AO HELD THAT THE CONDITION FOR GIVING CREDIT TO THE AMOUNT PAID/ INVESTED IN THE NEW ASSET AS WELL AS THE AMOUNT KEPT IN THE CAPITAL GAINS ACCOUNT WOULD ARISE ONLY WHERE THE COST OF THE NEW ASSET IS NOT FULLY MET WITHIN THE SPECIFIED DATE. IN SUCH CIRCUMSTANCE S, THE PARTIAL PAYMENT MADE TOWARDS THE NEW ASSET ALONG WITH THE MONIES KE PT IN THE CAPITAL GAINS ACCOUNT TO BE USED FOR MEETING THE BA LANCE INVESTMENT IN THE NEW ASSET ONLY BE ELIGIBLE FOR DEDUCTION U/S 54 F. SINCE IN THIS CASE, THE ASSESSEE HAS MADE THE INVESTMENT IN FULL IN THE NEW ASSET IE IN THE RESIDENTIAL FLAT, AND THERE IS NO FURTHER AM OUNT PAYABLE IN RESPECT OF THAT NEW ASSET , THE AO DID NOT ALLOW T HE CLAIM OF DEDUCTION ON RS.78,00,000 U/S 54F. AGGRIEVED, THE A SSESSEE FILED AN APPEAL BEFORE THE CIT (A). THE CIT (A), AFTER ANALY ZING THE DECISION OF THE HONBLE ALLAHABAD IN THE CASE OF RANJIT NARA NG 317 ITR 322(ALL) GATHERED THAT THREE CONDITIONS LAID DOWN U /S. 54F FOR AVAILING EXEMPTION / DEDUCTION ARE :- (I) PURCHASE / CONSTRUCTION OF THE PROPERTY WITHIN SPECIFIED TIME. (II) UNUTILISED PORTION TO BE DEPOSITED IN THE SCHEME AS PRESCRIBED WITHIN SPECIFIED TIME. (III) UNUTILISED PORTION TO BE OFFERED TO TAX AS INCOME U/S. 45 OF PREVIOUS YEAR IN WHICH THE PERIOD OF THR EE ITA.1537/BANG/2014 PAGE - 3 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASS ET EXPIRES. 03. THE CIT (A), INTER ALIA, HELD THAT ALTHOUGH TH E ALLAHABAD HONBLE HIGH COURT DEALT WITH THE LAW APPLICABLE DUR ING A PARTICULAR ASSESSMENT YEAR, SUPRA, IT HAS THROWN LI GHT ON THE THIRD CONDITION CLEARLY SPECIFYING THAT THE AMOUNT WHICH HAS NOT BEEN USED U/S. 54F HAS TO BE OFFERED AS INCOME IN THE THIRD Y EAR. AT NO STAGE, DOES THIS SECTION LAY DOWN THE CONDITION THAT IT IS MANDATORY FOR THE ASSESSEE TO PURCHASE PROPERTY EQUAL TO OR MORE THAN THE VALUE OF NET CONSIDERATION. THE SCHEME OF THE SECTION ITSELF TAK ES CARE OF ANY REVENUE LEAKAGE BY INSERTING A CONDITION THAT ANY U N-UTILIZED PORTION OF THE NET CONSIDERATION SHALL BE BROUGHT TO TAX AFTER A S PECIFIED PERIOD OF TIME. THE ASSESSEE HAS FULFILLED THE FIRST TWO COND ITIONS. IT WAS CLAIMED THAT THE CAPITAL GAIN AROSE IN THE A.Y. 2011-12 AND TAXES HAVE BEEN PAID ON THE UN-UTILIZED PORTION OF THE NET CONSIDER ATION IN MARCH 2014 AND CAPITAL GAINS HAVE BEEN OFFERED IN THE RELEVANT ASSESSMENT YEAR. THUS, THE CIT (A) DIRECTED THE AO TO VERIFY THIS FA CT AND IF THE FINDING IS IN THE AFFIRMATIVE, THE ASSESSEE IS ENTITLED TO EXEMPTION / DEDUCTION U/S. 54F IN THIS ASSESSMENT YEAR. AGGRIEVED AGAINST THIS DECISION, THE REVENUE FILED THIS APPEAL WITH FOLLOWING GROUNDS : ITA.1537/BANG/2014 PAGE - 4 04. THE DR TOOK US THROUGH THE ASSESSMENT ORDER AND SUBMITTED THAT THE CIT (A) HAS NOT APPRECIATED THE FACT THAT THE ASSE SSEE HAS PURCHASED THE FLAT ON 08.10.2010 ITSELF , THE FULL CONSIDERATION HAS BEEN PAID, THERE IS NO NEED TO KEEP THE AMOUNT IN CAPITAL GAINS ACCOUNT TO PAY TO THE SELLERS OF THAT FLAT IN SUBSEQUENT DATES AND SUPPORTED THE AOS ORD ER. ON THE OTHER HAND, THE AR SUBMITTED THAT THE ASSESSEE INTENDED TO PURC HASE THE ADJACENT PORTION AND HAVE A BIGGER FLAT BUT UNFORTUNATELY C OULD NOT DO SO. IN THE FACTS AND CIRCUMSTANCES, THE ASSESSEE HAS ADMITTED THE CA PITAL GAINS ON THE ITA.1537/BANG/2014 PAGE - 5 UNUTILISED PORTION IN HER RETURN FILED FOR A Y 2014 -15 ON 18.7.2014 IN ACCORDANCE WITH THE PROVISIONS OF SECTION 54F AND P AID THE TAXES ACCORDINGLY. IN THIS REGARD, THE AR SOUGHT OUR ATTENTION TO THE INTIMATION U/S 143(1) DT 25.03.2016 FOR AY 2014-15 AND ALSO TO THE ORDER PAS SED BY THE AO CONSEQUENT TO THE CSIT (A) ORDER DT 12.01.2015 WHE REIN THE AO, AS DIRECTED BY THE CIT (A) , VERIFIED AND FOUND THAT THE ASSES SEE HAS COMPLIED WITH THE PROVISION OF SEC.54F. THUS, THE AR SUPPORTED THE OR DER OF THE CIT (A). 05. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT ORDERS AND MATERIAL. SUB-SECTION 4 OF SECTION 54 F IS EXTRACTE D AS UNDER : (4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS N OT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGIN AL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CO NSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF I NCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RE TURN SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLIC ABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN AN ACCOUNT IN ANY SUCH BANK OR INSTI TUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROO F OF SUCH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUN T, IF ANY, ALREADY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTR UCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEM ED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B-SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION O F THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN,(I) THE AMOUNT BY WHICH(A) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFE R OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST O F THE NEW ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAU SE (B) OF SUB-SECTION (1), EXCEEDS (B) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE ITA.1537/BANG/2014 PAGE - 6 NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTIO N (1) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRAN SFER OF THE ORIGINAL ASSET EXPIRES ; AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. FROM THE ABOVE FACTS AND POSITION OF LAW, IT IS CL EAR THAT THE AMOUNT DEPOSITED BY THE ASSESSEE UNDER SUB-SECTION 4 OF SE CTION 54 WHICH WAS NOT UTILISED WHOLLY OR PARTLY BY THE ASSESSEE FOR THE P URCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SE CTION (1). THEN, IT SHALL HAVE TO BE CHARGED UNDER SECTION 45 AS INCOME OF TH E PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TH E TRANSFER OF THE ORIGINAL ASSET EXPIRES. ACCORDINGLY, THE ASSESSEE CLAIMED T O HAVE ADMITTED IT AS INCOME IN AY 2014-15. THUS, THE CIT (A) ON THE ABOV E FACTS CORRECTLY APPLIED THE RATIO OF THE HONBLE ALLAHABAD HIGH COURT, SUPRA, AND DIRECTED THE AO TO VERIFY THIS FACT AND IF THE FINDING IS I N THE AFFIRMATIVE, ALLOW THE EXEMPTION / DEDUCTION U/S. 54F IN THIS ASSESSM ENT YEAR. THE AO IN HIS CONSEQUENTIAL ORDER DT 12.01.2015 HAS ALLOWE D THE DEDUCTION . HENCE, THE GROUNDS OF REVENUES APPEAL FAIL. O6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DAY OF FEBRUARY, 2017. SD/- SD/- (VIJAY PAL RAO) (S. JAYARAMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER MCN* ITA.1537/BANG/2014 PAGE - 7 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR