DCIT, New Delhi V. Shri Raj Rajpal, New Delhi

ITA 1585/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3737 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Assessee Lawyers: SACHIN VA SUDEVA CAS; S VASUDEVA
• Keywords: Capital asset
• Section: 142(1); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 1585/DEL/2011 ASSESSMENT YEAR: 2007-08 DEPUTY CIT, VS. SMT. RAJ RAJPAL, CIRCLE 224(1), 44 POORVI MARG, NEW DELHI. VASANT VR., NEW DELHI (PAN: AJOPP8216C) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B. KISHORE, SR. DR RESPONDENT BY: SHRI S. VASUDEVA & SACHIN V ASUDEVA, CAS ORDER PER RAJPAL YADAV: JUDICIAL MEMBER PER RAJPAL YADAV: JUDICIAL MEMBER PER RAJPAL YADAV: JUDICIAL MEMBER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 11.01.2011 PASSED FOR ASSESSMENT YEAR 2007-08. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF CLAIM MADE UNDER SEC. 54E AND 54EC OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. SHE HAS FILED HER RETURN OF INCOME ON 30 TH JULY 2007 DECLARING TOTAL INCOME OF RS.52,01,960. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT 2 AND A NOTICE UNDER SEC. 143(2) AND 142(1) OF THE AC T WERE ISSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT REVEALED THAT ASSESSEE HAS SOLD A FREE HOLD PROPERTY BEARING NO.17, ROAD NO.51, SITUATED I N PUNJABI BAGH(WEST), NEW DELHI. THE PROPERTY WAS SOLD FOR A CONSIDERATIO N OF RS. 2 CRORES. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SEC. 54 AND 54 EC OF THE ACT. ASSESSING OFFICER HAS DISALLOWED THIS CLAIM OF ASSE SSEE ON THE GROUND THAT NO LONG TERM CAPITAL GAIN HAS ARISEN TO THE ASSESSE E. IN HIS OPINION, ONLY A SHORT TERM CAPITAL GAIN AROSE TO THE ASSESSEE. THE REASONS FOR HARBORING THIS BELIEF BY THE ASSESSING OFFICER ARE THAT THIS PROPE RTY WAS OWNED BY THE ASSESSEES LATE HUSBAND SHRI IC RAJPAL, WHO DIED ON 10.10.1989. LATE SHRI IC RAJPAL HAD EXECUTED A WILL ON 14 TH SEPTEMBER 1989. AS PER THE WILL, THE ASSESSEE WOULD HAVE A LIFE TIME INTEREST IN THE PRO PERTY. THE ASSESSEE WAS HAVING ANOTHER PROPERTY IN KAROL BAGH, NEW DELHI WH ICH WAS TO BE WILLED BY THE ASSESSEE TO THE ELDER SON. ON THE DEATH OF T HE ASSESSEE, THIS PROPERTY WAS TO DEVOLVE UPON THE YOUNGER SON SWARN G. RAJPAL . THE OTHER SON WOULD HAVE NO RIGHT IN THE PROPERTY. ALL THE SONS AND DAU GHTERS OF THE ASSESSEE HAVE RELINQUISHED THEIR RIGHTS BY WAY OF A DEED EXECUTED ON 17 TH APRIL 2006. THE PROPERTY WAS SOLD ON 12 TH OF JULY 2006. ASSESSING OFFICER ARRIVED AT A CONCLUSION THAT ABSOLUTE RIGHT OF THE TITLE ACCRUED TO THE ASSESSEE ON THE EXECUTION OF THE RELINQUISHMENT DEED AND SHE HAS NO T RETAINED THE PROPERTY 3 MORE THAN THREE YEARS. THE RELINQUISHMENT DEED WAS EXECUTED IN THE MONTH OF APRIL 2006 AND THE PROPERTY HAS BEEN SOLD ON 12 TH JULY 2006. THUS, GAIN ARISEN TO THE ASSESSEE IS A SHORT TERM CAPITAL GAIN AND SHE CANNOT CLAIM ANY EXEMPTION UNDER SEC. 54 AND 54EC OF THE ACT. 3. DISSATISFIED WITH THE ACTION OF THE ASSESSING OF FICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(APPEALS). SHE RAISED TWO FOLD SUBMISSIONS. IN THE FIRST FOLD OF SUBMISSIONS, SHE S UBMITTED THAT HER HUSBAND CREATED A RIGHT TO GIVE IN FAVOUR OF ASSESSEE, IN T HE PROPERTY, WHICH IS EQUIVALENT TO RIGHT TO MAINTENANCE AND ONCE A RIGHT TO MAINTENANCE HAS BEEN CREATED IN FAVOUR OF A HINDU LADY THEN RESTRICTION IMPOSED ON EXERCISE OF SUCH RIGHT WOULD NOT BE RECOGNIZED AND SHE SHOULD BE TRE ATED AS AN ABSOLUTE OWNER. SHE FURTHER SUBMITTED THAT SECTION 14(2) OF THE HINDU SUCCESSION ACT WOULD APPLY. SHE HAS RELIED UPON THE DECISION OF HO N'BLE SUPREME COURT IN THE CASE OF TULASAMMA VS. SESHA REDDY REPORTED IN (19 77) 3 SCC 99. SHE ALSO RELIED UPON THE DECISION OF HON'BLE SUPREME CO URT IN THE CASE OF BENI BAI VS. RAGHUBIR PRASAD (1999) 3 SCC 234. SHE RAISE D AN ADDITIONAL GROUND OF APPEAL BEFORE THE LEARNED CIT(APPEALS) AND CONTEND ED THAT ON IST OF OCTOBER 1999 HER HUSBAND EXECUTED A CODICIL TO THE W ILL. BY VIRTUE OF THIS 4 CODICIL, SHE HAS BEEN MADE ABSOLUTE OWNER OF THE PR OPERTY. SHE FURTHER CONTENDED THAT ON THE DEATH OF HER HUSBAND, THE PRO PERTY HAS BEEN MUTATED IN HER NAME IN THE RECORD OF MUNICIPALITY. THE OTHER LEGAL HEIRS HAD EXECUTED AFFIDAVITS EXPRESSING NO OBJECTION FOR MUTATING THE PROPERTY IN HER NAME. THE DEED EXECUTED IN APRIL 2006 BY THE OTHER LEGAL HEIR S WAS ON THE INSISTENT OF THE VENDEE, IN ORDER TO AVOID ANY FUTURE LITIGATION AT THE END OF THE OTHER LEGAL HEIRS. LEARNED CIT(APPEALS) PERMITTED THE ASSESSEE TO RAISE ADDITIONAL GROUND OF APPEAL. HE CALLED FOR A REMAND REPORT FRO M THE ASSESSING OFFICER. IT APPEARS THAT ASSESSING OFFICER HAS EXAMINED THE I SSUE. HE RECORDED THE STATEMENT OF SHRI ZIAUL HUSSAIN S/O INAMUL HUSSAIN O N 21.10.2010. SHRI ZIAUL HUSSAIN IS A WITNESS TO THE CODICIL. ASSESSING OFFI CER HAS ALSO RECORDED THE STATEMENT OF SHRI MANJU RAJPAL WHO IS ELDER DAUGHTE R-IN-LAW OF THE ASSESSEE AND A WITNESS TO THE CODICIL. LEARNED FIRST APPELLA TE AUTHORITY HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND HELD THAT HOUSE PROPERTY WAS ACQUIRED BY HER ON THE DEATH OF HER HUSBAND BY VIRTUE OF THE WILL, HENCE IT IS A LONG TERM CAPITAL ASSET WHICH ON TRANSFER GIVE RISE TO L ONG TERN CAPITAL GAIN. 4. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) SUBMITTED THAT STORY OF THE CODICIL WAS NOT BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AT THE TIME OF THE ASSESSMENT PRO CEEDINGS. IT APPEARS THAT 5 THIS HAS BEEN COCKED UP LATER ON AFTER THE ASSESSME NT ORDER. IF THIS STORY IS DISBELIEVED THEN ABSOLUTE RIGHT IN THE PROPERTY ACC RUED TO THE ASSESSEE IN APRIL 2006 AND IT DOES NOT GIVE RISE LONG TERM CAPI TAL GAIN BECAUSE IT WAS SOLD IN JULY 2006. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT ALL THE PAPERS WERE HANDED OVER TO THE LEARNED COUN SEL FOR THE ASSESSEE WHICH INCLUDE COPY OF THE WILL AS WELL AS CODICIL. LEARNED COUNSEL FOR THE ASSESSEE IN A BONA FIDE MISTAKE FAILED TO BRING THI S CODICIL TO THE NOTICE OF THE ASSESSING OFFICER. LEARNED CIT(APPEALS) HAS GRANTED F ULL OPPORTUNITY TO THE ASSESSING OFFICER FOR EXAMINING THIS ASPECT. HE HAS RECORDED THE STATEMENT OF THE WITNESSES WHO SIGNED THE CODICIL. LEARNED CIT(AP PEALS) HAS NOT ACCEPTED THIS CODICIL ALONE RATHER THE AFFIDAVITS SUBMITTED BY THE OTHER LEGAL HEIRS IN ASSESSEES FAVOUR WHILE GETTING THE MUTATION SANCTI ONED AT THE TIME OF HER HUSBANDS DEATH. ON THE BASIS OF ALL THESE MATERIAL , LEARNED FIRST APPELLATE AUTHORITY HAS ARRIVED AT A CONCLUSION THAT ASSESSEE BECOME ABSOLUTE OWNER OF THE PROPERTY IN 1991 AND ON TRANSFER OF THIS PROPE RTY, A LONG TERM CAPITAL GAIN HAS ARISEN TO THE ASSESSEE. SHE IS ENTITLED FO R EXEMPTION UNDER SEC. 54 AND 54EC OF THE ACT. 6 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE COPY OF THE CODICIL HAS BEEN P LACED ON PAGE NO. 149 OF THE PAPER BOOK. IT WAS EXECUTED ON IST OF OCTOBER 19 89. LATE SHRI IC RAJPAL HAS BEQUEATHED THE PROPERTY IN DISPUTE IN FAVOUR OF HIS WIFE. HE DID NOT ATTACH ANY CONDITION IN THIS CODICIL. THE QUESTION R AISED BY THE LEARNED DR IS WHETHER THIS DOCUMENT WAS EXECUTED ON IST OF OCTOBE R 1989 OR IT HAS BEEN PREPARED BY THE ASSESSEE AFTER THE ASSESSMENT ORDER . LEARNED FIRST APPELLATE AUTHORITY HAS GIVEN A FAIR CHANCE TO THE ASSESSING OFFICER FOR EXAMINING THIS DOCUMENT. HE HAS NOT RAISED HIS DOUBT IN THIS REGAR D. HE HAS RECORDED THE STATEMENT OF THE WITNESSES ON THIS CODICIL. HAD THE LEARNED ASSESSING OFFICER ANY DOUBT THEN HE WOULD HAVE REFERRED IT TO THE HAN D-WRITING EXPERT. APART FROM THIS ONE ASPECT, THE OTHER ASPECT FAVOURABLE T O THE ASSESSEE, IS THAT MUTATION WAS SANCTIONED IN HER FAVOUR ON THE DEATH OF HER HUSBAND AND AFFIDAVITS WERE EXECUTED BY HER PROGENY. THUS, AFFID AVITS WERE SWORN IN THE YEAR 1991 WHEN SUCH TYPE OF DISPUTE WAS NOT EVEN ANTI CIPATED. THEREFORE, WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE LEARNE D CIT(APPEALS) ON THIS ISSUE. 7 7. BEFORE LEARNED CIT(APPEALS), ASSESSEE HAS RAISED ONE MORE FOLD OF SUBMISSION, WHICH IS BASED ON THE INTERPRETATION OF SECTION 14(1) AND (2) OF THE HINDU SUCCESSION ACT, 1956. SHE HAS RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TULSAMMA (SUPRA). LEARN ED CIT(APPEALS) WITHOUT ANALYTICALLY EXAMINING THIS ISSUE HAS CONCU RRED WITH THE CONTENTIONS RAISED BY THE ASSESSEE. HOWEVER, THOSE CONCLUSIONS COULD NOT MET OUR APPROVAL, REASON BEING THAT THIS DECISION IS ALTOGE THER IN A DIFFERENT CONTEXT AND IT GOES AGAINST THE ASSESSEE. THE DISPUTE IN THI S DECISION WAS THAT IF A HINDU FEMALE HAD A PRE-EXISTING RIGHT TO MAINTENANC E AND SOME PROPERTY IS GIVEN UNDER THE WILL BY RECOGNIZING THAT PRE-EXISTI NG RIGHT THEN SECTION 14(1) OF THE HINDU ADOPTION AND MAINTENANCE ACT 1956 RECOGNIZ ED SUCH RIGHT AS AN ABSOLUTE RIGHT OVER THE PROPERTY. THIS SECTION IS NO T APPLICABLE ON THE PROPERTIES WHICH HAVE BEEN RECEIVED OTHERWISE UNDER A WILL ETC. FOR THE FIRST TIME AND SUCH RIGHT IS NOT IN RECOGNITION OF HER PR E-EXISTING RIGHT TO MAINTENANCE, THEN THE LIMITATION PROVIDED IN THE WI LL WOULD BE APPLICABLE. HOWEVER, IN VIEW OF THE CODICIL, THIS QUESTION IS T OTALLY ACADEMIC ONE BUT IN OUR OPINION, LEARNED FIRST APPELLATE AUTHORITY OUGH T TO HAVE NOT GIVEN HIS APPROVAL TO THE SUBMISSIONS MADE BY THE ASSESSEE WI THOUT ANALYTICALLY 8 EXAMINING THE ASPECT. WE DO NOT CONCUR WITH THE OB SERVATIONS OF THE LEARNED CIT(APPEALS) AVAILABLE IN PARAGRAPHS 9 AND 10 ON THIS ISSUE. 8. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 10.06.2011 SD/- SD/- ( K.D. RANJAN ) ( R AJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:10/06/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR