ACIT, Alwar V. SHRI RAJWANSH BEDI, Alwar

ITA 16/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7822 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value
• Section: 69; 27; 54

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JAIPUR BENCH JAIPUR BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI B. C. MEENA , ACCOUNTANT MEMBER . ITA.NO. 16 /JP /20 1 2 (ASSESSMENT YEAR: 200 8 - 0 9 ) ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE - 1 , ALWAR APPELLANT VS. SHRI RAJWANSH BEDI, B - 38B, M.I.A., ALWAR RESPONDENT PAN: A DKPB3821F / BY APPELLANT : SHRI RAJESH OJHA , D.R. / BY RESPONDENT : SHRI P. C. PARWAL , A.R. / DATE OF HEARING : 2 6 .1 1 .2014 / DATE OF PRONOUNCEMENT : 5 .1 2 .2014 I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY THE REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , ALWA R , DATED 03 . 1 0 .201 1 FOR A.Y. 200 8 - 0 9 ON THE FOLLOWING GROUND S : 1 . THAT T HE L D. CI T (A . ) HAS ERRED IN LA W AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 1,06,03,475 / - ON ACCOUNT OF LONG TERM CAPITAL GAIN. 2. WITHOUT PREJUDICE TO ABOVE CIT(A) HAS ERRED IN LAW AND FACT IN HOLDING THAT ASSESSEE HAS CONSTRUCTED HOUSE WITHIN THREE YEAR WHEREAS A.O. HAS PROVED THAT NO RESIDENTIAL HOUSE WAS CONSTRUCTED. 3. THAT THE L D.CIT (A.) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN RESTRIC TING THE ADDITION OF RS. 43,560 / - OUT OF TOTAL RS.58,660/ - MADE U/S. 69. 4 . THAT THE L D.CIT (A.) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 2,52,000 / - ON ACCOUNT OF RENTAL INCOME U/S 23 OF I.T. ACT. 2 . FIRST ISSUE IS WITH REGARDS TO ADDITION OF RS.1,06,03,475/ - ON ACCO UNT OF LONG TERM CAPITAL GAIN. ASSESSING OFFICER MADE ADDITION OF RS.1,06,03,475/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN AS AGAINST NIL CAPITAL GAIN SHOWN BY ASSESSEE. ASSESSING OFFICER FOUND THAT NO EVIDENCE HAS BEEN PROVIDED BY ASSESSEE WITH REGARDS TO HIS CLAIM THAT SAID LAND WAS TAKEN IN HIS POSSESSION BEFORE 01.04.1981 AND LAND WAS REGISTERED IN THE NAME OF ASSESSEE ON 24.12.1998, THEREFORE, THE CLAIM OF ASSESSEE FOR ACQUISITION OF THE LAND BEFORE 1981 WAS REJECTED. I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 3 ASSESSING OFFICER TOOK THE COST AC QUISITION OF LAND AT RS.32,790.00 DETAILS WHEREOF LISTED DOWN BY ASSESSING OFFICER ON PAGE NO.4 OF ASSESSMENT ORDER AND CONSIDERED FOR THE PURPOSE OF INDEXATION FROM YEAR 1998 - 99. ASSESSING OFFICER ALSO REJECTED THE CLAIM OF ASSESSEE U/S.54 OF THE INCOME TAX ACT ON THE GROUND THAT ASSESSEE HAS NOT PURCHASED ANY RESIDENTIAL HOUSE NOR CONSTRUCTED THE RESIDENTIAL HOUSE ON THE PLOT PURCHASED BY HIM BEFORE FILING THE RETURN OF INCOME. ACCORDING TO ASSESSING OFFICER, ASSESSEE ALSO FAILED TO DEPOSIT CAPITAL GAI N IN CAPITAL GAIN ACCOUNT BEFORE DUE DATE FOR FILING RETURN U/S.139(1) OF INCOME TAX ACT. THEREFORE, DEDUCTION U/S. 54 OF INCOME TAX ACT, 1961 WAS NOT ALLOWABLE AND ACCORDINGLY ASSESSING OFFICER COMPUTED LONG TERM CAPITAL GAIN AT RS.1,06,03,475/ - FOR TAXA TION U/S. 112 OF INCOME TAX ACT, 1961. 2 .1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) GRANTED RELIEF. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION OF RS.1,06,03,475/ - MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN MADE AFTER REJECTING CLAIM OF EXEMPTION LONG TERM CAPITAL GAIN. LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS NOT CONSTRUCTED THE HOUSE WITHIN 3 YEARS. SO, HE WAS NOT ALLOWED BENEFIT OF PROVISION OF SECTION 54. ACCORDINGLY, ORDER OF CIT(A) BE SET I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 4 ASIDE AND THAT OF ASSESSING OFFICER ON THE ISSUE BE RESTORED. ON TH E OTHER HAND, LD. AUTHORIZED REPRESENTATIV E SUPPORTED THE ORDER OF CIT(A) ON THIS ISSUE. 2 . 2 AFTER GOING THROUGH RIVAL SUBMISSION AND MATERIAL ON RECORD, WE FIND THAT PLOT OF LAND CAME INTO DOMAIN OF ASSESSEE BY SUCCESSION FROM HIS FATHER SHRI R. D. BEDI, WHO WAS HOLDING THE MEMBERSHIP OF SOCIETY WITH EFFECT FROM OCTOBER, 1967 . ASSESSEE MADE CLAIM BEFORE ASSESSING OFFICER ABOUT HIS OWNERSHIP WITH EFFECT FROM OCTOBER 1967 DURING ASSESSMENT PROCEEDINGS, BUT SAME WAS NEGATIVATED WITHOUT ANY REASON. THE MEMB ERSHIP OF SOCIETY GOT TRANSFERRED FROM SHRI R.D. BEDI TO ASSESSEE BY VIRTUE OF APPLICATION DATED 11.05.1982. FATHER OF ASSESSEE HAD MADE PAYMENT TOWARDS THE COST OF PLOT OF LAND FROM YEAR 1967, COPIES OF RECEIPTS SUBMITTED IN THIS REGARD. IN THIS BACKGRO UND, CIT(A) CAME TO THE CONCLUSION THAT BY VIRTUE OF PROVISIONS OF 2(42A)(B) READ WITH SECTION 49(1)(II) OF INCOME TAX ACT, BOARD CIRCULAR NUMBER 471 & 672 AND CASE LAWS RELIED UPON, ASSESSEE WAS OWNER OF THE SAID PLOT OF LAND WITH EFFECT FROM OCTOBER, 196 7, THEREFORE, THE FAIR MARKET VALUE AS ON 01.04.1981 SHOULD BE TAKEN FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. NEXT QUESTION CAME TO CONSIDERATION OF FAIR MARKET VALUE OF PLOT OF LAND SOLD AS ON 01.04.1981. THE STAND OF ASSESSEE HAS BEEN THAT FAIR M ARKET VALUE OF PLOT OF LAND AT RS.11,04,606/ - ON THE BASIS OF VALUER S REPORT. VALUER HAS VALUED THE PLOT OF LAND ON BACK INDEXING BASIS. ASSESSING OFFICER HAS RIGHTLY REJECTED THE SAID METHOD OF CALCULATION. I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 5 ASSESSEE DURING APPELLATE PROCEEDING SUBMITT ED ANOTHER REGISTERED VALUER S REPORT DATED 07.09.2011, WHEREIN VLAUE OF PLOT OF LAND VALUED AT RS.7,40,000/ - IN PLACE OF RS. 11,04,606/ - VALUED EARLIER. THEREFORE, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN FAIR MARKET VALUE OF THE PLOT OF LAND WAS RIG HTLY TAKEN BY CIT(A) AT RS.7,40,000/ - IN PLACE OF RS.11,04,606/ - . IT WAS CLAIMED BY ASSESSEE THAT HE H AS INVESTED A SUM OF RS.79,65,900/ - ON 17.03.2008 ON THE ACQUISITION OF RESIDENTIAL PLOT NUMBER 191 - P AT SECTOR 28, GURGAON AND IN ADDITION THERETO, ASSE SSEE HAS INVESTED A SUM OF RS.7,53,645/ - UP TO 10.01.2011 I.E. WITH A PERIOD OF THREE YEARS FROM THE DATE OF SALE OF PLOT OF LAND ON 11.03.2008. THUS, TOTAL INVESTMENT OF RS.87,19,545/ - (79,65,900.00 + 7,53,645.00) WOULD QUALIFY FOR EXEMPTION WITH THE MEA NING OF SECTION 54 OF INCOME TAX ACT, 1961. CIT(A) OBSERVED THAT ASSESSEE HAS INVESTED ITS ENTIRE AMOUNT OF CAPITAL GAIN IN ACQUISITION OF PLOT OF LAND NO. 191 - P IN SECTOR 28, GURGAON AND SUBSEQUENTLY CONSTRUCTED RESIDENTIAL HOUSE WITH THE STATUTORY PERI OD OF 3 YEARS. THEREFORE, THERE WAS NO REQUIREMENT TO INVEST CAPITAL GAIN AMOUNT IN CAPITAL GAIN ACCOUNT AND RS.87,19,545/ - WOULD QUALIFY FOR EXEMPTION U/S. 54 OF THE ACT. AS A RESULT, CAPITAL GAIN WAS WORKED AS UNDER: COMPUTATION OF EXEMPTION OF CAPIT AL GAIN U/S 54 (A) SALE PRICE RS. 13500000.00 (B) VALUATION AS ON 01/04/1981 RS. 740000.00 INDEX COST 740000/100*551 RS. 4077400.00 I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 6 CONSTRUCTION UP TO F.Y. 2003 - 04 2194985/463*551 RS. 2612174.00 CONSTRUCTION F.Y. 2004 - 05 80071/480*551 RS. 91915.00 CONSTRUCTION F.Y. 2005 - 06 40502/497*551 RS. 44903.00 6826392.00 TOTAL (A - B) RS. 6673608.00 (C) INVESTMENT IN RESIDENTIAL PLOT COST OF PLOT AT GURGAON FOR RUPEES 8719545/ - DT 17/03/2008 RS. 6673 608.00 TAXABLE CAPITAL GAIN RS. NIL HAVING MADE ABOVE WORKING, IT WAS FOUND THAT AFTER INVESTMENT IN ACQUISITION OF PLOT NO. 191 - P, SECTOR 28, GURGAON, NO CAPITAL GAIN REMAINS. THEREFORE, ASSESSING OFFICER WAS NOT JUSTIFIED IN COMPUTING LONG TERM CAPITAL GAIN AT RS.1,06,03,475/ - AND IN MAKING SAID ADDITION. SAME WAS DELETED. IT WAS PERTINENT TO NOTE THAT ASSESSEE HAS PUT ON RECORD SITE PLAN AND COMPLETION OF THE CONSTRUCTION OF PLOT AS DETAILED ON PAGE 92 TO 110 IN ITS PAPER BOOK CLAIMED TO BE FI LED. IN THIS BACKGROUND, CIT(A) HAS RIGHTLY DELETED ADDITION OF RS.1,06,03,475/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN. THIS FACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3 . NEXT ISSUE IS WITH REGARDS TO RESTRICTING ADDITION TO RS.43,560/ - OUT OF TOTAL RS.58,660/ - MADE U/S. 69. ASSESSING OFFICER MADE ADDITION OF RS.58,660/ - WITHIN MEANING OF SECTION 69 OF THE ACT. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS MADE PAYMENT OF CONVERSION CHARGES OF RS.41,000/ - , STAMP I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 7 D UTY OF RS. 2460/ - AND REGISTRATION CHARGES OF RS.100/ - , TOTALING RS.43,560/ - , WHICH ASSESSEE HAS NOT DISCLOSED IN HIS RETURN OF INCOME NOR IN HIS REPLIES. FURTHER, ASSESSEE HAS DECLARED INVESTMENT OF RS.79,65,900/ - IN PLOT NO. P - 191, SECTOR 28, GURGAON, W HEREAS INVESTMENT MADE THEREIN IS RS.79,81,100/ - , THUS THERE IS A DIFFERENCE OF RS.15,100/ - IN PURCHASE OF PLOT. ASSESSEE CLAIMED THAT INVESTMENT OF RS. 15,100/ - WAS MADE FROM DRAWINGS, BUT NO DOCUMENTARY EVIDENCE WAS PRODUCED. 3 .1 IN APPEAL, CIT(A) OB SERVED THAT ASSESSEE HAS NO EVIDENCE WITH REGARD TO PAYMENT OF RS.43,560/ - BY FATHER OF ASSESSEE SHRI R.D. BEDI. THEREFORE, ASSESSING OFFICER WAS JUSTIFIED IN MAKING ADDITION AND APPEAL OF ASSESSEE ON THIS GROUND WAS DISMISSED. IN REGARD TO SOURCE OF PAY MENT OF RS.15,100/ - , IT WAS SEEN THAT ASSESSEE HAS SUBMITTED THAT ASSESSEE MADE PAYMENT OF RS.15,100/ - OUT OF HIS DRAWINGS, TOTAL WHEREOF COMES TO RS.39,54,718/ - , LOOKING TO TOTAL QUANTUM OF DRAWING MADE BY ASSESSEE, THERE WAS EVERY LIKELIHOOD OF MAKING PA YMENT OF RS.15,100/ - OUT OF SAME, THEREFORE, CONSIDERING THE AMOUNT OF SUBSTANTIAL DRAWING THE ADDITION OF RS.15,100/ - WAS DELETED AND ASSESSEE GOT NECESSARY RELIEF. IN SUM AND SUBSTANCE, ADDITION WAS CONFIRMED TO THE EXTENT OF RS.43,560/ - OUT OF TOTAL A DDITION OF RS.58,660 / - . THIS REASONED FINDING OF CI T(A) NEED NO INTERFERENCE FROM OUR SIDE. SAME IS UPHELD. I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 8 4 . NEXT ISSUE IS WITH REGARDS TO NOTIONAL RENTAL INCOME OF RS.2,52,000/ - . ASSESSING OFFICER NOTED THAT ASSESSEE IS HAVING THREE HOUSES VIZ: I. 9, MOTI DUNGRI, ALWAR II. 146B, POCKET C, SIDHARTH EXTENSION, DELHI III. 15B, SUBHAM ENCLAVE, DELHI ASSESSING OFFICER CONSIDERED THE HOUSE NO. 9, MOTI DUNGRI, ALWAR, AS IN OCCUPATION OF ASSESSEE AND NO SOP WAS CONSIDERED IN RESPECT THEREOF AND IN RESPECT OF REMAINING TWO HOUSES, THE SOP OF RS.1,20,000/ - AND RS.1,32,000/ - WAS ADDED INTO THE INCOEM OF ASSESSEE. 4 . 1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORITY, WHEREIN ASSESSEE WAS GRANTED RELIEF. SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE, INTER ALIA, SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION OF RS.2,52,000/ - ON ACCOUNT OF RENTAL INCOME U/S. 23 OF THE ACT. ACCORDINGLY, ORDER OF CIT(A) ON THIS ISSUE BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON OTHER HAND, LD. AUTHORIZE D REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. 4 . 2 AFTER GOING THROUGH RIVAL SUBMISSION AND MATERIAL ON RECORD, WE FIND THAT HOUSE NO. 9, MOTI DUNGRI, A LWAR , WAS REGISTERED IN THE NAME OF HIS WIFE AND ALSO THERE WAS NO FINDING OF ASSESSING O FFICER THAT ASSESSEE HAS TRANSFERRED THE SAID HOUSE TO HIS SPOUSE FOR INADEQUATE CONSIDERATION. FURTHER, HOUSE NO. 146B, POCKET C, SIDHARTH EXTENSION, DELHI , WAS OCCUPIED BY ASSESSEE FOR THE PURPOSE OF HIS BUSINESS, WHICH I.T .A. NO. 16 / JP /2 0 1 2 A.Y . 200 8 - 0 9 ( A CIT VS. SHRI RAJWANSH BEDI) PAGE 9 WAS ESTABLISHED FROM DOCUMENTS SU BMITTED, THEREFORE, THE PROVISIONS OF SECTION 23 TO 27 COULD NOT BE APPLIED TO THE SAID PROPERTIES. ASSESSEE HAS EXERCISED HIS OPTION WITHIN THE MEANING OF SECTION 24(4) OF INCOME TAX ACT IN RESPECT OF 15B, SUBHAM ENCLAVE, PASCHIM VIHAR, DELHI, THEREFORE NO NOTIONAL RENTAL INCOME CAN BE TAKEN IN RESPECT THEREOF. THEREFORE, ADDITION OF RS.1,20,000/ - IN RESPECT OF HOUSE AT 146 - B, SIDHARTH EXTENSION, NEW DELHI AND RS.1,32,000/ - IN RESPECT OF HOUSE NO. 15B, SUBHAM ENCLAVE, PASCHIM VIHAR, DELHI, WAS RIGHTLY D ELETED BY CIT(A). ACCORDINGLY, ASSESSEE GOT NECESSARY RELIEF IN QUESTION. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5 . AS A RESULT, APPEAL FILED BY THE REVENU E IS DISMISSE D . PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF DECEMBER , 2014. SD/ - SD/ - ( B. C. MEENA ) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA COPY FORWARDED TO: 1. THE APPELLANT - A CIT, CIRCLE - 1 , ALWAR . 2. THE RESPONDENT - SHRI RAJWANSH BEDI 3. THE CIT 4. CIT(APPEALS) 5. THE DR 6. GUARD FILE (ITA NO. 16 /JP/ 201 2 ) BY ORDER A.R., JAIPUR.