Krishnan Kumaraguru, CHENNAI V. ITO, CHENNAI

ITA 2031/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81220 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 28-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: G BASKAR
• Keywords: Capital asset
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.2031/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010 ) SHRI. KRISHANAN KUMARAGURU, NO.14, FIREWOOD BANK STREET, CHENNAI 600 005. [PAN :APZPK6740H ] ( !% /APPELLANT) VS THE INCOME TAX OFFICER, BUSINESS WARD- VI(3), CHENNAI. ( &'!% /RESPONDENT) / APPELLANT BY : SHRI.G. BASKAR, ADVOCATE / RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. /DATE OF HEARING : 28.10.2014. /DATE OF PRONOUNCEMENT : 28.10.2014. #( / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENN AI, DATED 07.05.2014 FOR THE ASSESSMENT YEAR 2009-10. THE ON LY ISSUE IN THE APPEAL IS DENIAL OF EXEMPTION U/S.54F OF THE INCOME -TAX ACT, 1961. I.T.A.NO.2031 /MDS/2014 . . :- 2 -: 2. THE ASSESSEE HAD SOLD LAND AT PAMMAL, CHENNAI FOR A TOTAL CONSIDERATION OF RS.15,25,000/- ON 16.02.2009 AND H AD CLAIMED EXEMPTION U/S. 54F ON ACCOUNT OF PURCHASING RESIDEN TIAL PROPERTY AT TRIPLICANE, CHENNAI ON 10.03.2008 I.E. WITHIN ONE Y EAR PRIOR TO THE SALE OF LAND. THE ASSESSEE HAD UTILIZED ENTIRE AMO UNT OF SALE CONSIDERATION FOR PURCHASE OF RESIDENTIAL PROPERTY. DURING THE COURSE OF SCRUTINY OF ASSESSMENT, THE ASSESSING OFFICER HE LD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S.54F. THE ASSES SEE ALREADY HAD TWO HOUSE PROPERTIES PRIOR TO PURCHASE OF NEW ASSET. T HE ASSESSING OFFICER REFERRED TO THE RETURN OF INCOME FILED BY T HE ASSESSEE FOR THE ASSESSMENT YEAR 2009-2010, WHEREIN, THE ASSESSEE HA D DECLARED RENTAL INCOME FROM TWO HOUSE PROPERTIES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27.12.2011, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE FIRST APPELLATE AUTHORITY REJECTED THE SUBMISSI ONS OF THE ASSESSEE AND CONFIRMED THE FINDINGS OF THE ASSESSIN G OFFICER. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS). 3. THE LEARNED COUNSEL SHRI. G. BASKAR APPEARING ON BEHALF OF THE I.T.A.NO.2031 /MDS/2014 . . :- 3 -: ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ONLY ONE H OUSE PROPERTY REGISTERED IN HIS NAME PRIOR TO THE PURCHASE OF NEW ASSET. THE ASSESSEE HAD SOLD LAND AT PAMMAL, CHENNAI AND HAD I NVESTED THE ENTIRE SALE CONSIDERATION FOR THE PURCHASE OF RESID ENTIAL HOUSE WITHIN THE TIME LIMIT PRESCRIBED UNDER THE PROVISIONS SECT ION 54F. AS REGARDS THE RENTAL INCOME FROM TWO RESIDENTIAL PROPERTY AS REFLECTED IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10, THE L EARNED COUNSEL EXPLAINED THAT ONE HOUSE IS OWNED BY THE ASSESSEE A ND THE OTHER IS OWNED BY HIS FATHER SHRI. KRISHANAN. THE ASSESSEE HAD INCLUDED RENTAL INCOME OF HIS FATHERS HOUSE IN HIS RETURN ONLY FOR THE PURPOSE OF OBTAINING LOAN FROM BANK. DOCUMENTS SHOWING OWNERS HIP OF THE SAID HOUSE, ELECTRICITY BILL, PROPERTY TAX BILL ETC WERE FURNISHED BEFORE THE AUTHORITIES BELOW, BUT THEY DID NOT CONSIDER THE SA ME. 4. ON THE OTHER HAND, SHRI. A.V. SREEKAN TH REPRESENTING THE DEPARTMENT, VEHEMENTLY SUPPORTED THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS). THE LEARNED DEPARTMENTAL RE PRESENTATIVE (DR) SUBMITTED THAT PROVISO TO SECTION 54F (1) SPEC IFICALLY BARS EXEMPTION U/S. 54F IN CASE THE ASSESSEE OWNS MORE T HAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF SALE OF ORIGINAL ASSET. THE LEARNED DR FURTHER SUBMITTED TH AT ONCE THE I.T.A.NO.2031 /MDS/2014 . . :- 4 -: ASSESSEE ADMITS RENTAL INCOME IN HIS RETURN OF INCO ME UNDER THE HEAD, INCOME FROM HOUSE PROPERTY, IT AMOUNTS TO ADMIS SION OF FACT OF OWNERSHIP OF THE HOUSE AS WELL. 5. BOTH SIDES HEARD. THE ORDERS OF THE AUTHORITIES BELOW PERUSED. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAD PURCHASED RESIDENTIAL HOUSE (NEW ASSET) WITHIN THE TIME LINE SPECIFIED U/S. 54F (1) OF THE ACT, UTILIZING THE ENTIRE SALE CONSIDERATION OF CAPITAL ASSET SOLD. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE IS REGISTERED OWNER OF ONE RESIDENTIAL HOUSE AT THE TIME OF SALE OF CAPITAL ASSET. ONLY D ISPUTE IS WHETHER THE ASSESSEE IS DEEMED TO BE OWNER OF RESIDENTIAL HOUSE REGISTERED IN THE NAME OF HIS FATHER, THE RENTAL INCOME OF WHICH, AS SESSEE HAS DISCLOSED IN HIS RETURN OF INCOME. 6. THE AUTHORITIES BELOW HAD DENIED THE BENEFIT O F EXEMPTION U/S. 54F OF THE ACT TO THE ASSESSEE ON THE GROUND THAT T HE ASSESSEE OWNS TWO RESIDENTIAL HOUSES AT THE TIME OF TRANSFER OF C APITAL ASSET AND IS THUS, HIT BY PROVISIO TO SECTION 54F(1) OF THE ACT . THE PROVISIO TO 54F(1) READS AS UNDER: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTI ON SHALL WHERE : I.T.A.NO.2031 /MDS/2014 . . :- 5 -: (A) THE ASSESSEE, - (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIG INAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THA N THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DAT E OF TRANSFER OF THE ORIGINAL ASSET; (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER T HAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRAN SFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 7. A PERUSAL OF THE ABOVE PROVISIO MAKES IT CLEAR THAT THE ASSESSEE WILL NOT BE ENTITLED TO CLAIM EXEMPTION U/S 54F(1) IF HE OWNS MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF TRANSFER OF ORIGINAL ASSET. THE AUTHORITIES BELOW HAVE ERRED IN COMING TO THE CONCLUSION THAT ASSESSEE IS OWNER OF THE HOU SE OF WHICH HE HAS ADMITTED RENTAL INCOME IN HIS RETURN OF INCOME. DO CUMENTARY EVIDENCE SHOW THAT THE OWNERSHIP OF THE HOUSE IS IN THE NAME OF THE FATHER OF THE ASSESSEE. THE AUTHORITIES BELOW HAVE OVER STRE TCHED THE MEANING OF TERM OWN TO BRING IN THE OWNERSHIP OF THE SEC OND HOUSE IN THE NAME OF THE ASSESSEE EVEN THOUGH, THE DOCUMENTS ON RECORD ARE CONTRARY TO THAT. IT IS EVIDENT FROM THE RECORDS T HAT THE ASSESSEE OWNS ONLY ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET I.E RESIDENTIAL HOUSE PURCHASED BY HIM AT TRIPLICANE, CHENNAI ON T HE DATE OF TRANSFER I.T.A.NO.2031 /MDS/2014 . . :- 6 -: OF ORIGINAL ASSET I.E. THE LAND SOLD AT PAMMAL, CH ENNAI. THE PROVISIONS OF SECTION 54F ARE BENEVOLENT IN NATURE AND BENEFIT UNDER SUCH PROVISIONS SHOULD NOT BE DENIED ON HYPER TECHNICAL VIEWS. IN OUR CONSIDERED OPINION, THE ASSESSEE IS NOT HIT BY THE PROVISIO TO SECTION 54F(1) AND IS THUS, ENTITLED FOR EXEMPTION THEREIN. 8. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 28 TH OCTOBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) (DR. O.K. NARAYANAN) / VICE PRESIDENT ( ! ) (VIKAS AWASTHY) ' # / JUDICIAL MEMBER !' /CHENNAI #$ /DATED:28.10.2014. K.V $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF. I.T.A.NO.2031 /MDS/2014 . . :- 7 -: