Ajeet Kumar Jaiswal, Hyderabad, Hyderabad V. ITO, Ward-4(4), Hyderabad, Hyderabad

ITA 1707/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2657 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 20-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: C V NARASIMHAM
• Section: 143(3); 54F; 54; 139

Judgement Text

ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1707/HYD/2016 (ASSESSMENT YEAR: 2013-14) SRI AJEET KUMAR JAISWAL HYDERABAD PAN: ABHPJ 1947 K VS INCOME TAX OFFICER WARD 4 ( 4 ) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI C.V. NARASIMHAM FOR REVENUE : SMT. N. SWAPNA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE CIT (A)-1 HYDERABAD, DATED 20.09.2 016. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITS REVISED FORM-36 FILED ON 9.2.2017: 1. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS CONTRARY TO FACTS OF THE CASE, CONTRARY TO THE EVIDENCE ON RECORD AND UNSUSTAINABLE IN LAW. THE COMMISSIONER (APPEALS) HAS PASSED A CRYPTIC ORDER WITHOUT PROPERLY EXAMINING THE RELEVANT FACTS AND LAW. 2. THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAD COMPLIED WITH ALL THE REQUIREMENTS OF SECTION 54 (1) OF THE ACT SINCE THE APPELLANT HAD PURCHASED A RESIDENTIAL APARTMENT OF VALUE MORE THAN THE DATE OF HEARING : 15.06.2017 DATE OF PRONOUNCEMENT : 31.08.2017 ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 2 OF 9 CAPITAL GAINS AND THE NEW RESIDENTIAL ASSET WAS PURCHASED WITHIN 2 YEARS FROM THE DATE OF SALE OF RESIDENTIAL PROPERTY. 3. THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAD ADMITTEDLY SOLD THE PROPERTY ON 09-08-2012 AND HAD PURCHASED A NEW ASSET ON 09-01-2014 WHICH IS WELL WITHIN THE 2 YEAR PERIOD UNDER SECTION 54 (1) OF THE ACT. 4. THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAD PURCHASED THE NEW RESIDENTIAL ASSET WELL WITHIN THE RELEVANT ASSESSMENT YEAR ITSELF AND HENCE THERE IS NO DEFAULT UNDER SECTION 54 (2) OF THE ACT CONSIDERING THAT THE TIME LIMIT MUST BE INTERPRETED TO INCLUDE SECTION 139 (4) OF THE ACT. 5. THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE TIME LIMIT UNDER SECTION 54 (1) OF THE ACT HAS TO BE READ AS INCLUDING THE TIME LIMIT UNDER SECTION 139 (4) OF THE ACT AND HENCE THE APPELLANT HAVING PURCHASED THE NEW ASSET WITHIN THE PERIOD PRESCRIBED UNDER SECTION 139 (4), THE EXEMPTION CANNOT BE DENIED MERELY ON THE GROUND THAT APPELLANT HAS DEPOSITED THE CAPITAL GAINS IN TERM DEPOSIT WITH BANK WITHIN THE TIME INSTEAD OF DEPOSITING IN THE CAPITAL GAINS ACCOUNT WITHIN THE PERIOD PRESCRIBED UNDER SECTION 139 (1). 6. THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN, REPORTED IN [2006] 286 ITR 274 (GAUHATI) AND THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MS. JAGRITI AGGARWAL, REPORTED IN [2011] 339 ITR 610 (P&H) HAVE CLEARLY STATED THAT THE SECTION 54 (2) MUST BE READ WITH SECTION 139 (4) AND THE APPELLANT WOULD HAVE TIME UP TO 1 YEAR FROM END OF THE RELEVANT ASSESSMENT YEAR. ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 3 OF 9 7. THE LEARNED COMMISSIONER (APPEALS) ALSO FAILED TO APPRECIATE THAT THE APPELLANT HAD ADMITTEDLY DEPOSITED THE ENTIRE CAPITAL GAINS WITH THE BANK UNDER TERM DEPOSIT INSTEAD OF DEPOSIT UNDER CAPITAL GAINS ACCOUNT SCHEME WHICH IS MERELY A TECHNICAL DEFAULT AND EXEMPTION CANNOT BE DENIED. 8. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT APPEAL MAY BE ALLOWED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2 013-14 ON 4.10.2013 ADMITTING TOTAL INCOME OF RS.4,44,240. TH E ASSESSEE CLAIMED EXEMPTION OF CAPITAL GAIN U/S 54F OF THE AC T. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT DURING THE RELEVANT A.Y, THE ASSESSEE JOINTLY SOLD AN IMMOVABLE PROPERTY VIDE DO CUMENT NO.3253/12 DATED 9.8.2012 FOR A CONSIDERATION OF RS .1,08,00,000. IN HIS COMPUTATION OF INCOME, WHILE CALCULATING THE LONG TERM CAPITAL GAIN, THE ASSESSEE ADMITTED HIS SHARE OF 50 % OF THE CONSIDERATION I.E. RS.50,40,000 AS LONG TERM CAPITA L GAIN AND THEREAFTER CLAIMED DEDUCTION U/S 54F OF THE ACT WITH THE NARRATION INVESTMENT IN CAPITAL GAIN AMOUNT IN BAN K RS.50,40,000 AND THUS ADMITTED NIL CAPITAL GAIN. IN THE CASH ACCOUNT FILED ALONG WITH THE RETURN OF INCOME ALSO, THE ASSESSEE HAS SHOWN THAT THIS AMOUNT WAS DEPOSITED IN CAPITAL GAINS ACCOUNT. IN THE RETURN OF INCOME FILED, THE ASSESSE E HAS CLAIMED DEDUCTION U/S 54F OF THE ACT ON THE ENTIRE AMOUNT RE CEIVED TOWARDS HIS SHARE I.E. RS.50,40,000. ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 4 OF 9 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO ASKED THE ASSESSEE TO FUR NISH THE DETAILS OF DEPOSITS IN CAPITAL GAINS A/C. THOUGH THE ASSESS EE CLAIMED THAT THE AMOUNT OF CAPITAL GAIN WAS INVESTED IN CAPITAL GAINS A/C U/S 54(2), THE ASSESSEE, VIDE LETTER DATED 16.11.2015 CAME UP WITH A NEW PLEA OF INVESTMENT IN CONSTRUCTION OF RESIDENTI AL HOUSES U/S 54(1) OF THE ACT. IT WAS STATED THAT THE ASSESSEE H AD DEPOSITED THE ENTIRE AMOUNT IN SBH ON 13.08.2013 AND THE SAME WAS UTILIZED FOR PURCHASE OF ANOTHER TWO RESIDENTIAL FLATS VIDE AGREEMENT OF SALE DATED 9.1.2014 AND THEREFORE, THE REQUIREMENT OF SECTION 54 ARE SUBSTANTIALLY COMPLIED WITH. 4. THE AO SOUGHT A CLARIFICATION FROM THE BANK ABOU T THE DEPOSIT OF CAPITAL GAINS AND IT WAS INTIMATED BY TH E BANK TO THE AO THAT THE DEPOSIT WAS INTO A NORMAL TERM DEPOSIT A/C AND NOT A CAPITAL GAIN A/C. OBSERVING THAT THE UNUTILIZED POR TION OF THE CAPITAL GAIN HAS TO BE DEPOSITED IN THE CAPITAL GAI N A/C U/S 54 F OF THE ACT, BEFORE THE DUE DATE OF FILING OF RETURN U/ S 139(1) OF THE ACT AND ALSO THAT THE FLATS ALLEGEDLY PURCHASED BY THE ASSESSEE WERE IN JOINT NAMES OF THE ASSESSEE AND HIS SON, TH E AO DISALLOWED THE CLAIM U/S 54F OF THE ACT AND BROUGHT THE ENTIRE AMOUNT OF CAPITAL GAIN TO TAX. AGGRIEVED, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER O F THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD INVESTED THE ENTIRE SALE CONSIDERA TION IN PURCHASE OF RESIDENTIAL FLATS WITHIN THE TIME ALLOW ED U/S 139(4) OF ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 5 OF 9 THE ACT AND THEREFORE, THE EXEMPTION U/S 54F SHOULD BE ALLOWED. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE U PON THE DECISION OF THE HON'BLE GAUHATI HIGH COURT IN THE C ASE OF CIT VS. RAJESH KUMAR JALAN REPORTED IN (2006) 286 ITR 274 ( GAU.) AND ALSO THE DECISION OF THE HON'BLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF CIT VS. JAGRITI AGGARWAL REPORTED IN (2 011) 339 ITR 610 (P&H H.C). 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE FOLLOWING FACTS ARE REL EVANT FOR ADJUDICATION OF THE ISSUE: I) DATE OF SALE OF THE PROPERTY 9.2.2012 II) DATE OF DEPOSIT OF PREVIOUS YEAR 2011-12, A.Y 2012-13 CAPITAL GAINS IN TERM DEPOSIT A/C 13.8.2013 III) DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) 31.07.2013 IV) DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(4) 31.03.2014 V) DATE OF AGREEMENT OF PURCHASE 9.1.2014 8. FROM THE ABOVE DETAILS, IT IS SEEN THAT THE ASSES SEE HAS DEPOSITED THE CAPITAL GAINS IN THE TERM DEPOSIT A/C AND NOT THE CAPITAL GAINS SCHEME A/C AS REQUIRED U/S 54(2) OF T HE ACT. WHETHER, IT IS SUFFICIENT COMPLIANCE OF THE REQUIRE MENT IS TO BE SEEN. IT IS THE CASE OF THE ASSESSEE THAT IT IS ONL Y A TECHNICAL DEFECT AND EXEMPTION CANNOT BE DENIED ON THIS GROUND. WE H AVE EXAMINED THE FEATURES OF THE CAPITAL GAINS ACCOUNT SCHEME AND ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 6 OF 9 FIND THAT SUCH AN ACCOUNT CAN BE OPENED ONLY BY DEP OSITING THE ENTIRE CAPITAL GAIN FUNDS AND NOT WITH PARTIAL SALE WITHDRAWALS AND THE MONEY CAN BE WITHDRAWN ONLY BY GIVING A WRI TTEN APPLICATION GIVING DETAILS OF THE PURPOSE OF FUND R EQUIREMENTS SUCH AS FOR PURCHASE OF A PROPERTY OR CONSTRUCTION OF A HOUSE AND CANNOT AVAIL ANY LOAN FACILITY ON SUCH FUNDS. THUS , THE INTENTION OF INTRODUCING THE CAPITAL GAIN A/C SCHEME IS TO SE E THAT WHERE THE ASSESSEE INTENDS TO CLAIM THE BENEFIT U/S 54 OF THE ACT, THE CAPITAL GAINS ARE PARKED WITH THE BANK TILL THE ASSESSEE ID ENTIFIES THE PROPERTY AND INVESTS THE SAME WITHIN THE SPECIFIED PERIOD. EXCEPT FOR THE ABOVE CONDITIONS, THERE IS NOT MUCH OF A DI FFERENCE BETWEEN THE TERM DEPOSIT AND THE CGAS AND THE INTEREST EARN ED THEREON IS ALSO CHARGEABLE TO TAX AS INCOME FROM OTHER SOURCE S. TAKING THE ABOVE FEATURES INTO CONSIDERATION AND ALSO THAT THE ASSESSEE HAS NOT UTILIZED THE TERM DEPOSIT FOR ANY OTHER PURPOSE TILL INVESTMENT IN THE RESIDENTIAL FLATS, WE AGREE WITH THE CONTENT ION OF THE ASSESSEE THAT THE DEFECT IS ONLY A TECHNICAL DEFECT WHICH CAN BE CONDONED PROVIDED HE FULFILS ALL THE CONDITIONS OF THE CAPITAL GAINS A/C EXCEPT FOR THE NOMENCLATURE OF THE A/C. IT IS N OT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS VIOLATED ANY OF T HE ABOVE CONDITIONS. 9. THE OTHER ARGUMENT OF THE ASSESSEE IS THAT THE F UNDS HAVE BEEN UTILIZED FOR INVESTMENT IN RESIDENTIAL FL ATS WITHIN THE PERIOD ALLOWED TO FILE THE RETURN OF INCOME U/S 139 (4). FOR THIS PURPOSE, THE ASSESSEE HAS RELIED ON TWO DECISIONS. IN THE CASE OF RAJESH KUMAR JALAN, THE ASSESSEE THEREIN HAD INVEST ED THE FUNDS IN PURCHASE OF RESIDENTIAL PROPERTY WITHIN THE PERI OD ALLOWABLE U/S 139(4) OF THE ACT AND THE HON'BLE GAUHATI HIGH COURT ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 7 OF 9 CONFIRMED THE ORDER OF THE TRIBUNAL THAT IT WAS SUF FICIENT COMPLIANCE OF SECTION 54(1) AND THERE WAS NO NECES SITY TO COMPLY WITH THE CONDITIONS U/S 54(2) OF THE ACT. 10. IN THE CASE OF JAGRUTI AGGARWAL, THE HON'BLE PU NJAB & HARYANA HIGH COURT FOLLOWED THE DECISION OF THE HON 'BLE GAUHATI HIGH COURT IN THE CASE OF RAJESH KUMAR JALAN. HOWEV ER, WE FIND A SLIGHT DIFFERENCE IN THE CASE OF THE ASSESSEE BEFOR E US FROM THE CASE OF JAGRUTI AGGARWAL AS THE ASSESSEE BEFORE US HAS INVESTED IN THE NEW PROPERTY AFTER FILING THE RETURN OF INCOME BUT BEFORE THE TIME U/S 139(4) EXPIRES, WHEREAS IN THE SAID CASE T HE INVESTMENT WAS MADE PRIOR TO FILING OF THE RETURN U/S 139(4) O F THE ACT. 11. HOWEVER, SECTION 54 OF THE ACT BEING A BENEFICI AL PROVISION INTRODUCED WITH THE GOAL OF PROVIDING RES IDENCE TO THE CITIZENS OF INDIA, HAS TO BE CONSTRUED LIBERALLY AS LONG AS IT SERVES THE PURPOSE OF ITS ENACTMENT. AS HELD BY THE HON'BL E SUPREME COURT OF INDIA IN THE CASE OF KUNAL SINGH VS. UNION OF INDIA, REPORTED IN (2003) ARI SCW 1013 IN CONSTRUING A PR OVISION OF SOCIAL BENEFICIAL ENACTMENT, .. THE VIEW THAT ADVA NCES THE OBJECT AND SERVES ITS PURPOSE MUST BE PREFERRED TO THE ONE WHICH OBSTRUCTS THE OBJECT AND PARALYSES THE PURPOSE OF T HE ACT. 12. FURTHER, IN THE CASE OF PETRON ENGINEERING CONSTRUCTION (P) LTD VS. CBDT (1989) 175 ITR 523 (S .C), THE HON'BLE SUPREME COURT HELD THAT IT IS TRUE THAT AN EXEMPTION PROVISION SHOULD BE LIBERALLY CONSTRUED BUT THIS DO ES NOT MEAN THAT SUCH LIBERAL CONSTRUCTION SHOULD BE MADE DOING VIOLENCE TO THE PLAIN MEANING OF SUCH EXEMPTION PROVISION. LIBE RAL ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 8 OF 9 CONSTRUCTION WILL BE MADE WHENEVER IT IS POSSIBLE T O BE MADE WITHOUT IMPAIRING THE LEGISLATIVE REQUIREMENT AND T HE SPIRIT OF THE PROVISION. 13. THEREFORE, IT IS IMPORTANT TO UNDERSTAND THE LE GISLATIVE INTENT BEHIND THE INTRODUCTION OF SECTION 54 OF THE I.T. ACT. IT WAS INTRODUCED WITH A VIEW TO ENCOURAGE HOUSE CONSTRUCT ION IN INDIA AS EXPLAINED BY CBDT IN ITS CIRCULAR NO.348 DATED 3 0.06.1982. WE ARE OF THE OPINION THAT UNLESS THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 54 IN SUCH A WAY THAT BY ALLO WING THE EXEMPTION, THE PURPOSE OF THE LEGISLATION WOULD BE DEFEATED, THE ASSESSEE CANNOT BE DENIED THE EXEMPTION. IN THE CAS E BEFORE US, WE FIND THAT THE ASSESSEE HAS INVESTED IN PURCHASE OF THE RESIDENTIAL FLATS WITHIN TWO YEARS AFTER SALE OF TH E ORIGINAL ASSET AND IS ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT SUB JECT TO THE FULFILLMENT OF THE OTHER CONDITIONS STIPULATED IN T HE SECTION. IN THE PARAGRAPHS ABOVE, IN THE PECULIAR CIRCUMSTANCES OF THIS CASE, WE HAVE ALREADY HELD THAT THE DEPOSIT IN TERM DEPOSIT A/C CAN BE CONSIDERED AS COMPLIANCE U/S 54(2) OF THE ACT, PROV IDED THE ASSESSEE HAS DEPOSITED THE ENTIRE CAPITAL GAINS AND HAS NOT AVAILED ANY LOAN AGAINST THE SAID A/C AND HAS UTILI ZED THE SAME FOR PURCHASE OF THE NEW PROPERTY. THE ISSUE IS THER EFORE, SET ASIDE TO THE FILE OF THE AO ONLY FOR VERIFICATION OF THIS ASPECT. 14. THE OTHER OBJECTION OF THE AO THAT THE NEW PROP ERTY IS PURCHASED IN THE JOINT NAMES OF THE ASSESSEE AND HI S SON ALSO IS NOT SUSTAINABLE IN VIEW OF THE DECISION OF THE HON' BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVINDER KUMAR ARORA R EPORTED IN 242 ITR 38. ITA NO 1707 OF 2016 AJEET KUMAR JAISWAL HYDERABAD PAGE 9 OF 9 15. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST AUGUST, 2017. VINODAN/SPS COPY TO: 1 SRI AJEET KUMAR JAISWAL, 3-3-120/A CHAPPAL BAZAR, KACHIGUDA HYDERABAD 2 INCOME TAX OFFICER CIRCLE 4(4) IT TOWERS, AC GUAR DS, HYDERABAD 500004 3 CIT (A)-1 HYDERABAD 4 PR. CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER