Sushiela Natarajan, CHENNAI V. ITO, CHENNAI

ITA 1622/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68794 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 06-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJA YARAGHAVAN SHRI G
• Keywords: Rectification of order; Question of law
• Section: 54F; 54; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI V, DURGA RAO, JUDICIAL MEMBER ITA NO. 1622(MDS)/2013 ASSESSMENT YEAR : 2009-10 MS. SUSHIELA NATARAJAN, REP BY HER P/H P.S. NATARAJAN, 8/23, SASTRI STREET, SALIGRAMAM, CHENNAI - 600 093. PAN : AHQPN 2282 G V. THE INCOME TAX OFFICER, BUSINESS WARD V(3), CHENNAI - 600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. VIJA YARAGHAVAN, ADVOCATE RESPONDENT BY : SHRI GURU BHASHY AM, IRS, JCIT DATE OF HEARING : 22 ND OCTOBER, 2013 DATE OF PRONOUNCEMENT : 22 ND OCTOBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V AT CHENNAI, DATED 19.6.2013. THE APPEAL ARISES OUT OF THE ORDE R PASSED UNDER SECTION 154 OF THE INCOME-TAX ACT, 1961. 2 I.T.A. NO. 1622/MDS/13 2. THE ASSESSEE IN THIS CASE HAS FILED THE RETURN O F INCOME ON A TOTAL INCOME OF ` 5,27,891/-. THE RETURN REFLECTED A REFUND CLAIM F OR ` 63,84,256/-. THIS REFUND IS MADE UP OF EXCESS ADV ANCE TAX AS WELL AS TDS. 3. THE RETURN WAS PROCESSED UNDER SECTION 143(1) AN D THE INTIMATION WAS COMMUNICATED WITH DEMAND OF ` 76,920/-. AS AGAINST THE REFUND CLAIMED BY THE ASSESSEE, THE PRO CESSING OF RETURN RESULTED IN A FURTHER DEMAND OF ` 76,920/-. ACCORDING TO ASSESSEE, THIS WAS NOT PROPER. A PETITION FOR RECT IFICATION UNDER SECTION 154 WAS FILED. THE ASSESSEE CLAIMED IN THE PETITION THAT CREDIT MUST BE GIVEN TO A SUM OF ` 64,41,799/- COMPRISING OF ADVANCE TAX PAYMENTS AND TDS. 4. IN THE ORDER PASSED BY THE ASSESSING OFFICER ON THE SAID PETITION FILED BY THE ASSESSEE UNDER SECTION 154, I T WAS HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR THE CLAIM OF EXEMPTIO N MADE BY HER UNDER SECTION 54F OF THE INCOME-TAX ACT, 1961. THE ASSESSEE HAD SOLD A PROPERTY IN CHENNAI AND INVESTMENT WAS MADE IN A RESIDENTIAL PROPERTY IN UNITED STATES OF AMERICA. IT WAS ON THAT BASIS, THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SEC TION 54F. ASSESSING OFFICER HELD THAT INVESTMENT MADE OUTSIDE INDIA CANNOT BE CONSIDERED FOR THE PURPOSE OF EXEMPTION AND AS S UCH, NO 3 I.T.A. NO. 1622/MDS/13 EXEMPTION COULD BE GIVEN UNDER SECTION 54F AND THER EFORE, THE ADDITION WAS MADE WHILE PROCESSING OF RETURN OF INC OME IN ACCORDANCE WITH LAW. THE PETITION UNDER SECTION 15 4 WAS DISMISSED. 5. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE CAPITAL GAIN AROSE IN THE HANDS OF TH E ASSESSEE IS TAXABLE IN INDIA AND THEREFORE, THE COMPUTATION MAD E BY THE ASSESSING OFFICER WAS CORRECT AND NO RECTIFICATION WAS CALLED FOR IN THE INTIMATION ISSUED UNDER SECTION 143(1)(A). HE ALSO FOUND THAT THE ORDER DOES NOT ENHANCE THE ASSESSMENT OR REDUCE THE REFUND OR OTHERWISE INCREASE THE LIABILITY OF ASSESSEE AND TH EREFORE, SECTION 154(3) IS ALSO NOT APPLICABLE. HE ACCORDINGLY CONF IRMED THE ORDER OF THE ASSESSING OFFICER. 6. IT IS AGAINST THE ABOVE THAT THE ASSESSEE HAS CO ME IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE ASSESSEE IN T HE PRESENT APPEAL ARE ACCORDINGLY READ AS BELOW:- (2) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER. (3) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ASSESSEES PETITION FOR RECTIFICATION U/S. 154 HAS BECOME INFRUCTUOUS AS THERE IS NO NECESSITY OF 4 I.T.A. NO. 1622/MDS/13 AMENDING THE SAID INTIMATION U/S. 143(1) WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM RECORD. (4) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT WHILE PROCESSING THE RETURN U/S. 143(1), ASSESSING OFFICER OMITTED TO GIVE CREDIT FOR ADVANCE TAX AND TAX DEDUCTED AT SOURCE AGGREGATING TO ` 64,41,799/-, HENCE A PETITION U/S. 154 WAS FILED TO GIVE CREDIT FOR THE ABOVE SUM AND GRANT REFUND WITH. (5) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S. 154 HAS WITHDRAWN THE CLAIM OF EXEMPTION U/S. 54F ON HIS OWN MOTION AND WHICH WAS NOT THE SUBJECT MATTER OF RECTIFICATION. (6) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING OFFICER HAVING ADMITTED THAT INTIMATION U/S. 143(1) REQUIRES NO RECTIFICATION, HAD ERRED IN WITHDRAWING EXEMPTION CLAIMED U/S. 54F ON THE GROUND THAT THAT INVESTMENT IN HOUSE PROPERTY IN USA IS NOT ELIGIBLE FOR EXEMPTION U/S. 54F OF THE ACT. (7) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT WITHDRAWAL OF EXEMPTION U/S. 54F IN RESPECT OF INVESTMENT IN A HOUSE PROPERTY IN USA IS A DEBATABLE ONE AND CANNOT BE SUBJECT MATTER OF RECTIFICATION U/S. 154 IN PROCEEDINGS U/S. 143(1) OF THE ACT. (8) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT ASSESSEE HAS FULFILLED ALL THE CONDITIONS LAID OUT IN SEC.54F OF THE ACT AND HENCE EXEMPTION HAS TO BE ALLOWED. 5 I.T.A. NO. 1622/MDS/13 (9) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT FOLLOWING THE TRIBUNAL DECISIONS WHEREIN IT WAS HELD THAT ASSESSEE CANNOT BE DENIED EXEMPTION U/S 54F MERELY ON THE GROUND THAT THE PURCHASE/CONSTRUCTION OF THE RESIDENTIAL HOUSE MUST BE IN INDIA AND NOT OUTSIDE INDIA IF ALL OTHER CONDITIONS LAID DOWN IN THE SECTION ARE SATISFIED. (I) MRS. PREMA P. SHAH & SANJIV P. SHAH VS. ITO 282 ITR (AT) 211 (MUMBAI). (II) VINAY MISHRA V. ACIT (2012) 20 ITR (TRIB) 129 (BANGALORE) 7. WE HEARD SHRI R. VIJAYARAGHAVAN, THE LEARNED COU NSEL APPEARING FOR THE ASSESSEE AND SHRI GURU BHASHYAM, THE LEARNED JOINT COMMISSIONER OF INCOME TAX, APPEARING FOR THE REVENUE. 8. THE PROVISION OF LAW CONTAINED IN SECTION 143(1) (A) PROVIDES THAT THE RETURN FILED SHALL BE PROCESSED TO COMPUTE THE TOTAL INCOME OR LOSS OF THE ASSESSEE, AFTER MAKING ADJUSTMENTS F OR ANY ARITHMETICAL ERROR IN THE RETURN OR INCORRECT CLAIM , IF SUCH INCORRECT CLAIM IS SO APPARENT FROM ANY INFORMATION IN THE RE TURN. ANY PAYMENT OF ADDITIONAL TAX OR PAYMENT OF REFUND OR A NY OTHER ADJUSTMENT SHALL FOLLOW THE COMPUTATION OF INCOME I N THE ABOVE MANNER. THEREFORE, IT IS CLEAR THAT WHAT IS POSSI BLE TO ADJUST IS ONLY ANY ARITHMETICAL MISTAKE OR ANY INCORRECT CLAIM PAT ENT ON THE FACE OF THE RETURN. IN THE PRESENT CASE, THERE WAS NO QUES TION OF ANY ARITHMETICAL ERROR. ASSESSING OFFICER HELD THAT TH E CAPITAL GAIN WAS 6 I.T.A. NO. 1622/MDS/13 NOT EXEMPT FROM LEVY OF TAX. WHETHER THE CAPITAL G AIN AROSE IN THE HANDS OF THE ASSESSEE IS EXEMPTED OR NOT IN THE LIG HT OF THE RESIDENTIAL HOUSE PURCHASED IN UNITED STATES OF AME RICA, IS NOT A QUESTION IN THE NATURE OF MISTAKE APPARENT FROM REC ORDS. IT IS NOT POSSIBLE TO SAY PRIMA FACIE THAT THE CLAIM MADE BY THE ASSESSEE IS INCORRECT. IT IS A HIGHLY DEBATABLE ISSUE. THE RE LEVANCE OF LAW HAS TO BE DEEPLY STUDIED. THEREFORE, WE ARE OF THE CON SIDERED VIEW THAT THE ASSESSING OFFICER HAS OVERSTEPPED HIS AUTHORITY TO DENY THE EXEMPTION CLAIM OF THE ASSESSEE MADE UNDER SECTION 54F IN THE PRESENT CASE, BEYOND THE JURISDICTION OF SECTION 14 3(1)(A). ACCORDINGLY, THE ORDER OF COMMISSIONER OF INCOME TA X (APPEALS) IS ALSO NOT SUSTAINABLE IN LAW. 9. THEREFORE, WE SET ASIDE THE ORDERS OF LOWER AUTH ORITIES AND DIRECT THE ASSESSING OFFICER TO PASS A FRESH ORDER ON THE PETITION FILED BY THE ASSESSEE UNDER SECTION 154 ON THE SUBJ ECT MATTER RAISED IN THE SAID PETITION. IF ANY REFUND IS DUE, BASED ON THE SAID ORDER, THE SAME SHALL BE PAID OVER TO THE ASSESSEE. 10. THE QUESTION WHETHER THE EXEMPTION CLAIMED BY T HE ASSESSEE UNDER SECTION 54F IS A SERIOUS QUESTION TO BE CONSIDERED BY THE ASSESSING OFFICER. ASSESSEE HAS SOLD THE PR OPERTY IN INDIA. THE INVESTMENT HAS BEEN MADE IN UNITED STATES OF AM ERICA. 7 I.T.A. NO. 1622/MDS/13 WHETHER THE EXEMPTION IS AVAILABLE AGAINST PROPERTY ACQUIRED IN A FOREIGN COUNTRY, IS A SERIOUS QUESTION OF LAW TO BE CONSIDERED IN THE LIGHT OF SECTION 54F, ESPECIALLY IN THE LIGHT OF SU B-SECTION (4) OF THAT SECTION. SUB-SECTION (4) OF SECTION 54F PROVIDES A N IMPRESSION THAT THE CONSIDERATION RECEIVED ON SALE OF THE PROPERTY MUST BE UTILIZED FOR ACQUIRING A NEW ASSET. THEREFORE, THE QUESTION IS WHETHER THE ASSESSEE HAS PURCHASED THE AMERICAN PROPERTY BY TRA NSFERRING THE CONSIDERATION RECEIVED IN INDIA IN FOREIGN EXCHANGE OR THE AMERICAN PROPERTY WAS ACQUIRED BY HER BY INDEPENDENT FUNDS A VAILABLE IN UNITED STATES OF AMERICA. ALL THESE MATTERS HAVE T O BE DISCUSSED AND SORTED OUT. 11. THEREFORE, WE CANNOT JUST IGNORE THE ANXIETY OF THE ASSESSING OFFICER IN THE MATTER OF EXEMPTION UNDER SECTION 54 F. BUT, THE ONLY THING IS THAT SUCH AN ENQUIRY IS NOT POSSIBLE ON TH E PETITION FILED BY THE ASSESSEE UNDER SECTION 154. 12. THEREFORE, IN THE INTEREST OF JUSTICE, WE FEEL THAT THE ASSESSING AUTHORITY MAY, IF HE THINKS IT PROPER, IN ITIATE PROCEEDINGS PERMISSIBLE UNDER LAW TO BRING THE QUESTION OF EXEM PTION UNDER SECTION 54F FOR SCRUTINY. IF THE ASSESSING OFFICER INITIATES SUCH PROCEEDINGS, HE CAN CONSIDER THE ISSUE AND COME TO A DECISION IN ACCORDANCE WITH LAW. 8 I.T.A. NO. 1622/MDS/13 13. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 22 ND OF OCTOBER, 2013 AT CHENNAI. SD/- SD/- (V. DURGA RAO) (DR. O. K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 22 ND OCTOBER, 2013. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT-X, CHE NNAI-34 4. CIT(A)-V, CHENNAI 5. DR 6. GF.