ITO, Ward-31(2), Kolkata, Kolkata V. Smt. Namita Chowdhury, Kolkata

ITA 1595/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1645 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: ALOKE KUMAR GHOSH
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Valuation report
• Section: 54F; 54

Judgement Text

1 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.1595/KOL/2016 ASSESSMENT YEAR : 2009-10 I.T.O., WARD-31(2) -VERSUS- SMT. NAMITA CHOWDHUR Y KOLKATA KOLKATA (PAN:AMUPC 2763 Q) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.DASGUPTA, ADDL. CIT ( DR) FOR THE RESPONDENT: SHRI ALOKE KUMAR GHOSH DATE OF HEARING : 16.01.2018. DATE OF PRONOUNCEMENT : 02.02.2018. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 31.05.2016 OF C.I.T- (A)-9, KOLKATA RELATING TO A.Y.2009-10. 2. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE OWNE D A PROPERTY MEASURING 5 COTTAHS 10 CHATTAK 30 SQ.FT IN THE CITY OF KOLKATA. THE ASS ESSEE ENTERED INTO A JOINT DEVELOPMENT AGREEMENT DT. 29.09.2008 WITH M/S ROY T ECH INFRASTRUCTURE LTD. WHICH WAS MODIFIED BY A SUPPLEMENTARY AGREEMENT DATED 12. 12.2008. AS PER THE TERMS OF THE SAID AGREEMENT, THE ASSESSEE WAS TO GET 50% OF THE CONSTRUCTION TO BE CARRIED OUT OVER THE PROPERTY OWNED BY THE ASSESSE AND AS PER THE B UILDING PLAN SANCTIONED BY THE KOLKATA MUNICIPAL CORPORATION. THE ASSESSEE RECEIVE D A SUM OF RS.11,000/- AS ADVANCE. THE ASSESSEE WAS TO RECEIVE CONSTRUCTED AR EA OF 5556 SQ.FT OF BUILDING. THE DEVELOPER WAS FREE TO SELL 50% OF THE UNDIVIDED SHA RE OF LAND AND 50% OF THE REMAINING CONSTRUCTION THAT WERE TO PUT UP OVER THE PROPERTY. 2 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 3. ON THE ABOVE FACTS THE AO WAS OF THE VIEW THAT T HERE IS A TRANSFER OF THE PROPERTY BY THE ASSESSEE DURING THE PREVIOUS YEAR R ELEVANT TO A.Y.2009-10 WITHIN THE MEANING OF SECTION 2(47(V) OF THE INCOME TAX ACT, 1 961 (ACT). THE AFORESAID PROVISION READS AS FOLLOWS : TRANSFER, IN RELATION TO A CAPITAL ASSET, INCLUD ES (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT, 1882 (4 OF 1882). 4. THE AO REFERRED TO THE QUESTION OF VALUATION OF THE SHARE OF THE PROPERTY WHICH THE ASSESSEE WAS TO RECEIVE FROM THE DEVELOPER TO T HE DEPARTMENT VALUATION OFFICER (DVO) IN TERMS OF SECTION 55A OF THE ACT. THE DVO I N HIS VALUATION REPORT GAVE THE FOLLOWING AS THE VALUE OF THE PROPERTY WHICH THE AS SESSEE WAS TO RECEIVE : I) COST OF HALF SHARE OF LAND MEASURING 5 COTTAH 1 0 CHATTAK 30 SQ. FT. AS ON 23/12/1997 IS X RS.3,46,018/- I.E. RS.1,73,009/-. INDEXED COST OF HALF SHARE OF LAND AS IN THE F.Y.20 08-09- RS.1,7 3,009 / - X 582/331 = RS.3,04,203/- II) COST OF HALF SHARE OF TWO STORIED (G+ 1) BUILDI NG AS IN 2000-01 IS X RS.6,02,370/- IE. RS.3,01,185/- INDEXED COST OF BUILDING AS IN THE F.Y.2008-09- RS. 3,01,185/ - X 582/406 = RS.4,31,748/- THE FULL VALUE OF CONSIDERATION ACCRUING TO THE ASS ESSEE U / S 45(1) OF THE I. T.ACT FOR TRANSFER OF THE LAND AND TWO STORIED BUILDING I S RS.3,04,185/- + RS.4,31,748/- = RS. 7:35,951/- THE VALUE AS PER VALUATION REPORT OF VALUATION OFFI CER-III, VALUATION CELL, I.T.DEPARTMENT, OF HALF SHARE OF BUILDING (NIRMALA APARTMENT) OF AREA 5076 SQ.FT. AND HALF SHARE OF SHOP/ ATM/GARAGE SPACE OF AREA 48 0 SQ.FT. IS RS.60,93,615/- CASH CONSIDERATION OF RS.11,000/-. 5. ON THE BASIS OF THE ABOVE REPORT OF DVO, THE AO WAS OF THE VIEW THAT THE LONG TERM CAPITAL GAIN CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE WAS A SUM OF RS.53,68,664/- WHICH WAS ARRIVED AT BY THE AO BY RE DUCING FROM THE SUM OF 3 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 RS.60,93,615/- THE COST OF ACQUISITION AND ADDING T HERETO THE SUM OF RS.11,000/- RECEIVED AS ADVANCE . 6. THE PLEA OF THE ASSESSEE WAS THAT THERE WAS NO T RANSFER BY THE ASSESSEE OF ANY CAPITAL ASSET DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2009-10. THE AO HOWEVER REJECTED THE CONTENTIONS OF THE ASSESSEE AND HELD T HAT THERE WAS TRANSFER OF CAPITAL ASSET BY THE ASSESSEE DURING THE PREVIOUS YEAR AND BROUGH T TO TAX LONG TERM CAPITAL GAIN OF RS.53,68,664/-. 7. BEFORE CIT(A) THE ASSESSEE APART FROM REITERATIN G HER STAND THAT THERE WAS NO TRANSFER OF ANY CAPITAL ASSET DURING THE PREVIOUS Y EAR RELEVANT TO A.Y.2009-10 ALSO TOOK A PLEA THAT THE ASSESSEE IS ENTITLED TO EXEMPT U/S 54/54F OF THE ACT IN RESPECT OF FOUR FLATS AND ONE SHOP WHICH SHE GOT AS HER SHARE OF THE CONSTRUCTED AREA. THE ASSESSEE MADE A CLAIM FOR DEDUCTION U/S 54/54F OF T HE ACT AND IN THIS REGARD RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SMT. K.G.RUKMINIAMMA 331 ITR 211 (KAR) AND THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS SMT. V.R.KARPAGAM 373 I TR 121 (MDS). IN THE DECISION OF THE HONBLE KARNATAKA HIGH COURT THE ASSESSEE HE LD A PROPERTY WHICH SHE GAVE IT TO A BUILDER. THE ASSESSEE GOT FOUR FLATS REPRESEN TING 48% OF THE BUILT UP AREA AND THE REMAINING 52% WAS SHARE OF THE BUILDER. IN RESPECT OF 48% BUILT UP AREA THE ASSESSEE RECEIVED FOUR RESIDENTIAL FLATS. UNDER SECTION 54/5 4F OF THE ACT IF CAPITAL GAIN IS INVESTED IN PURCHASE OF OR CONSTRUCTION OF A RESIDE NTIAL HOUSE THEN THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION IN SUCH INVESTMENT UNDER C ONSTRUCTION OR PURCHASE OF RESIDENTIAL HOUSE. UNDER THE PROVISO TO SECTION 54F (1) OF THE ACT, DEDUCTION WILL NOT BE AVAILABLE IN THE FOLLOWING SITUATION :- PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY WHERE (A) THE ASSESSEE- (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGI NAL ASSET; OR 4 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NE W ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE OR IGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET , IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY.] PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY WHERE THE ASSESSEE OWNS ON THE DATE OF THE TRANSFER OF THE OR IGINAL ASSET, OR PURCHASES, WITHIN THE PERIOD OF ONE YEAR AFTER SUCH DATE, OR C ONSTRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY, OTHER THAN THE NEW ASSET. 8. THE STAND OF THE REVENUE WAS THAT SINCE THE ASSE SSEE GOT FOUR FLATS THE ASSESSE SHOULD BE ENTITLED TO DEDUCTION U/S 54F OF TE ACT O NLY IN RESPECT OF ONE FLAT AND THE VALUE OF THE OTHER THREE FLATS WILL NOT BE ENTITLED TO DEDUCTION U/S 54F(1)OF THE ACT. THE HONBLE KARNATAKA HIGH COURT HELD THAT THE FOUR RES IDENTIAL HOUSES/FLATS WOULD CONSTITUTE ONE RESIDENTIAL HOUSE AND THE ASSESSEE S HALL BE ENTITLED TO THE BENEFIT OF SECTION 54F OF THE ACT ON ALL THE FOUR FLATS. SIMIL AR WAS THE RULING OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF V.R.KARPAGAM (SUPR A). THE CIT(A) FOLLOWING THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE HELD THAT NO CAPITAL GAIN WAS ASSESSABLE IN THE HANDS OF THE ASSESSEE. 9. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS O F APPEAL :- 1. THE LD. CIT (A) ERRED IN INTERPRETING THE DECIS IONS MADE BY THE HON'BLE KARNATAKA HC IN THE CASE OF CIT VS. K G RUKMINAMMA (2011) (331 ITR 211) (KAR) AND BY THE HON'BLE MADURAI HC IN THE CASE OF CLT VS V R KARPAGAM (2015) (373 ITR 121) (MAD) AND RELATED THE FACTS WI TH THE PRESENT CASE WHICH IS NOT AT ALL TENABLE. 2. THE LD. CLT(A) ERRED IN ADMITTING THE GROUND OF EXEMPTION U/S-54/54F BY THE ASSESSEE WHEN NO SUCH PLEA WAS TAKEN DURING THE ASS ESSMENT PROCEEDINGS AND NO RETURN WAS FILLED IN RESPONSE TO NOTICE U/S-148, MO RE OVER THE LD. CIT(A) VIOLATED RULE-46A OF THE INCOME TAX RULES 1962 IN THIS REGAR D. 3. THE LD. CIT (A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSE WITHOUT GIVING COGENT REASONS AS TO WHY THE DEVELOPMENT AGREEMENT MADE BY THE ASSESSE CANNOT 5 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 BE CONSIDERED AS TRANSFER AS PER SECTION 2(47) (V) OF THE INCOME TAX ACT, 1961 WHEN AS PER THE TERMS OF AGREEMENT AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT, IT IS CLEARLY A CASE OF TRANSFER OF ASSET. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THERE WAS NO ADDITIONAL EVIDENCE WHATSOEVER FILED OR CONSIDERED BY THE CIT(A) AND THEREFORE THERE IS NO MERIT IN GROUND NO.2 RAISED BY THE REVENUE. A S FAR AS GROUND NO.3 IS CONCERNED THE NON ADJUDICATION OF THE GROUND WITH REGARD TO Y EAR OF TRANSFER CANNOT BE A GRIEVANCE IN SO FAR AS THE REVENUE IS CONCERNED. A S FAR AS GROUND NO. 1 IS CONCERNED THE FACTS OF THE ASSESEES CASE AND FACTS OF THE CA SE DECIDED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF R.G.RUKMINIAMMA (SUPRA) A RE SAME. IN THE CASE OF K.G.RUKMINIAMMA, THE FACTS WERE ON A SITE MEASURING 30 X 110' THE ASSESSEE HAD A RESIDENTIAL PREMISES. UNDER A JOINT DEVELOPMENT AGR EEMENT SHE GAVE THAT PROPERTY TO A BUILDER FOR PUTTING UP FLATS. UNDER THE AGREEMENT 8 FLATS ARE TO BE PUT UP IN THAT PROPERTY AND 4 FLATS REPRESENTING 48% IS THE SHARE OF THE ASSESSEE AND THE REMAINING 52% REPRESENTING ANOTHER 4 FLATS IS THE SHARE OF TH E BUILDER. SO THE CONSIDERATION FOR SELLING 52% OF THE SITE WAS 4 FLATS REPRESENTING 48 % OF BUILT UP AREA AND THE 4 FLATS ARE SITUATED IN A RESIDENTIAL BUILDING. THE COURT HELD THAT THE 4 FLATS CONSTITUTE 'A RESIDENTIAL HOUSE' FOR THE PURPOSE OF SEC 54. THE 4 RESIDENTIAL FLATS CANNOT BE CONSTRUED AS 4 RESIDENTIAL HOUSES FOR THE PURPOSE OF SEC 54. IT HAS TO BE CONSTRUED AS 'A RESIDENTIAL HOUSE' AND THE ASSESSEE IS ENTITLED TO THE BENEFIT ACCORDINGLY. IN THAT VIEW OF THE MATTER, THE COURT HELD THAT THE TRIBUNAL AS WELL AS THE APPELLATE AUTHORITY WERE JUSTIFIED IN HOLDING THAT THERE IS NO LIABILITY TO PAY CAPITAL GAINS TAX AS THE CASE SQUARELY FALLS UNDER SEC. 54 OF THE INCOME TAX ACT, 1961. 11. AS FAR AS THE DECISION OF THE HONBLE MADRAS HI GH COURT IN THE CASE OF V.R. KARPAGAM IS CONCERNED THE FACTS WERE SIMILAR TO THE CASE OF THE ASSESSEE. THE ASSESSEE IN THE CASE OF V.R.KARPAGAM ENTERED INTO AN AGREEME NT WITH M FOR DEVELOPMENT OF A PIECE OF LAND OWNED BY IT-AS PER AGREEMENT, ASSESSE E WAS TO RECEIVE 43.75% OF BUILT UP AREA AFTER DEVELOPMENT, WHICH WAS TRANSLATED INT O FIVE FLATS. THE ASSESSEE CLAIMED EXEMPTION U/S 54F ON THE VALUE OF FIVE FLATS. THE A O GRANTED BENEFIT OF CAPITAL GAINS 6 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 IN RESPECT OF ONE FLAT AND THE CIT( A) AFFIRMED FIN DINGS OF AO HOLDING THAT CLAIM OF ASSESSEE U/S 54F FOR ALL FIVE FLATS COULD NOT BE AD MITTED, BUT HOWEVER, HE TOOK THE VIEW THAT THE ASSESSEE WOULD BE ENTITLED TO BENEFIT OF S 54F IN RESPECT OF ONE SINGLE FLAT WITH LARGEST AREA. IN APPEAL, TRIBUNAL HELD THAT ASSESSE E WAS ELIGIBLE FOR EXEMPTION U/S 54F ON ALL FIVE FLATS RECEIVED BY HER IN LIEU OF LAND S HE HAD PARTED WITH AND WORD 'A' APPEARING IN S 54F SHOULD NOT BE CONSTRUED IN SINGU LAR, BUT SHOULD BE UNDERSTOOD IN PLURAL. THE MADRAS HIGH COURT UPHELD THE ORDER OF T HE TRIBUNAL. IT WAS ALSO HELD THAT AMENDMENT WAS MADE TO S 54F WITH REGARD TO WORD 'A' BY FINANCE (NO.2) ACT, 2014 W.E.F ONLY FROM 01.04.2015 WITHDRAWING DEDUCTION FO R MORE THAN ONE FLAT (RESIDENTIAL HOUSE). POST AMENDMENT, VIZ., FROM 01.04.2015, BENE FIT OF S 54F WILL BE APPLICABLE TO ONE RESIDENTIAL HOUSE IN INDIA. HOWEVER, PRIOR TO SAID AMENDMENT, A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RESIDENTIAL UNITS. 12. SIMILAR DECISIONS WERE RENDERED ON IDENTICAL FA CTS BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS GUMANMAL JAIN [2017] 8 0 TAXMANN.COM 21 (MDS). 13. IN THE LIGHT OF ABOVE JUDICIAL PRONOUNCEMENTS O N IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE WE ARE OF THE VIEW THAT THE CIT(A) WAS FULLY JUSTIFIED IN COMING TO THE CONCLUSION THAT THERE WA S NO CAPITAL GAIN CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE. WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 14. IN THE RESULT THE APPEAL BY THE REVENUE IS DISM ISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 02.02.2018. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.02.2018. [RG SR.PS] 7 ITA NO.1595/KOL/2016 SMT. NAMITA CHOUDHURY A.Y.2 009-10 COPY OF THE ORDER FORWARDED TO: 1.SMT. NAMITA CHOWDHURY, 32, GOBRA ROAD, BENIAPUKUR , KOLKATA-700 014. 2. I.T.O., WARD-31(2), KOLKATA. 3. C.I.T.(A)-9, KOLKATA 4. C.I.T.-1 1, KOLKATA.. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES