Asst. Commissioner of Income Tax, Circle-9(1), Hyderabad V. Sri M.A.Sattar, Hyderabad

ITA 1752/HYD/2013

• Counselvise Citation: 175222514 RSA 2013
• Duration Of Justice: 44 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIB IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE S/SHRI B. RAMAKOTAIAH, A.M. & SAKTIJIT DEY, J.M. ITA.NO.1752/HYD/2013 ASSESSMENT YEAR 2007-08 ACIT, CIR-9(1), HYDERABAD. VS. SRI M.A. SATTAR, HYDERABAD. PAN: APRPS9709Q (APPELLANT) (RESPONDENT) FOR REVENUE : SRI SOLGY JOSE. T. KOTTARAM FOR ASSESSEE : SRI K.C. DEVDAS DATE OF HEARING : 01-05-2014 DATE OF PRONOUNCEMENT : 13-06-2014 ORDER PER SAKTIJIT DEY, J.M . THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER DATED 30-9-2013 OF CIT (A), VIJAYAWADA PERTAI NING TO ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE IN THE PRESENT APPEAL IS WITH REGARD TO THE ORDER PASSED BY THE CIT (A) DIRECTING THE ASSES SING OFFICER TO ALLOW ASSESSEES CLAIM OF EXEMPTION U/S 54F OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FIL ED RETURN OF INCOME ON 24-1-2008 DECLARING INCOME OF RS.59,87 ,100/- BESIDES AGRICULTURAL INCOME OF RS.50,000/-. DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT 2 ITA.NO.1752 OF 2013 SRI M.A. SATTAR, HYD. THE ASSESSEE ALONG WITH SRI M. SURSH BASAVAIAH SOLD OF 1600 SQ. YARDS AT PLOT NO. A/1, HYDERNAGAR VILLAGE, KUKA TPALLY MUNICIPALITY ON 13-3-2007 FOR RS.2,56,00,000/- AND THE ASSESSEES SHARE IN THE SALE CONSIDERATION BEING RS.1,28,00,000/-. HE FURTHER NOTICED THAT THE ASSES SEE HAS PURCHASED THIS PROPERTY ON 15-7-1989 FOR A CONSIDER ATION OF RS.4,80,000/- AND ALONG WITH STAMP DUTY OF RS.55,00 0/- AND THE ASSESSEES SHARE BEING RS.2,67,500. HOWEVER, ASSESSEE WHILE COMPUTING THE CAPITAL GAIN HAS CLAI MED COST OF ACQUISITION OF RS.23,32,900 AND CLAIMED INDEXATI ON FROM FINANCIAL YEAR 1989-90. HE FURTHER NOTED THAT THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54F OF THE ACT OF AN AMOU NT OF RS.40 LAKHS TOWARDS PURCHASE OF A NEW PROPERTY. W HEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY TH E EXEMPTION CLAIMED U/S 54F OF THE ACT, THE ASSESSEE SUBMITTED THAT HE HAS PAID AN AMOUNT OF RS.40 LAKH TO HIS WIFE MRS. FARIDA BANU AS ADVANCE FOR PURCHASE OF 5 0% OF THE PROPERTY BEARING DOOR NO.20-4-194/7/15, NEW SHALIBANDA, KHILWAT. 4. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT AS H E WAS NOT AWARE OF EXEMPTION U/S 54F HE DID NOT MAKE ANY CLAIM AT THE TIME OF FILING THE RETURN WHICH HAS BEEN MA DE NOW. IN SUPPORT OF SUCH CLAIM, THE ASSESSEE FURNISHED A COPY OF AGREEMENT DATED 24-2-2007 MADE ON A PLAIN PAPER BE TWEEN HIM AND HIS WIFE MENTIONING THAT RS.50 LAKH IS TO B E PAID BY THE ASSESSEE TO HIS WIFE FOR 50% SHARE IN THE PROPE RTY AND OUT OF WHICH THE ASSESSEE HAS PAID AN AMOUNT OF R S.40 LAKH. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISALLOWED THE CLAIM O F EXEMPTION U/S 54F BY OBSERVING THAT THE AGREEMENT O N PLAIN 3 ITA.NO.1752 OF 2013 SRI M.A. SATTAR, HYD. PAPER IS ONLY A SELF SERVING DOCUMENTS AND AN AFTE RTHOUGHT AS NO SUCH CLAIM OF EXEMPTION WAS MADE BY THE ASSES SEE IN THE RETURN OF INCOME. HE FURTHER NOTED THAT IF THE AGREEMENT WAS TO BE TAKEN AS TRUE, AS PER THE PROVISIONS OF S ECTION 54F, THE ASSESSEE HAS TO PURCHASE A PROPERTY IN HIS OWN NAME. HE WAS OF THE VIEW THAT AS THE ASSESSEES WIFE HAS PURCHASED THE PROPERTY IN HER NAME UTILIZING THE AMOUNTS ADVA NCED TO HER BY THE ASSESSEE, IT IS NOTHING BUT APPLICATION OF INCOME. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NO RIGHT OF OWNERSHIP OVER THE PROPERTY ACQUIRED BY HIS WIFE. HE NOTED THAT ANY AGREEMENT IN RELATION TO IMMOVABLE PROPERT Y, IS NOT LEGALLY VALID AS PER THE STAMPS ACT UNLESS IT IS E XECUTED ON STAMP PAPER AND REGISTERED AS PER REGISTRATION ACT. FURTHER, THE ASSESSING OFFICER HELD THAT AS PER THE CASH FLO W STATEMENT AND THE STATEMENT OF AFFAIRS FILED BY THE ASSESSEE ADVANCES FOR PROPERTY IS SHOWN AT RS.62 LAKH AND AN AMOUNT OF RS.25 LAKH IS SEPARATELY MENTIONED AS GIVEN TO H IS WIFE MRS. FARIDA BANU. THE 50% OWNERSHIP ON PROPERTY OF THE ASSESSEES WIFE HAS NOT BEEN DISCLOSED IN THE CASH FLOW STATEMENT AND STATEMENT OF AFFAIRS. HE FURTHER NOT ED THAT ON EXAMINATION OF BANK ACCOUNTS, IT WAS REVEALED THAT NO PAYMENT IS MADE TO MRS. FARIDA BANU BUT THE PAYMENT S WERE MADE TO SOME OTHER THIRD PARTY. ON THE BASIS OF AFO RESAID FACTS, THE ASSESSING OFFICER CONCLUDED THAT THE ASS ESSEE IS NOT ELIGIBLE TO CLAIM EXEMPTION U/S 54F AND ACCORDI NGLY DISALLOWED THE SAME. BEING AGGRIEVED OF THE DISALL OWANCE OF EXEMPTION U/S 54F, ASSESSEE CHALLENGED THE SAME BE FORE THE CIT (A). THE CIT (A) AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE VIS A VIS THE MATERIALS AVAILABLE O N RECORD, ALLOWED THE CLAIM OF ASSESSEE BY HOLDING AS UNDER: 4 ITA.NO.1752 OF 2013 SRI M.A. SATTAR, HYD. 5.2 COMING TO THE CLAIM OF DEDUCTION/S 54 OF THE AC T, THERE IS STRENGTH IN THE SUBMISSIONS MADE BY THE AP PELLANT. THE APPELLANT HAS PAID RS.40 LAKHS AS PER THE AGREE MENT DATED 24-2-2007 FOR THE PURCHASE OF SHARE OF THE HOUSE PROPERTY FROM HIS WIFE. THE CONTENTION OF THE APPE LLANT WAS FURTHER SUPPORTED BY THE MUNICIPAL CERTIFICATE PRODUCED BY THE APPELLANT DURING THE APPEAL PROCEED INGS AND MUNICIPAL TAXES WERE BEING PAID BY THE APPELLAN T AS THE OWNER OF THE 50% OF PROPERTY PURCHASED FROM HIS WIFE. IN VIEW OF THE SAME, THE ASSESSING OFFICER IS DIREC TED TO ALLOW DEDUCTION U/S 54F OF THE ACT. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. IT IS THE CLAIM OF THE ASSESSEE THAT HE HAS PURCHASED 50% OF THE OWNERSHIP RIGHTS OF THE PROPER TY STANDING IN THE NAME OF HIS WIFE BY PAYING AN ADVAN CE OF RS.40 LAKH TO HER. IN SUPPORT OF SUCH CLAIM, THE A SSESSEE HAS SUBMITTED THE MUNICIPAL TAX RECEIPTS AND CERTIF ICATE WHICH INDICATE ASSESSEES 50% OWNERSHIP OVER THE P ROPERTY IN QUESTION. ON PERUSAL OF THE FINDING RECORDED BY THE ASSESSING OFFICER AT PARA 1.7(III), IT IS ALSO EVID ENT THAT THE ASSESSING OFFICER DOES NOT DISPUTE THE FACT THAT AS SESSEES WIFE HAS PURCHASED THE PROPERTY IN HER NAME BY UTIL IZING THE AMOUNTS ADVANCED BY THE ASSESSEE. THAT BEING THE F ACT, THE ASSESSEES INVESTMENT IN THE PROPERTY CANNOT BE DIS PUTED. IT IS ALSO A FACT THAT THE ASSESSEE HAS SHOWN THE AMOU NT ADVANCED TO HIS WIFE TOWARDS PURCHASE OF THE PROPER TY IN THE CASH FLOW STATEMENT. IF THE ASSESSING OFFICER HAD ANY DOUBT WITH REGARD TO THIS FACT, HE SHOULD HAVE CONDUCTED NECESSARY ENQUIRY TO FIND OUT WHETHER THE ASSESSEE HAS ACTUAL LY MADE THE ADVANCE OF RS.40 LAKH TO HIS WIFE. WITHOUT DOI NG SO THE ASSESSING OFFICER CANNOT PRESUME THAT NO ADVANCE HA S BEEN 5 ITA.NO.1752 OF 2013 SRI M.A. SATTAR, HYD. MADE. IN FACT THE FINDING OF THE ASSESSING OFFICER APPEARS TO BE CONTRADICTORY. FURTHER, THE ASSESSEE HAS PRODUC ED EVIDENCE IN FORM OF MUNICIPAL TAX RECEIPTS WHICH PR OVE 50% OWNERSHIP OVER THE PROPERTY. 6. IN AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 54F OF THE ACT. SO FAR AS THE CONTENTION OF THE DEPARTMENT THAT THE CIT (A) HAS V IOLATED THE PROVISION OF RULE 46A, WE ARE UNABLE TO ACCEPT SUCH CONTENTION. IT IS NOT DISPUTED THAT THE CIT (A) HA S POWER COTERMINOUS WITH THAT OF THE ASSESSING OFFICER. TH EREFORE, THE CIT (A) CERTAINLY CAN CONSIDER MATERIAL WHICH I S NECESSARY FOR DECIDING THE ISSUE. IT IS NOT MANDAT ORY THAT IN EVERY CASE, THE CIT (A) HAS TO PROVIDE AN OPPORTUNI TY TO THE ASSESSING OFFICER UNDER RULE 46A. WHEN THE EVIDENC E PRODUCED IS GLARING AND SPEAKS FOR ITSELF, IT WILL SERVE NO PURPOSE IN GETTING IT VERIFIED AGAIN BY THE ASSESSI NG OFFICER. IN THE AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT (A) BY DISMISSING THE GROUND RAISED BY THE DEPARTMENT. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER WAS PRONOUNCED IN COURT ON 13 -6-2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIA L MEMBER HYDERABAD, DATED 13 TH JUNE, 2014 JMR* 6 ITA.NO.1752 OF 2013 SRI M.A. SATTAR, HYD. COPY TO : 1. ACIT, 9 (1), IT TOWERS AC GUARDS, MASAB TANK, H YDERABAD. 2. SRI M.A. SATTAR, KHILWAT ROAD, BEHIND NAYA FUNCT ION HALL, HYDERABAD. 3. CIT (A), HYDERABAD. 4. CIT-VI, HYDERABAD. 5.D.R. ITAT, A BENCH, HYDERABAD. 7 ITA.NO.1752 OF 2013 SRI M.A. SATTAR, HYD.