Uvais Ayesha Rafeeka, CHENNAI V. ACIT, CHENNAI

ITA 1562/CHNY/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1479 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-05-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U M KHALILULLAH
• Keywords: Cost of acquisition; Fair market value; Capital Gains
• Section: 143(3); 142(1); 48; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.1562/CHNY/2016 [ [ / ASSESSMENT YEAR: 2011-12) M/S. UVAIS AYESHA RAFEEKA, C/O. WAVOO BROTHERS, 29, KRISHNAN KOIL STREET, MANNADY, CHENNAI 600 001. VS THE ACIT, BUSINESS RANGE VIII(3), CHENNAI. PAN: AAEPR7414H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI U.M. KHALILULLAH, CA / RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT /DATE OF HEARING : 28.11.2018 /DATE OF PRONOUNCEMENT : 22.01.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-13, CHENNAI, DATED 28.03.2016 IN ITA NO.173/CIT(A)-13/2011-12 FOR THE ASSESSMENT YEAR 2011-12 PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED TWO GROUNDS IN HER APPEAL HOWEVER THE CRUXES OF THE ISSUES ARE THAT 2 ITA NO.1562/CHNY/2016 I. THE LD.CIT(A) HAS ERRED BY CONFIRMING THE ORDER OF THE LD.AO WHO HAD DENIED TO GRANT DEDUCTION U/S.54F OF THE ACT TO THE ASSESSEE WITH RESPECT TO SALE OF PROPERTY LOCATED AT NO.9, MANNARSAMY KOIL STREET, ROYAPURAM, CHENNAI -13, ON THE GROUND THAT THE ASSESSEE HAD FAILED TO CLAIM THE DEDUCTION IN THE ORIGINAL RETURN OF INCOME. II. THE LD.CIT(A) HAS ERRED BY CONFIRMING THE ORDER OF THE LD.AO WHO HAD DENIED THE BENEFIT OF COST INFLATION INDEX WHILE COMPUTING THE LONG TERM CAPITAL GAIN TOWARDS THE SALE OF 1/5 TH SHARE IN THE LAND AND BUILDING LOCATED AT NO.26, JAMBULINGAM STREET, CHENNAI, BECAUSE THE ASSESSEE HAD NOT FURNISHED EVIDENCE, PLAN, ESTIMATE ETC., TO SUBSTANTIATE THE CONSTRUCTION COST OF THE BUILDING. III. THE LD.CIT(A) HAS ERRED BY CONFIRMING THE ORDER OF THE LD.AO WHO HAD DENIED THE BENEFIT OF COST INFLATION INDEX WHILE COMPUTING THE LONG TERM CAPITAL GAIN TOWARDS THE SALE OF PROPERTY LOCATED AT SIVAN KOIL STREET. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM HOUSE PROPERTY AND CAPITAL GAINS FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.02.2011 ADMITTING 3 ITA NO.1562/CHNY/2016 TOTAL INCOME OF RS.26,15,130/-. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT ON 19.03.2012. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) OF THE ACT WAS ISSUED ON 20.09.2012 & 02.08.2013 RESPECTIVELY. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 11.03.2014 WHEREIN THE LD. AO COMPUTED THE LONG TERM CAPITAL GAIN OF THE ASSESSEE AT RS.71,12,843/- BY DENYING THE BENEFIT OF DEDUCTION U/S.54F OF THE ACT AND THE BENEFIT OF COST INFLATION INDEX WHILE COMPUTING THE LONG TERM CAPITAL GAIN IN REGARD TO CERTAIN IMMOVABLE PROPERTIES SOLD BY THE ASSESSEE. 4. GROUND NO.2 (I) : DEDUCTION U/S.54F OF THE ACT WITH RESPECT TO THE SALE OF PROPERTY AT MANNARSAMY KOIL STREET, ROYAPURAM:- THE LD.AO HAD DENIED THE CLAIM OF DEDUCTION U/S.54F OF THE ACT CITING THE FOLLOWING REASONS:- 2. THE ASSESSEE OUGHT TO HAVE DEPOSITED THE RECEIPTS (CAPITAL GAIN) IN A RECOGNIZED CAPITAL GAIN DEPOSIT SCHEME OF ANY BANK TILL THE DATE OF PURCHASE OF PROPERTY AT MOGAPPAIR. THIS IS ALSO NOT SEEN TO HAVE BEEN DONE. 3. AS THE ASSESSEE HAS NOT BEEN DISCLOSING HER PROPERTIES EVEN IN RESPONSE TO QUERIES FROM THE DEPARTMENT IT WOULD APPEAR THAT ASSESSEE OWNS MORE THAN ONE RESIDENTIAL PROPERTY. IN THIS CONTEXT IT IS ALSO TO BE NOTED THAT THE ASSESSEE DID NOT FILE COPIES OF SALE DEED OF SIVAN KOIL STREET PROPERTY AND SUBSEQUENTLY PRODUCED THE SAME IN RESPONSE TO SPECIFIC NOTICE U/S.142(1) OF THE I.T. ACT, 1961. 4. IT IS EVIDENT THAT THE FRESH CLAIM OF THAT DEDUCTION U/S 54 IS BELATED AND MADE WITH A VIEW TO REDUCE TAX LIABILITY WITHOUT PROPER ENTITLEMENT TO THE CLAIM. 4 ITA NO.1562/CHNY/2016 ON APPEAL THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BY AGREEING WITH HIS VIEW. 4.1 BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE HAD PURCHASED A RESIDENTIAL APARTMENT IN MOGAPPAIR AT THE COST OVER AND ABOVE THE SALE PROCEEDS OF THE ORIGINAL ASSET OWNED BY HER AT MANNARSAMY KOIL STREET. THE LD.AR FURTHER SUBMITTED THAT THE INVESTMENT WAS MADE IN THE RESIDENTIAL APARTMENT ON 30.03.2012 WHICH IS WITHIN THE DUE DATE OF FILING THE RETURN FOR THE RELEVANT ASSESSMENT YEAR AND THEREFORE THERE WAS NO NECESSITY TO DEPOSIT THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOUNT. HOWEVER THE LD.AO HAD ERRONEOUSLY REJECTED THE SUBMISSION OF THE ASSESSEE AND DENIED THE BENEFIT OF DEDUCTION U/S.54F OF THE ACT FOR THE REASON THAT, THE ASSESSEE HAD NOT CLAIMED THE DEDUCTION IN HER RETURN OF INCOME BUT HAD ONLY CLAIMED IT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS THEREFORE PLEADED THAT THE DEDUCTION U/S.54F OF THE ACT WHICH THE ASSESSEE IS ELIGIBLE MAY BE GRANTED. 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE LD.REVENUE AUTHORITIES HAD DENIED THE GRANT OF DEDUCTION U/S.54F 5 ITA NO.1562/CHNY/2016 OF THE ACT TO THE ASSESSEE FOR THE REASONS THAT THE ASSESSEE HAD NOT CLAIMED THE DEDUCTION IN THE RETURN OF INCOME FILED BEFORE THE LD.AO, THE SALE PROCEEDS WAS NOT DEPOSITED IN THE CAPITAL GAIN SCHEME ACCOUNT AND THE ASSESSEE HAS NOT ESTABLISHED THAT SHE DOES NOT HAVE MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ACQUIRED ON THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET. WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD.REVENUE AUTHORITIES ON THESE ISSUES. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAS ACQUIRED FOR RS.33,61,198/- UNDIVIDED SHARE IN THE LAND AND ENTERED INTO AN AGREEMENT FOR THE CONSTRUCTION OF THE RESIDENTIAL FLAT ON 30.03.2012 AND THE SAME IS NOT IN DISPUTE. FURTHER THE ASSESSEE HAD CONTENTED BEFORE THE LD.REVENUE AUTHORITIES THAT SHE DID NOT OWN MORE THAN ONE HOUSE OTHER THAN THE RESIDENTIAL PROPERTY SOLD AND THE REVENUE DID NOT HAVE ANY MATERIALS TO HOLD OTHERWISE. FROM THE FACTS OF THE CASE, IT IS ALSO APPARENT THAT THE ASSESSEE HAD INVESTED THE ENTIRE SALE PROCEEDS OF THE ORIGINAL ASSET FOR ACQUIRING THE NEW RESIDENTIAL HOUSE BEFORE THE DUE DATE OF FILING THE RETURN. THEREFORE AS PER THE PROVISIONS OF THE ACT IT IS NOT NECESSARY FOR THE ASSESSEE TO DEPOSIT THE SALE PROCEEDS IN THE CAPITAL GAIN SCHEME ACCOUNT. MOREOVER IT IS THE FUNDAMENTAL DUTY OF THE LD.REVENUE AUTHORITIES AND IN THE INTEREST OF JUSTICE TO GRANT ANY ELIGIBLE DEDUCTION TO THE ASSESSEE EVEN THOUGH THEY HAVE NOT CLAIMED 6 ITA NO.1562/CHNY/2016 IT IN THE ORIGINAL RETURN OF INCOME. IN THE CASE OF THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ELIGIBLE CLAIM OF DEDUCTION U/S.54FOF THE ACT WAS BROUGHT TO THE KNOWLEDGE OF THE LD.AO. THEREFORE IT WAS THE DUTY OF THE LD.AO TO EXAMINE THE SAME AND GRANT DEDUCTION IN THE INTEREST OF JUSTICE, WHICH THE LD.AO HAS MISERABLY FAILED. HENCE WE HEREBY DIRECT THE LD.AO TO GRANT THE BENEFIT OF DEDUCTION U/S.54F OF THE ACT TO THE ASSESSEE WITH RESPECT TO THE SALE OF HER PROPERTY AT MANNARSAMY KOIL STREET, ROYAPURAM CHENNAI BECAUSE THERE IS NOTHING ON RECORD TO SUGGEST THAT AT THE TIME OF THE SALE OF THE ORIGINAL ASSET THE ASSESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE, THE ASSESSEE HAD ALSO INVESTED THE ENTIRE SALE CONSIDERATION OF THE ORIGINAL ASSET IN THE CONSTRUCTION OF THE RESIDENTIAL FLAT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND FURTHER IT IS NOT DISPUTED THAT THE NEW RESIDENTIAL HOUSE IS CONSTRUCTED BEYOND THE PERIOD STIPULATED UNDER THE ACT. 5. GROUND NO.2(II) : DENIAL OF THE BENEFIT OF COST INFLATION INDEX WITH RESPECT TO SALE OF PROPERTY LOCATED AT JAMBULINGAM STREET:- THE LD.AO HAD DENIED THE BENEFIT OF COST INFLATION INDEX ON THE SALE OF THE LAND AND BUILDING LOCATED AT JAMBULINGAM STREET BECAUSE 7 ITA NO.1562/CHNY/2016 THE ASSESSEE HAD NOT FURNISHED EVIDENCE FOR INCURRING EXPENSE TOWARDS THE CONSTRUCTION OF BUILDING AND ALSO NOT PRODUCED THE BUILDING PLAN. BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE HAD CONSTRUCTED THE PROPERTY DURING THE ASSESSMENT YEAR 2006-07 TO 2009- 10 AND THE ASSESSEE HAD PRODUCED THE DETAILS OF THE EXPENDITURE BEFORE THE LD.REVENUE AUTHORITIES AND ALSO FURNISHED THE PAN NUMBER OF M/S. WAVOO BROTHERS FROM WHOM THE ASSESSEE HAD DRAWN THE AMOUNT FOR THE CONSTRUCTION. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAD ALSO DECLARED THE SAME IN HER RETURN OF INCOME FOR THE RELEVANT FOUR YEARS. IT WAS THEREFORE PLEADED THAT THE OBSERVATIONS OF THE LD.REVENUE AUTHORITIES ARE ERRONEOUS. THE LD.DR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD.AR. 5.1 WE FIND MERIT IN THE SUBMISSION OF THE LD.AR. IT APPEARS THAT THE LD.AO HAD DENIED THE BENEFIT OF COST INFLATION INDEX ONLY FOR THE REASON THAT THE ASSESSEE HAD NOT FURNISHED THE BUILDING PLAN AND PRODUCED THE EVIDENCE FOR THE CONSTRUCTION OF THE BUILDING. THE LD.CIT(A) HAD ALSO AGREED WITH THE VIEW OF THE LD.AO ON THE ISSUE BY UPHOLDING HIS ORDER. HOWEVER FROM THE FACTS OF THE CASE IT IS EVIDENT THAT THE BUILDING WAS IN EXISTENCE AND THE ASSESSEE HAS ALSO BEEN FILING HER RETURN OF INCOME DECLARING THE INVESTMENT MADE IN THE 8 ITA NO.1562/CHNY/2016 BUILDING DURING THE RELEVANT EARLIER YEARS CONSISTENTLY. THEREFORE THE INVESTMENT MADE BY THE ASSESSEE FOR THE CONSTRUCTION OF THE BUILDING CANNOT BE DISPUTED AT THIS STAGE. HENCE WE HEREBY DIRECT THE LD.AO TO GRANT THE BENEFIT OF COST INFLATION INDEX WITH RESPECT TO THE COST OF ACQUISITION OF THE LAND AS WELL AS THE BUILDING CONSTRUCTED BY THE ASSESSEE WHILE COMPUTING THE LONG TERM CAPITAL GAIN 6. GROUND NO.2(III): DENIAL OF THE BENEFIT OF COST INFLATION INDEX WITH RESPECT TO SALE OF PROPERTY LOCATED AT SIVAN KOIL STREET:- FROM THE FACTS OF THE CASE IT IS APPARENT THAT THOUGH THE LD.AO HAS ESTIMATED THE VALUE OF THE PROPERTY AS ON 01.04.1981 AT RS.30,000/-, FAILED TO GRANT THE BENEFIT OF COST INFLATION INDEX. THE LD.CIT(A) HAD ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY STATING THAT THE LAND HAS BEEN REASONABLY VALUED BY THE LD.AO. WE DO NOT FIND MERIT IN THE STAND TAKEN BY THE LD.REVENUE AUTHORITIES ON THIS ISSUE. IF THE ASSESSEE HAD ACQUIRED THE PROPERTY BEFORE 01.04.1981 THEN THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF ADOPTING THE FAIR MARKET VALUE AS ON 01.04.1981 AND THEREAFTER COMPUTE THE LONG TERM CAPITAL GAIN BY GIVING BENEFIT OF COST INFLATION INDEX AS PER SECTION 48, PROVISO TO SECTION 48 AND EXPLANATION 5 OF THE LAST PROVISO TO SECTION 9 ITA NO.1562/CHNY/2016 48 OF THE ACT. THEREFORE WE HEREBY DIRECT THE LD.AO TO GRANT THE BENEFIT OF COST INFLATION INDEX TO THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT WHILE COMPUTING THE LONG TERM CAPITAL GAIN. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 22 ND JANUARY, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 22 ND JANUARY, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF