ACIT, Circle- 34(1), New Delhi V. Sanjay Khanna (HUF), Delhi

ITA 174/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7499 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: Y K KAPOOR
• Keywords: Application of stay; Set aside; Capital Gains
• Section: 54EC; 54

Judgement Text

1 | P A GE IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & DR.B.R.R.KUMAR, ACCOUNTANT MEMBER ITA NO.174/DEL/2018 ASSESSMENT YEAR : 2012-13 ACIT, CIRCLE-34(1), NEW DELHI. VS SANJAY KHANNA (HUF), B-127, ASHOK VIHAR, PHASE-I, NEW DELHI-110052. PAN-AAIHS9436G APPELLANT RESPONDENT APPELLANT BY SH. PRAKASH DUBEY, SR.DR RESPONDENT BY SH. Y.K.KAPOOR, ADV. DATE OF HEARING 26.07.2021 DATE OF PRONOUNCEMENT 3 1 .08.2021 ORDER PER KUL BHARAT, JM : THIS APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-25, DE LHI DATED 29.09.2017. THE REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL:- 1. WHETHER THE CIT(A) HAS NOT ERRED IN DELETING TH E ADDITION OF RS.4,55,00,000/- MADE BY THE ASSESSING OFFICER BY R EJECTING THE ASSESSEES CLAIM OF DEDUCTION U/S 54 OF THE IT ACT, 1961? 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4,53,85,150/- WAS FILE D BY THE ASSESSEE ON 03.08.2012. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY. WHILE FRAMING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT ON PERUSAL OF THE ITA NO.174/DEL/2018 ASSESSMENT YEAR : 2012-13 2 | P A GE COMPUTATION, IT WAS SEEN THAT THE ASSESSEE HAD RECE IVED ENHANCED COMPENSATION OF RS.13,15,68,759/- (INCLUSIVE OF INT EREST) ON ACCOUNT OF COMPULSORY ACQUISITION OF HIS IMMOVABLE PROPERTY HE LD IN THE YEAR 2001-02. THE ASSESSEE HAD DISCLOSED RS.5,44,45,242/- AS ENHA NCED COMPENSATION AND RS.7,71,23,517/- AS INTEREST INCOME ON ENHANCED COM PENSATION UNDER THE HEAD OF INCOME FROM OTHER SOURCES. IN RESPECT OF T HE ENHANCED COMPENSATION UNDER THE HEAD OF LONG TERM CAPITAL GAIN, THE ASSES SEE HAD CLAIMED EXEMPTION U/S 54 OF THE INCOME TAX ACT, 1961 (THE ACT) BY INVESTING RS.4,55,00,000/- IN THE CAPITAL GAIN SCHEME, RS.25, 00,000/- AS LITIGATION EXPENSES AND THE BALANCE AMOUNT OF COMPENSATION OF RS.64,45,242/- OFFERED TO TAX UNDER THE HEAD INCOME FROM CAPITAL GAINS. THE ASSESSING OFFICER OBSERVED THAT PROPERTY IN QUESTION WAS ACQUIRED ON ACCOUNT O F DEVELOPMENT OF DELHI METRO RAIL AT CIVIL LINES, DELHI. THEREAFTER, THE ASSESSEE HAD RECEIVED THE COMPENSATION AND DECLARED CAPITAL GAIN IN THE ASSES SMENT YEAR 2003-04. IN THE SAME ASSESSMENT YEAR, THE ASSESSEE HAD CLAIMED EXEMPTION U/S 54 OF THE ACT ON THE ORIGINAL COMPENSATION BY INVESTING THE S AME INTO CAPITAL GAIN FDR SCHEME. HOWEVER, THE SAME WAS NOT UTILIZED FOR THE SPECIFIED PURPOSE LATER ON TAX WAS PAID IN ASSESSMENT YEAR 2005-06 ON THE ORIG INAL AMOUNT OF COMPENSATION. IN THE CURRENT ASSESSMENT YEAR, THE ASSESSEE HAD AGAIN CLAIMED DEDUCTION U/S 54 OF THE ACT BY INVESTING TH E ENHANCED COMPENSATION RECEIVED IN THE RELEVANT ASSESSMENT YEAR INTO THE C APITAL GAIN SCHEME. THE ASSESSING OFFICER, THEREFORE, VIDE ORDER SHEET ENTR Y DATED 22.12.2014 CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF DEDU CTION U/S 54 OF THE ACT IN ITA NO.174/DEL/2018 ASSESSMENT YEAR : 2012-13 3 | P A GE RESPECT OF THE ENHANCED COMPENSATION RECEIVED IN TH E RELEVANT FINANCIAL YEAR. IN RESPONSE THERETO, A REPLY VIDE LETTER DATED 05.0 1.2014 WAS FILED. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N OFFERED BY THE ASSESSEE AND PROCEEDED TO MAKE ADDITION OF RS.4,55,00,000/- IN RESPECT OF ENHANCED COMPENSATION. THUS, HE ASSESSED THE INCOME AT RS.4 ,53,85,150/- AGAINST THE INCOME DECLARED AS PER THE RETURN OF RS.4,55,00,000 /- 3. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS AND RELYING U PON THE PROVISION OF SECTION 54H OF THE ACT AND THE CASE LAWS AS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, ALLOWED THE CLAIM OF DEDUCTION U/S 54 H OF THE ACT. 4. NOW, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUN AL. 5. LD. SR. DR ON BEHALF OF THE REVENUE VEHEMENTLY A RGUED THAT LD.CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSE SSEE. LD. SR. DR STRONGLY SUPPORTED THE ASSESSMENT ORDER. HE SUBMITTED THAT LD.CIT(A) HAS ERRONEOUSLY ALLOWED THE BENEFIT OF SECTION 54H OF THE ACT WHICH WOULD NOT BE AVAILABLE TO THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HA D RECEIVED ENHANCED COMPENSATION AMOUNTING TO RS.13,15,68,759/- THAT I NCLUDED THE INTEREST ON ENHANCED COMPENSATION OF RS.7,71,23,517/- SO FAR TH E INTEREST IS CONCERNED, THE SAME HAS BEEN OFFERED FOR TAX AS INCOME UNDER T HE HEAD INCOME FROM OTHER SOURCES. HOWEVER, FOR THE COMPONENT OF ENHANCED C OMPENSATION, THE ASSESSE CLAIMED EXEMPTION U/S 54 OF THE ACT BY INVESTING RS .4,55,00,000/- UNDER THE CAPITAL GAINS SCHEME. HE SUBMITTED THAT LD.CIT(A) ERRONEOUSLY APPLIED SECTION ITA NO.174/DEL/2018 ASSESSMENT YEAR : 2012-13 4 | P A GE 54H OF THE ACT. HE DREW OUR ATTENTION TO THE PROVI SION OF SECTION 54H OF THE ACT IN SUPPORT OF HIS CONTENTION THAT THE BENEFIT OF SE CTION 54H OF THE ACT IS NOT AVAILABLE TO THE ASSESSEE. 6. PER CONTRA, LD. COUNSEL FOR THE ASSESSEE OPPOSED THESE SUBMISSIONS AND SUPPORTED THE ORDER OF LD.CIT(A). HE SUBMITTED THA T THERE IS NO AMBIGUITY UNDER LAW AND ON FACTS, THERE IS NO DISPUTE WITH RE GARD TO THE FACT THAT THE ASSESSEE HAD RECEIVED ENHANCED COMPENSATION ON COMP ULSORY ACQUISITION OF HIS PROPERTY. HE FURTHER SUBMITTED THAT HONBLE DE LHI HIGH COURT WHILE GRANTING STAY OF DEMAND HAS HELD THAT THE ASSESSEE S CLAIM FOR TREATMENT OF THE ENHANCED AMOUNT RECEIVED TOWARDS COMPENSATION U/S 54 OF THE ACT IS PRIMA FACIE - A STRONG ONE, SINCE THE EVENT WHICH LED HIM TO CLAIM SUCH HIGHER AMOUNT WAS ON ACCOUNT OF THE ACQUISITION ITSELF. I N OTHER WORDS, THERE WAS AN INTRINSIC LINK BETWEEN THE REFERENCE WHICH LED TO T HE ENHANCEMENT AND THE ACQUISITION U/S 54(H) OF THE ACT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR EFFECTIVE ADJUDI CATION AND CLARITY, SECTION 54H OF THE ACT IS REPRODUCED HEREUNDER:- 54H. NOTWITHSTANDING ANYTHING CONTAINED IN SECTIONS 54, 54B, 54D, 54EC AND 54F, WHERE THE TRANSFER OF T HE ORIGINAL ASSET IS BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW AND THE AMOUNT OF COMPENSATION AWARDED FOR SUCH ACQUISITION IS NOT RE CEIVED BY THE ASSESSEE ON THE DATE OF SUCH TRANSFER, THE PERIOD F OR ACQUIRING THE NEW ASSET BY THE ASSESSEE REFERRED TO IN THOSE SECTIONS OR, AS THE CASE MAY BE, ITA NO.174/DEL/2018 ASSESSMENT YEAR : 2012-13 5 | P A GE THE PERIOD AVAILABLE TO THE ASSESSEE UNDER THOSE SE CTIONS FOR DEPOSITING OR INVESTING THE AMOUNT OF CAPITAL GAIN IN RELATION TO SUCH COMPENSATION AS IS NOT RECEIVED ON THE DATE OF THE TRANSFER, SHALL BE RECKONED FROM THE DATE OF RECEIPT OF SUCH COMPENSATION : PROVIDED THAT WHERE THE COMPENSATION IN RESPECT OF TRANSFER OF THE ORIGINAL ASSET BY WAY OF COMPULSORY ACQUISITION UNDER ANY LA W IS RECEIVED BEFORE THE 1ST DAY OF APRIL, 1991, THE AFORESAID PERIOD OR PERIODS, IF EXPIRED, SHALL EXTEND UP TO THE 31ST DAY OF DECEMBER, 1991. 8. AS PER THE REVENUE, NO BENEFIT CAN BE GIVEN TO T HE ASSESSEE U/S 54H OF THE ACT AS THE FACTS IN THE PRESENT CASE ARE THAT T HE ASSESSEE HAD CLAIMED DEDUCTION U/S 54H OF THE ACT FOR THE COMPENSATION R ECEIVED IN RESPECT OF ASSESSMENT YEAR 2003-04. IT IS CONTENDED THAT SECT ION 54/54H OF THE ACT NEITHER SPEAK ABOUT THE INVESTMENT OF ADDITIONAL CO MPENSATION NOR ABOUT THE EXTENSION OF THE TIME LIMIT IN RESPECT OF CLAIM OF DEDUCTION U/S 54 OF THE ACT QUA THE ADDITIONAL COMPENSATION INTO THE CAPITAL G AINS SCHEME. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAD CLAIMED EXEMPTION U /S 54 OF THE ACT ON THE ORIGINAL COMPENSATION BY INVESTING THE SAME INTO CA PITAL GAIN FDR SCHEME WHICH HAS NOT BEEN UTILIZED FOR THE SPECIFIC PURPOS E FOR WHICH HE HAD TO PAY CAPITAL GAIN TAX IN THE ORIGINAL ASSESSMENT YEAR 20 05-06. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT IN THE PRESENT CASE, T HERE WAS COMPULSORY ACQUISITION. THE QUANTUM OF COMPENSATION WAS INCRE ASED BY THE LD. COURT OF ADDL. DISTRICT JUDGE (NORTH), DELHI. WE FIND THAT LD.CIT(A) RELYING ON THE JUDGEMENT OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CHAKRI ASHOK KUMAR, ONGOLE VS ITO, 2014 (11) TMI 937 VIDE ORDER DATED 23.07.2014 IN ITA NO.174/DEL/2018 ASSESSMENT YEAR : 2012-13 6 | P A GE ITA NO.47 OF 2002 WHICH HAS BEEN REPRODUCED IN THE IMPUGNED ORDER WH EREIN HONBLE ANDHRA PRADESH HIGH COURT HAS HELD AS UNDER :- .SINCE THE VERY ADJUDICATION BEFORE VARIOUS AUTH ORITIES PROCEEDED ON THE ASSUMPTION THAT THERE EXITS A SEPARATE COMPONEN T OF ADDITIONAL COMPENSATION AND SINCE WE FIND THAT SUCH A CONCEPT IS ALIEN TO THE SCHEME AND THE ACT OF FOR THAT MATTER, THE I.T.ACT, WE ALL OW THE APPEAL AND ACCORDINGLY SET ASIDE THE IMPUGNED ORDER. 9. IT WAS DIRECTED THAT BENEFIT OF SECTION 54H OF T HE ACT SHALL BE EXTENDED TO THE ENTIRE AMOUNT OF COMPENSATION AS ENHANCED BY HO NBLE HIGH COURT. THE REVENUE HAS NOT BROUGHT ANY CONTRARY BINDING PRECED ENTS TO OUR NOTICE, THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDE R OF LD.CIT(A) AND THE SAME IS HEREBY AFFIRMED. THUS, GROUND RAISED BY THE REVENU E IS REJECTED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIR TUAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 31 ST AUGUST, 2021. SD/- SD/- (DR.B.R.RKUMAR) (KUL BHARAT) ACCOUNTANT MEMBER JUDIC IAL MEMBER * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI