MANOJ KHATURIA, MUMBAI V. ITO 21(1)-3, MUMBAI

ITA 2040/MUM/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0356 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 01-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 54F; 142(1); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO S . 2040 /M/ 20 1 2& 4218 /M/201 4 ( ASSESSMENT YEAR S : 2008 - 09 ) MANOJ KHATURIA 38/E, GARIB CO - OP. HOUSING SOCIETY, N.S. ROAD NO.5 ANDHERI WEST MUMBAI - 400058 VS. ITO 21(1) - 3, MUMBAI ./ ./ PAN/GIR NO. : AAFPK 0639 L ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 07 .11 .2017 DATE OF PRONOUNCEMENT : 05 .0 2 . 2018 O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEA LS AGAINST THE ORDER DATED 19.12.2011 AND 08.04.2014 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 32 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2008 - 09 . ITA NO.2040 /M/201 2 : - 2. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 19.12 .201 1 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 32 , ASSESSEE BY: SHRI MEHUL SHAH DEPARTMENT BY: MS. POOJA SWAROOP ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 2 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEARS 2008 - 09 . 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - BEING AGGRIEVED BY THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) - 32 AND ASSESSING OFFICER, 21 (1) - 3, MUMBAI, THIS APPEAL PETITION IS FILED ON THE FOLLOWING AMONGST OTHER GROUNDS OF APPEAL, WHICH IT IS PRAYED MAY BE CONSIDERED WITHOUT PREJUDICE TO ONE ANOTHER 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) ERRED IN UPHOLDING ACTION OF THE ASSESSING OFFICER IN REFUSING TO ALLOW EXEMPTION U/S. 54F AND TREATING LONG TERM CAPITAL GAIN OF RS. 8,909,665 WITHOUT APPRECIATING THAT, THE APPELLANT HAD COMPLIED WITH HIS PART OF PERFORMANCE OF MAKING INVESTMENT IN A RESIDENTIAL HOUSE AS WELL AS BY RESORTING TO APPROPRIATE LEGAL REMEDIES AGAINST THE DEVELOPER, AND FAULT FOR NON - COMPLETION OF CONSTRUCTION WAS ATTRIBUTABLE TO THE FACTORS BEYOND HIS CONTROL IN SO MUCH SO THAT, THE LOWER AUTHORITIES WERE E XPECTING HIM TO DO SOMETHING IMPOSSIBLE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) ERRED IN UPHOLDING ACTION OF THE ASSESSING OFFICER IN DISALLOWING COST OF IMPROVEMENT AMOUNTING TO RS. 770, 310 WITHOUT APPRECIATING THAT, THOUGH YOUR APPELLANT COULD NOT FURNISH THE SUPPORTING DOCUMENTS FOR COST OF IMPROVEMENT, YOUR APPELLANT WAS NOT BENEFITING BY ARTIFICIALLY JACKING UP THE COST OF PLOT, AS THE ENTIRE CONSIDERATION WAS ANY WAYS INVESTED INTO R ESIDENTIAL HOUSE FOR WHICH EXEMPTION UNDER SECTION 54F WAS CLAIMED. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) ERRED IN UPHOLDING ACTION OF THE ASSESSING OFFICER IN ADDING A SUM OF RS. 563,633 ON THE BASIS OF SUMMARY OF BANK STATEMENT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITHOUT CONSIDERING OTHER SUPPORTING DOCUMENTS OF ACCUMULATION OF INCOME OVER YEARS. ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 3 4. YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER, MODIFY, AND / OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE FINAL DISPOSAL OF APPEAL. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31 . 03 .20 10 DECLARING TOTAL INCOME TO THE TUN E OF RS.15,125 / - . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE ON 23.08.2010. NOTICE U/S 142(1) OF THE ACT WAS ISSUED ON 09.09.2010 AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL. THE ASSES SEE HAS SHOWN THE TOTAL INCOME TO THE TUNE OF RS.15,125/ - . THE ASSESSEE EARNED LONG TERM CAPITAL GAIN OF RS.74,09,100/ - AND CLAIMED EXEMPTION U/S 54 F OF THE ACT. ON VERIFICATION , IT WAS FOUND THAT THE ASSESSEE INVESTED AN AMOUNT OF RS.90,00,000/ - IN A FLAT AT CBD BELAPUR IN THE BUILDING BUILT BY M/S. WELVAN SECURITIES PVT. LTD. AT 86A, SECTOR II, CBD, BELAPUR, NAVI MUMBAI AND DEDUCTION FOR LONG TERM CAPITAL GAIN WAS CLAIMED U/S 54 F OF THE ACT . IT WAS ALSO FOUND THAT THE SAID COMPANY DID NOT CONSTRUCT THE HOUSE, THEREFORE, THE ASSESSEE FAILED TO FULFIL THE CONDITIONS AS REQUIRED U/S 54F OF THE ACT. THEREFORE, THE CLAIMED OF EXEMPTION WAS DECLINED AND THE SALE CONSIDERATION TO THE TU NE OF RS.89,09,665/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 96,11,518/ - . FEELING AGGRIEVED, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A ) WHO DISMISSED THE CLAIM OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 4 ISSUE NO . 1 : - 5 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF CLAIM OF LTCG OF RS. 8,909,665/ - U/S 54F OF THE ACT. IT IS UNDISPUTED FACTS THAT THE ASSESSEE SOLD A LAND AT MURUD, DISTRICT RAIGAD FOR TOTAL CONSIDERATION OF RS.1.8 CRORES. THE ASSESSEE ALONG WITH HIS BROTHER WAS OWNER IN POSSESSION OF THE SAID LAND TO THE EXTENT OF 50% SHARES EACH . THE ASSESSEE RECEIVED THE SALE CONSIDERATION OF RS.90,00,000/ - I.E., 50% OF SALE CONSID ERATION OF THE SAID LAND. IT IS ALSO UNDISPUTED FACTS THAT THE ASSESSEE BOOKED A FLAT IN OCTOBER, 2007 WITH THE WELVAN SECURITIES P. LTD. WHO CONFIRMED THE TRANSACTION OF RS.90,00,000/ - RECEIVED BY THEM BY VIRTUE OF CHEQUE NO.337130 DATED 31.10.2007 OF HS BC BANK AND IN VIEW OF ALLOTMENT LETTER DATED 31.10.2007. IN THIS REGARD THE CONFIRMATION LIES AT PAGE NO. 15 OF THE PAPER BOOK. THE ASSESSEE HAD ALREADY PRODUCED THE RECEIPT BEFORE THE ASSESSING OFFICER . T HE COMPANY DID NOT START THE CONSTRUCTION TILL 201 1. EVEN THE CONTROVERSY OF THE ASSESSEE ALONG WITH OTHERS WITH THE BUILDERS IS PENDING BEFORE THE HONBLE HIGH COURT OF BOMBAY BY VIRTUE OF SUIT NO. 275 OF 2011 AND COPY OF WHICH LIES AT PAGE NO. 18 TO 45 OF THE PAPER BOOK . IT IS NOT IN DISPUTE THAT THE ASS ESSEE SOLD THE PROPERTY IN THE RELEVANT ASSESSMENT YEAR AND INVESTED AN AMOUNT OF RS.90,00,000/ - ON 31.10.2010 BY VIRTUE OF CHEQUE NO. 337130 DATED 31.10.2007 OF HSBC BANK WITH THE WELVAN SECURITIES PVT. LTD. FOR THE ALLOTMENT OF FLAT . I NVESTMENT IS NOT IN DISPUTE. THE CLAIM OF THE ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 5 ASSESSEE WAS DECLINED ON THE BASIS OF THE NON - CONSTRUCTION OF THE FLAT . NOW IT IS TO BE SEEN WHETHER IN THE SAID CIRCUMSTANCES THE ASSESSEE IS ENTITLED TO GET THE EXEMPTION U/S 54F OF THE ACT OR NOT . IN THIS RE GARD THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED BY HONBLE HIGH COURT OF MADRAS IN THE CASE OF TITLE D AS SMT. SHASHI VARMA VS. CIT 224 ITR 107 MP IN WHICH IT IS SPECIFICALLY HELD THAT IF THE CONSTRUCTION WAS NOT COMPLETED WITHIN THE 2 YEARS THEN IN THE SAID CIRCUMSTANCES, THE ASSESSEE WAS ALSO ENTITLED TO EXEMPTION U/S 54F OF THE ACT . T HE HONBLE ITAT MADRAS IN THE CASE OF MRS. SEETHA SUBRAMANIAN. VS. ACIT (59 ITD 94) HAS ALSO HELD THAT IF THE CONSTRUCTION WAS NOT COMPLETED WITHIN THE PERIOD OF 2 YEARS THEN IN THE SAID CIRCUMSTANCES ALSO THE CLAIM OF THE ASSESSEE CANNOT BE DECLINED IF THE ASSESSEE MADE THE INVESTMENT IN THE SPECIFIED PERIOD . THE HONBLE HIGH COURT OF KARNATAK A HAS ALSO HELD THAT IN INCOME TAX APPEAL NO. 175 OF 2012 IN THE CASE OF DCIT VS. SHRI SAMBANDAM UDAY KUMAR THAT IF THE CAPITAL GAIN EARNED BY THE ASSESSEE HAS BEEN INVESTED IN A RESIDENTIAL HOUSE WELL IN TIME AND THE BUILDING HAS NOT BEEN COMPLETED WITHIN THE PERIOD OF 3 YEARS THEN IN THE SAID CIRCUMSTANCES ALSO THE BENEFIT U/S 54 F OF THE ACT CANNOT BE DENIED . THE FACTS AND CIRCUMSTANCES OF THESE CASES ARE QUITE SIMILAR TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE BECAUSE THE ASSESSEE MADE THE INVESTMENT FOR THE PURCHASE OF THE FLAT WITHIN THE STIPULATED PERIOD BUT BUILDER FA ILED TO COMPLETE CONSTRUCTION OF THE PLOT AND TO HAND OVER THE POSSESSION WITHIN THE SPECIFIED PERIOD EVEN TILL TODAY TO WHICH THE ASSESSEE IS NOT AT FAULT. . ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 6 THE PROVISION CONTAINED IN SECTION 54F OF THE ACT IS A BENEFICIAL PROVISION FOR PROMOTING CONSTRUC TION OF RESIDENTIAL HOUSES THEREFORE, IN THE SAID PROVISION HAS TO BE CONSTRUED LIBRARY FOR ACHIEVING THE PURPOSE FOR WHICH IT WAS IN COOPERATED STATUTE. THE INTENTION OF THE LEGISLATURE WAS TO ENCOURAGE THE INVESTMENT IN THE ACQUISITION OF THE RESIDENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT THE REQUIREMENT OF THE LAW THEREFORE, IN THE SAID CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE U/S 54 F OF THE ACT IS NOT LIABLE TO BE DECLINED. ACCORDINGLY, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW . THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT. ISSUE NO. 2: - 6. UNDER THIS ISSUE THE ASSESSEE HAS CLAIMED THE EXPENSES TO THE TUNE OF RS.770,310/ - FOR THE IMPROVEMENT OF THE LAND IN THE DIFFERENT YEARS. SINCE THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT HAS ALREADY BEEN ALLOWED BY US ABOVE WHILE DECIDING ISSUE NO. 1 T H EREFORE, THIS ISSUE BECAME INFRUCTUOUS. IN RESULT, APPEAL FILED BY THE ASSESSEE I S HEREBY ORDERED TO BE ALLOWED . I TA NO.4218 /M/201 4 : - ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 7 7 . THE ASSESSEE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 19 . 12 .201 1 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 32 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2008 - 09 IN WHICH THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE CONFIRMED . 8 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - BEING AGGRIEVED BY THE ORDER S OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) - 32 AND ASSESSING OFFICER, 21 (1) - 3, MUMBAI, THIS APPEAL PETITION IS FILED ON THE FOLLOWING AMONGST OTHER GROUNDS OF APPEAL, WHICH IT IS PRAYED MAY BE CONSIDERED WITHOUT PREJUDICE TO ONE ANOTHER. 1. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) ERRED IN UPHOLDING ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME - TAX ACT 1961 ON ENTIRE LONG TERM CAPITAL GAINS WITHOUT APPRECIATING THAT. THE APPELLANT HAD COMPLIED WITH HIS PART OF PERFORMANCE OF MAKING INVESTMENT IN A RESIDENTIAL HOUSE AS WELL AS BY RESORTING TO APPROPRIATE LEGAL REMEDIES AGAINST THE DEVELOPER, AND FAULT FOR NON - COMPLETION OF CONSTRUCTION WAS ATTRIBUTABLE TO THE FACTORS BEYOND HIS CONTROL IN SO MUCH SO THAT, THE LOWER AUTHORITIES WERE EXPECTING HIM TO DO SOMETHING IMPOSSIBLE. 2. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME - LAX (APPEAL) ERRED I N UPHOLDING ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME - TAX ACT 1961 ON THE COST OF IMPROVEMENT WITHOUT APPRECIATING THAT, THOUGH YOUR APPELLANT COULD NOT FURNISH THE SUPPORTING DOCUMENTS FOR COST OF IMPROVEMEN T, YOUR APPELLANT WAS NOT BENEFITING BY ARTIFICIALLY JACKING UP THE COST OF PLOT, AS THE ENTIRE CONSIDERATION WAS ANY WAYS INVESTED INTO RESIDENTIAL HOUSE FOR WHICH EXEMPTION UNDER SECTION 54F WAS CLAIMED 3. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE , AND IN LAW, LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) ERRED IN UPHOLDING ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME - TAX ACT 1961 ON RS. 563,633 ON THE BASIS OF ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 8 SUMMARY OF BANK STATEMENT FILED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS WITHOUT CONSIDERING OTHER SUPPORTING DOCUMENTS OF ACCUMULATION OF INCOME OVER YEARS. 4. YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER, MODIFY, AND / OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE FINAL DISP OS AL OF APPEAL. 9 . THE FACTS OF THE PRESENT CASE ARE THE SAME AS MENTIONED IN TH E ABOVE IN THE APPEAL NO 2040 /M/201 2 . THEREFORE , THERE IS NO NEED TO REPEAT THE SAME. HOWEVER, PENALTY HAS BEEN LEVIED AFTER THE CONFIRMATION OF THE ORDER OF AO BY THE CIT(A) ON ACCOUNT OF NON - ALLOWANCE OF LTCG U/S 54F OF THE ACT . T HE PENALTY LEVIED BY VIRTUE OF ORDER DATED 18.03.2013 HAS BEEN CONFIRMED BY CIT(A) UNDER THE ORDER IN APPEAL. SINCE THE QUANTUM HAS BEEN ORDER TO BE SET ASIDE WHILE DECIDING THE APPEAL BEARING NO. 2040/M/2012, THEREFORE, IN THE SAID CIRCUMSTANCES, THE PENALTY HAS NO LEG TO STAND. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DELETE THE PENALTY. 10. IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 05. 02 . 201 8 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 05. 02 . 2018 V IJAY ITA NOS. 4020/MUM/2012 4218/MUM/2014 A.Y. 2008 - 09 9 / 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 COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI