Naveen Chand Khanna & Sons (HUF), Delhi V. ACIT, New Delhi

ITA 1912/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3203 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Question of law
• Section: 54F; 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SH.G.D.AGRAWAL, HON BLE PRESIDENT AND SH.K.N.CHARY, JUDICIAL MEMBER ITA NO. 1912 / DEL/20 1 6 ( ASSESSMENT YEAR: 20 12 - 13 ) O O R ORDE R PER K.N. CHARY , JUDICIAL MEMBER THESE TWO APPEALS ARE PREFERRED BY THE ASSESSEES CHALLENGING ORDERS DATED 29.2.2016 IN APPEAL NO. 59/14 - 15 PASSED BY THE LEARNED CIT(A) - 12 NEW DELHI CONFIRMING THE ADDITIONS MADE BY THE AO MAKING ADDITION ON ACCOUNT OF DISALLOWANCE OF THE EXEMPTION UNDER SECTION 54 OF THE INCOME TAX ACT , 1961 [IN SHORT HEREINAFTER CALLED AS THE CIT(A) ] . FACTS ARE SIM ILAR IN BOTH THE APPEALS SO ALSO THE QUESTION OF LAW . HENCE WE DEEM IT JUST AND CONVENIEN T TO DISPOSE OF THE APPEALS BY WAY OF THIS COMMON ORDER. NAVEEN CHAND KHANNA & SONGS (HUF) 17, ALIPUR ROAD, CIVIL LINES, DELHI PAN: AAAHN2704A VS ACIT CIRCLE - 35(1) (APPELLANT) (RESPONDENT) ASSESSEE BY SH. LALITA KRISHNAMURTI & VIDHI AGARWAL, CA RESPONDENT BY SH. AMIT JAIN, SR. DR DATE OF HEARING 6 . 11 .2017 DATE OF PRONOUNCEMENT 2 3 . 11 .2017 2 2. RELEVANT FACTS FOR THE DISPOSAL OF THESE APPEALS ARE THAT WHILE SCRUTINIZING THE RETURN OF INCOME OF THE ASSESSEES, THE AO FOUND THAT DURING THE RELEVANT YEAR, THE ASSESSEE HAS RECEIVED ENHANCED AMOUNT OF COMPENSATION ON ACCOUNT OF COMPULSORY ACQUISITION OF THE IMMOVABLE PROPERTY OF THE ASSESSEES DURING THE YEAR 2003 - 04 IN RESPECT OF WHICH THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54/54F OF THE ACT. THE AO HELD THAT THE PROVISIONS UNDER SECTION 45 READ WITH SECTION 54 DEAL WITH THE EXEMPTION TO BE CLAIMED IN RESPECT OF COMPENSATION BUT NOT THE ENHANCED COMPENSATION AND INASMUCH AS THE EXEMPTION UNDER SECTION 54 IS AVAILABLE ONLY IN RESPECT OF THE COMPENSATION, THE CLAIM OF THE ASSESSEE IN RESPECT OF OF ENHANCED COMPENSATION WAS NOT ACCEPTABLE ACCORDING TO THE AO. IN THE CASE OF ENHANCED COMPENSATION, THE RESPECTIVE TRANSFER OF CAPITAL ASSET TOOK PLACE MUCH BEFORE THE YEAR UNDER CONSIDERATION IN RESPECT OF ENHANCED COMPENSATION. HE RECORDED A FINDING THAT IN THIS CASE, TRANSFER BY WAY OF COMPULSORY ACQUISITION HAD TO BE CONSIDERED IN THE YEAR WHEN THE COMPENSATION WAS FIRST RECEIVED BY THE ASSESSEES I.E. IN THE FINANCIAL YEAR 2003 - 04. ON THIS PREMISE, THE AO REJECTED THE CLAIM FOR DEDUCTION UNDER SECTION 54 OF THE ACT AND ADDED THE AMOUNT OF ENHANCED COMPENSATION. 3. IN THE APPEALS PREFERRED BY THE ASSESSEES, LEARNED CIT(A) CONSIDERED THE CASE LAW ON THIS ASPECT AND WHILE FOLLOWING THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT IN CHAKIRI ASHOK KUMAR VS. ITO 50 TAXMANN.COM 108 HELD THAT THE BENEFIT OF SECTION 54H IS TO BE EXTENDED TO AMOUNT OF COMPENSATION AS ENHANCED BY THE HIGH COURT THEREFORE THE CLAIM OF THE ASSESSEES ON THAT COUNT WAS TENABLE. HOWEVER, LEARNED CIT(A) DENIED THE RELIEF TO 3 THE ASSESSEES ON THE GROUND THAT WHAT IS REQUIRED IN THIS MATTER WAS NOT A RESIDENTIAL HOUSE NOR THE LAND APPURTENANT THERETO BUT IT IS ONLY A SELF VACANT PLOT WITH BOUNDARY WALL AND GATE. ACCORDING TO HIM THERE WAS NO RESIDENTIAL BUILDING AND HE STATED THAT ACCORDING TO THE AWARD NO ONE WAS RESIDING IN THE LAND UNDER REFERENCE THEREFORE LEARNED CIT(A) HAD WRI TTEN A FINDING NO RELIEF COULD BE GRANTED UNDER SECTION 54 (1) OF THE ACT UNLESS THERE WAS ANY SUPERIOR STRUCTURE IN THE LAND THAT WAS ACQUIRED . HE ALSO REJECTED THE CONTENTION OF THE ASSESSEES THAT THE TIME FRAMES UNDER SECTION 54 OF THE ACT ARE RELEVANT ONLY WHEN THE RELIEF UNDER SECTION 54 OF THE ACT WAS GRANTED TO THE ASSESSEES. HEN CE CHALLENGING SUCH FINDING BY THE LEARNED CIT(A) , THE ASSESSEE HAVE FILED THESE APPEALS. 4. IT IS THE ARGUMENT OF THE LEARNED AR THAT IN THIS MATTER IT COULD BE SEE N FROM THE THIRD PARAGRAPH OF THE ASSESSMENT ORDER, THE ASSESSEE HAD CLAIMED EXEMPTION NOT ONLY UNDER SECTION 54 OF THE ACT BUT ALSO THERE WAS A CLAIM UNDER SECTION 54F OF THE ACT AND RESIDENTIAL WHEN THE LEARNED CIT(A) FAILED THAT THERE WAS NO RESIDENTIAL HOUSE IN THE LAND THAT WAS ACQUIRED THE AUTHORITY SHALL UNDER AN OBLIGATION TO CONSIDER THE CLAIM OF THE ASSESSEE UNDER SECTION 54 OF THE ACT BUT THE LEARNED CIT(A) FAILED TO CONSIDER THE SAME. THE NEXT CONTENTION OF THE ASSESSEES IS THAT THE FINDING OF THE LEARNED CIT(A) THAT THERE WAS NO RESIDENTIAL BUILDING IN THE PROPERTY WAS FACTUALLY INCORRECT INASMUCH AS THE PROPERTY WAS ASSESSED TO HOUSE TAX WHICH IS NOT POSSIBLE WITHOUT THERE BEING ANY BUILDING. ACCORDING TO THE LEARNED AR THERE HAS BEEN A BUILDI NG AND WHAT WAS ACQUIRED IS THE LAND APPURTENANT THERETO AND IF AN OPPORTUNITY IS GRANTED TO THE ASSESSE E, THE ASSESSEES ARE READY TO PROVE THE FACT 4 OF THE EXISTENCE OF BUILDING IN THE PROPERTY THAT WAS ACQUIRED. LEARNED DR HEAVILY PLACED RELIANCE ON THE O RDERS OF THE AUTHORITIES BELOW. 5. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED AO REJECTED THE CLAIM OF THE ASSESSEES HOLDING THAT THE LAW PERMITS THE EXEMPTION IN RESPECT OF THE COMPENSATION ONLY IN THE YEAR IN WHICH THE TRANSFER TAKES PLACE BUT THE ENHANCED COMPENSATION STANDING ON A DIFFERENT FOOTING IS NOT QUALIFIED FOR THE EXEMPTION. THE LEARNED CIT(A) IS PERFECTLY L EGAL IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT IN VIEW OF THE DECISION OF CHAKIRI AS HOK KUMAR VS. ITO (SUPRA) . THE BENEFIT OF SECTION 54(H) HAS TO BE EXTENDED TO THE AMOUNT OF COMPENSATION AS ENHANCED BY THE COURTS. 6. HOWEVER, IN SO FAR AS THE FINDINGS OF THE LEARNED CIT(A) THAT THERE WAS RESIDENTIAL STRUCTURE IN THE LAND UNDER ACQUISITION IS CONCERNED. THE RECORD DOES NOT REVEAL THAT THE LEARNED CIT(A) HAD UNDERTAKEN ANY ENQUIRY ON THIS ASPECT. HE PLACED RELIANCE ON THE AWARD TO SAY THAT NO ONE WAS RESIDING IN THE LAND UNDER REFERENCE AND IT WAS A VACANT LAND. WE ARE UNABL E TO SEE BASIS FOR THE LEARNED CIT(A) TO OBSERVE SO. WHAT WAS ACQUIRED WAS VACANT LAND AS SUCH IT IS BUT NATURALLY THAT REFERENCE WOULD READ ONLY ABOUT THE VACANT LAND. BUT THE QUESTION THAT FALLS FOR CONSIDERATION UNDER SECTION 54 OF THE ACT IS WHETHER SU CH VACANT LAND IS APPURTENANT TO ANY RESIDENTIAL HOUSE. RESIDUAL OF AWARDS NEED NOT BE THE FINAL SOURCE ON THAT ASPECT. INASMUCH AS LEARNED AR STATED IN THAT THE PROPERTY WAS ASSESSED TO HOUSE TAX AND THERE IS EVIDENCE TO SHOW THAT HOUSE TAX WAS COLLECTED WE FIND THAT THIS REQUIRES TO VERIFICATION. FURTHER 5 THE LEARNED CIT(A) HAS NOT CONSIDERED THE CASE OF THE ASSESSEE UNDER SECTION 54 H OF THE ACT WHEN HE REACHED A CONCLUSION THAT THE PROPERTY THAT WAS ACQUIRED IS NOT A RESIDENTIAL HOUSE OR THE LAND APPURTENANT THERETO. WE, THEREFORE, FIND JUST AND PROPER TO DIRECT THE AO TO VERIFY WHETHER THE LAND UNDER ACQUISITION WAS THE LAND APPURTE NANT TO A RESIDENTIAL HOUSE OR NOT AND DEPENDENT UPON THE OUTCOME GRANT THE RELIEF UNDER SECTION 54 OR SECTION 54F OF THE ACT. WE, THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR COMPLIANCE WITH THE ABOVE DIRECTION AFTER GIVING AN OPPORTUNITY TO T HE ASSESSEE TO PRODUCE RELEVANT EVIDENCE. 7 . IN THE RESULT, APPEAL S OF THE ASSESSEE S ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 3 R D N O V E M B E R , 2017. S D / - S D / - (G.D.AGRAWAL) (K.N.CHARY) PRESIDENT JUDICIAL MEMBER DATE: - 2 3 R D NOV , 2017 SH COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 1 6 .1 1 .2017 PS 2. DRAFT PLACED BEFORE AUTHOR 2 3 .1 1 .2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS .1 1 .2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK .1 1 .2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 6