SRI ANAND KUMAR DHANUKA , RANCHI V. ITO WARD-1(1), RANCHI

ITA 163/RAN/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9037 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDRAJIT SINGH
• Keywords: Capital asset; Capital Gains
• Section: 143(3); 54B; 54F; 251; 192; 22; 27; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI, ECOURT, AT KOLKATA BEFORE SHRI S.S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.163/RAN/2018 ( / ASSESSMENT YEAR:2011-12) ANAND KUMAR DHANUKA FLAT NO. 604, 6 TH FLOOR, RESIDENCY ESTATE, AMALTASH, OLD H.B. ROAD, LALPUR, RANCHI-834001 VS. ITO, WARD-1(1), RANCHI ./ ./PAN/GIR NO.: ACAPD 6322 L (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI DEVESH PODDAR, ADVOCATE RESPONDENT BY :SHRI INDRAJIT SINGH, CIT DR / DATE OF HEARING : 13/07/2020 /DATE OF PRONOUNCEMENT : 31/07/2020 / O R D E R PER BENCH (ORAL): THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2011-12 IS DIRECTED AGAINST THE CIT(A)-JHARKHANDS ORDER DATED 06/12/20 18 IN APPEAL NO. CIT(A), RANCHI/10433/2016-17 INVOLVING PROCEEDINGS U/S 263 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE IN THE INSTANT LIS SEEKS TO REVERSE BOTH THE LOWER AUTHORITIES ACTION DISALLOWI NG SECTION 54F DEDUCTION CLAIM OF RS. 27,66,230/-. IT IS NOT IN DI SPUTE THAT THE ASSESSEE HAD INVESTED THE CORRESPONDING LONG TERM CAPITAL GAIN I N THE NAME OF HIS WIFE MRS. MANISHA BAGARIA ON 28.01.2011. THE CIT(A)S LO WER APPELLATE ORDER I.T.A NO.163/RAN/2018 ANAND KUMAR DHANUKA A.Y. 2011-12 PAGE | PAGE | PAGE | PAGE | 2 22 2 HAS UPHELD THE ASSESSING OFFICERS ACTION DISALLOWI NG THE IMPUGNED DEDUCTION CLAIM FOR THE SOLE REASON THAT THE ASSES SEE HAD NOT REINVESTED THE IMPUGNED LONG TERM CAPITAL GAINS IN HIS OWN NAME BU T IN THE NAME OF HIS WIFE. THE LOWER APPELLATE DISCUSSION TO THIS EFFECT READS AS UNDER: [5.9] SECTION 54 REFERS TO THE ASSESSEE BEING AN INDIVIDU AL OR A HINDU UNDIVIDED FAMILY. IMPORTANTLY, BOTH ARE DIFFERENT L EGAL ENTITIES. AS PER THE SCHEME OF THESE SECTIONS OF THE INCOME-TAX ACT, THE ASSESSEE, WHO IS THE OWNER OF THE ORIGINAL ASSET, NEED TO, WITHIN A PERI OD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE, PURCHASED OR WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONS TRUCT A RESIDENTIAL HOUSE (NEW ASSET). THE CAPITAL GAIN SHALL BE DEALT WITH I N ACCORDANCE WITH THE OTHER PARTS OF THE SECTION. [5.10] THE CONCEPTS OF THE 'ASSESSEE', 'OWN', 'OWNED', 'OW NER', 'OWNERSHIP', 'CO-OWNER', 'OWNER OF HOUSE PROPERTY' OR 'OWNERSHIP OF PROPERTY' AS ELABORATED IN SECTIONS 22 TO 27 AND 32 OF THE INCOME-TAX ACT, ARE VERY MUCH INTERLINKED AND CONNECTED FOR GRANTIN G THE BENEFIT UNDER THE INCOME-TAX ACT. THE WORD AND PHRASE 'OWNER' IN THE CONTEXT OF SECTION 22 OF THE INCOME-TAX ACT HAS BEEN ELABORATED IN CIT V. PODAR CEMENT (P.) LTD. [1997] 226 ITR 625(SC) AND MYSORE MINERALS LTD . V. CIT [1999] 239 ITR 775(SC). AN ASSESSEE MUST HAVE VALID TITLE LEGA LLY CONVEYED TO HIM AFTER COMPLYING WITH THE REQUIREMENT OF LAW OR AT L EAST ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT AND HAVE CONTROL AND DOMAIN OVER THE SAID PROPERTY FOR ALL THE LEGAL PURPOSES, WHICH BASICALLY EXCLUDING A THIRD PERSON OF ANY RIGHT OVER THE SAID PROPERTY. THEREFORE, ALL THESE CONCEPTS ARE INTER-LINKED. THE SCHEME AND PUR POSE OF SECTION 54F, WHICH WAS INSERTED BY THE FINANCE ACT, 1982 WITH EF FECT FROM 01.04.1983, I.E., FROM THE ASSESSMENT YEAR- 1983-84 IS WITH A V IEW TO ENCOURAGE HOUSE CONSTRUCTION. THE OBJECT, THEREFORE, IS TO GIVE ALL BENEFITS UNDER THIS SECTION TO THE ASSESSEE ON CONDITIONS AS ELABORATED IN THE SECTION. NO SUCH BENEFIT IS AVAILABLE TO A PERSON OTHER THAN THE ASSESSEE. I T ALSO MEANS THE ASSESSEE MUST COMPLY WITH THE CONDITIONS STRICTLY AS PER THI S PROVISION IN ALL RESPECTS. AS NOTED, THIS EXEMPTION WILL NOT BE AVAI LABLE IN CASE WHERE THE ASSESSEE OWNS, ON THE DATE OF TRANSFER OF THE ORIGI NAL ASSET, ANY RESIDENTIAL HOUSE OR PURCHASED WITHIN THE PERIOD OF ONE YEAR, A FTER SUCH DATE OR CONSTRUCTS WITHIN A PERIOD OF THREE YEARS AFTER SUC H DATE ANY OTHER RESIDENTIAL HOUSE. WHERE AN ASSESSEE PURCHASES OR C ONSTRUCTS ANY OTHER RESIDENTIAL HOUSE WITHIN THE PERIOD OF THE AFORESAI D EXEMPTION UNDER THE PROPOSED PROVISION, IF ALLOWED, SHALL STAND FORFEIT ED. THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSE T WHICH WAS NOT CHARGED TO TAXES SHALL BE ALLOWED TO BE INCOME CHARGEABLE U NDER THE HEAD 'CAPITAL GAIN' RELATING TO LONG-TERM CAPITAL ASSETS OF THE P REVIOUS YEAR IN WHICH SUCH RESIDENTIAL HOUSE IS SO PURCHASED OR CONSTRUCT ED. FURTHERMORE, IF AN ASSESSEE TRANSFERS NEWLY ACQUIRED RESIDENTIAL HOUSE WITHIN THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, THEN THE AMOUNT OF CA PITAL GAIN ARISING FROM THE TRANSFER OF ORIGINAL ASSET, WHICH WAS NOT CHARG ED TO TAX, SHALL BE DEEMED TO BE THE INCOME OF THE YEAR IN WHICH THE NE W ASSET IS TRANSFERRED AND THE SAID INCOME SHALL BE CHARGED TO TAX UNDER T HE HEAD OF CAPITAL I.T.A NO.163/RAN/2018 ANAND KUMAR DHANUKA A.Y. 2011-12 PAGE | PAGE | PAGE | PAGE | 3 33 3 GAINS RELATING TO THE LONG-TERM CAPITAL ASSETS. [(1 982) 138 ITR SECTION 10] (DEPARTMENTAL CIRCULAR NO.346, DATED 30.06.1982) [5.11] IT IS, THEREFORE, CLEAR THAT THE PURPOSE IS TO GIVE THIS BENEFIT ON THE OWNERSHIP OF ONE RESIDENTIAL HOUSE ONLY BY THE ASSE SSEE AND TO ENCOURAGE TO HAVE ONE RESIDENTIAL HOUSE OF THE ASSESSEE. THER EFORE, RIGHT FROM THE SALE OF ORIGINAL ASSET TILL THE PURCHASE AND/OR CON STRUCTION OF THE RESIDENTIAL HOUSE, I.E., THE 'NEW ASSET', THE OWNER SHIP AND DOMAIN OVER THE NEW ASSET IS A MUST. THE NEW PROPERTY MUST BE OWNED BY THE ASSESSEE AND/OR HAVING LEGAL TITLE OVER THE SAME. THE OTHERS MAY USE AND OCCUPY THE SAME ALONG WITH THE ASSESSEE BUT THE OWNERSHIP SHOULD BE OF THE ASSESSEE OF THE RESIDENTIAL HOUSE SO PURCHASED FROM THE NET CONSIDERATION/SALE PROCEEDS OF THE SALE OF ORIGINAL ASSET BY THE ASSESSEE. [5.12] HAVING OBSERVED ABOVE AND IN VIEW OF THE UNDISPUTED POSITION ON THE RECORD THAT THE APPELLANT, ADMITTEDLY, THOUGH S OLD THE PROPERTY PART OWNED BY HIM YET DID NOT PURCHASE ANY PROPERTY IN H IS NAME BENEFIT U/S.54F WAS NOT ALLOWABLE. IN THE CASE OF PRAKASH V ITO [2008] 312 ITR 40 (BOM) ONE OF THE QUESTIONS W EXACTLY THE SAME BEING : - WHETHER FOR QUALIFYING EXEMPTION UNDER SECTION 54 OF THE INCOME-TAX A CT IS IT NECESSARY AND OBLIGATORY TO HAVE INVESTMENT M ADE IN RESIDENTIAL HOUSE IN THE NAME OF ASSESSEE ONLY OR INVESTMENT IN RESIDENTIAL HOUSE IS ENOUGH TO QUALIFY AND CLAIM THE SAID EXEMPTION? ... .YES [5.13] AFTER EXAMINING THE LAW IN THIS REGARD THE HONBLE BOMBAY HC HELD THAT: - 15. THE DECEASED ASSESSEE ADMITTEDLY SOLD AND PURC HASED THE PROPERTY FROM THE REALISATION BUT IN THE NAME OF THE ADOPTED SON, WHO IN THE SCHEME OF THE ACT AND SECTION 54F IS NOT AN ASSESSEE, WHO AFTER SELLING THE OLD ASSET PURCHASED AND CONSTRUCTED THE NEW PROPERTY. H E WAS NOT THE OWNER OF THE NEW PURCHASED PROPERTY. IN PONDS INDIA LTD. (MERGED WITH H.L. LTD.) V. COMMISSIONER OF TRADE TAX, JT 2008 (9) SC 94, THE APEX COURT'S FOLLOWING DECLARATION SUPPORTS THE VIEW WE HAVE TAK EN BASED UPON THE PRINCIPLE OF INTERPRETATION OF REVENUE/TAXATION STA TUS : - '39. WHEN A CASE OF OBVIOUS INTENT ON THE PART OF T HE LEGISLATURE IS MADE OUT, A MEANING WHICH SUBSERVES THE LEGISLATIVE INTE NT MUST BE GIVEN EFFECT TO. IT IS HOWEVER ALSO WELL KNOWN THAT WHEN A WORD IS DEFINED BY THE LEGISLATURE ITSELF, THE SAME MEANING MAY BE ATTRIBU TED EVEN IN THE CHANGED SITUATION.' [5.14] IN THE CASE OF GANTA VIJAYA LAXMI V ITO VIJAYWADA [ 2013] 37 TAXMANN.COM 263 (VISAKHAPATNAM ITAT) THE FACTS WERE THAT THE ASSESSEE SOLD AGRICULTURAL LAND FOR A CONSIDERATION OF RS 1. 41 CRORES AND HAD INVESTED MONEY IN PURCHASE OF AN AGRICULTURAL LAND AND A RESIDENTIAL FLAT IN THE NAME OF HER TWO MARRIED DAUGHTERS WHO WERE A LSO MAJORS. THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54B IN RES PECT OF AGRICULTURAL LAND AND ALSO CLAIMED EXEMPTION UNDER SECTION 54F I N RESPECT OF THE FLAT WHILE COMPUTING LONG-TERM CAPITAL GAIN ON SALE OF A GRICULTURAL LAND. I.T.A NO.163/RAN/2018 ANAND KUMAR DHANUKA A.Y. 2011-12 PAGE | PAGE | PAGE | PAGE | 4 44 4 NEGATING THE CLAIM OF THE APPELLANT IT WAS HELD THA T THE TERM 'ASSESSEE' USED IN SECTION 54B/54F CANNOT BE EXTENDED TO MEAN THE MAJOR MARRIED DAUGHTERS. 3. DRAWING STRENGTH FROM THE CIT(A)S DETAILED DISC USSION IN VIEW OF THE HONBLE BOMBAY HIGH COURTS DECISION (SUPRA), MR. S INGH VEHEMENTLY ARGUES THAT THE ASSESSEES DEDUCTION CLAIM HAS BEEN RIGHTLY DISALLOWED. MR. PODDAR QUOTES CIT VS. KAMAL WAHAL (2013) 258 CTR 251 (DEL) DECIDING THE ISSUE IN ASSESSEES FAVOUR IN ITA NO. 4/ 2013 DATED 11.01.2013. FACED WITH THIS SITUATION OF NON-JURISDICTIONAL HIGH COUR TS HAVING DIFFERENT OPINIONS ON THE ISSUE AND NO GUIDANCE COMING FROM H ONBLE JURISDICTIONAL HIGH COURT, WE INVOKE HONBLE APEX COURT JUDGMENT I N CIT VS. VEGETABLE PRODUCTS LTD (1973) 88 ITR 192 (SC) THAT THE VIEW I N ASSESSEES FAVOUR HAS TO BE ADOPTED. WE ORDER ACCORDINGLY. THE ASSESSIN G OFFICER IS DIRECTED TO DELETE THE IMPUGNED DISALLOWANCE. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 31.07.2020 SD/- (A.L.SAINI) SD/- (S.S.GODARA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /KOLKATA; / DATE: 31/07/2020 SB, SR.PS COPY OF THE ORDER FORWARDED TO: 1. ANAND KUMAR DHANUKA 2. ITO, WARD-1(1), RANCHI 3. C.I.T(A)- 4. C.I.T.- RANCHI 5. CIT(DR), RANCHI BENCH, RANCHI . 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, RANCH I BENCH I.T.A NO.163/RAN/2018 ANAND KUMAR DHANUKA A.Y. 2011-12 PAGE | PAGE | PAGE | PAGE | 5 55 5