Sanjay Surendrabhai Gor, Ahmedabad V. DCIT, Circle-3(2), Ahmedabad

ITA 1739/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3997 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Assessee Lawyers: S N DIVETIA
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Set aside
• Section: 143(3); 54F; 54; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO.1739/AHD/2018 / ASSTT. YEAR: 2012-2013 SANJAY SURENDRABHAI GOR, PLOT NO.426, NR JYOTI TOWER, B/H STEEL TOWN WEIGH BRIDGE, MORAIYA, CHANGODAR, AHMEDABAD. PAN: AAWPG4093M VS. D.C.I.T., CIRCLE-3(2), AHMEDABAD. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, A.R REVENUE BY : SHRI R.R. MAKWANA, SR.D.R /DATE OF HEARING : 22/09/2021 /DATE OF PRONOUNCEMENT: 30/09/2021 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, AHMEDABAD, DATED 26/06/2018 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2012-2013. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 2 1.1 THE ORDER PASSED U/S.250 ON 26.06.2018 FOR A.Y.2012-13 BY CIT(A)-3, ABAD UPHOLDING THE DISALLOWANCE OF EXEMPTION AGGREGATING TO RS.1,39,08,029/- U/S.54 AND 54F MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED DISALLOWANCE. 2.1 THE LD.CIT{A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF EXEMPTION OF RS. 1,23,10,660/- U/S.54F THOUGH IT WAS NOT SUBJECT MATTER OF REVISION OR DIRECTION BY PR. CIT IN HIS ORDER DATED 29.03.2017 AND THE CONDITIONS REQUIRED FOR AVAILING THE EXEMPTION WERE FULFILLED. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CLT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF EXEMPTION OF RS.1,23,10,6607- U/S.54F THOUGH IT WAS NOT SUBJECT MATTER OF REVISION OR DIRECTION BY PR. CIT IN HIS ORDER DATED 29.03.2017 AND THE CONDITIONS REQUIRED FOR AVAILING THE EXEMPTION WERE FULFILLED. 3.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF EXEMPTION OF RS. 15,97,3697- U/S.54F OF THE ACT. 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF EXEMPTION OF RS.15,97,369/- U/S.54F OF THE ACT. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE APPELLANT WAS NOT HOLDING MORE THAN TWO RESIDENTIAL HOUSES ON THE DATE OF TRANSFER OF LAND AT MUNDRA AND AS SUCH THERE WAS NO BREACH OF THE CONDITIONS PROVIDED U/S.54F. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO BY DISALLOWING THE EXEMPTION CLAIMED UNDER SECTION 54/54F OF THE ACT AMOUNTING TO RS. 1,39,08,029/- 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF WORKS CONTRACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION SOLD TWO PROPERTY BEING PARAS BUNGALOW AND MUNDRA LAND FOR RS. 2,15,00,000/- AND RS. 18,32,000/- RESPECTIVELY. IN SUCH TRANSACTION HE EARNED LONG TERM CAPITAL GAIN OF RS. 1,23,10,660/- AND RS. 15,97,369/- RESPECTIVELY. THEREAFTER HE PURCHASED NEW RESIDENTIAL PROPERTY FOR RS. 1,70,00,000/- ONLY. ACCORDINGLY THE ASSESSEE CLAIMED THE EXEMPTION OF RS. 1,39,08,029/- ( 1,23,10,660.00 PLUS 15,97,369.00) AGAINST CAPITAL GAIN. THE CLAIM OF THE ASSESSEE WAS ALLOWED IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 18 TH JUNE 2014. 4.1 SUBSEQUENTLY, THE LEARNED PCIT IN HIS ORDER DATED 29 TH MARCH 2017 HELD THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT. HOWEVER HE WAS ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 3 THE OWNER OF MORE THAN ONE RESIDENTIAL PROPERTY AS ON THE DATE OF TRANSFER OF THE BUNGALOW AS WELL AS THE LAND. THUS, ACCORDING TO THE PROVISO ATTACHED TO SUBSECTION 1 OF SECTION 54F OF THE ACT, THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT. ACCORDINGLY, THE LEARNED PCIT HELD THAT THE ASSESSMENT FRAMED UNDER SECTION 143 (3) OF THE ACT DATED 18 TH JUNE 2014 AS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE. THUS THE SAME WAS SET ASIDE BY HIM WITH THE DIRECTION TO THE AO TO MAKE THE FRESH ASSESSMENT AS PER LAW IN TERMS OF SECTION 54F OF THE ACT AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 4.2 IN CONSEQUENCE TO THE DIRECTION OF THE LEARNED PCIT, THE AO INITIATED THE PROCEEDING AGAINST ASSESSEE BY ISSUING SHOW CAUSE NOTICE DATED 4 TH OCTOBER 2017 SEEKING CLARIFICATION FROM THE ASSESSEE FOR DISALLOWING THE EXEMPTION CLAIMED BY HIM UNDER THE PROVISIONS OF SECTION 54F OF THE ACT. 4.3 THE ASSESSEE IN RESPONSE TO SUCH SHOW CAUSE NOTICE VIDE LETTER DATED 15 TH DECEMBER 2017 SUBMITTED THAT HE HAS SOLD TWO PROPERTIES BEING BUNGALOW AND THE LAND IN THE YEAR UNDER CONSIDERATION. HE HAS CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT WITH RESPECT TO THE SALE OF BUNGALOW. LIKEWISE, THE EXEMPTION UNDER SECTION 54F OF THE ACT WAS CLAIMED WITH RESPECT TO THE SALE OF LAND. THE NECESSARY DETAILS FOR THE EXEMPTION CLAIMED UNDER THE RESPECTIVE SECTION STAND AS UNDER: FACTS OF THE CASE RELATING TO EXEMPTION OF LONG TERM CAPTIAL GAIN U/S 54 AS WELL AS 54F ASSTT. YEAR 2012-2013 DATE OF PURCHASE SALE DATE AMOUNT OF SATE COST INDEXED AMOUNT LONG TERM CAPITA! GAM COST OF NEW PROPERTY PURCHASE 1 PARAS BUNGLOW 27-06- 2006 20-12- 2011 2,15,00,000 60,75,500 91,89,340 1.23,10,660 1.70,00.0 00 2 MUDRA LAND 08-12- 2005 20-12- 2011 18,32,000 1,48,550 2,34,831 15,97,369 ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 4 TOTAL RS... 2.33,32,000 62.21.050=00 94,23,971= 00 1,33,08,029= 00 4.4 IT WAS ALSO CONTENDED BY THE ASSESSEE THAT HE HAD TWO RESIDENTIAL PROPERTIES BESIDES THE BUNGALOW WHICH WAS SOLD IN THE YEAR UNDER CONSIDERATION. ONE OF THE RESIDENTIAL PROPERTY WAS USED FOR FACTORY STAFF QUARTERS. IN OTHER WORDS, SUCH RESIDENTIAL PROPERTY WAS USED AS BUSINESS AND ALSO SHOWN IN THE BALANCE SHEET. THUS, THE ASSESSEE EFFECTIVELY HAD ONLY ONE RESIDENTIAL PROPERTY AS ON THE DATE OF TRANSFER OF SALE OF THE LAND. ACCORDINGLY, THERE WAS NO CONTRAVENTION OF THE PROVISIONS OF SECTION 54F OF THE ACT WHICH PROHIBITS THE EXEMPTION TO THE ASSESSEE IF THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL PROPERTY ON THE DATE OF TRANSFER OF THE LAND. THUS IN NUTSHELL, THE ASSESSEE SUBMITTED THAT HE IS ELIGIBLE FOR EXEMPTION FOR THE SALE OF BUNGALOW UNDER THE PROVISIONS OF SECTION 54 OF THE ACT AND HE IS ALSO ELIGIBLE FOR EXEMPTION FOR THE SALE OF LAND UNDER THE PROVISIONS OF SECTION 54F OF THE ACT. 4.5 HOWEVER, THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT AND ON THE DATE OF TRANSFER, HE HAD MORE THAN ONE RESIDENTIAL PROPERTY. BUT HE HAS CLAIMED THAT OTHER RESIDENTIAL PROPERTY WAS USED AS BUSINESS ASSETS WHICH NOT ACCEPTABLE AS HE FAILED TO PROVE HIS CONTENTION BASED ON DOCUMENTARY EVIDENCE AND ALSO NO DEPRECIATION WAS CLAIMED ON SUCH RESIDENTIAL PROPERTY. THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT. 4.6 THE AO FURTHER OBSERVED THAT THE ASSESSEE IS ALSO NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THE PROVISION OF SECTION 54 OF THE ACT IS APPLICABLE WHERE AN INDIVIDUAL/HUF HAS TRANSFERRED CAPITAL ASSET BEING BUILDING OR LAND APPURTENANT THERETO, AND BEING RESIDENTIAL HOUSE, AND THE INCOME FROM WHICH CHARGEABLE TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER THE ASSESSEE HAS NOT DECLARED ANY INCOME FROM HOUSE PROPERTY IN ANY OF THE ASSESSMENT YEARS STARTING FROM A.Y. 2008-09 TO 2012-13. THUS HE DID NOT FULFILL ALL THE INGREDIENT TO ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 5 CLAIM EXEMPTION UNDER SECTION 54 OF THE ACT. THUS, THE AO, IN VIEW OF THE ABOVE OBSERVATION DENIED THE EXEMPTION OF RS. 1,39,08,029/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT (A). 6. THE ASSESSEE BEFORE LEARNED CIT(A) REITERATED HIS SUBMISSION THAT HE CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT AGAINST GAIN OF RS. 1,23,10,660/- ON SALE OF BUNGALOW AND EXEMPTION UNDER SECTION 54F FOR RS. 15,97,369/- AGAINST GAIN ON SALE OF LAND. THE ASSESSEE FURTHER SUBMITTED THAT THE LEARNED PCIT HAS REVISED THE ASSESSMENT ORDER UNDER SECTION 263 FOR EXEMPTION UNDER SECTION 54F OF THE ACT ONLY. CONSEQUENTIAL NOTICE DATED 11 TH DECEMBER 2017 ISSUED BY THE AO WAS ALSO WITH RESPECT TO EXEMPTION UNDER SECTION 54F ONLY. ACCORDINGLY THE ASSESSEE CONTENDED THAT THE AO HAS EXCEEDED HIS JURISDICTION IN DISALLOWING THE EXEMPTION UNDER SECTION 54 OF RS. 1,23,10,600/- CLAIMED ON ACCOUNT OF SALE OF BUNGALOW. THE ASSESSEE FURTHER CONTENDED THAT THE PROVISION OF SECTION 54 OF THE ACT REQUIRES THE INCOME FROM SUCH RESIDENTIAL HOUSE OR BUILDING IS TO BE TAXABLE UNDER THE HEAD HOUSE PROPERTY. IN HIS CASE THE BUNGALOW A RESIDENTIAL PROPERTY WAS NOT LET OUT. HAD THE SAME BEEN LET OUT, THE INCOME WOULD HAVE TAXED UNDER THE HEAD HOUSE PROPERTY. THUS THERE WAS NO VIOLATION OF SECTION 54 OF THE ACT OCCURRED. 6.1 THE ASSESSEE WITH REGARD TO EXEMPTION OF RS. 15,97,369/- CLAIMED UNDER SECTION 54F ON ACCOUNT OF TRANSFER OF LAND REITERATED THAT OTHER RESIDENTIAL PROPERTY WAS BUSINESS ASSETS. THUS HE HAD ONLY ONE RESIDENTIAL HOUSE ON THE DATE OF TRANSFER. 6.2 HOWEVER THE LEARNED CIT (A) ALSO REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: THE ORIGINAL ASSESSMENT ORDER 'HAS BEEN SET ASIDE AND AO HAS BEEN DIRECTED TO FRAME ASSESSMENT ORDER AFRESH' AS CAN BE SEEN FROM THE CONCLUDING PARA OF ORDER U/S.263 (SUPRA). FURTHER, THE CONCLUDING PARA OF THE AO'S ORDER U/S.143{3) R.W.S.263 IS REPRODUCED AS UNDER: 'AS THE ASSESSEE HAS NOT FULFILLED THE TERMS AND CONDITIONS REQUIRED FOR THE CLAIMING DEDUCTION UNDER SECTION 54 & 54F AND NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S.54 & 54F OF THE INCOME TAX ACT, THE CLAIMED AMOUNT DEDUCTION U/S.54 & 54F OF THE INCOME TAX ACT OF ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 6 RS.1,39,08,029/- IS HEREBY DISALLOWED AND THE SAME AMOUNT ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ........ .............' I HAVE NO DOUBT ABOUT THE CONCLUSIONS DRAWN BY THE AO AS HAS BEEN CONCLUDED ELSEWHERE THAT THE APPELLANT NEITHER ELIGIBLE FOR DEDUCTION U/S.54 OR U/S.54F. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX NOW COMING TO THE FACTUAL ASPECT OF THE CONTROVERSY INVOLVED. THERE HAS BEEN SALE OF PARAS BUNGLOW AND LAND AT MUDRA FROM WHERE THE APPELLANT EARNED LTCG OF RS.1,39,08,029/- AND ASKED FOR DEDUCTION U/S.54/54F (CONCERNING LTCG ON THE SALE OF RESIDENTIAL PROPERTY/NON- RESIDENTIAL ASSETS BUT INVESTED IN RESIDENTIAL PROPERTY) AS THERE WAS EXCESS INVESTMENT IN NEW PROPERTY. DURING THE APPELLATE PROCEEDINGS THE AR SUBMITTED THAT INVESTMENT IN NEW PROPERTY WAS RS,1,70,00,000/- AND THE APPELLANT WAS HOLDING FOLLOWING PROPERTIES AT THE TIME OF PURCHASE OF NEW PROPERTY. 1 RESIDENTIAL FLAT (ASMAKAM) 31.03.2012 RS.12,96,135/- {CLAIMED AS ASSET IN BALANCE SHEET AND USED FOR RESIDENCE OF THE STAFF MEMBERS OF MY BUSINESS). * 2 RESIDENTIAL FLAT 31.03.2012 RS.15,21,492/- USED AS RESIDENCE * THIS IS A CASE OF INDIVIDUAL AND NOT FIRM OR COMPANY HAVING ESTABLISHED BUSINESS SO AS TO PROVIDE RESIDENTIAL ACCOMMODATION TO THE 'SO-CALLED STAFF AND THE UNDERSIGNED CONCLUDES IT TO BE A AVARICE CLAIM ATTEMPTING TO REDUCE THE TAX LIABILITY. THE FINDINGS IN PARA-3 OF ORDER U/S.263 DATED 29.03.2017 ARE THAT THE APPELLANT WAS HAVING TWO RESIDENTIAL FLATS AND ONE RESIDENTIAL BUILDING AS ON 31.03.2011. THEREFORE; LTCG ARISING ON SALE OF PARAS BUNGLOW DATED 20.10.2011 IS NOT ELIGIBLE FOR ANY DEDUCTION U/S.54 (CIT ORDER U/S.263 AT PARA [6 (IT)] MENTIONS, 'WHEN, DUE TO NOTICE U/S.263, HE BECAME AWARE THAT HE CAN'T GET BENEFIT OF SECTION 54F ON SALE OF RESIDENTIAL HOUSE, HE IS NOW CLAIMING IT U/S.54). THEREFORE, THERE IS NO GAINSAYING IN EMPHASIZING SECTION 54 OR 54F OR MAY BE THE APPELLANT DOES NOT HAVE A CASE ON FACTS, THEREFORE, TRYING TO \ SCUTTLE THE ISSUE BY OVER- EMPHASIZING NON-EXISTENT LEGAL GROUND. THE ISSUE BECOMES VERY CLEAR WHEN APPELLANT HIMSELF ADMITS IN SUBMISSION AND SAME IS REPRODUCED AS UNDER: '(5) ON LEGAL GROUND YOUR APPELLANT ARGUES THAT::- CONDITION OF SECTION 54, SAYS ' THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD ' INCOME FROM HOUSE PROPERTY' THAT MEANS, IF THE INCOME RECEIVED FROM RESIDENTIAL PROPERTY IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY THEN CONDITIONS OF SECTION U/S. 54 IS FULFILLED. ' PARAS BUNGLOW ' WAS RESIDENTIAL PROPERTY, IT WAS KEPT VACANT AND HAD IT BEEN GIVEN ON RENT THEN ITS INCOME WOULD HAVE BEEN TAXED UNDER THE HEAD ' INCOME FROM HOUSE PROPERTY' IT EQUALLY MEANS IF THE INCOMES FROM PROPERTY ARE NOT TAXED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY ' THEN U/S. 54 IS NOT ALLOWED. E.G. INCOME FROM FARM HOUSE IS EXEMPT, INCOME FROM PROPERTY OF A TRADE UNION IS EXEMPT, INCOME FROM INSTALLATION OF MOBILE TOWER IS TAXED AS INCOME UNDER OTHER SOURCES. THE INCOMES FROM ALL THE PROPERTIES WILL NOT QUALIFY FOR EXEMPTION U/S. 54.' ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 7 THEREFORE, ADMITTEDLY APPELLANT WAS HOLDING MORE THAN TWO RESIDENTIAL PROPERTIES AT THE TIME OF ORIGIN OF LTCG. SIMILARLY, ANY INVESTMENT OF LTCG ARISING ON 20.12.2011 ON THE SALE OF MUDRA LAND ARE NOT ELIGIBLE FOR ANY DEDUCTION U/S.54F AS THE APPELLANT IS ALREADY HAVING TWO RESIDENTIAL PREMISES. THERE IS NO INVESTMENT OUT OF SALE OF MUDRA LAND IN ANY AGRICULTURAL LAND THEREFORE, DEDUCTION U/S.54B IS NOT TENABLE. THE APPELLANT IS TRYING TO MAKE HIMSELF ELIGIBLE FOR DEDUCTION U/S.54 FOR THE HUGE INVESTMENT MADE IN RESIDENTIAL BUILDING 'KANHA' SAYING THAT THE SAME INVESTMENT HAS BEEN MADE AFTER SALE OF PARAS BUNGALOW. HOWEVER, AS PER RECORD THE APPELLANT OWNS ANOTHER TWO RESIDENTIAL PREMISES THEREFORE, IS NOT ELIGIBLE FOR DEDUCTION EITHER U/S.54 OR 54F. 7. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 108 AND CONTENDED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54/54F OF THE ACT ON THE SALE OF BUNGALOW AND LAND. 9. ON THE OTHER HAND THE LEARNED DR BEFORE US VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE BEFORE US RELATES TO THE FACT THAT WHETHER THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF SALE OF THE BUNGALOW AS WELL AS THE LAND. 10.1 FIRST, WE PROCEED TO SEE WHETHER THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT WITH RESPECT TO THE SALE OF BUNGALOW. FOR THIS PURPOSE, WE REFERRED THE INCOME TAX STATEMENT FILED BY THE ASSESSEE PLACED ON PAGES 91 TO 95 OF THE PAPER BOOK WHICH IS REPRODUCED AS UNDER: INCOME FROM LONG TERM CAPITAL GAIN RS. RS. RS. SALE OF ITEMS AS PER LIST ENCLOSED 23332000 LESS: (COST OF ACQUISITION ETC.) INDEXED COST OF ACQUISITION (-)9423971 LESS: (EXEMPTIONS U/S.54B/54D/54G ETC.) INVESTMENT IN PROPERTY U/S.54-A 17000000 (-)13908020 NIL ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 8 10.2 ON PERUSAL OF THE ABOVE STATEMENT OF INCOME OF THE ASSESSEE, IT IS NOWHERE CLEAR WHETHER THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54/54F OF THE ACT. RATHER, IT SHOWS THE DEDUCTION CLAIMED UNDER SECTION 54EA OF THE ACT WHICH DEALS WITH THE CAPITAL GAIN ON SALE OF CAPITAL ASSETS INVESTED IN SPECIFIED SECURITIES. HOWEVER, WE FIND THAT NONE OF THE AUTHORITIES INCLUDING THE PRINCIPAL CIT HAS DISPUTED THAT THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 54EA OF THE ACT. RATHER THE ISSUE REVOLVES FOR THE EXEMPTION CLAIMED UNDER SECTION 54 OR 54F OF THE ACT. THUS, THE STATEMENT OF INCOME OF THE ASSESSEE DOES NOT GIVE ANY INFORMATION TO DECIDE THE ISSUE ON HAND. 10.3 MOVING FURTHER, WE HAVE REFERRED THE SHOW CAUSE NOTICE ISSUED BY THE AO DATED 16 TH APRIL 2014 DURING THE ORIGINAL ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT AND ITS RELEVANT EXTRACT IS REPRODUCED AS UNDER: SUBJECT: ASSESSMENT PROCEEDING U/S.143(3) IN YOUR CASE FOR THE A.Y.2012-13 SHOW CAUSE NOTICE FOR PROPOSED ADDITION-REG. PLEASE REFER TO THE ABOVE. ON VERIFICATION OF THE STATEMENT OF INCOME IT IS SEEN THAT YOU HAVE SHOWN LTCG IN RESPECT OF SALE OF PARAS BUNGLOW AND MUDRA LAND OF RS.1,39,08,029/-. FURTHER, YOU HAVE CLAIMED EXEMPTION U/S.54 OF RS.1,70,00,000/- OUT OF WHICH THE EXEMPTION U/S.54F IS OF RS.15,97,369/-. THE EXEMPTION U/S.54F IS NO ALLOWABLE AS YOU ARE HOLDING MORE THAN ONE RESIDENTIAL PROPERTY ON THE DATE OF TRANSFER OTHER THAN NEW RESIDENTIAL PROPERTY. YOU ARE THEREFORE REQUESTED TO EXPLAIN WHY THE EXEMPTION U/S.54F OF RS.15,97,369/- SHOULD NOT BE DISALLOWED. 10.4 FROM THE ABOVE SHOW CAUSE NOTICE ISSUED BY THE AO, IT IS VERY CLEAR THAT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT WITH RESPECT TO THE SALE OF BUNGALOW. 10.5 BESIDES THE ABOVE, WE ALSO NOTE THAT THE EXEMPTION UNDER SECTION 54 AND 54F OF THE ACT ARE COMPUTED IN A DIFFERENT MANNER. AS SUCH UNDER THE PROVISIONS OF SECTION 54 OF THE ACT THE AMOUNT OF CAPITAL GAIN IS CONSIDERED FOR THE PURPOSE OF MAKING THE INVESTMENT IN ANOTHER RESIDENTIAL PROPERTY WHEREAS UNDER THE PROVISIONS ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 9 OF SECTION 54F OF THE ACT THE AMOUNT OF NET CONSIDERATION IS CONSIDERED FOR THE PURPOSE OF MAKING THE INVESTMENT IN ANOTHER RESIDENTIAL PROPERTY. 10.6 THE ASSESSEE IN THE PRESENT CASE HAS SOLD THE BUNGALOW FOR CONSIDERATION OF RS. 2.15 CRORES AND PURCHASED NEW HOUSE FOR RS. 1.7 CRORES AND CLAIMED THE EXEMPTION ON ENTIRE CAPITAL GAIN OF RS. 1,23,10,660/-. THUS THE ASSESSEE CONSIDERED THE AMOUNT OF CAPITAL GAIN FOR INVESTMENT WHICH WAS CLAIMED AS EXEMPTED UNDER SECTION 54 OF THE ACT. IN OTHER WORDS, HAD THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT AND THE SAME SHOULD HAVE BEEN LIMITED TO PROPORTION OF AMOUNT INVESTED VIZ A VIZ NET CONSIDERATION I.E. RS. 97,34,010/- (1.7 CRORE / 2.15 CRORE X 1,23,10,660) ONLY. 10.7 ADMITTEDLY, THE ASSESSEE HAS CLAIMED EXEMPTION OF RS. 1,23,10,660/- WHICH IS AN AMOUNT ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THUS, IT CAN BE INFERRED THAT THE DEDUCTION WAS CLAIMED WITH RESPECT TO THE SALE OF BUNGALOW UNDER THE PROVISIONS OF SECTION 54 OF THE ACT. 10.8 IN THIS BACKGROUND, WE PROCEED TO ADJUDICATE THE QUESTION WHICH RAISED BEFORE US THAT THE AO HAS EXCEEDED HIS JURISDICTION UNDER SET ASIDE PROCEEDING OR NOT? 10.9 WE FIND IT IMPORTANT TO BRING ON RECORD THAT THE AO IN THE SET-ASIDE PROCEEDINGS IS BOUND BY THE DIRECTION OF THE HIGHER AUTHORITY. THE PROCEEDINGS IN THE PRESENT CASE WERE INITIATED BY THE AO IN CONSEQUENCE TO THE DIRECTION OF THE LEARNED PRINCIPAL CIT UNDER SECTION 263 OF THE ACT WHICH ARE REPRODUCED AS UNDER: IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT THE ASSESSMENT ORDER PASSED BY THE A.O IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. I HEREBY SET-ASIDE THE AFRESH, AND AS PER LAW, IN TERMS OF SECTION 54F OF THE ACT. THE ASSESSING OFFICER IS DIRECTED TO ENSURE THAT ADEQUATE AND DUE OPPORTUNITY OF BEING HEARD IS GRANTED TO THE ASSESSEE. 10.10 ON PERUSAL OF THE DIRECTION OF THE LEARNED PRINCIPAL CIT WE FIND THAT IT WAS DIRECTED TO THE AO TO MAKE A FRESH ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 10 LAW IN TERMS OF SECTION 54F OF THE ACT. THUS, IT WAS CLEAR THAT THE AO WAS AUTHORIZED TO MAKE A FRESH ASSESSMENT AS PER THE PROVISIONS OF LAW AFTER THE NECESSARY VERIFICATION IN TERMS OF SECTION 54F OF THE ACT. 10.11 WITHOUT PREJUDICE TO THE ABOVE, WE ALSO NOTE THAT, ASSUMING THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT, THEN IT WAS THE DUTY OF THE REVENUE TO PROVIDE THE RIGHTFUL CLAIM OF THE ASSESSEE WHICH IS AVAILABLE UNDER THE PROVISIONS OF LAW BUT THE SAME WAS NOT CLAIMED BY THE ASSESSEE UNDER THE WRONG BELIEVE. AS SUCH, THE REVENUE CANNOT TAKE THE BENEFIT OF THE IGNORANCE OF THE ASSESSEE RATHER IT WAS DUTY-BOUND TO EXTEND THE BENEFIT AVAILABLE TO THE ASSESSEE UNDER THE PROVISIONS OF LAW. IN THIS CONNECTION, FIND SUPPORT FROM THE ORDER OF COORDINATE BENCH OF DELHI ITAT IN CASE OF ANANT RAJ LTD VS. DCIT REPORTED IN [2021] 124 TAXMANN.COM 576 (DELHI-TRIB) WHERE IT WAS HELD AS UNDER: 86. IT IS A WELL ESTABLISH LAW THAT, IF ON THE BASIS OF MATERIAL ON RECORD, THE ASSESSEE IS ENTITLED TO A RELIEF, THEN IT WOULD CONSTITUTE A MISTAKE APPARENT FROM RECORD WHICH CAN BE RECTIFIED U/S 154 OF THE ACT AND SUCH RELIEF CANNOT BE DENIED EVEN IF THE ASSESSEE OMITTED TO CLAIM THE SAME BY MISTAKE. THE HON'BLE SUPREME COURT IN THE CASE OF ANCHOR PRESSINGS (P.) LTD. (SUPRA) HELD THAT THE JURISDICTION U/S 154 TO RECTIFY THE MISTAKE IS MUCH WIDER THAN PROVIDED IN ORDER XLVII, RULE 1 OF THE CPC, 1908, AND THEREFORE, RELIEF COULD BE ALLOWED IN THE RECTIFICATION PROCEEDINGS IF ALL THE FACTUAL MATERIAL NECESSARY FOR ALLOWING THE RELIEF WERE AVAILABLE ON RECORD AND SUCH RELIEF COULD NOT BE DENIED MERELY BECAUSE THE ASSESSEE OMITTED TO CLAIM THE SAME. THIS VIEW HAS BEEN UPHELD IN THE CASE OF LUSTRE TILES LTD. (SUPRA) WHERE RELIANCE HAS BEEN PLACED ON CONTAINER CORP. OF INDIA LTD. V. DY. CIT [2005] 92 ITD 333 (DELHI) WHEREIN THE ITAT, DELHI BENCH, AFTER DISCUSSING SEVERAL DECISIONS OF THE COURT INCLUDING THAT OF ANCHOR PRESSINGS (P.) LTD. (SUPRA) HELD THAT THE JURISDICTION U/S 154 CAN BE ASSUMED IF THERE IS A MISTAKE APPARENT FROM RECORD. IF ON THE BASIS OF MATERIAL ON RECORD, THE ASSESSEE IS ENTITLED TO A RELIEF WHICH HAS REMAINED TO BE ALLOWED, THEN IT WOULD CONSTITUTE A MISTAKE APPARENT FROM RECORD AND CONSEQUENTLY, SUCH RELIEF CANNOT BE DENIED MERELY BECAUSE THE ASSESSEE OMITTED TO CLAIM THE SAME BY MISTAKE. 10.12 NOW COMING TO THE EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT ON THE SALE OF LAND BY THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS CLAIMED THE EXEMPTION UNDER SECTION 54F OF THE ACT ON THE SALE OF LAND. AS SUCH THE ASSESSEE CAN CLAIM THE DEDUCTION UNDER SECTION 54F OF THE ACT ON THE SALE OF LONG- TERM CAPITAL ASSET BEING LAND IN THE PRESENT CASE. FURTHERMORE, THIS FACT WAS ALSO ADMITTED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. HOWEVER, THE AUTHORITIES BELOW HAVE DENIED THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F OF THE ACT ON THE SALE OF LAND ON THE REASONING THAT THE ASSESSEE ON THE DATE OF TRANSFER ITA NO.1739/AHD/2018 ASSTT. YEAR 2012-13 11 OF LAND WAS THE OWNER OF MORE THAN ONE RESIDENTIAL PROPERTY. THE CONTENTION OF THE ASSESSEE WAS THAT ONE OF THE ASSESSEE RESIDENTIAL PROPERTY WAS USED AS BUSINESS ASSET AS STAFF QUARTERS. THEREFORE, AS PER THE ASSESSEE THE SAME CANNOT BE HELD AS RESIDENTIAL PROPERTY OWNED BY THE ASSESSEE AS ON THE DATE OF TRANSFER. ADMITTEDLY, THE ONUS LIES UPON THE ASSESSEE TO PROVE THAT ITS RESIDENTIAL PROPERTY WAS USED FOR THE BUSINESS PURPOSES. FOR THIS PURPOSE, WE HAVE PERUSED THE DEPRECIATION CHART OF THE ASSESSEE TO SEE WHETHER THE ASSESSEE HAS CLAIMED DEPRECIATION ON SUCH ALLEGED BUILDING USED FOR THE PURPOSE OF THE BUSINESS. BUT WE FIND THAT THERE WAS NO DEPRECIATION CLAIMED BY THE ASSESSEE ON THE ALLEGED BUILDING RATHER THE DEPRECIATION WAS CLAIMED BY THE ASSESSEE ONLY ON THE FACTORY BUILDING ALONG WITH OTHER ASSETS. THUS, THE ASSESSEE FAILED TO PROVIDE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CONTENTION. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT ON THE SALE OF LAND, AS THE ASSESSEE WAS HOLDING MORE THAN ONE RESIDENTIAL UNIT. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30/09/2021 AT AHMEDABAD. SD/- SD/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 30/09/2021 MANISH