Mr.G.R.Chennakeshava Reddy, Bangalore V. Income Tax Officer, Bangalore

ITA 1852/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7590 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: C A N PANDURANGA RAO
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Competent authority
• Section: 50C; 142(1); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.1852/BANG/2016 ASSESSMENT YEAR : 2010-11 SHRI. G. R. CHANNAKESHAVA REDDY, NO.307, 7 TH MAIN, 1 ST CROSS, LAKKASANDRA EXTN., BENGALURU-560030. PAN : AAOPC0081H VS. THE INCOME TAX OFFICER, WARD 3(3)(4), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. C. A. N. PANDURANGA RAO, CA REVENUE BY : SHRI. M. K. BIJU, JCIT DATE OF HEARING : 21.06.2017 DATE OF PRONOUNCEMENT : 20.09.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A), INTER ALIA , ON THE FOLLOWING GROUNDS: (A) THE IMPUGNED ORDER ID IMPROPER, UNJUST AN D MUCH AGAINST ALL KNOWN CANONS OF LAW. (B) THE ASSESSING OFFICER HAS SERIOUSLY ERRED IN STATIN G THAT THE APPELLANT HAS NOT PRODUCED EVIDENCE IN SUPPORT OF C LAIM. (C) HON'BLE COMMISSIONER OF INCOME TAX (APPEALS)-7, BENGALURU, DURING THE PASSING THE ORDER HAS ALLOWED COST OF CONSTRUCTION OF BUILDING U/S 54, HOWEVER HE HAS IGN ORED COST OF LAND ON WHICH BUILDING WAS CONSTRUCTED. (D) THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUN DS OF APPEAL AND DETAILED SUBMISSIONS OF GROUNDS OF APPEA L AT THE ITA NO. 1852/BANG/2016 PAGE 2 OF 5 TIME OF HEARING. 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE IS AN EMPLOYEE OF UAS GKVK, BENGALURU. HE HAS SOLD IMMOV ABLE PROPERTY ON 22.03.2010 FOR A SALE CONSIDERATION OF RS.28,80,000 /- AND SINCE THE INCOME CHARGEABLE TO TAX IN THE SHAPE OF CAPITAL GAIN ARIS ING FROM IT, HAD ESCAPED ASSESSMENT AND THE NOTICE UNDER SECTION 148 WAS ISS UED. IN RESPONSE TO NOTICE UNDER SECTION 142(1) OF THE IT ACT, (HEREINAFTER CA LLED AS AN ACT), THE ASSESSEE FILED VARIOUS DETAILS OF SALE AND PURCHASE OF IMMOV ABLE PROPERTIES, STATEMENT OF BANK ACCOUNT AND FURNISHED THE STATEMENT OF INCOME ADMITTING A LONG TERM CAPITAL GAIN OF RS.17,49,049/-. THE ASSESSEE CLAIM ED EXEMPTION OF CAPITAL GAIN UNDER SECTION 54 OF THE ACT AT RS.8,50,299/- AND PA ID TAX OF RS.1,82,170/-. SUBSEQUENTLY, IN RESPONSE TO NOTICE UNDER SECTION 1 48 OF THE ACT, RETURN WAS FILED ON 12.02.2015 DECLARING CAPITAL GAIN AT RS.4, 51,127/-. IN THIS RETURN, THE SALE CONSIDERATION UNDER SECTION 50C OF THE ACT WAS TAKEN AS RS.29,50,500/-. THE OTHER TWO STATEMENTS OF INCOME FILED EARLIER IN RESPONSE TO NOTICE UNDER SECTION 142(1) WAS THAT THE AMOUNT OF COMMISSION PA ID HAS BEEN INCREASED FROM RS.57,600/- TO RS.59,000/- AND DEVELOPMENT CHARGES, CIVIL WORKS AND COMPOUND WALL, ACC ROOF SHED, WATER DEPOSIT, COST OF SITE EX PENSES, AFTER INDEXATION OF THE SAME AT RS.13,06,122/- WAS REDUCED FROM THE SALE CO NSIDERATION TO COMPUTE LONG TERM CAPITAL GAIN. FURTHER, A SUM OF RS.11,33,750/ - WAS ALSO REDUCED AS COST OF NEW SITE CONSTRUCTION AND COMMISSION TO ARRIVE THE AMOUNT OF CAPITAL GAIN AT RS.4,51,128/-. 3. THE ASSESSEE HAS ALSO CLAIMED THE COST OF REMOVA L OF SHRUBS AND WEEDS, LEVELING, CUTTING AND FILLING THE SURFACE AND WATER DEPOSIT CHARGES AS COST OF DEVELOPMENT, THAT EFFECT THE INDEXATION CLAIMED FOR COMPUTATION OF LONG TERM CAPITAL GAIN. THE AO DENIED THE EXPENSES OF REMOVA L OF SHRUBS AND WEEDS, ITA NO. 1852/BANG/2016 PAGE 3 OF 5 LEVELING OF SURFACE ETC., WHICH WERE NOT CAPITAL GA IN IN NATURE. THE AO FURTHER DENIED THAT CLAIM OF INVESTMENT IN CONSTRUCTION OF COMPOUND WALL ETC., AS NO DOCUMENTARY EVIDENCE WAS FURNISHED. IN THE ABSENCE OF SANCTIONED PLAN, THE ELECTRICITY, WATER SUPPLY CONNECTION AND NO CLAIM M ADE IN THE ORIGINAL COMPUTATION, THE AO DENIED THE EXEMPTION UNDER SECT ION 54 OF THE ACT TO THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) AND DURING THE APPELLATE PROCEEDINGS, HE FILED THE GROUND FLOO R PLAN OF THE ABOVE MENTIONED SITE WHICH SHOWS THERE IS A PROPOSED CONSTRUCTION O F RESIDENTIAL HOUSE. THE SAID PLAN WAS DULY APPROVED BY ADHYAKSHARU, CHIKKAJALA G RAMA, PANCHAYATI, CHIKKAJALA, JALA, HOBLI, BENGALURU UTTARA TALUK. I T WAS FURTHER SUBMITTED THAT THE PROPOSED SITE PLAN SHOWS THAT THE CONSTRUCTION OF 25 X 10 FT HAS BEEN PROPOSED AND APPROVED BY THE COMPETENT AUTHORITY. IT WAS FURTHER CONTENDED THAT AO HAS NOT BROUGHT OUT ANY OTHER FACT AS TO WH Y THE CLAIM OF CONSTRUCTION OF THE ASSESSEE SHOULD BE DENIED. THE CIT(A) RE-EXAMI NED THE CLAIM OF THE ASSESSEE BUT WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE. HE ACCORDINGLY DENIED THE EXEMPTION UNDER SECTION 54 O F THE ACT HAVING HELD THAT EXEMPTION IS ALLOWABLE IN FULL EVEN IF HOUSE IS PAR TLY PURCHASED AND PARTLY CONSTRUCTED, FOLLOWING THE JUDGMENT IN THE CASE OF B. B. SARKAR V. CIT [1981] 132 ITR 150(CAL.). THE CIT(A) FURTHER OBSERVED THA T THE MAIN PURPOSE OF SECTION 54 OF THE ACT IS TO GIVE RELIEF FOR THE ACQ UISITION OF THE NEW RESIDENTIAL HOUSE. THEREFORE IT DOES NOT REALLY MATTER THAT TH E NEW RESIDENTIAL HOUSE IS PARTLY CONSTRUCTED OR PARTLY PURCHASED. HE ACCORDINGLY CO NFIRMED THE COMPUTATION OF LONG TERM CAPITAL GAIN AT RS.13,26,433/- BUT HE ALL OWED THE EXEMPTION UNDER SECTION 54 OF THE ACT ON AMOUNT OF INVESTMENT OF RS .3,05,000/- INCURRED ON THE CONSTRUCTION OF THE RESIDENTIAL BUILDING. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE TRIBUNAL WITH THE ITA NO. 1852/BANG/2016 PAGE 4 OF 5 SUBMISSION THAT HE BE ALLOWED DEDUCTION UNDER SECTI ON 54 OF THE ACT AND THE CAPITAL GAIN DECLARED BY THE ASSESSEE AT RS.4,51,12 7/- BE ACCEPTED. 6. THE LEARNED DR ON THE OTHER HAND HAS CONTENDED T HAT IN ORIGINAL RETURN, ASSESSEE HAS NOT CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE INVITED OUR ATTENTION TO THE ASS ESSMENT ORDER IN WHICH AO HAS CATEGORICALLY MENTIONED THAT ASSESSEE HAD NOT ADMIT TED CAPITAL GAIN IN TAX RETURN FILED ON 20.07.2010. NOW THE ASSESSEE INTEND TO CL AIM THE DEDUCTION UNDER SECTION 54 OF THE ACT IN THE RETURN FILED IN RESPON SE TO NOTICE UNDER SECTION 148 OF THE ACT. HE HAD FURTHER CONTENDED THAT PROVISIO NS OF SECTION 147 ARE INVOKED FOR THE BENEFIT OF THE REVENUE AND NOT FOR THE BENE FIT OF THE ASSESSEE. IT WAS FURTHER CONTENDED THAT DESPITE THESE FACTS, THE LOW ER AUTHORITIES HAVE CONSIDERED THE CLAIM OF THE ASSESSEE UNDER SECTION 54 OF THE A CT AND GRANTED THE RELIEF ACCORDINGLY. THE LEARNED DR FURTHER PLACED RELIANC E ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD [1992] 198 ITR 297. 7. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS NOT OFFERED ANY CAPITAL GAIN IN THE RETURN FILED ORIGINALLY. WHEN IT WAS DETECTED THAT THE ASSESSEE HAS NOT OFFERED THE CAPITAL GAIN TO TAX, THE AO REO PENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT HAVING FORMED A BELIEF THAT ON ACCOUNT OF NON DISCLOSURE OF CAPITAL GAIN, THE INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. BUT IN RESPONSE TO NOTICE UNDE R SECTION 148 OF THE ACT, THE ASSESSEE FILED A RETURN OF INCOME AND CLAIMED DEDUC TION UNDER SECTION 54 OF THE ACT. WE HAVE CAREFULLY PERUSED THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD (SUPRA) IN WHI CH IT HAS BEEN HELD THAT THE PROVISION UNDER SECTION 147 OF THE ACT CAN BE INVOK ED TO HELP THE REVENUE FOR DETECTING THE UNDISCLOSED INCOME AND NOT FOR THE AS SESSEE TO RAISE A FURTHER CLAIM ITA NO. 1852/BANG/2016 PAGE 5 OF 5 WHICH WAS NOT RAISED IN THE ORIGINAL RETURN OF INCO ME. IN THE INSTANT CASE, THE LOWER AUTHORITIES HAVE ALREADY EXAMINED THE CLAIM U NDER SECTION 54 OF THE ACT, THOUGH THE ASSESSEE IS NOT ENTITLED TO RAISE A CLAI M, AND GRANTED A RELIEF TO THE ASSESSEE. MOREOVER, AS PER PROVISION OF SECTION 54 OF THE ACT, DEDUCTION CAN ONLY BE CLAIMED IF THE ASSESSEE HAS ESTABLISHED THA T HE HAS ACQUIRED THE RESIDENTIAL HOUSE OUT OF SALE PROCEEDS. BUT WE DO NOT FIND ANY EVIDENCE ON RECORD WHERE FROM IT CAN BE ESTABLISHED THAT ASSESS EE HAS ACQUIRED THE RESIDENTIAL HOUSE OUT OF THE SALE PROCEEDS RECEIVED BY HIM ON S ALE OF CAPITAL ASSET. IN THE ABSENCE OF THESE EVIDENCES, WE ARE OF THE VIEW THAT NO FURTHER RELIEF CAN BE GRANTED TO THE ASSESSEE. SINCE THE CIT(A) HAS ALRE ADY GRANTED REASONABLE RELIEF TO THE ASSESSEE, WE FIND NO JUSTIFICATION TO INTERF ERE IN HIS ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2017. SD/- SD/- BANGALORE. DATED: 20 TH SEPTEMBER, 2017. /NSHYLU/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4 . GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. (A. K. GARODIA) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER