Jayantilal Dahyabhai Patel, Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-5(3), Ahmedabad

ITA 19/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5115 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JIGNESHKUMAR P PARIKH
• Keywords: Sale consideration of property below Jantri Value
• Section: 54; 143(3); 50C; 54F

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 19/AHD/2017 ( ASSESSMENT YEAR : 2010-11) JAYANTILAL DAHYABHAI PATEL, NR. HOTEL MEGHDOOT, LOKHAND BAZAR, SARANGPUR, AHMEDABAD / VS. THE DCIT, CIRCLE - 5(3), AHMEDABAD ././ PAN/GIR NO. : AAWPP0790Q ( APPELLANT ) .. ( !' / RESPONDENT ) # / APPELLANT BY : SHRI JIGNESHKUMAR P. PARIKH, A.R. !' $# / RESPONDENT BY : SHRI ALOK KUMAR, SR. D.R. % &'($) DATE OF HEARING 04/07/2018 *+, $) / DATE OF PRONOUNCEMENT 02/08/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-5, AHMEDAB AD (CIT(A) IN SHORT), DATED 23.11.2016 ARISING IN THE ASSESSMENT ORDER DATED 19.08.2015 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT) CO NCERNING AY 2010-11. ITA NO. 19/AHD/17 [JAYANTILAL D. PATEL VS. DCIT] A.Y. 2010-11 - 2 - 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS, HOWEVE R, IN ESSENCE, IS AGGRIEVED BY THE ACTION OF THE REVENUE FOR RESTR ICTING THE DEDUCTION CLAIMED UNDER S.54F TO THE TUNE OF RS.44, 31,000/- IN PLACE OF RS.88,62,000/- CLAIMED BY THE ASSESSEE. THE ASS ESSEE HAS ALSO RAISED ALTERNATIVE GROUND THAT INVESTMENT OF SALE C ONSIDERATION IN THE NEW ASSET HAS TO BE RECKONED WITH REFERENCE TO THE ACTUAL SALE CONSIDERATION RECEIVED IN PLACE OF DEEMED SALE CONS IDERATION SUBSTITUTED UNDER S. 50C OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE AN INDIVIDUAL FILE D HIS RETURN OF INCOME FOR AY 2010-11. THE RETURN WAS SUBJECTED TO SCRUTINY ASSESSMENT IN PURSUANCE OF NOTICE ISSUED UNDER S.14 8 OF THE ACT. IN THE COURSE OF SCRUTINY ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE ALONGWITH OTHER CO-OWNERS SOLD CERTAIN PARCEL OF LA ND SITUATED AT NAROL, AHMEDABAD ON WHICH THE ASSESSEE HAS OFFERED LONG TERM CAPITAL GAINS OF RS.2,47,131/- ATTRIBUTABLE TO HIS SHARE IN SALE OF CO- OWNERSHIP LAND ON A SALE CONSIDERATION ATTRIBUTABLE TO THE CO- OWNERSHIP SHARE OF THE ASSESSEE DECLARED AT RS.21,6 0,720/- BY THE ASSESSEE IN THE RETURN OF INCOME. THE AO HOWEVER S UBSTITUTED THE AFORESAID SALE CONSIDERATION BY CIRCLE RATE/JANTRI VALUE (DETERMINED BY STAMP VALUATION AUTHORITY) DETERMINED AT RS.82,9 0,800/- WITH THE AID OF SECTION 50C OF THE ACT. THE ASSESSEE CL AIMED ELIGIBILITY FOR DEDUCTION UNDER S.54F OF THE ACT ON THE GROUND THAT SALE CONSIDERATION AS ASSESSED BY THE AO UNDER S.50C HAS BEEN INVESTED FOR ACQUISITION OF NEW ASSET IN TERMS OF SECTION 54 F OF THE ACT. THE INVESTMENT IN THE NEW ASSET (RESIDENTIAL PROPERTY) WAS CLAIMED AT RS.88,62,000/-. IT WAS THUS THE CASE OF THE ASSESS EE BEFORE THE AO THAT THE ENTIRE SALE CONSIDERATION DEEMED UNDER S.5 0C STANDS INVESTED IN THE NEW ASSET IN TERMS OF SECTION 54F O F THE ACT. THE ASSESSEE IS THUS ENTITLED TO DEDUCTION AS CLAIMED I N THE RETURN OF ITA NO. 19/AHD/17 [JAYANTILAL D. PATEL VS. DCIT] A.Y. 2010-11 - 3 - INCOME. THE IMPACT OF DEEMED INCREASE IN SALE CONS IDERATION AND CONSEQUENTLY, DEEMED INCREASE IN LONG TERM CAPITAL GAINS ON ACCOUNT OF SUBSTITUTION BY CIRCLE RATE, THUS, STANDS NULLIF IED. THE AO HOWEVER CONTROVERTED THE STAND OF THE ASSESSEE AND NOTED THAT THE PURCHASE OF NEW ASSET HAS BEEN MADE JOINTLY ALONGWI TH SON OF THE ASSESSEE SHRI NANDISH JAYANTILAL PATEL AND THEREFOR E, THE APPROPRIATION TOWARDS PURCHASE OF NEW ASSET WOULD B E DEEMED TO BE HALF OF THE GROSS PURCHASE CONSIDERATION (RS.82,90, 800/-). THE DEDUCTION WAS THUS COMPUTED UNDER S.54F WITH REFERE NCE TO UTILIZATION OF SALE CONSIDERATION TO THE EXTENT OF RS.44,31,000/- ONLY INSTEAD OF FULL CONSIDERATION RS.88,62,000/- AS CLA IMED BY THE ASSESSEE. THE AO ACCORDINGLY ASSESSED THE CAPITAL GAINS AT RS.19,46,211/-. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) SEEKING RELIEF UNDER S.54F WITH REFERENCE TO FULL A MOUNT OF PURCHASE CONSIDERATION INVESTED IN THE NEW HOUSE. CIT(A) HOW EVER DECLINED TO INTERFERE WITH THE ORDER OF AO. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 5.1 THE LEARNED AR FOR THE ASSESSEE REITERATED THE FACTS NOTED ABOVE AND SUBMITTED THAT THE PURCHASE OF THE NEW AS SET (RESIDENTIAL HOUSE) WAS UNDOUBTEDLY MADE IN THE JOINT NAME ALONG WITH SON OF THE ASSESSEE BUT WITH A PURPOSE. IT WAS TO SAFEGUARD I NHERITANCE AND SMOOTH TRANSACTION OF PROPERTY IN THE EVENT OF UNFO RESEEN CONTINGENCIES ETC. HOWEVER, NOTABLY THE ENTIRE COS T TOWARDS ACQUISITION HAS BEEN MADE FROM THE RESOURCES OF THE ASSESSEE. THE OTHER CO-OWNER I.E. SON OF THE ASSESSEE HAS NOT INV ESTED ANY AMOUNT FOR PURCHASE OF NEW HOUSE ON WHICH THE ASSESSEE HAS CLAIMED ITA NO. 19/AHD/17 [JAYANTILAL D. PATEL VS. DCIT] A.Y. 2010-11 - 4 - DEDUCTION UNDER S.54F OF THE ACT. THE LEARNED AR T HUS SUBMITTED THAT NOTWITHSTANDING THE PURCHASE OF THE HOUSE IN T HE JOINT NAME, THE ASSESSEE IS ENTITLED IN LAW FOR RELIEF ON FULL AMOU NT OF INVESTMENT IN THE NEW HOUSE I.E. RS.88.62 LAKHS. THE LEARNED AR SUBMITTED THAT MERELY BECAUSE THE ACQUISITION OF NEW ASSET HAS BEE N MADE IN THE JOINT NAME, THE AO WAS NOT CORRECT IN REDUCING THE APPROPRIATION TOWARDS NEW ASSET BY HALF ARTIFICIALLY OVERLOOKING THIS VITAL FACT THAT ENTIRE PAYMENT HAS BEEN MADE BY THE ASSESSEE ALONE. THE LEARNED AR THEREAFTER REFERRED TO THE DECISION OF THE MUMBA I BENCH OF ITAT IN JITENDRA V FARIA VS. ITO [2017] 81 TAXMANN.COM 1 6 (MUMBAI- TRIB.) FOR THE PROPOSITION THAT THERE IS NO JUSTIFI CATION TO RESTRICT BENEFIT OF INVESTMENT IN NEW HOUSE TO 50% ON THE GR OUNDS OF JOIN OWNERSHIP FOR THE PURPOSES OF SECTION 54F OF THE AC T. 5.2 LEARNED AR IN THE ALTERNATIVE CONTENDED THAT DE EMED SALE CONSIDERATION 50C IS ALIEN TO THE PROVISIONS OF SEC TION 54F AND THEREFORE, THE ASSESSEE IS REQUIRED TO INVEST ONLY THE ACTUAL CONSIDERATION (AND NOT DEEMED SALE CONSIDERATION) I N THE NEW ASSET. 5.3 THE LEARNED AR ACCORDINGLY SOUGHT A PROPER RELI EF IN THE LIGHT OF THE AFORESAID SUBMISSIONS. 5.4 THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LOWER AUTHORITIES. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE F IRST AND FOREMOST QUESTION THAT ARISES FOR OUR CONSIDERATION IS WHETH ER THE DEDUCTION 54F OF THE ACT CAN BE RESTRICTED IN PROPORTION TO T HE NUMBER OF JOINT OWNERS IN THE NEW ASSET DISREGARDING THE FACT OF FU LL PAYMENT ITA NO. 19/AHD/17 [JAYANTILAL D. PATEL VS. DCIT] A.Y. 2010-11 - 5 - APPROPRIATED BY THE ASSESSEE TOWARDS SUCH ACQUISITI ON. IN THE INSTANT CASE, THE ASSESSEE CLAIMS THAT ENTIRE DEEME D SALE CONSIDERATION (COMPUTED UNDER S.50C OF THE ACT) STA NDS INVESTED IN THE PURCHASE OF NEW ASSET (RESIDENTIAL PROPERTY) OU T OF RESOURCES OF ASSESSEE HEREIN. THE AO, ON THE OTHER HAND, CLAIMS THAT THE NEW ASSET HAS BEEN PURCHASED IN THE JOINT NAME AND THER EFORE, UTILIZATION OF SALE CONSIDERATION HAS TO BE DETERMINED ON PROPO RTIONATE BASIS. THE AO ACCORDINGLY CLAIMED THAT THE ASSESSEE IS ENT ITLED TO RELIEF UNDER S.54F ONLY TO THE EXTENT OF HIS SHARE IN THE CO-OWNERSHIP OF THE NEW ASSET I.E. ONE HALF OF THE PURCHASE CONSIDE RATION. 7. WE DO NOT FIND ANY RATIONALE IN THE ACTION OF TH E AO. WE ARE IN COMPLETE AGREEMENT WITH THE CLAIM OF THE ASSESSE E THAT WHERE THE INVESTMENT IN THE NEW ASSET HAS BEEN MADE (ALONGWIT H OTHER CO- OWNERS) AND WHERE ALL MONEY HAS BEEN PAID BY THE AS SESSEE, IT IS THE ASSESSEE WHICH WILL BE ENTITLED TO DEDUCTION IN RES PECT OF INVESTMENTS. WHAT IS CRUCIAL IS THE ACT OF INVESTM ENT WHICH WILL OVERRIDE THE FACT OF JOINT OWNERSHIP IN SO FAR AS E LIGIBILITY OF DEDUCTION UNDER S. 54F IS CONCERNED. THE CASE OF T HE ASSESSEE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF JITENDRA V FARIA (SUPRA) WHERE THE DECISIONS OF SEVERAL HIGH C OURTS WERE REFERRED WHILE HOLDING THE ISSUE IN FAVOUR OF THE A SSESSEE. 8. IN CONCLUSION, WHERE THE ASSESSEE PURCHASED NEW HOUSE OUT OF HIS MONEY, EXEMPTION UNDER S.54F CANNOT BE DENIED T O THE ASSESSEE, REGARDLESS OF THE FACT THAT THE ASSESSEE HOLDS THE PROPERTY IN JOINT OWNERSHIP ALONGWITH OTHER PARTIES AS PER THE PURCHA SE DEED. CONSEQUENTLY, WE DIRECT THE AO TO GRANT DEDUCTION U NDER S. 54F OF THE ACT WITH REFERENCE TO THE AMOUNT UTILIZED BY TH E ASSESSEE TOWARDS PURCHASE OF NEW ASSET IN JOINT OWNERSHIP. ITA NO. 19/AHD/17 [JAYANTILAL D. PATEL VS. DCIT] A.Y. 2010-11 - 6 - 9. AS THE SUBSTANTIVE GRIEVANCE HAS BEEN ADJUDICATE D IN FAVOUR OF THE ASSESSEE, WE DO NOT SEE ANY WARRANT TO DELINEAT E ON THE ALTERNATIVE PLEA. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/08/2018 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- ..' / REVENUE 2.' / ASSESSEE 0. ) % 1) / CONCERNED CIT 4. % 1)- / CIT (A) 4.5'67!8)8& 9 9 / DR, ITAT, AHMEDABAD :.7;<= / GUARD FILE. BY ORDER / 9 / 9 THIS ORDER PRONOUNCED IN OPEN COURT ON 02/08/2 018