CHIMANBHAI NAKRANI, NAVI MUMBAI V. DCIT (OSD) 10(3), MUMBAI

ITA 1973/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2813 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2015
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Assessee Lawyers: HIRAL D DEJPAL
• Keywords: Period of limitation; Cost of acquisition; Benefit of exemption
• Section: 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1973 /MUM/ 20 1 5 (ASSESSMENT YEAR 2011 - 12 ) SHRI CHIMANBHAI NAKRANI 102, SARATHI PLOT NO. 77, SECTOR 21 NERUL EAST NAVI MUMBAI - 400 706. VS. DCIT (OSD) - 10( 3) ROOM NO. 451 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . ACSPN1783D ASSESSEE BY SHRI HIRAL D. DEJPAL DEPARTMENT BY SHRI A. RAMACHANDRAN DATE OF HEARING 3 .8. 201 6 DATE OF PRONOUNCEMENT 1 8 . 8 . 201 6 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED05 - 01 - 2015 PASSED BY LD CIT(A) - 24, MUMBAI FOR ASSESSMENT YEAR 2011 - 12 AND THE ASSESSEE IS AGGRIEVED BY THE DECISION RENDERED BY LD CIT(A) ON THE FOLLOWING ISSUES: - (A) DISALLOWANCE OF COMM ISSION EXPENSES INCURRED ON SALE OF PLOT. (B) REJECTION OF CLAIM FOR DEDUCTION U/S 54F OF THE ACT. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUES ARE STATED IN BRIEF. THE ASSESSEE ALONG WITH HIS BROTHER SOLD A PLOT LOCATED IN KHARGHAR AREA FOR A CONSID ERATION OF RS.1,20,11,000/ - ON 17.03.2011. THE ASSESSEE HELD 50% SHARE IN THE PLOT AND ACCORDINGLY THE SHARE OF THE ASSESSEE ON THE SALE CONSIDERATION STOOD AT RS.60,05,500/ - . AFTER CLAIMING THE INDEXED COST OF ACQUISITION OF RS.17,84,970/ - AND COMMISSIO N EXPENSES ON SALE OF PLOT AMOUNTING TO RS.1,20,000/ - , THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN OF RS.41,00,528/ - . CHIMANBHAI NAKRANI 2 SINCE THE ASSESSEE PURCHASED A FLAT AFTER THE SALE, HE CLAIMED EXEMPTION U/S 54 OF THE ACT IN THE RETURN OF INCOME. 3. SINCE THE ASS ESSEE HAS SOLD LAND, THE AO NOTICED THAT THE ASSESSEE COULD CLAIM DEDUCTION U/S 54F OF THE ACT AND NOT U/S 54 OF THE ACT. THE AO NOTICED THAT THE ASSESSEE HAS PURCHASED A FLAT FROM MONA BUILDERS AT NERUL AREA FOR A CONSIDERATION OF RS.41.25 LAKHS INCLUDIN G THE EXPENSES ON 13.12.2011. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS ALSO PURCHASED ANOTHER FLAT ALONG WITH HIS BROTHER IN ROYAL REAL TOWERS CO - OP HSG SOCIETY AT ULWE FOR A CONSIDERATION OF RS.20,72,021/ - ON 15.02.2012. THE AO OBSERVED THAT THE EXE MPTION GRANTED U/S 54F OF THE ACT HAVE TO BE WITHDRAWN, IF THE ASSESSEE PURCHASES ANOTHER HOUSE WITHIN THREE YEARS. FURTHER THE PROVISIONS OF SEC. 54F(4) MANDATES THAT THE SALE CONSIDERATION HAD TO BE DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME, IF IT HAS N OT BEEN USED WITHIN THE DUE DATE FOR FILING RETURN OF INCOME FOR PURCHASE/CONSTRUCTION OF A NEW HOUSE. THE AO NOTICED THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE CAPITAL GAINS ACCOUNT SCHEME AS MANDATED BY THE PROVISIONS OF SEC. 54F(4) OF THE AC T. IN VIEW OF THE ABOVE REASONS, THE AO DID NOT ALLOW DEDUCTION U/S 54F OF THE ACT ALSO. THE AO DID NOT ALLOW THE DEDUCTION FOR COMMISSION PAYMENT ON THE REASONING THAT THE ASSESSEE DID NOT FURNISH THE EVIDENCES TO SUPPORT THE SAID CLAIM. 4. BEFORE LD CIT(A), THE ASSESSEE FURNISHED CONFIRMATION LETTER OBTAINED FROM THE BROKER TOWARDS COMMISSION PAYMENT, BANK ACCOUNT COPIES EVIDENCING THE TRANSACTIONS AND THE LEDGER ACCOUNT COPIES. SINCE THE LD CIT(A) ALSO REJECTED THE CLAIM FOR DEDUCTION U/S 54F OF THE ACT, HE HELD THAT THE COMMISSION EXPENSES CANNOT BE CONSIDERED. WITH REGARD TO THE CLAIM FOR DEDUCTION U/S 54F OF THE ACT, THE ASSESSEE SUBMITTED THAT THE SECOND FLAT BOOKED IN ULWE AREA WAS PURCHASED AFTER THE EXPIRY OF THREE YEARS AND ACCORDINGLY SU BMITTED THAT THERE WAS NO VIOLATION OF THE CONDITIONS PRESCRIBED IN SEC. 54F OF THE ACT. WITH REGARD CHIMANBHAI NAKRANI 3 TO THE DEPOSIT REQUIRED TO BE MADE IN THE CAPITAL GAINS ACCOUNT SCHEME, THE ASSESSEE SUBMITTED THAT HE HAS PURCHASED A NEW FLAT WITHIN THE PERIOD PRESCRIB ED IN SEC. 139(4) OF THE ACT. HOWEVER, THE LD CIT(A) CONFIRMED THE REJECTION OF THE DEDUCTION U/S 54F OF THE GROUND THAT THE ASSESSEE DID NOT DEPOSIT THE UNUTILISED AMOUNT OF SALE CONSIDERATION IN CAPITAL GAINS ACCOUNT SCHEME BEFORE THE DUE DATE FOR FILIN G THE RETURN OF INCOME. 5. I HEARD THE PARTIES AND PERUSED THE RECORD. FROM THE ORDER OF LD CIT(A), I NOTICE THAT THE LD CIT(A) HAS CONFIRMED THE REJECTION OF THE DEDUCTION U/S 54F OF THE ACT ONLY ON THE GROUND THAT THE ASSESSEE DID NOT DEPOSIT THE UNUTILISED AMOUNT OF SALE CONSIDERATION IN CAPITAL GAINS ACCOUNT SCHEME BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MS. JAGRITI AGGARWAL (2011)(339 ITR 610) HAS HELD AS UNDER: - THE SALE OF THE ASSET HAVING TAKEN PLACE ON 13TH JAN., 2006, FALLING IN THE PREVIOUS (SIC ASSESSMENT) YEAR 2006 - 07, THE RETURN COULD BE FILED BEFORE THE END OF RELEVANT ASST. YR. 2007 - 08 (SIC 2006 - 07) I.E. 31ST MARCH, 2007. THUS, SUB - S. (4) OF S. 139 PROVIDES EXTENDED PERIOD OF LIMITATION AS AN EXCEPTION TO SUB - S. (1) OF S. 139 OF THE ACT. SUB - S. (4) IS IN RELATION TO THE TIME ALLOWED TO AN ASSESSEE UNDER SUB - S. (1) TO FILE RETURN. THEREFORE, SUCH PROVISION IS NOT AN INDEPENDENT PROVISION, BUT RELATES TO TIME C ONTEMPLATED UNDER SUB - S. (1) OF S. 139. THEREFORE, SUCH SUB - S. (4) HAS TO BE READ ALONG WITH SUB - S. (1). SIMILAR IS THE VIEW TAKEN BY THE DIVISION BENCH OF KARNATAKA AND GAUHATI HIGH COURTS IN FATIMA BAI AND RAJESH KUMAR JALAN CASES (SUPRA) RESPECTIVELY. THE HONBLE PUNJAB & HARYANA HIGH COURT HAS TAKEN THE VIEW THAT THE PROVISIONS OF SEC. 139(4) IS NOT AN INDEPENDENT PROVISION, BUT RELATES TO TIME CONTEMPLATED UNDER SUB - S. (1) OF S. 139. THEREFORE SUCH SUB - S. (4) HAS TO BE READ ALONG WITH SUB - S. (1). CHIMANBHAI NAKRANI 4 6. THE HONBLE GAUHATI HIGH COURT HAD AN OCCASION TO CONSIDER THE OPENING PORTION OF SEC. 54(2) OF THE ACT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN (286 ITR 274) AND THE HIGH COURT HAS EXPRESSED THE FOLLOWING VIEW: - 6. FROM A PLAIN READING OF SUB - S. (2) OF S. 54 OF THE IT ACT, 1961, IT IS CLEAR THAT ONLY S. 139 OF THE IT ACT, 1961, IS MENTIONED IN S. 54(2) IN THE CONTEXT THAT THE UNUTILISED PORTION OF THE CAPITAL GAIN ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD BE DEPOSITED BEFORE THE DATE OF FURNI SHING THE RETURN OF THE INCOME - TAX UNDER S. 139 OF THE IT ACT. SEC. 139 OF THE IT ACT, 1961, CANNOT BE MEANT ONLY AS S. 139(1) BUT IT MEANS ALL SUB - SECTIONS OF S. 139 OF THE IT ACT, 1961. UNDER SUB - S. (4) OF S. 139 OF THE IT ACT ANY PERSON WHO HAS NOT FURN ISHED A RETURN WITHIN THE TIME ALLOWED TO HIM UNDER SUB - S. (1) OF S. 142 MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT WHICHEVE R IS EARLIER. SUCH BEING THE SITUATION, IT IS THE CASE OF THE RESPONDENT/ASSESSEE THAT THE RESPONDENT/ASSESSEE COULD FULFILL THE REQUIREMENT UNDER S. 54 OF THE IT ACT FOR EXEMPTION OF THE CAPITAL GAIN FROM BEING CHARGED TO INCOME - TAX ON THE SALE OF PROPER TY USED FOR ITA NO.1101 /11 17 RESIDENCE UPTO 30TH MARCH, 1998, INASMUCH AS THE RETURN OF INCOME - TAX FOR THE ASST. YR. 1997 - 98 COULD BE FURNISHED BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSE SSMENT WHICHEVER IS EARLIER UNDER SUB - S. (4) OF S. 139 OF THE IT ACT, 1961. 7. THE APEX COURT IN STATE OF MAHARASHTRA VS. SANTOSH SHANKAR ACHARYA (2000) 7 SCC 463 HELD THAT IT IS TOO WELL KNOWN A PRINCIPLE OF CONSTRUCTION OF STATUTES THAT THE LEGISLATUR E ENGRAFTED EVERY PART OF THE STATUTE FOR A P URPOSE. THE LEGISLATIVE INTENTION IS THAT EVERY PART OF THE STATUTE SHOULD BE GIVEN EFFECT. THE LEGISLATURE IS DEEMED NOT TO WASTE ITS WORDS OR TO SAY ANYTHING IN VAIN AND A CONSTRUCTION WHICH ATTRIBUTES REDUNDA NCY TO THE LEGISLATURE WILL NOT BE ACCEPTED EXCEPT FOR COMPELLING REASONS. 8. THE APEX COURT IN BHAVNAGAR UNIVERSITY VS. PALITANA SUGAR MILL (P) LTD. (2003) 2 SCC 111, HELD THAT IT IS THE BASIC PRINCIPLE OF CONSTRUCTION OF STATUTE THAT STATUTORY ENACTMEN T MUST ORDINARILY BE CONSTRUED ACCORDING TO THEIR PLAIN MEANING AND NO WORDS SHOULD BE ADDED, ALTERED OR MODIFIED UNLESS IT IS PLAINLY NECESSARY TO DO SO TO PREVENT A PROVISION FROM BEING UNINTELLIGIBLE, ABSURD, UNREASONABLE, UNWORKABLE OR TOTALLY IRRECONC ILABLE WITH THE REST OF THE STATUTE. PARAS 24 AND 25 OF THE BHAVNAGAR UNIVERSITY VS. PALITANA SUGAR MILL (P) LTD. READ AS FOLLOWS : CHIMANBHAI NAKRANI 5 '24. TRUE MEANING OF A PROVISION OF LAW HAS TO BE DETERMINED ON THE BASIS OF WHAT IT PROVIDES BY ITS CLEAR LANGUAGE, WITH DU E REGARD TO THE SCHEME OF LAW. 25. SCOPE OF THE LEGISLATION ON THE INTENTION OF THE LEGISLATURE CANNOT BE ENLARGED WHEN THE LANGUAGE OF THE PROVISION IS PLAIN AND UNAMBIGUOUS. IN OTHER WORDS STATUTORY ENACTMENTS MUST ORDINARILY BE CONSTRUED ACCORDING TO I TS PLAIN MEANING AND NO WORDS SHALL BE ADDED, ALTERED OR MODIFIED UNLESS IT IS PLAINLY NECESSARY TO DO SO TO PREVENT A PROVISION FROM BEING UNINTELLIGIBLE, ABSURD, UNREASONABLE, UNWORKABLE OR TOTALLY IRRECONCILABLE WITH THE REST OF THE STATUTE.' 9. FOR THE REASONS DISCUSSED ABOVE, WE ANSWER THE QUESTION FORMULATED IN THE PRESENT CASE IN POSITIVE. ACCORDINGLY THE ORDER OF THE LEARNED TRIBUNAL, GAUHATI BENCH, GAUHATI, DT. 18TH APRIL, 2001, PASSED IN ITA NO. 328/GAU/1999 AND ITA NO. 49/GAU/2000 IS NOT INTE RFERED WITH AND THE APPEAL IS DISMISSED. 7. THE PROVISIONS OF SEC. 54(2) AND SEC. 54F(4) ARE IDENTICALLY WORDED. I NOTICE THAT THE DECISION RENDERED BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MS. JAGRITI AGGARWAL (SUPRA) AND THE DE CISION RENDERED BY HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN (SUPRA) COMES TO THE SUPPORT OF THE ASSESSEE HEREIN. FURTHER SEC.54 /54F , BEING A BENEFICIAL PROVISION S , THEY REQUIRE LIBERAL INTERPRETATION AS PER SETTLED PROPOSITION O F LAW . IN THIS REG ARD, I FEEL IT PERTINENT TO EXTRACT THE FOLLOWING OBSERVATIONS MADE BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF RAJESH KUMAR JALAN (SUPRA): - THE ISSUE INVOLVED IN THE PRESENT APPEAL IS THE CLAIM FOR BENEFIT OF EXEMPTION FROM BEING C HARGED TO INCOME - TAX ON THE SALE OF PROPERTIES USED FOR RESIDENCE UNDER SECTION 54 OF THE INCOME TAX ACT, 1961. SECTION 54 OF THE INCOME - TAX ACT, 1961, IS A BENEFICIAL PROVISION OF THE INCOME - TAX ACT, 1961 FOR THE ASSESSEE IN THE MATTER RELATING WITH THE S ALE OF PROPERTIES USED FOR RESIDENCE, IT APPEARS, FOR THE CONSTITUTIONAL GOAL OF PROVIDING RESIDENCE TO THE CITIZEN OF INDIA. IT IS FAIRLY WELL - SETTLED THAT IN CONSTRUING A BENEFICIAL ENACTMENT, THE VIEW THAT ADVANCES THE OBJECT OF THE BENEFICIAL ENACTMENT AND SERVES ITS PURPOSE MUST BE PREFERRED TO THE ONE WHICH OBSTRUCTS THE OBJECTS AND PARALYSES THE PURPOSE OF THE CHIMANBHAI NAKRANI 6 BENEFICIAL ENACTMENT. IN THIS REGARD, WE MAY REFER TO THE DECISION OF THE APEX COURT IN KUNAL SINGH V. UNION OF INDIA [2003 4 SCC 524. HENCE , IN VIEW OF THE FACT TH AT THE DEDUCTION ALLOWED U/S 54 /54F IS FOR THE BENEFIT OF THE ASSESSEES, WHICH WERE INTRODUCED TO ACHIEVE CONSTITUTIONAL GOALS AND FURTHER BY TAKING INTO CONSIDERATION THE FAVOURABLE DECISIONS RENDERED BY THE HIGH COURTS (REFERRED S UPRA), I HOLD THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE SHOULD NOT BE DENIED THE DEDUCTION U/S 54F OF THE ACT FOR NOT DEPOSITING THE AMOUNT IN CAPITAL GAINS ACCOUNT SCHEME, SINCE THE ASSESSEE HAS PURCHASED THE NEW FLAT BEFORE THE DUE D ATE FOR FILING RETURN OF INCOME U/S 139(4) OF THE ACT. 8. IN VIEW OF THE FOREGOING, I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE DEDUCTION U/S 54F OF THE ACT. 9. I HAVE EARLIER NOTICED THAT THE LD CIT(A) HAS REJECTED THE CLAIM FOR DEDUCTION OF COMMISSION EXPENSES ONLY FOR THE REASON THAT THE DEDUCTION U/S 54F OF THE ACT WAS REJECTED. THE FACTS AVAILABLE ON RECORD SHOW THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTER OBTAINED FROM THE BROKER, THE BANK T RANSACTION AND LEDGER ACCOUNT DETAILS TO SUPPORT THE CLAIM OF PAYMENT OF COMMISSION EXPENSES. HENCE I AM OF THE VIEW THAT THERE IS NO REASON TO REJECT THE CLAIM OF PAYMENT OF COMMISSION. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE COMMISSION EXPENSES WHILE COMPUTING THE CAPITAL GAIN. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 18. 8 .2016 SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 18 / 8 / 20 1 6 CHIMANBHAI NAKRANI 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE CO PY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS