Abdulla Mehbubsab Shaikh, Latur V. Income-tax Officer, Ward - 2, Latur

ITA 1794/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2678 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 22-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: K SRINIVASAN
• Keywords: Business income; Cost of acquisition; Valuation report
• Section: 143(3); 54F

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 17 94 /P U N/201 8 / ASSESSMENT YEAR : 20 1 2 - 1 3 ABDULLA MEHBUBSAB SHAIKH, GALLI NO.7, GOUSPURA, NEW KOLHE NAGAR, LATUR 413512 . / APPELLANT PAN: EBFPS1586D VS. THE INCOME TAX OFFICER, WAD 2 , LAT UR . / RESPONDENT / APPELLANT BY : SHRI K.SRINIVASAN / RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 0 6 . 0 3 .201 9 / DATE OF PRONOUNCEMENT: 08 . 0 3 . 201 9 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 2 , AURANGABAD, DATED 06 . 0 8 .201 8 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - ITA NO. 17 94 /P U N/201 8 ABDULLA MEHBUBSAB SHAIK 2 1. THE CIT(A) HAS UNJUSTIFIED TO CONFIRM AN ADDITION OF RS.10,34,728/ - ON ACCOUNT OF LTCG BY DISALLOWING CLAIM U/S 54F AS CONSTRUCTION COST OF NEW HOUSE OF RS.9,78,990/ - AND COS T OF IMPROVEMENT RS.2,50,000/ - TO ORIGINAL ASSET SOLD IS ALLOWABLE U/S 55, MAY PLEASE BE JUSTIFIED AND ALLOWED THE SAME. 3. THE ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER ERRED IN HIS COMPUTATION OF BUSINESS INCOME ADOPTING INCORRECT CLOSING STOCK FIGURE AND THE SAME MAY BE QUASHED. 4. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN DENYING THE COST OF IMPROVEMENT OF 2,50,000/ - WHILE COMPUTING INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF ORIGINAL ASSET. FURTHER, THE ASSESSEE IS ALSO AGGRIEVED BY THE ORDER OF CIT(A) IN DENYING THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT AT 9,78,990/ - . THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROU ND OF APPEAL BUT HAS PRESSED ORIGINAL GROUND OF APPEAL RAISED BEFORE US. 5. BRIEFLY, IN THE FACTS OF THE CASE, IT IS UNDISPUTED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD PIECE OF LAND WHICH WAS ACQUIRED BY THE ASSESSEE IN ASSESSMENT Y EAR 2002 - 03. THE SALE CONSIDERATION HAS BEEN TAKEN AT 12 LAKHS AND COST OF ACQUISITION AT 94,110/ - . AFTER INDEXING THE COST OF ACQUISITION, THE NET LONG TERM CAPITAL GAINS HAS BEEN WORKED OUT AT 10,34,728/ - . THERE IS NO DISPUTE TO THE ADOPTION OF SALE CONSIDERATION AND THE COST OF ACQUISITION. HOWEV ER, THE ASSESSEE IS AGGRIEVED BY NOT ALLOWING THE CLAIM OF COST OF CONSTRUCTION OF 2,50,000/ - . THE SAID PLEA OF ASSESSEE WAS REJECTED AS THE ASSESSEE COULD NOT PRODUCE THE VOUCHERS SUBSTANTIATING THE COST OF CONSTRUCTION. ANOTHER CLAIM MADE BY THE ASSE SSEE WAS OF DEDUCTION UNDER SECTION 54F OF THE ACT, WHEREIN THE ASSESSEE HAD ACQUIRED PLOT OF LAND ITA NO. 17 94 /P U N/201 8 ABDULLA MEHBUBSAB SHAIK 3 FOR 1,25,000/ - IN ASSESSMENT YEAR 2011 - 12 I.E. BEFORE THE DATE OF SALE OF ORIGINAL ASSET. FURTHER , THE ASSESSEE HAS UNDERTAKEN CONSTRUCTION OF THE SAID PR OJECT AND THE TOTAL INVESTMENT IN THE SAID CONSTRUCTION WAS TO THE EXTENT OF 9,78,990/ - . THE ASSESSEE BEFORE US HAS FILED THE DETAILS OF INVESTMENT MADE, WHICH HAS BEEN MADE STARTING FROM 15.03.2012 TO 25.08.2012, TOTALING 9,78,990/ - . THE SAID DEDU CTION WAS NOT ALLOWED TO THE ASSESSEE BY THE ASSESSING OFFICER IN THE ABSENCE OF COMPLETE PROOF BEING FILED IN THIS REGARD. HOWEVER, BEFORE THE CIT(A), THE ASSESSEE FURNISHED BILLS AND DETAILS AND IN THE REMAND REPORT DATED 27.07.2018, THE ASSESSING OFFIC ER ACKNOWLEDGES THAT THE ASSESSEE HAD INVESTED SUM OF 1,33,990/ - IN NEW LAND AND 8,45,000/ - AS CONSTRUCTION COST. THE PLEA OF ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT EVEN IF HE HAD PUR CHASED NEW PLOT OF LAND BEFORE SALE OF ORIGINAL ASSET BUT HE HAD COMPLETED THE CONSTRUCTION OF HOUSE ON THE NEW PR OJECT WITHIN TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET. THE ASSESSEE HAD CLAIMED TO HAVE CONSTRUCTED NEW HOUSE AFTER DEMOLISHING THE ORIGINAL HOUSE. THE ASSESSING OFFICER IN THIS REGARD CALLED FOR INFORMATION FROM LATUR MUNICIPAL CORPORATION, LAT UR, WHO IN TURN CONFIRM THE ISSUE OF EXTRACT 8D IN THE NAME OF ASSESSEE FOR THE YEAR 2012. IN THE SAID EXTRACT, TYPE OF CONSTRUCTION WAS MENTIONED AS RCC FRAME STRUCTURE. A LETTER WAS ALSO ISSUED TO THE REGISTERED VALUER TO CONFIRM THE VALUATION MADE BY HIM IN RESPECT OF SAID LAND AND FURNISH THE CERTIFIED COPY. IN REPLY, THE REGISTERED VALUER CONFIRMED THAT HE HAD MADE VALUATION AND IT WAS SINGLE STORIED CONSTRUCTION AND THE TOTAL AREA OF PLOT WAS 80.85 SQ.MTRS. AND THE BUILT UP AREA WAS 71.95 SQ.MTRS. AND HE HAD ADOPTED THE VALUATION AT 11,750/ - PER SQ.MTR., AS PER RATES ISSUED BY GOVT. OF MAHARASHTRA, PUBLIC WORKS DEPARTMENT, AURANGABAD. THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS CONCLUDED BY HOLDING THAT THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 54F ITA NO. 17 94 /P U N/201 8 ABDULLA MEHBUBSAB SHAIK 4 OF THE ACT SEEMS TO BE ACCEPTABLE. HOWEVER, THE CIT(A) DID NOT ALLOW THE SAID CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, SINCE THE ASSESSEE HAD FAILED TO DEPOSIT THE AMOUNT IN THE SPECIFIED ACCOUNT, SINCE THE TOTAL AMOUNT WAS NOT UTILIZED BEFORE DUE DATE OF FILING THE RET URN OF INCOME. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS STRESSED THAT MAJOR AMOUNT WAS SPENT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND ONLY SOME AMOUNT WAS PAID IN THE MONTH OF AUGUST, 2012 ITSELF I.E. AGAINST CONSTRUCTIO N WHICH WAS COMPLETED BY JULY, 2012. HE ALSO POINTS OUT THAT THE VALUER HAS ALSO IN THE REMAND PROCEEDINGS HAS MENTIONED THAT THE CONSTRUCTION WAS UNDERTAKEN DURING THE YEAR 2011 - 12. HE FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN MRS. JYOTI NITIN UNKULE VS. ITO IN ITA NO.1787/PN/2014, RELATING TO ASSESSMENT YEAR 2008 - 09, ORDER DATED 17.06.2016. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. ON PERUSAL OF RECORD, WE FIND MERIT IN THE CLAIM OF ASSESSEE, WHEREIN IT HAD PURCHASED THE LAND BEFORE SALE OF ORIGINAL AS SET AND THE TOTAL INVESTMENT WAS TO THE TUNE OF 1,33,990/ - . THEREAFTER, CONSTRUCTION ON THE SAID LAND WAS UNDERTAKEN IN THE YEAR 2011 - 12 AND MAJORITY OF THE PAYMENTS FOR CONSTRUCTION WERE MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME I.E. JULY , 2012. SOME OF THE PAYMENTS WERE MADE THEREAFTER, BUT THE SAME CAN BE ON ACCOUNT OF AMOUNT DEEMED TO BE PAID. THE ASSESSING OFFICER IN THE REMAND REPORT HAS REFERRED TO THE VALUATION REPORT OF THE VALUER, WHEREIN HE HAS REPORTED THAT ON ITA NO. 17 94 /P U N/201 8 ABDULLA MEHBUBSAB SHAIK 5 TOTAL PLOT AREA OF 80.85 SQ.MTRS., THE ASSESSEE HAD BUILT UP AREA OF 71.95 SQ.MTRS. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF BUILDING ON A PLOT WHICH WAS PURCHASED WITHIN ONE YEAR PRIOR TO THE DATE O F SALE OF PROPERTY AND THE CONSTRUCTION HAS BEEN COMPLETED WITHIN TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET AND THE AMOUNT HAS BEEN UTILIZED BEFORE DUE DATE OF FILING THE RETURN OF INCOME, THEN THE CLAIM UNDER SECTION 54F OF THE ACT NEEDS TO BE ALL OWED TO THE ASSESSEE. THERE IS NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN THIS REGARD. IT MAY BE POINTED OUT THAT THE REQUIREMENT OF SECTION FOR THE ASSESSEE TO MAKE INVESTMENT IN THE PURCHASE OF NEW ASSET BUT THERE IS NO LIMIT TO FINISH THE CONSTRUC TION WITHIN PERIOD SPECIFIED. SUCH A PROPOSITION HAS BEEN LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN MRS. JYOTI NITIN UNKULE VS. ITO (SUPRA) VIDE PARAS 10 TO 12 OF THE ORDER AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 54F OF THE ACT. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND RELIED ON THE RATIO LAID DOWN BY MUMBAI BENCH OF TRIBUNAL IN ACIT VS. DILIP MANHAR PAREKH (2013) 56 SOT 487 (MUMBAI TRIB.), WHEREIN THE PROPOSITION WAS IN RESPECT OF DEMOLISHING OF HOUSE AND WHETHER THE SAME WOULD FALL WITHIN THE DEFINITION OF TRANSFER. THE TRIBUNAL ALSO DECIDED THE ISSUE THAT DEDUCTION UNDER SECTION 54F OF THE ACT WAS AVAILABLE FOR PURCHASE OF RESIDENTIAL H OUSE AND SUCH HOUSE SHOULD BE REAL AND NOT SYMBOLIC. THE CASE OF ASSESSEE BEFORE US IS THAT IT HAD CONSTRUCTED THE SAID PROPERTY AND HENCE, IT FULFILLS THE CONDITIONS LAID DOWN IN THE ACT AND THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECT ION 54F OF THE ACT. THE ADDITIONAL GROUND OF ITA NO. 17 94 /P U N/201 8 ABDULLA MEHBUBSAB SHAIK 6 APPEAL RAISED BY THE ASSESSEE IS DISMISSED BEING ACADEMIC AFTER WE HAVE ALLOWED THE CLAIM OF ASSESSEE. THE ORIGINAL GROUND OF APPEAL RAISED BY ASSESSEE IS THUS, ALLOWED. 10 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 8 TH DAY OF MARCH , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHO WLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 8 TH MARCH , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , AURANGABAD ; 4. THE PR. CIT - 2, AURANGABAD ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE