Dr. R. Balaji, Bangalore V. DCIT, Bangalore

ITA 164/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63718 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 01-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Section: 143(3); 54F; 234B; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.164/BANG/2012 (ASSESSMENT YEAR : 2008-09) DR. R. BALAJI, NO.466, 5 TH MAIN, SADASHIVANAGAR, BANGALORE-560 080 . APPELLANT. PAN ACKPB 5197F VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 5(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SMT. SHEETAL BORKAR. RESPONDENT BY : SMT. SUSAN THOMAS JOSE. DATE OF HEARING : 4.9.2012. DATE OF PRONOUNCEMENT : 05.10.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, BANGALORE DT.1.12.2011 FOR ASSESSMENT YEAR 2008-09. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UND ER: 2.1 THE ASSESSEE, A MEDICAL PRACTITIONER, FILE D HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 4.9.2008 DECLARING TOTAL INCOME OF RS.27,22,500. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TA X ACT, 1961 (HEREIN AFTER REFERRED TO AS 'THE ACT') AND THEN TAKEN UP FOR SCRUTINY BY ISS UE OF NOTICE UNDER SECTION 143(2) OF THE 2 ITA NO.164/BANG/11 ACT. THE ASSESSMENT WAS COMPLETED BY AN ORDER UND ER SECTION 143(3) OF THE ACT ON 20.10.2010 DETERMINING THE INCOME OF THE ASSESSEE A T RS.1,03,25,814 BY DENYING THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.20.1 0.2010, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)-II, BANGALORE, WHO DISMISSED THE APPEAL BY ORDER DT.1.12.2011. 3. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. IN THIS APPEAL, THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : REPR. 1 TO 8 APPEAL MAY BE ALLOWED. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT AND THE EVIDENCE PRODUCED AND ALLOWED THE EXEMPTION UNDER S ECTION 54F OF THE ACT AS CLAIMED BY THE APPELLANT. 2. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECI ATED THAT THE APPELLANT HAVING SATISFIED THE CONDITIONS REQUIRED UNDER SECT ION 54F OF THE ACT AND HE OUGHT TO HAVE ALLOWED THE CLAIM OF EXEMPTION AS MAD E BY THE APPELLANT IN TOTO. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECI ATED THAT THE APPELLANT HAVING BOUGHT A RESIDENTIAL HOUSE WITH ALL CIVIC AM ENITIES WHICH IS FURTHER SUPPORTED BY DOCUMENTARY EVIDENCE LIKE SALE DEED, T AX PAID RECEIPT ETC AND OUGHT TO HAVE ALLOWED THE BENEFIT AS CLAIMED BY THE APPELLANT IN TOTO. 4. THE LEARNED CIT (APPEALS) FURTHER OUGHT TO HAVE APPRECIATED THAT THERE IS NO TRANSFER OF PROPERTY AND THE APPELLANT CONTINUES TO BE THE OWNER EVEN TILL TODAY AND HENCE THE INTENTION OF THE APPELLANT FRO M THE BEGINNING WAS TO PURCHASE A RESIDENTIAL HOUSE AND HE HAVING DONE SO WITHIN THE STIPULATED TIME, THE APPELLANT IS ENTITLED TO THE EXEMPTION. 54F IN RESPECT OF THE INVESTMENT MADE. 5. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECI ATED THAT THE CASE LAW RELIED ON BY HER IS DISTINGUISHABLE AND NOT APPLICA BLE TO THE FACTS OF THE APPELLANTS CASE. 6. WITHOUT PREJUDICE, THE ADDITION AS CONFIRMED BY THE LEARNED CIT (APPEALS) IS ARBITRARY, EXCESSIVE AND OUGHT TO BE DELETED IN TOT O. 7. THE LEARNED CIT (APPEALS) OUGHT TO HAVE DELETED THE INTEREST OF RS. 6,37,804 CHARGED UNDER SECTION 234B AND RS.8,434 UN DER SECTION 234C OF THE ACT. 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED . 3 ITA NO.164/BANG/11 4. ON PERUSAL, WE FIND THAT THE GROUNDS RAISED AT S.NOS. 6 AND 7 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON . 5.1 THE GROUNDS RAISED AT S.NOS.1 TO 5 DEAL WITH THE DENIAL OF THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT. 5.2 AS PER THE FACTS ON RECORD, THE ASSESSEE ON 2 1.11.2007 SOLD A VACANT SITE ACQUIRED BY HIM ON 3.5.1989 SITUATED AT IDEAL HOMES TOWNSHIP , KANCHANAHALLI, BANGALORE SOUTH MEASURING 65 X 90 PURCHASED FROM M/S. IDEAL HOMES CO-OPERATIVE BUILDING SOCIETY LTD FOR A CONSIDERATION OF RS. 80 LAKHS. IT IS ALSO SEE N THAT THE ASSESSEE HAD PURCHASED A SITE BEARING NO.8, RAJ MAHAL VILAS II STAGE, BANGALORE F OR RS.76,58,360 ON 16.10.2007. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED EXEMPTION UND ER SECTION 54 IN RESPECT OF THIS SUM OF RS.76,58,260 REPRESENTING THE INVESTMENT IN PUR CHASE OF THE SAID PROPERTY. HOWEVER, THE ASSESSEE NOTING THE MISTAKE MADE IN CLAIMING EX EMPTION UNDER SECTION 54, REVISED THE CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT, COMPUTED THE LONG TERM CAPITAL GAINS (LTCG) ON THE SAID TRANSACTION AT RS. 76,03,305 AND BROUGHT THE SAME TO TAX IN THE ASSESSEES HANDS. IN APPEAL, THE LEARNED CI T (APPEALS) DISMISSED THE ASSESSEES CLAIM. 5.3 THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE CLAIM MADE IN THE GROUNDS OF APPEAL AND FILED SUBMISSION DT.4.5.2012. THE LEARN ED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH O F THE TRIBUNAL IN THE CASE OF M.A. PATEL 4 ITA NO.164/BANG/11 VS. ITO IN ITA NO.183/BANG/2011 FOR ASSESSMENT YEAR 2006-07 STATING THAT THE FACTS OF THAT CASE AND THE DECISION THEREIN SQUARELY APPLIED TO THE PRESENT CASE OF THE ASSESSEE. IN VIEW OF THIS, IT WAS SUBMITTED THAT THE FINDING OF THE LEARNED CIT (APPEALS) WAS LIABLE TO BE REVERSED AND THE ASSESSEE'S APPEAL ALLOWED ON THE ISSUE OF EXEMPTION UNDER SECTION 54F OF THE ACT. THE LEARNED DEPARTMENTAL REPRESENT ATIVE ON HER PART SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT (APPEALS) AND SOUGHT UPHOLDING OF THEIR ORDERS DENYING THE ASSESSEE THE EXEMPTION CLA IMED UNDER SECTION 54F OF THE ACT. 5.4 WE HAVE HEARD BOTH PARTIES, CAREFULLY PERUSED A ND CONSIDERED THE MATERIAL ON RECORD AND THE JUDICIAL DECISIONS CITED AND PLACED RELIANCE ON. THE FACTS AS CULLED OUT FROM THE DOCUMENTS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE SHOW THAT THE ASSESSEE PURCHASED THE PROPERTY IN QUESTION BY AN ABSOLUTE S ALE DEED DT.16.10.2007 (AT PAGES 20 TO 31 OF ASSESSEES PAPER BOOK). THE RECITALS THEREIN , AT PAGE 3 THEREOF, INDICATE THAT THE VENDOR OF THE PROPERTY HAD ALREADY CONSTRUCTED A T WO SQUARE RCC ROOFED HOUSE IN THE SCHEDULED PROPERTY. FURTHER, ON PAGE 8 THEREOF, TH E SCHEDULE PROPERTY IS DESCRIBED AS ALL THAT PIECE AND PARCEL OF THE SITE BEARING NO.8 IN R AJ MAHAL VILAS, II STAGE MEASURING 50 X 50 IN ALL 277.77 SQ. YARDS, TOGETHER WITH TWO SQUA RES RCC ROOFED HOUSE, CEMENT FLOOR, JUNGLE WOOD DOORS AND WINDOWS. IN FORM 1A ISSUED B Y THE GOVT. OF KARNATAKA, DEPT. OF REGISTRATION AND STAMPS DT.16.10.2007 (ON PAGE 37 O F ASSESSEE'S PAPER BOOK FILED ON 4.5.2012), THE SCHEDULES OF THE PROPERTY AT SCHEDUL E C DESCRIBE THE PROPERTY MEASURING 200 SQ. FT. OF RCC ROOFED HOUSE, CEMENT FLOORING AN D WITH ALL CIVIC AMENITIES. ON PAGE 33 OF THE ASSESSEE'S PAPER BOOK, WE FIND THAT THE ASSE SSEE HAS FILED A COPY OF THE RECEIPT FOR 5 ITA NO.164/BANG/11 PAYMENT OF PROPERTY TAX IN RESPECT OF THE SAID PROP ERTY ON 3.7.2007 FOR 2006-07 AND 2007-08. A COPY OF THE ENGLISH TRANSLATION OF THE SAID PROPERTY TAX RECEIPT (DULY ATTESTED) WAS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE VIDE SUBMISSIONS ON 21.5.2012 WHICH SPECIFIES THAT THE TAX COLLECTED WAS BUILDING TAX. THESE DETAILS AS EXTRACTED FROM THE DOCUMENTS FILED SHOW THAT THE PROPERTY CONSISTE D OF A HOUSE AND NOT A VACANT LAND AT THE TIME THE PROPERTY WAS PURCHASED BY THE ASSESSEE AND THERE IS NO DOUBT THAT RAJ MAHAL VILAS II STAGE WAS A DESIGNATED RESIDENTIAL AREA. IN THE LIGHT OF THE ABOVE EVIDENCE ON RECORD, THE QUESTION THAT NEEDS TO BE DECIDED IS AS TO WHETHER THE ASSESSEE HAD PURCHASED A RESIDENTIAL HOUSE SO AS TO ENABLE HIM T O CLAIM EXEMPTION UNDER SECTION 54F OF THE ACT. 5.5 ON THIS ISSUE, THE ASSESSING OFFICER HAD MADE C ERTAIN OBSERVATIONS IN THE ORDER OF ASSESSMENT IN REACHING THE FINDING THAT THE ASSESSE E HAD PURCHASED ONLY A VACANT SITE AND NOT A SITE WITH A HOUSE THEREON : A) THE ASSESSING OFFICER IN COMING TO THIS FINDING RELIED ON LOCAL ENQUIRIES MADE REPORT THEREON AND PHOTOGRAPHS TAKEN BY THE INSPECT OR OF HIS OFFICE. THE REPORT INDICATED THAT THE PLOT WAS A VACANT SITE THOUGH TH E PHOTOGRAPHS TAKEN SHOWED A SMALL STRUCTURE WITH A GRILLED DOOR WITH NO WINDOWS ETC W HICH THE ASSESSING OFFICER DID NOT ACCEPT WAS A HOUSE BUT A TEMPORARY SHED/STRUCTURE. WE FIND FROM A PERUSAL OF THE DOCUMENTS ON RECORD THAT THE INSPECTORS REPORT WAS DT.19.11.2010, 3 YEARS AFTER THE ASSESSEE PURCHASED THE SAID PROPERTY AND THEREFORE IN OUR CONSIDERED VIEW THIS WOULD NOT CONTROVERT THE FACTS RECORDED IN THE SCHEDULE TO TH E ABSOLUTE SALE DEED DT.16.10.2007 AND FORM 1A ISSUED BY THE DEPT. OF REGISTRAR AND STAMPS , GOVT. OF KARNATAKA ON 16.10.2007 6 ITA NO.164/BANG/11 WHICH CONFIRM THAT ON THE DATE OF PURCHASE OF THE P ROPERTY BY THE ASSESSEE THERE WAS A 200 SQ. FT. OF RCC ROOFED HOUSE, CEMENT FLOORING AN D WITH ALL CIVIC AMENITIES. B) THE ASSESSING OFFICER WAS ALSO OF THE VIEW THA T THE TAX PAID BY THE ASSESSEE WAS PROPERTY TAX ON A VACANT SITE. HOWEVER, WE FIND TH AT THE LEARNED COUNSEL FOR THE ASSESSEE AS BROUGHT OUT IN PARA 5.4 OF THIS ORDER, HAS PLACE D ON RECORD A TRANSLATED COPY OF THE PROPERTY TAX RECEIPT ATTESTED BY A NOTARY SHOWING T HAT THE SAID PAYMENT OF RS. 6900 ON 3.7.2007 WAS FOR TAX PAID FOR BUILDING AND NOT FOR A VACANT SITE. C) THE LEARNED CIT (APPEALS) WAS OF THE VIEW THAT THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF D.P. MEHTA VS. CIT (251 ITR 529) WAS SQUARELY APPLICABLE IN THE ASSESSEE'S CASE AND ACCORDINGLY DISALLOWED THE ASSE SSEE'S CLAIM FOR DEDUCTION UNDER SECTION 54F OF THE ACT. IN THE CITED CASE, THE ASS ESSEE ADMITTED THAT THE BUILDING WAS NOT INHABITABLE OR WORTH OCCUPYING AND THEREFORE IT WAS HELD THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 54F. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE HAS MADE NO SUCH ADMISSION AND THEREFORE WITH DUE RESPE CT THE CITED DECISION WOULD NOT HAVE ANY RELEVANCE TO THE FACTS OF THE PRESENT CASE. SE CTION 54F WITH WHICH WE ARE DEALING IN THE PRESENT CASE ONLY TALKS OF THE PURCHASE OF A RE SIDENTIAL HOUSE WHICH HAS TAKEN PLACE IN THIS CASE AND THERE ARE NO CONDITIONS THAT THE HOUS E SHOULD BE OF A PARTICULAR QUALITY, SHOULD GENERATE INCOME FROM HOUSE PROPERTY ETC. D) APART FROM THE ABOVE, THE LEARNED DEPARTMENTA L REPRESENTATIVE RELIED ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF M.B. RAMESH VS. ITO (2010) 320 ITR 0451. WITH DUE RESPECT, THIS DECISION WAS RENDERED IN THE CONTEXT OF SECTION 54 OF THE ACT. IN THE CITED CASE, THE TRIBUNAL FOUND THAT TH ERE WAS ONLY A SAND STRUCTURE AND THERE 7 ITA NO.164/BANG/11 WAS NEVER ANY STRUCTURE FITTING THE DESCRIPTION OF A HABITABLE RESIDENTIAL HOUSE ON THE PROPERTY SOLD BY THE ASSESSEE. IN THE PRESENT CASE , THE ISSUE IS OF DEDUCTION UNDER SECTION 54F OF THE ACT. ALSO, DOCUMENTS SUCH AS AB SOLUTE SALE DEED, FORM 1A ISSUED BY THE DEPT. OF REGISTRATION AND STAMPS, GOVT. OF KARN ATAKA CLEARLY INDICATE THAT THERE EXISTED ON THE SAID PROPERTY A 200 SQ. FT. RCC HOU SE, WITH CEMENT FLOOR AND CIVIC AMENITIES. IN THIS MATTER, WITH DUE RESPECT, WE AR E OF THE VIEW THAT THE CASE OF M.B. RAMESH(SUPRA) CITED BY THE LEARNED DEPARTMENTAL REP RESENTATIVE IS DISTINGUISHABLE ON FACTS AND WOULD NOT APPLY TO THE ASSESSEE'S CASE. 5.6 AS ALREADY DISCUSSED IN PARAS 5.2 TO 5.5 ABOVE, WE HAVE ALREADY HAD OCCASION TO EXAMINE THE EVIDENCE FILED BY THE ASSESSEE IN THE P RESENT CASE AND THIS IN OUR CONSIDERED OPINION SUFFICIENTLY JUSTIFIES THE EXISTENCE OF A H OUSE OF 200 SQ. FT. RCC WITH CEMENT FLOOR AND CIVIC AMENITIES ON THE SAID PROPERTY WHEN IT WA S PURCHASED BY THE ASSESSEE ON 16.10.2007. THE CLAIM OF ASSESSEE IS THAT IT WAS H ABITABLE AT THE TIME OF PURCHASE. AT THIS POINT IN TIME, 5 YEARS AFTER THE PURCHASE IN 2 007, IT IS NOT POSSIBLE TO VERIFY THE CONDITION OF THE BUILDING OR WHETHER IT WAS HABITAB LE AT THE TIME OF PURCHASE. WE ALSO FIND THAT EVEN THE INSPECTORS INSPECTION REPORT DT .19.11.2010 WAS THREE YEARS AFTER THE PURCHASE OF THE PROPERTY BY THE ASSESSEE AND WOULD THEREFORE NOT CONTAIN AN AUTHENTIC VERIFICATION OF THE CONDITION OF THE SAID LAND AND BUILDING AS IT WAS WHEN THE PROPERTY WAS PURCHASED IN 2007. ON THE BASIS OF THE MATERIAL AV AILABLE ON RECORD, WE ARE SATISFIED THAT THE ASSESSEE HAS FULFILLED THE CONDITIONS FOR GRANT OF EXEMPTION UNDER SECTION 54F OF THE ACT. IN COMING TO THE FINDING, WE FIND SUPPORT FRO M THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M.A. PATEL (SUPRA) R ELIED ON BY THE LEARNED COUNSEL FOR THE 8 ITA NO.164/BANG/11 ASSESSEE, WHEREIN ON SIMILAR FACTS AND IN THE CONTE XT OF THE CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT, THE TRIBUNAL HELD THAT THE ASSESSEE WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 54F OF THE ACT. RESPECTFUL LY FOLLOWING THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M.A. PATEL (SUPRA), WE DIRECT THAT THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F OF THE ACT BE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2012. SD/- SD/- (N.V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER