ITO, Ward-11(3), Hyderabad V. Smt D Aruna Reddy, Hyderabad

ITA 1762/HYD/2012

• Counselvise Citation: 176222514 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH AN D SHRI SAKTIJIT DEY ITA NO.1762/HYD/2012 : ASST. YEAR 2009 - 10 INCOME TAX OFFICER WARD 11(3), HYDERABAD V/S. SMT. D. A R UNA REDDY, HYDERABAD ( PAN - AJRPD 0356 J ) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. K.HARITHA, DR RESPONDENT BY : NONE DATE OF HEARING 20 . 5 .201 4 DATE OF PRONOUNCEMENT 28.5 . 2014 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD DATED 28.9.2012 FOR THE ASSESSMENT YEAR 2009 - 10. 2. EFFECTIVE GRIEVANCE OF THE REVENUE IN THI S APPEAL REL A TES TO COMPUTATION OF CAPITAL GAINS ASSESSABLE IN THE HANDS OF THE ASSESSEE AND THE CLAIM OF THE ASSESSEE FOR RELIEF UNDER S.54F OF THE ACT. GROUNDS RAISED BY THE REVENUE IN THAT BEHALF READ AS FOLLOWS - 1. THE LEARNED CIT(A) ERRED B OTH ON FACTS AND IN LAW. 2. THE CIT(A) ERRED IN DIRECTING TO ADOPT THE SAL E CONSIDERATION AT RS .71,00,000 AGAINST RS.1,01,00,000 ADOPTED BY THE ASSESSING OFFICER IN RESPECT OF SALE O F LAND ON WHI C H THE LIABILITY OF CAPITAL GAIN S TAX AROSE. ITA NO. 1 762/HYD/2012 S MT S.ARUNA REDDY, HYDERABAD 2 3. THE CIT(A) ERRED IN DIRECTING TO ALLOW EXEMPTION U/S. 54F EV EN THOUGH THE CONSTRUCTION OF THE NEW ASSET WAS PRIOR TO THE DATE O F SALE O F CAPITAL ASSET. 4. . 3. ON THE PENULTIMATE DATE OF HEARING, VIZ. ON 6.2.2014, HEARING ON THIS APPEAL WAS ADJOURNED TO L20 - .5.2014, DULY INFORMING THE ADJOURNED DATE TO BOTH THE PARTIES IN THE OPEN COURT. STILL, NONE APPEARED ON BEHALF OF THE ASSESSEE - RESPONDENT. NOT EVEN AN ADJOURNMENT PETITION HAS BEEN RECEIVED FROM THE ASSESSEE. HENCE, WE PROCEED TO DISPOSE OF THIS APPEAL EX - PARTE QUA THE ASSESSEE - AFTER HEARING THE LEARNE D DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. 4 . FACTS OF THE CASE IN BRIEF , RELATING TO GROUND NO.2 ABOVE, ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08, ON 28.7.2007 DECLARING A TOTAL INCOME OF RS.3,58,500, AFTER CLAIMING EXEMPTION IN RESPECT OF LONG TERM CAPITAL GAINS OF RS.765,44,718 UNDER S.54B AND S.54F OF TH E ACT. THE ASSESSEE SOLD TWO ACRES OF LAND AT TELLAPUR, RAMACHANDRAPURAM MANDAL, MEDAK DI S TRICT FOR A STATED CONSIDERATION OF R S.70 LAKHS. AS AGAINST THE STATED CON S I D ERATION IN TH E SALE DEED, SUPP O RTED BY A CERTIFICATE ISSUED BY PROPRIETOR OF M/S. G.S . CON S TRUCTIONS, SH R I G . SUDHAKAR RAO, TO WHOM THE LAND HA S BEEN SOLD, THE BANK STATEMENT OF THE ASSESSEE SHOWED RECEIPT OF RS .1.01 CRORES. THE ASSESSEE CLAIMED THAT THE SAID SUDH A KAR R AO INTENDED TO BUY ONE ACRE OF LAND, ADJACENT TO THE ASSESSEES LAND BE LONGING TO ON E SHANKAR R E D D Y, FOR WHICH ADDITIONAL PAYMENT HAD BEEN MA D E TO THE ASSESSEE FOR BEIN G PASSED ON TO SHANKAR REDDY. IT WAS FURTHER CLAIMED, THAT DUE TO MISUNDERSTANDINGS, THE AMOUNT WAS RETURNED TO SUDH A KAR R AO, SO TH A T THE P A YMENT CO U LD B E MA DE DIRECTLY TO SHANKAR RE DDY WITH CL E AR EVIDENCE OF THE PAYMENT TO HIM. THE S TATEMENT OF G .SUDHAKAR RAO WAS ALSO RECORDED BY THE ASSESSING OFFICER ON 15.10.2009. THOUGH THE SAID STATEMENT OF SUDHAKAR RA O CORROBORATED WITH THE VERSION OF TH E ASSESSEE TO SOME EXTENT , THE ASSESSING OFFICER WAS NOT CONVINCED ITA NO. 1 762/HYD/2012 S MT S.ARUNA REDDY, HYDERABAD 3 WITH THE SAME. HE OBSERVED THAT THE VERSION OF THE ASSESSEE WAS NOT SUPPORTED BY ANY MATERIAL EVIDENCE AND NO PRUDENT BUYER WOULD PAY SUCH A HUGE AMOUNT TO A THIRD PARTY WITHOUT ANY LEGALLY BIN D IN G DOCUM E N T S WITH THE LAND OWNER. THE ASSESSING OFFICER ALSO REFERRED TO THE CONTRADICTION BETWEEN THE ASSESSEES SUBMISSION THAT THE DEAL WITH SHANKAR REDDY HAD NO T MATERIALIZED AND THE STATEMENT OF SUDHA KA R RAO THAT THE AMOUNT O F R S .35 LAKHS WAS PAID DIREC TLY TO SHANKAR REDDY. THE ASSESSING OFFICER ALSO RELIE D ON THE FACT CORROBO R ATED BY I G .SUDHAKAR RAO THAT THE ASSESSEE H A D PURCHA S ED A FLAT IN G.S. HEIGHTS, S.R. NAGAR, HYDERABAD FOR A SUM OF R S .30 LAKHS AND CONCLUDED THAT THE AMOUNT RETURNED BACK WAS ACT UALLY PAYMENT TOWARDS THE FL A T PU R CHA S ED. THE ASSESSING OFFICER ACCORDINGLY REJECTING THE CONTENTION OF THE ASSESSEE , COMPU T ED THE CAPITAL GAINS BY ADOPTING THE SALE CONSIDERATION AS RS.1,01,000 AS AGAINST THE SUM OF RS.70 LAKHS CLAIMED BY THE ASSESSEE. 5 . ON APPEAL, THE CIT(A), RELYING ON THE REPLY OF SHRI G.SUDHAKAR RAO TO QUESTION NO.4, WHICH FORMED PART OF STATEMENT RECORDED ON 15.10.2009 FROM HIM, WHEREIN HE ASSERTED TO HAVE PAID ONLY AN AMOUNT OF RS.71,00,000 TO THE ASSESSEE FOR THE PU R CHASE O F 2 ACRES AT TELLAPUR VILLAGE, THE CIT(A) CONCLUDED THAT THE SALE CONSI DE RATION FOR THE LAND SOLD BY TH E ASSESSEE WAS ONLY RS.71,00,000 AND NOT RS.1,01,00,000. 6 . AGGRIEVED BY THE ORDER OF THE CIT(A) ON THIS ISSUE, REVENUE IS IN APPEAL BEFORE US. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, STRONGLY SUPPORTING THE ORDER OF THE ASSESSING OFFICER, SUBMITTED THAT THE CIT(A) WAS NOT CORRECT IN DIRECTING THE ASSESSING OFFICER TO ADOPT THE SALE CONSIDERATION AT RS.71,00,000. ITA NO. 1 762/HYD/2012 S MT S.ARUNA REDDY, HYDERABAD 4 8. WE HEARD THE LEARNED DEP ARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS TAKEN THE SALE CONSIDERATION AT R S .1,01,00,000 MERELY ON THE BASIS OF THE BANK STATEMENT OF THE ASSESSEE, WHICH SHOWED RECEIPT OF RS.1.01 CRORES BY THE ASSESSEE FROM THE PURCHASER OF THE PROPERTY. HOWEVER, THE ASSESSEE HAS GIVEN A REASONABLE EXPLANATION, WITH REGARD TO RECEIPT OF THE EXTRA AMOUNT OF RS.31 LAKHS, WHICH STOOD CORROBORATED BY THE STATEMENT OF THE PURC HASER, G.SUDHAKAR RAO, WHO, IN REPLY TO QUESTION NO.4 PUT TO HIM, DURING TH E COU R SE OF STATEMENT RECORDED ON 15.10.2009, CATEGORICALLY STATED THAT THE CONSIDERATION PAID TO THE ASSESSEE FOR THE PURCHASE OF THE PROPERTY IN QUESTION WAS ONLY RS.71,00,000. I N SUPPORT OF THIS STATEMENT, IT IS EVIDENT FROM THE IMPU G N E D ORDERS OF THE REVENUE AUTHORITIES THAT THE SAID SHRI G.SUDHAKAR RAO HAS ALSO SUBMITTED DETAI L S OF THE PAYM E N T S MADE ON VARIOUS DATES AND ALSO COPIES O F THE RELEVANT EXTRACTS OF BANK STATEMENTS. IT IS IN VIEW OF THIS CATEGORICAL STATEMENT OF THE PU R CHA S ER, ALSO SUPPORTED BY THE ENTRIES IN T H E BOOKS OF ACCOUNT, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ADOPT A SUM OF RS.71,00,000 AS THE SALE CONSIDERATION WHILE COMPUTING THE CAPITAL GAINS FROM THE SALE OF THE LAND BY THE ASSESSEE. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BROUGHT ON RECORD BY THE REVENUE , TO CONTRADICT THE ABOVE FINDING OF THE CIT(A), WE FIND NO JUSTIFICATION TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT(A) ON THIS ASPE CT. WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUND OF THE REVENUE ON THIS ISSUE. 9. AS FOR THE OTHER GROUND RELATING TO DEDUCTION CLAIMED UNDER S.54F OF THE ACT, FACTS IN BRIEF ARE THAT THE ASSESSEE, AGAINST THE CAPITAL GAINS COMPUTED, CLAIMED DEDUCTION UNDER S.54F OF RS.53,69,718, WHICH IS THE AMOUNT INCURRED FOR PURCHA S E OF PLOT BEARING N O.402, VIVEKANAND NAGAR COLONY, K U KATPALLY ON 27.7.2006 FOR A SUM OF R S .54,45,000 ON WHICH CONSTRUCTION OF THE HOUSE WAS COM P LETED ON 1.6.2009. THE ASSESSI NG OFFICER OBSERV ED THAT THE ASSESSEE H A D ITA NO. 1 762/HYD/2012 S MT S.ARUNA REDDY, HYDERABAD 5 SOLD T H E LAND ON 5.10.2006 AND SIN C E THE ASSET IN RESPECT OF WHICH DEDUCTION UNDER S.54F WAS CLAIMED WAS PU R CHA S ED ON 27.7.2006, VIZ. PRIOR TO THE DATE OF S A LE, DEDUCTION UNDER S.54F COULD NO T BE ALLOWED. THE ASSESSING OFFICER, THUS WAS OF THE VIEW THAT S.54F REQU I RE S THAT CONST R UC T ION OF NEW HOUSE TO BE STARTED AFTER THE SALE O F THE CAPITAL ASSET AND COM P LETED WITHIN A PERIOD OF THREE YEARS. THE ASSESSING OFFICER, IN SUPPORT OF HIS CONCLUSI ON, RELIED ON THE DECISION OF THE GUJARAT H IGH COU R T IN THE CASE OF SHANTABEN P. GANDHI V/S. CIT (129 ITR 218), DISTINGUISHING THE DECISIONS O F THE ALLAHABAD HI G H COURT IN TH E CA S E OF CIT V/S. H. K . K APOOR (150 CTR 128) AND OF THE KARNATAKA HIGH C OU R T IN TH E CA S E OF CIT V/S. J.R. SUBRAHMANYA B HAT (165 ITR 571), RELIED UPON BY THE ASSESSEE. 10. ON APPEAL, THE CIT(A), REFERRING TO THE PROVISIONS OF S.54F OF THE AC T, OBSERVED THAT IT REFERS ONLY TO THE DATE OF COMPLETION OF THE CONSTRUCTION, AND THE DATE ON WHICH CONSTRUCTION SHOULD BEGIN IS NOT SPECIFIED. FINDING THE FACTS OF THE CASE ON HAND ARE SIMILAR TO THOSE INVOLVED IN THE CASE OF J .R.SUBRAHMANYA B HAT (SUPRA), THE CIT(A) HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER S.54F OF THE ACT, SINCE CO NSTRUCTION WAS COMPLETED WITHIN PERIOD PRESCRIBED BY STATUTE. 11. AGGRIEVED, REVENUE IS IN APPEAL ON THIS ASPECT. 12. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACTUAL ASPECTS OF THE MATTER. THE ASSESSING OFFICER DENIED DEDUCTION CL A I M E D BY THE ASSESSEE UNDER S.54F OF THE AC T, ON THE GROUND THAT THE LAND ON WHICH CONSTRUCTION WAS TAKEN UP, WAS PURCHASED ON 27.7.2006, WHEREAS THE SALE OF THE CAPITAL ASSET GIVING RISE TO CAPITAL GAINS, VIZ. LAND, WAS DONE ON 5.10.2006, AND THUS, THE ACQUISITION/CONSTRUCTION OF THE NEW ASSET HAS PRECEDED THE SALE OF THE CAPITAL ASSET GIVING RISE TO CAPITAL GAINS. ON A CAREFUL READING OF THE PROVISION CONTAINED UNDER S.54F O F THE ACT, WE ARE ITA NO. 1 762/HYD/2012 S MT S.ARUNA REDDY, HYDERABAD 6 UNABLE TO LOCATE ANY PRECONDITION TO SUGGEST THAT CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE MUST COMMENCE AFTER SALE OF THE ORIGINAL ASST. THE ONLY CONDITION IMPOSED IS THAT IT IS TO BE COMPLETED WITHIN THREE YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET. THE DECISION OF KARNATAKA HIGH C OU R T IN THE CA S E OF SUBRAHMANYA BHAT (SUPRA), RELIED UPON BY THE CIT(A) CLEARLY APPLIES TO THE FACTS OF THE PRESENT CASE, INASMUCH AS IN TH A T CA S E ALSO, THE DATE OF COMMENCEMENT OF CONSTRUCTION OF THE NE W PROPERTY HAS PRECEDED THE DATE OF SALE OF THE ASSET GIVING RISE TO CAPITAL GAINS COMPUTED. IN THAT VIEW OF THE MATTER, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ASPECT ALSO. THE SAME IS ACCORDINGLY UPHELD, AND THE G ROUND OF THE REVENUE ON THIS ISSUE IS ALSO REJECTED. 13. IN THE RESULT, REVENUES APPEAL IS DISMISSED ORDER PRONOUNCED IN THE COURT ON 28.5.2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 28 TH MAY, 2014 COPY FORWARDED TO: 1. SMT. D. A R UNA REDDY, PLOT NO.402, VIVEKANANDA NAGAR COLONY, KUKATPALLY, HYDERABAD 2. INCOME TAX OFFICER WARD 11 ( 3 ), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD COMMISSIONER OF INCOME - TAX V HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. ITA NO. 1 762/HYD/2012 S MT S.ARUNA REDDY, HYDERABAD 7 B.V.S