Anitha Bobba, Hyderabad V. Asst. Commissioner of Income Tax, Circle-6(1), Hyderabad

ITA 1863/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4979 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 23-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SRIKANTH
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Question of law; Benefit of exemption; Capital Gains
• Section: 143(3); 54B; 54F; 158BD; 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1863/HYD/2019 ASSESSMENT YEAR: 2008 - 09 SMT. BOBBA ANITHA, HYDERABAD. PAN: BIVPB 4181 K VS. ACIT, CIRCLE - 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI V. SIVA KUMAR REVENUE BY: SHRI N. SRIKANTH, DR DATE OF HEARING: 12/ 0 1/2021 DATE OF PRONOUNCEMENT: 04 /02/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 10, HYDERABAD IN APPEAL NO. 0011/CIT(A) - 10/2016 - 17, DATED 14/08/ 2019 PASSED U/S. 143(3) R.W.S 147 AND U/S. 250(6) OF THE ACT FOR THE AY: 2008 - 09. 2. THE ASSESSEE HAS RAISED THREE GROUNDS IN HER APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE L D. AO WHO HAD DENIED THE CLAIM OF EXEMPTION U/S. 54 OF THE ACT BECAUSE THE ASSESSEE HAS PURCHASED THE NEW R ESIDENTIAL HOUSE PROPERTY IN THE NAME OF HER HUSBAND OUT OF THE SALE PROCEEDS OF HER ERSTWHILE RESIDENTIAL PROPERTY . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON - RESIDENT INDIAN WHO HAD EARNED INCOME FROM LONG TERM CAPITAL GAINS DURING THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE HAS NOT FILED HER RETURN OF INCOME FOR THE RELEVANT AY 2008 - 09. SUBSEQUENTLY , IT WAS REVEALED THAT THE ASSESSEE HAS SOLD HER RESIDENTIAL HOUSE PROPERTY VIDE DOC. NO. 1708, DATED 18/4/2007 FOR SALE CONSIDERATION O F RS. 62,90,000/ - . THEREAFTER, NOTICE U/S. 148 WAS ISSUED AND THE CASE WAS TAKEN UP FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS STATED BY THE ASSESSEE THAT DURING THE RELEVANT PREVIOUS YEAR SHE HA D SOLD HER RESIDENTIAL HOUSE PROPERTY FOR SALE CONSIDERATION OF RS. 61,37,000/ - AND PURCHASED OF ANOTHER RESIDENTIAL HOUSE IN THE NAME OF HER HUSBAND FOR RS. 92,00,000/ - ON 7/5/2007. IT WAS FURTHER SUBMITTED THAT SINCE SHE HA D INVESTED MORE THAN THE SALE CONSIDERATION RECEIVED WITH RESPECT TO THE SALE OF HER ERSTWHILE RESIDENTIAL HOUSE PROPERTY TOWARDS THE PURCHASE OF ANOTHER RESIDENTIAL HOUSE WITHIN THE STIPULATED PERIOD AS PER SECTION 54 OF THE ACT , SHE WOULD BE ELIGIBLE FOR EXEMPTION U/S. 54 OF THE ACT AND LTCG WOULD NOT BE ATTRAC TED. FOR THE AFORESAID REASONS IT WAS SUBMITTED THAT THE ASSESSEE HAD REFRAINED FROM FILING HER RETURN OF INCOME. THE ASSESSEE ALSO RELIED ON CERTAIN DECISIONS OF THE HIGHER JUDICIARY TO DRIVE HER POINT WITH RESPECT TO HER CLAIM OF EXEMPTION U/S.54 OF THE ACT . HOWEVER, THE LD. AO DISTINGUISHING THOSE CASES FROM THE CASE OF THE ASSESSEE HELD THAT , SINCE THE ASSESSEE HAD NOT PURCHASED THE HOUSE IN HER OWN NAME, SHE WILL NOT BE ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION U/S. 54 OF THE ACT. ACCORDINGLY , THE LD. AO COMPUTED THE TAXABLE LTCG OF THE ASSESSEE AT RS. 34,25,280/ - . ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY AGREEING WITH HIS VIEW. 4. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE US THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISION S OF THE HONBLE HIGH COURTS: - (I) CIT VS. GURNAM SINGH [2008] 170 TAXMAN 160 (PUNJAB & HARYANA). (II) CIT VS. V. NATARAJAN [2006] 154 TAXMAN 399 (MAD.) (III) CIT VS. KAMAL WAHAL [2013 ] 30 TAXMANN.COM 34 (DELHI) AND (IV) CIT VS. RAVINDER KUMAR ARORA [2011] 15 TAXMANN.COM 307 (DELHI). 5. THE LD. DR , ON THE OTHER HAND, RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD AND THE DECISIONS CITED BY THE LD. AR. ON THE PLAIN READING OF THE DECISIONS CITED BY THE LD. AR HEREINABOVE , WE FIND MERIT IN THE CASE OF THE ASSESSEE . THE GIST OF THE DECISIONS CITED BY THE LD. AR ARE CITED HEREIN BELOW FOR REFERENCE : - (1) CIT VS. V. NATARAJAN [2006] 154 TAXMAN 399 (MAD.) / [2006] 287 ITR 271 (MAD.): FOR THE ASSESSMENT YEAR 1990 - 91 THE ASSESSING OFFICER DISALLOWED EXEMPTION U/S. 54 OF THE INCOME TAX ACT, 1961 . THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO THE EX EMPTION OF CAPITAL GAINS AND DELETED THE ADDITION. ON APPEAL; HELD, (I) THAT THE ASSESSEE HAD PURCHASED A HOUSE IN THE NAME OF HIS WIFE AFTER SELLING THE PROPERTY AT BANGALORE. BUT THE SAME WAS ASSESSED IN THE HANDS OF THE ASSESSEE. HENCE, AS CORRECTLY H ELD BY THE COMMISSIONER (APPEALS) AS WELL AS BY THE TRIBUNAL THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S. 54. (2) CIT VS. GURNAM SINGH [2008] 170 TAXMAN 160 (PUNJAB & HARYANA) [ 2010] 327 ITR 278 . THE ASSESSING OFFICER INITIATED PROCEEDINGS AGAINST THE ASSESSEE UNDER SECTION 158BD OF THE INCOME TAX ACT, 1961, ON THE BASIS OF AN AGREEMENT SEIZED DURING A SEARCH CONDUCTED IN THE BUSINESS PREMISES OF SP WHICH REVEALED THAT THE ASSESSEE HAD SOLD AGRICUL TURAL LAND TO ONE S AND OBTAINED EARNEST MONEY. IN THE ASSESSMENT OF INCOME THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 54B OF THE ACT IN RESPECT OF THE AGRICULTURAL LAND PURCHASED BY HIM ALONG WITH HIS SON OUT OF THE SALE PROCEEDS OF THE AGRICULTURAL LA ND. THE ASSESSING OFFICER DISALLOWED THE DEDUCTION ON THE GROUND THAT THE LAND WAS REGISTERED IN THE NAME OF THE ASSESSEES SON. HOWEVER, THE COMMISSIONER (APPEALS) ALLOWED THE DEDUCTION AND THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER (APPEALS) ON THE PREMISE THAT THE SALE PROCEEDS OF THE AGRICULTURAL LAND WERE USED TO PURCHASE ANOTHER PIECE OF AGRICULTURAL LAND. ON APPEAL, HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD RECORDED A PURE FINDING OF FACT THAT THE LAND IN QUESTION WAS PURCHASED OUT OF THE SALE PROCEEDS OF THE AGRICULTURAL LAND WHICH WAS USED ONLY FOR AGRICULTURAL PURPOSES AND MERELY BECAUSE THE ASSESSEES SON WAS SHOWN IN THE SALE DEED AS CO - OWNER, IT DID NOT MAKE ANY DIFFERENCE. IT WAS NOT THE CASE OF THE REVENUE THAT THE LAND IN QUESTION WAS EXCLUSIVELY USED BY HIS SON. THEREFORE, THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S. 54B. CIT VS. KAMAL WAHAL [2013] 30 TAXMANN.COM 34 (DELHI) FACTS THE ASSESSEE SOLD HIS JOINT PROPERTY WHICH GAVE RISE TO PROPORTIONATE CAPITAL GAINS. HE C LAIMED DEDUCTION UNDER SECTION 54F BY INVESTING SALE PROCEEDS IN ACQUISITION OF VACANT PLOT AND PURCHASE OF A RESIDENTIAL HOUSE IN THE NAME OF HIS WIFE. TAKING A VIEW THAT UNDER SECTION 54F, INVESTMENT IN RESIDENTIAL HOUSE SHOULD BE IN THE ASSESSEE'S NAME, THE ASSESSING OFFICER DENIED DEDUCTION IN RESPECT OF INVESTMENT IN RESIDENTIAL HOUSE PURCHASED BY ASSESSEE IN HIS WIFE'S NAME. THE COMMISSIONER (APPEALS) ALLOWED THE ASSESSEE'S CLAIM. THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIO NER (APPEALS), HOLDING THAT SECTION 54F, BEING A BENEFICIAL PROVISION ENACTED FOR ENCOURAGING INVESTMENT IN RESIDENTIAL HOUSES, SHOULD BE LIBERALLY INTERPRETED. ISSUE INVOLVED WHETHER FOR CLAIMING DEDUCTION OF CAPITAL GAINS UNDER SECTION 54F, THE NEW RE SIDENTIAL HOUSE NEEDS TO BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME? HELD IN CIT V. RAVINDER KUMAR ARORA [2012] 342 ITR 38/[2011] 203 TAXMAN 289/15 TAXMANN.COM 307 (DELHI) , IT WAS HELD THAT WHERE THE ENTIRE PURCHASE CONSIDERATION WAS PAID ONLY BY THE ASSESSEE AND NOT A SINGLE PENNY WAS CONTRIBUTED BY ANY OTHER PERSON, PREFERRING A PURPOSIVE CONSTRUCTION AGAINST A LITERAL CONSTRUCTION, MORE SO WHEN EVEN APPLYING THE LITERAL CONSTRUCTION, THERE IS NOTHING IN SE CTION 54F TO SHOW THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. SECTION 54F IN TERMS DOES NOT REQUIRE THAT THE NEW RESIDENTIAL PROPERTY SHALL BE PURCHASED IN THE NAME OF THE ASSESSEE; IT MERELY SAYS THAT THE ASSESSEE SHOULD HAVE PURC HASED/CONSTRUCTED 'A RESIDENTIAL HOUSE'.[PARA 7] THEREFORE, THE PREDOMINANT JUDICIAL VIEW FOR THE PURPOSES OF SECTION 54F IS THAT THE NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURCH ASED EXCLUSIVELY IN HIS NAME. IT IS MOREOVER TO BE NOTED THAT THE ASSESSEE IN THE PRESENT CASE HAS NOT PURCHASED THE NEW HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCONNECTED WITH HIM. HE HAS PURCHASED IT ONLY IN THE NAME OF HIS WIFE. THERE IS ALS O NO DISPUTE THAT THE ENTIRE INVESTMENT HAS COME OUT OF THE SALE PROCEEDS AND THAT THERE WAS NO CONTRIBUTION FROM THE ASSESSEE'S WIFE. [PARA 9] THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. [PARA 10] (3) CIT VS. RAVINDER KUMAR ARORA [2011] 15 TAXMANN.COM 307 (DELHI) FACTS DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAD SHOWN CERTAIN LONG - TERM CAPITAL GAIN ON SALE OF A PLOT OF LAND AND CLAIMED EXEMPTION UNDER SECTION 54F ON ACCOUNT OF PURCHASE OF NEW HOUSE PROPERTY. THE ASSESSING OFFICER NOTED THAT THOUGH ALL THE PAYMENTS WERE MADE BY THE ASSESSEE, THE RESIDENTIAL HOUSE WAS PURCHASED JOINTLY IN THE NAMES OF THE ASSESSEE AND HIS WIFE. THE ASSESSING OFFICER, THEN REFERRED TO SECTION 54F O NLY TO THE EXTENT OF HIS RIGHT IN THE NEW RESIDENTIAL HOUSE PURCHASED JOINTLY WITH HIS WIFE AND ALLOWED ONLY 50 PER CENT OF THE EXEMPTION CLAIMED UNDER SECTION 54F AS AGAINST TOTAL CLAIM MADE BY THE ASSESSEE. THE COMMISSIONER (APPEALS) DISMISSED THE ASSESS EE'S APPEAL. ON SECOND APPEAL, THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO BENEFIT OF SECTION 54F WITH REFERENCE TO THE TOTAL INVESTMENT. ON THE REVENUE'S APPEAL TO THE HIGH COURT: HELD PLAIN READING OF SECTION 54F INDICATES THAT IN ORDER TO GET BENEFIT OF THIS SECTION, THE ASSESSEE SHOULD, INTER ALIA, 'PURCHASE' A HOUSE. AS PER THE REVENUE, THIS HOUSE HAS TO BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY AND BENEFIT IS NOT GIVEN IF IT IS PURCHASED BY THE ASSESSEE JOINTLY WITH HIS WIFE.[PARA 7] AT THE OUTSET, IMPORTANT FACTUAL FINDINGS RECORDED BY THE TRIBUNAL IN THIS CASE ARE THAT IT WAS THE ASSESSEE WHO INDEPENDENTLY INVESTED IN THE PURCHASE OF NEW RESIDENTIAL HOUSE THOUGH IN HIS OWN NAME BUT ALONG WITH THE NAME OF HIS WIFE ALSO AND THAT IT WAS TH E ASSESSEE WHO PAID STAMP DUTY AND CORPORATION TAX AT THE TIME OF THE REGISTRATION OF THE SALE DEED OF THE HOUSE SO PURCHASED AND HAS ALSO PAID COMMISSION AND LEGAL EXPENSES IN CONNECTION WITH THE PURCHASE OF THE HOUSE. THE TRIBUNAL FURTHER RECORDS THAT WH OLE OF THE PURCHASE CONSIDERATION HAS BEEN PAID BY THE ASSESSEE AND NOT EVEN A SINGLE PENNY HAS BEEN CONTRIBUTED BY THE WIFE IN THE PURCHASE OF THE HOUSE. THE TRIBUNAL ALSO NOTED THE ARGUMENT THAT THE PROPERTY WAS PURCHASED BY THE ASSESSEE IN THE JOINT NAM E WITH HIS WIFE FOR 'SHAGUN' PURPOSE AND BECAUSE OF THE FACT THAT THE ASSESSEE WAS PHYSICALLY HANDICAPPED. THE TRIBUNAL FURTHER CONCLUDES THAT AS A MATTER OF FACT, THE ASSESSEE WAS THE REAL OWNER OF THE RESIDENTIAL HOUSE IN QUESTION. [PARA 8] ON THE AFORES AID FACTS, THE CONDITIONS STIPULATED IN SECTION 54F STAND FULFILLED. IT WOULD BE TREATED AS THE PROPERTY PURCHASED BY THE ASSESSEE IN HIS NAME AND MERELY BECAUSE HE HAS INCLUDED THE NAME OF HIS WIFE AND THE PROPERTY WAS PURCHASED IN THE JOINT NAMES WOULD N OT MAKE ANY DIFFERENCE. SUCH A CONDUCT HAS TO BE, RATHER, ENCOURAGED WHICH GIVES EMPOWERMENT TO WOMEN. THERE ARE VARIOUS SCHEMES FLOATED BY THE GOVERNMENT ITSELF PERMITTING JOINT OWNERSHIP WITH WIFE. IF THE VIEW OF THE ASSESSING OFFICER (AO) OR THE CONTENT ION OF THE REVENUE IS ACCEPTED, IT WOULD BE A DEROGATORY STEP.[PARA 9] EVEN WHEN ONE LOOK INTO THE MATTER FROM ANOTHER ANGLE, FACTS REMAIN THAT THE ASSESSEE IS THE ACTUAL AND CONSTRUCTIVE OWNER OF THE HOUSE. IN CIT V. PODAR CEMENT (P) LTD. [1997] 226 ITR 625/92 TAXMAN 541 (SC) , THE SUPREME COURT HAS ALSO ACCEPTED THE THEORY OF CONSTRUCTIVE OWNERSHIP. MOREOVER, SECTION 54F MANDATES THAT THE HOUSE SHOULD BE PURCHASED BY THE ASSESSEE AND IT DOES NOT STIPULATE THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. HERE IS A CASE WHERE THE HOUSE WAS PURCHASED BY THE ASSESSEE AND THAT TOO IN HIS NAME AND WIFE'S NAME WAS ALSO INCLUDED ADDITIONALLY. SUCH INCLUSION OF THE NAME OF THE WIFE FOR THE ABOVE - STATED PECULIAR FACTUAL REASON SHOULD NOT STAND IN THE WAY OF THE DEDUCTION LEGITIMATELY ACCRUING TO THE ASSESSEE. OBJECTIVE OF SECTION 54F AND THE LIKE PROVISION SUCH AS SECTION 54 IS TO PROVIDE IMPETUS TO THE HOUSE CONSTRUCTION AND SO LONG AS THE PURPOSE OF HOUSE CONST RUCTION IS ACHIEVED, SUCH HYPER - TECHNICALITY SHOULD NOT IMPEDE THE WAY OF DEDUCTION WHICH THE LEGISLATURE HAS ALLOWED. PURPOSIVE CONSTRUCTION IS TO BE PREFERRED AS AGAINST THE LITERAL CONSTRUCTION, MORE SO WHEN EVEN LITERAL CONSTRUCTION ALSO DOES NOT SAY T HAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. SECTION 54F IS THE BENEFICIAL PROVISION WHICH SHOULD BE INTERPRETED LIBERALLY IN FAVOUR OF THE EXEMPTION/DEDUCTION TO THE TAX - PAYER AND DEDUCTION SHOULD NOT BE DENIED ON HYPER - TECHNICAL GR OUND. THE WORD 'ASSESSEE' MUST BE GIVEN WIDE AND LIBERAL INTERPRETATION SO AS TO INCLUDE HIS LEGAL HEIRS ALSO. THERE IS NO WARRANT FOR GIVING TOO STRICT AN INTERPRETATION TO THE WORD 'ASSESSEE' AS THAT WOULD FRUSTRATE THE OBJECT OF GRANTING EXEMPTION. [PARA 10] IN VIEW OF AFORESAID DISCUSSION THE EXEMPTION UNDER SECTION 54F IS EXTENDABLE TO THE ASSESSEE FOR THE TOTAL CONSIDERATION PAID BY HIM, FOR THE PURCHASE OF THE NEW ASSET (THE RESIDENTIAL PROPERTY) IN THE JOINT NAME [PARA 12] 7. FROM THE ABOVE IT IS EVIDENT THAT EVEN IF THE ASSESSEE PU RCHASES THE NEW ASSET IN THE NAME OF HIS OR HER IMMEDIATE RELATIVES SUCH AS SPOUSE , OWN CHILDREN , THEN THE ASSESSEE WILL BE ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION U/S. 54 OF THE ACT. THEREFORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE HIGH COURTS MENTIONED HEREIN ABOVE, I HEREBY DIRECT THE LD. AO TO GRANT EXEMPTION TO THE ASSESSEE U/S. 54F OF THE ACT AND ACCORDINGLY, DELETE THE LTCG OF RS. 34,25,280/ - ASSESSED IN THE HANDS OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE FOURTH OF FEBRUARY, 2021. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 04 TH FEBRUARY, 2021. OKK COPY TO: - 1) SMT. BOBBA ANITHA C/O. CHOWDARY & RAO, CHARTERED ACCOUNTANTS, 8 - 3 - 677/26, 1 ST FLOOR, SRIKRISHNA DEVARAYA NAGAR COLONY, OPP. RBI QUARTERS, YELLAREDDYGUDA, HYDERABAD 500 073. 2) THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE - 6(1), R.NO. 625, 6 TH FLOOR, IT TOWERS, AC GUARDS, HYDERABAD 522660. 3) THE COMMISSIONER OF INCOME TAX (APPEALS) - 10, HYDERABAD. 4) THE CHIEF COMMISSIONER OF INCOME TAX (IT) (SZ), BENGALURU. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE