Dr. Saif Salahuddin, Bangalore V. Assistant Commissioner of Income Tax, Circle-2(3)(1), Bangalore

ITA 1863/BANG/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0643 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 15-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Benefit of exemption
• Section: 54F; 234B; 148; 54; 12; 2; 11; 139

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. 186 3 /BANG/201 7 ASSESSMENT YEAR S : 20 1 1 - 1 2 DR. SAIF SALAHUDDIN, NO. 511, 5 TH MAIN, 3 RD BLOCK, KORAMANGALA, BENGALURU 560 034. PAN : APNPS 2167 J VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE - 2(3)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SMT. SHEETAL BORKAR, ADVOCATE REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT DATE OF HEARING : 25 . 0 7 .201 8 DATE OF PRONOUNCEMENT : 28 . 0 9 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), INTER ALIA, ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE DENIAL OF EXEMPTION UNDER SECTION 54F OF THE ACT TO THE APPELLANT TO THE EXTENT OF RS.75 LAKHS AS CLAIMED BY HIM. 2. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE NEW ASSET PURCHASED ON WHICH THE EXEMPTION UNDER SECTION 54 HAS BEEN CLAIMED WAS PURCHASED WITHIN TIME FOR FILING THE RETURN UNDER SECTION 139 OF THE ACT AND CONSEQUENTLY THE INVESTMENT IN CAPITA GAIN INVESTMENT ACCOUNT MADE BY THE APPELLANT WAS NOT A CONS ILION PRECEDENT AS HELD BY THE JURISDICTIONAL HIGH COURT AND ACCORDINGLY THE CLAIM OF - THE APPELLANT SHOULD HAVE BEEN ALLOWED. ITA NO. 1863/BANG/2017 PAGE 2 OF 5 3. THE LEARNED CIT (APPEALS) ALSO OUGHT TO HAVE APPRECIATED THAT THE CONDITION FOR EXEMPTION IS ONLY INVESTMENT AND THERE WAS NO CONDITION THAT SALE CONSIDERATION RECEIVED ALONE SHOULD BE REINVESTED IN THE NEW ASSET AND ACCORDINGLY AS LONG AS THE APPELLANT INVESTED IN THE NEW ASSET WITHIN THE PROVISIONS OF SECTION 54F(1) OF THE ACT, THE BENEFIT OF EXEMPTION OUGHT TO HAVE BEEN ALLOWED TO THE APPELLANT. 4. ON THE FACTS, THE LEARNED CIT (APPEALS) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT AND REFRAINED FROM UPHOLDING THE DISALLOWANCE. 5. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234B AND 234D OF THE ACT. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE, ALONG WITH HIS MOTHER AND HIS 2 BROTHERS, HAS JOINTLY SOLD HIS RESIDENTIAL PROPERTY ON 12.11.2010 FOR A CONSIDERATION OF RS. 4,95,00,000/- AND THE ASSESSEES 1/4 TH SHARE IS RS.1,23,75,000/-. SUBSEQUENTLY, THE ASSESSEE HAS ENTERED INTO AN AGREEMENT TO PURCHASE 1/3 RD OF SHARE OF ANOTHER RESIDENTIAL PROPERTY FROM HIS FATHER DR. SALAHUDDIN ON 10.12.2010 FOR A CONSIDERATION OF RS.1,22,50,000/-. THE ASSESSEE MADE PAYMENT OF RS.22,50,000/- AND RS. 1,00,00,000/- ON 1.9.2010 AND 18.12.2010. ACCORDINGLY, HE COMPUTED THE LONG TERM TAXABLE CAPITAL GAIN AFTER CLAIMING DEDUCTION UNDER SECTION 54 OF THE ACT AT RS.23,089/-. THE ASSESSMENT WAS COMPLETED ACCEPTING THE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT BASED ON THE AGREEMENT TO SELL DATED 10.12.2013 FOR PURCHASE OF 1/3 RD OF RESIDENTIAL PROPERTY BEARING NO. 649, 4 TH CROSS, 3 RD BLOCK, KORAMANGALA, BANGALORE. SUBSEQUENTLY, IT WAS NOTICED THAT ASSESSEE DID NOT PURCHASE THE SAID PROPERTY. ACCORDINGLY, ASSESSMENT WAS REOPENED AND NOTICE UNDER SECTION 148 WAS ISSUED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED ON BEHALF OF THE ASSESSEE THAT ON ACCOUNT OF CERTAIN LEGAL OBSTRUCTIONS IN THE FAMILY, THE SAID PROPERTY COULD NOT BE PURCHASED AND THE SALE PROCEEDS WAS DIVERTED FOR PURCHASE OF ITA NO. 1863/BANG/2017 PAGE 3 OF 5 ANOTHER ANCESTRAL PROPERTY VIDE SALE DEED DATED 8.11.2012. THEREFORE, THE BENEFIT OF SECTION 54 CANNOT BE DENIED TO THE ASSESSEE ON ACCOUNT OF CERTAIN LAPSES FOR DELAY IN ACQUISITION OF THE PROPERTY. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND HE DISALLOWED THE BENEFIT OF SECTION 54 OF THE ACT AND COMPUTED THE LONG TERM CAPITAL GAIN AT RS. 1,21,30,000/-. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) BUT DID NOT FIND FAVOUR WITH HIM. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT ASSESSEE HAS MADE ITS SINCERE EFFORTS TO ACQUIRE THE RESIDENTIAL HOUSE DURING THE PRESCRIBED PERIOD. THE PROPERTY WAS SOLD OUT ON 12.11.2010 AND THE ASSESSEE RECEIVED ITS SHARE. THE SALE PROCEEDS WERE INVESTED IN ACQUIRING THE RESIDENTIAL HOUSE BY ENTERING INTO AN AGREEMENT TO PURCHASE 1/3 RD SHARE OF ANOTHER RESIDENTIAL PROPERTY FOR A CONSIDERATION OF RS.1,22,58,000/- BUT UNFORTUNATELY THE TRANSACTION COULD NOT BE MATERIALIZED AND THE AGREEMENT WAS CANCELLED VIDE CANCELLATION DEED DATED 18.5.2012. THEREAFTER, THE ASSESSEE HAS PURCHASED ANOTHER RESIDENTIAL HOUSE ON 8.11.2012. COPY OF THE CANCELLATION DEED AND THE PURCHASE DEED IS PLACED ON RECORD. THEREFORE, ASSESSEE HAS ACQUIRED A RESIDENTIAL HOUSE WITHIN THE PRESCRIBED PERIOD OF 2 YEARS FORM THE DATE OF SALE OF THE RESIDENTIAL HOUSE. HE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. 5. THE LEARNED DR ON THE OTHER HAND HAS PLACED RELIANCE UPON THE ORDER OF THE CIT(A). 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY ASSESSEE HAS SOLD ITS 1/4 TH SHARE IN THE PROPERTY BY EXECUTING THE SALE DEED ON 12.11.2010 AND RECEIVED ITS SHARE AT RS.1,22,50,000/-. IT IS ALSO AN UNDISPUTED FACT THAT ASSESSEE HAS MADE AN INVESTMENT OF RS. 1,22,50,000/- IN ORDER TO ACQUIRE 1/3 RD SHARE OF RESIDENTIAL PROPERTY BEARING NO. 649, 4 TH CROSS, 3 RD BLOCK, KORAMANGALA, BANGALORE, VIDE AGREEMENT TO SELL DATED ITA NO. 1863/BANG/2017 PAGE 4 OF 5 10.12.2010. THE TRANSACTION COULD NOT BE MATERIALIZED AND THE AGREEMENT TO SELL WAS CANCELLED VIDE CANCELLATION DEED DATED 18.5.2012. ON THE CANCELLATION OF THE EARLIER AGREEMENT TO SELL, ASSESSEE HAS PURCHASED ANOTHER RESIDENTIAL HOUSE THROUGH SALE DEED DATED 8.11.2012. THOUGH ASSESSEE COULD NOT ACQUIRE THE PROPERTY PURSUANT TO THE AGREEMENT TO SELL EXECUTED ON 10.12.2010 WHICH WAS ULTIMATELY CANCELLED BY CANCELLATION DEED DATED 85.52012 BUT HE FINALLY ACQUIRED THE RESIDENTIAL HOUSE VIDE SALE DEED DATED 8.11.2012 WITHIN A PERIOD OF 2 YEARS FROM THE DATE OF TRANSFER OF RESIDENTIAL HOUSE HELD BY HIM. THE REVENUE HAS DENIED THE EXEMPTION UNDER SECTION 54 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NEITHER PURCHASED THE RESIDENTIAL HOUSE WITHIN A PRESCRIBED PERIOD NOR PUT THE MONEY IN THE CAPITAL ACCOUNT BUT THE REVENUE DID NOT APPRECIATE THE FACT THAT ASSESSEE HAS FINALLY ACQUIRED THE RESIDENTIAL HOUSE THROUGH SALE DEED DATED 8.11.2012. SECTION 54 OF THE INCOME TAX ACT IS A BENEFICIAL PROVISION AND IT SHOULD BE INTERPRETED LIBERALLY IN FAVOUR OF THE ASSESSEE. ONE HAS TO SEE THE INTENTION OF THE ASSESSEE AS TO WHETHER HE INTENDS TO BUY RESIDENTIAL HOUSE. IF THE ASSESSEE SUCCEEDS IN DEMONSTRATING THAT HE INTENDS TO BUY RESIDENTIAL HOUSE, THE BENEFIT OF SECTION 54 SHOULD BE GRANTED TO IT. IN THE INSTANT CASE, ASSESSEE HAS IMMEDIATELY INVESTED THE SALE PROCEEDS IN ACQUIRING ANOTHER RESIDENTIAL HOUSE BY ENTERING INTO AGREEMENT TO SELL BUT UNFORTUNATELY IT WAS NOT MATERIALIZED AND THE AGREEMENT WAS CANCELLED AND UPON CANCELLATION, ASSESSEE FURTHER PURCHASED THE RESIDENTIAL HOUSE THROUGH SALE DEED DATED 8.11.2012 RATHER WITHIN THE PRESCRIBED PERIOD OF 2 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL RESIDENTIAL HOUSE. THEREFORE, FOR THE MINOR LAPSES, IF ANY, THE BENEFIT OF DEDUCTION OF SECTION 54 CANNOT BE DENIED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO RECOMPUTE THE LONG TERM CAPITAL GAIN AFTER ALLOWING DEDUCTION UNDER SECTION 54 OF THE ACT IN THE LIGHT OF THE SALE DEEDS THROUGH WHICH THE ASSESSEE HAS PURCHASED THE NEW RESIDENTIAL HOUSE. ACCORDINGLY, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1863/BANG/2017 PAGE 5 OF 5 PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPTEMBER, 2018. SD/- SD/- BANGALORE. DATED: 28 TH SEPTEMBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. (A. K. GARODIA) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER