Y. Manjula Reddy, V. ITO,

ITA 1755/BANG/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9250 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Cost of acquisition
• Section: 143(3); 54F; 54; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTU0RI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1755/BANG/2013 (ASSESSMENT YEAR: 2008-09) ASSESSEES APPEAL REVENUES APPEAL ASSESSEE BY : SHRI. PADAM CHAND KHINCHA, CA REVENUE BY : MS. SWAPNA DAS, JCIT DATE OF HEARING : 06.09.2016 DATE OF PRONOUNCEMENT : 02.12. 2016 SMT. Y. MANJULA REDDY, D-1102, STERLING TERRACE APARTMENTS, KATHRIGUPPE MAIN ROAD, BANASHANKARI 3 RD STAGE, BANGALORE 560 070. PAN : ABLPR5569H VS. THE INCOME TAX OFFICER , WARD-10(2), BANGALORE. APPELLANT RESPONDENT ITA NO.1780/BANG/2013 (ASSESSMENT YEAR: 2008-09) THE INCOME TAX OFFICER , WARD-10(2), BANGALORE. VS. SMT. Y. MANJULA REDDY, BANGALORE 560 070. PAN : ABLPR5569H APPELLANT RESPONDENT ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 2 OF 13 ORDER PER INTURI RAMA RAO, AM : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A S WELL AS THE REVENUE, DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-V, BANGALORE DATED 24.09.2013 FOR THE ASSESS MENT YEAR 2008-09. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS AN INDIVIDUAL. THE ASSESSEE FILED THE RETURN OF IN COME FOR THE ASSESSMENT YEAR 2008-09 ON 29.09.2008, DECLARIN G TOTAL INCOME OF RS.9,06,856/- AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE INCOME TAX ACT VIDE ORDER DATED 31.12.2010 AT TOTAL INCOME OF RS.1,65,40,730/-. WHILE DOING SO, THE LEARNED A O HAD DENIED THE CLAIM FOR EXEMPTION OF RS.1,56,33,870/-, UNDER THE PROVISIONS OF SECTION 54F. 3. THE BRIEF FACTS LEADING TO THE IMPUGNED ADDITIO N ARE AS UNDER: I. THE ASSESSEE ALONG WITH OTHER CO-OWNERS SOLD THE IMMOVABLE PROPERTY SITUATED AT SURVEY NO. 54/1, 54/2 AND 54/3, KALENAGRAHARA VILLAGE, BEGUR HOBLI, BANGALORE SOUTH TALUK FOR A SALE CONSIDERATION OF RS.5,35,00,000/- VIDE SALE DEED DATED 27.10.2007. ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 3 OF 13 II. THE SHARE OF APPELLANT WAS RS.1,60,50,000/-. AFTER DEDUCTION, THE SELLING EXPENSES AND INDEXING THE COST OF ACQUISITION, THE LONG TERM CAPITAL GAIN OF RS.1,56,85,225/- WAS ARRIVED AT BY THE APPELLANT. IN RESPECT OF THIS CAPITAL GAIN, THE APPELLANT HAS CLAIMED EXEMPTION UNDER SECTION 54F TO THE EXTENT OF RS.1,56,33,870/- AND OFFERED BALANCE OF LONG TERM CAPITAL GAIN OF RS.51,355/- TO TAX. THE APPELLANT HAD CLAIMED EXEMPTION UNDER SECTION 54F IN RESPECT OF PROPERTIES SUPPOSED TO HAVE BEEN ACQUIRED FOR PURCHASE OF FLAT BEARING NO.3092 IN LEVEL 9 OF BLOCK NO.3 AT PRESTIGE NOTTINGHILL SURVEY NO. 9, KALENA AGRAHARA VILLAGE, BEGUR HOBLI, BANGALORE SOUTH TALUK (HEREINAFTER CALLED NEW HOUSE). III. ACCORDING TO THE APPELLANT, THE FOLLOWING PAYMENTS WERE MADE FROM THE FINANCIAL YEAR 2007-08 TO 2010-11 TOWARDS THE CONSIDERATION FOR ACQUISITION OF NEW HOUSE: ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 4 OF 13 COST OF ACQUISITION OF NEW ASSET: 4. THE SAME WAS CLAIMED AS EXEMPT UNDER THE PROVISI ONS OF SECTION 54F OF THE ACT. THE SAID CLAIM WAS REJE CTED BY THE AO VIDE PARA 8 AND 9, REPRODUCED BELOW: ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 5 OF 13 ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 6 OF 13 5. THUS THE AO IS OF THE OPINION THAT THE ASSESSEE WAS OWNING MORE THAN ONE HOUSE ON THE DATE OF ACQUISITI ON OF NEW PROPERTY I.E., AT PRESTIGE OZONE AND THE COST O F ACQUISITION ALSO SHOWN BY THE ASSESSEE WAS DISPUTED BY AO VIDE PARA 6.1, WHICH IS AS UNDER: 6.1. THE ASSESSEE HAS SUBMITTED THAT THE COST OF L AND IS RS.39,69,933/- AS PER AGREEMENT DT. 5.5.2004. THE ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 7 OF 13 AGREEMENT DT. 5.5.2004 IS ONLY THE CONSTRUCTION AGR EEMENT AND DOES NOT INCLUDE THE COST OF LAND. FOR THE PUR POSE OF COST OF LAND, THE SALE DEED DATED 24.02.2007 IS TO BE TAKEN INTO CONSIDERATION AND THE COST AS PER THE SAME IS RS.39,69,933/-. AS PER THE SALE DEED DT 24.02.2007 , THE EXTENT OF LAND SOLD BY M/S.PRESTIGE GARDEN CONSTRUC TION PVT. LTD.(SELLERS) AND M/S. PRESTIGE ESTATES PROJECTS PV T. LTD., (BUILDERS/CONFIRMING PARTY) IS 6108 SQ FT AND THE S AME IS SOLD TO MR. Y. C. RAMA REDDY AND MRS. Y. MANJULA RE DDY. AS PER THIS SALE DEED, THE ASSESSEE HAS AUTOMATICAL LY GOT A SHARE OF 50% IN THE RIGHTS AND TITLE OF THE PROPERT Y. 6. THUS THE AO DISALLOWED THE CLAIM ON THE GROUND T HAT THE ASSESSEE OWNS MORE THAN ONE HOUSE AND THE COST OF INVESTMENT ALSO NOT BEEN PROVED BY THE ASSESSEE. 7. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE CIT(A), WHO VIDE IMPUGNED ORDER HELD THAT THE ASSES SEE IS ENTITLED TO DEDUCTION UNDER SECTION 54F TO THE EXTE NT OF 50% OF COST OF ACQUISITION OF THE NEW PROPERTY WHICH IS ESTIMATED AT RS.91,58,083/- WHICH COMES TO RS.45,79,042/-. THE RELEVANT PARA OF CIT(A) IS AS FOLLOWS: ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 8 OF 13 8. BEING AGGRIEVED BY THAT PART OF THE ORDER, THE R EVENUE IS IN APPEAL IN ITA NO.1780/BANG/2013 BY RAISING TH E FOLLOWING GROUNDS OF APPEAL: ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 9 OF 13 9. THE ASSESSEE IS IN APPEAL IN ITA NO. 1755/BANG/2 013 RAISING THE FOLLOWING GROUNDS OF APPEAL: ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 10 OF 13 10. NOW WE SHALL TAKE UP THE REVENUE APPEAL. THE REVENUE HAS RAISED 5 GROUNDS OF APPEAL. GROUND NOS . 1 TO 4 ARE GENERAL IN NATURE, DO NOT REQUIRE ANY ADJUDICAT ION. GROUND NOS. 2 AND 3 CHALLENGES THE DIRECTION OF THE LEARNED CIT(A) GRANTING RELIEF OF 50% OF THE INVESTMENT IN THE NEW ASSET UNDER THE PROVISIONS OF SECTION 54F ON THE GR OUND THAT THE NEW ASSET WAS ACQUIRED AFTER EXPIRY OF TWO YEAR S FROM THE DATE OF SALE OF ORIGINAL RECEIPT. HOWEVER, THE RELIEF UNDER SECTION 54F IS NOT ADMISSIBLE AND FOR THE REA SON THAT THE ASSESSEE IS ALREADY OWNING 50% IN THE NEW ASSET . ON THE OTHER HAND, THE LEARNED AR ARGUED THAT THE R ELEASE OF THE SHARE OF INTEREST IN THE PROPERTY I.E., NEW ASSET BY THE HUSBAND IN FAVOUR OF THE ASSESSEE FOR A CONSIDERATI ON CONSTITUTES A PURCHASE WITHIN THE AMBIT AND SCOPE O F PROVISIONS OF SECTION 54F AND IN THIS CONNECTION, H E RELIED ON ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 11 OF 13 THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F CIT VS. T.N. ARAVINDA REDDY (2 TAXMAN 541). HE FURTHER SUB MITTED THAT ANY EXPENDITURE INCURRED TO MAKE THE HOUSE HAB ITABLE CONSTITUTES THE COST OF THE NEW ASSET WHICH IS ELIG IBLE FOR RELIEF UNDER SECTION 54F AND IN THIS REGARD HE PLAC ED RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MRS. RAHANA SIRAJ VS. CIT-I, BANGALORE, 58 TAXMA NN.COM 333. 11. HE FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT OWNING MORE THAN TWO HOUSES ON THE RELEVANT DATE AS THE ASSESSEE WAS OWNING ONLY ONE HOUSE ON THE DATE OF ACQUISITION OF NEW ASSET. 12. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE THAT COMES UP FOR CONSIDERATION BEFORE US IN THE PRESENT APPEAL IS WH ETHER THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54 F IN VIEW OF THE FACT THAT THE HUSBAND OF THE ASSESSEE RELEAS ED THE PROPERTY IN FAVOUR OF THE APPELLANT, WHETHER SUCH R ELEASE IS ACCEPTABLE UNDER THE LAW. THE AO HAD CATEGORICALLY HELD THAT IT IS A TRANSACTION OF COLOURFUL DEVICE ADOPTE D WITH A VIEW TO AVOID TAX LIABILITIES AND THE TRANSACTION B ETWEEN A WIFE AND HUSBAND IS ONLY A PAPER TRANSACTION. THE LEARNED AO HAD COME TO THIS CONCLUSION BECAUSE THE ASSESSEE HAD FAILED TO PROVE THAT THE ASSESSEE HAD PAID THE CONS IDERATION TO HER HUSBAND TOWARDS RELINQUISHMENT OF INTEREST I N THE PROPERTY I.E., NEW ASSET AND THE DEED OF RELINQUISH MENT WAS NOT REGISTERED. IN OUR CONSIDERED OPINION, THIS IS A VERY MATERIAL FACTOR TO BE EXAMINED FOR GRANT OF EXEMPTI ON UNDER ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 12 OF 13 SECTION 54F OF THE INCOME TAX ACT. THE ONUS LIES O N THE ASSESSEE TO PROVE BEYOND DOUBT THE TRANSACTION ENTE RED BY THE ASSESSEE AND HER HUSBAND AS GENUINE. THE VERY FACT THAT THE TRANSACTION IS BETWEEN THE WIFE AND HUSBAN D HAD RAISED THE EYE BROWS OF THE AO ABOUT THE GENUINENES S OF THE TRANSACTIONS. THE TRANSACTION IS PERHAPS INTENDED TO AVOID THE TAX LIABILITY IN THE HANDS OF THE ASSESSEE. FU RTHERMORE, THE RELEASE DEED EXECUTED BY HER HUSBAND IS NOT REG ISTERED. THE ONUS LIES ON THE ASSESSEE TO PROVE THAT THE TRA NSACTION WAS A GENUINE TRANSACTION BY FURNISHING THE DETAILS OF ACTUAL DATE OF PAYMENT OF CONSIDERATION TO HER HUSBAND TOW ARDS RELINQUISHING HIS SHARE OF RIGHT IN THE PROPERTY. FURTHERMORE, IT IS MENTIONED THAT EVEN AFTER THE RELINQUISHMENT DEED, THE ASSESSEE ALONG WITH HER HU SBAND ENTERED JOINTLY INTO A LEASE AGREEMENT DATED 09.01. 2008 WITH SHELL TECHNOLOGY INDIA (P) LTD. THIS GOES TO PROVE THAT THE RELEASE DEED IS NOT ACTUALLY INTENDED TO BE ACT ED UPON. THEREFORE, IN OUR CONSIDERED OPINION, THE APPELLANT IS NOT ENTITLED TO ANY DEDUCTION UNDER SECTION 54F AS SHE HAS FAILED TO PROVE BEYOND DOUBT THAT THE ASSESSEE ACQUIRED TH E NEW HOUSE BY THE SALE PROCEEDS OF THE ORIGINAL ASSETS S OLD. SINCE WE HELD THAT THE ASSESSEE HAD NOT ACQUIRED AN Y ASSET, THE OTHER ASPECTS ARE CONSIDERED TO BE IRRELEVANT A ND DOES NOT REQUIRE ANY ADJUDICATION. 13. ASSESSEES APPEAL: SINCE IN THE REVENUES APPEAL, WE HELD THAT THE ASSESSEE HAD FAILED TO PROVE BEYON D DOUBT THAT THE ASSESSEE HAD ACQUIRED THE NEW ASSET AND AS SESSEE IS NOT ENTITLED TO RELIEF U/S 54F, THE GROUNDS OF A PPEAL RAISED BY THE ASSESSEE ARE DISMISSED. ITA NO.1755/BANG/2013 AND ITA NO.1780/BANG/2013 PAGE 13 OF 13 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED AND THE APPEAL FILED BY THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF DECEMBER, 2016 SD/- SD/- (ASHA VIJAYARAGHAVAN) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE DATED : 02/12/2016 /NS/ COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A)-II BANGALORE 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT RE GISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE