Sri Basudeb Sengupta, Burdwan V. A.C.I.T Cir - 3,Asansol, Asansol

ITA 2046/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4490 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2013
• Court: TRIBUNAL
• Department Lawyers: M K BISWAS
• Assessee Lawyers: S K TULSIYAN
• Keywords: Fair market value
• Section: 45(2); 143(3); 54F

Judgement Text

I.T.A. NOS. 2046 & 2047/KOL./2013 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NOS. 2046 & 2047/KOL/ 2013 ASSESSMENT YEARS: 2006-2007 & 2007-2008 SHRI BASUDEB SENGUPTA,............................. ..............................APPELLANT BURNPUR ROAD, BURNPUR, BURDWAN [PAN: AIXPS 9788 E] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. .................RESPONDENT CIRCLE-3, ASANSOL APPEARANCES BY: SHRI S.K. TULSIYAN, ADVOCATE, FOR THE ASSESSEE SHRI M.K. BISWAS, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 02, 2016 DATE OF PRONOUNCING THE ORDER : JULY 20, 2016 O R D E R PER SHRI P.M. JAGTAP :- THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST TWO SEPARATE ORDERS BOTH DATED 09.05.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL FOR ASSESSMENT YEARS 2006-07 AND 2007- 08 AND SINCE A COMMON ISSUE IS INVOLVED THEREIN, TH E SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SI NGLE CONSOLIDATED ORDER. 2. THE SOLITARY COMMON ISSUE INVOLVED IN THESE APPE ALS RELATES TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 54F AN D THE SAME IS RAISED BY THE ASSESSEE BY WAY OF THE FOLLOWING GROUNDS:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN HOLDING THAT CONTINUED EXPENDI TURE OUT OF PROCEEDS OF THE PART OF COMMERCIAL VENTURE COMPRISING SEVERAL RESIDENTIAL UNITS BUILT AS STOCK -IN- TRADE IN THE REMAINING PART OF THE COMMERCIAL VENTU RE I.T.A. NOS. 2046 & 2047/KOL./2013 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 2 OF 5 CANNOT BE CONSTRUED AS INVESTMENT IN A NEW ASSET WI THIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE OF ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WIT HIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN REJECTING THE CLAIM OF THE APPELLANT TOWARDS DEDUCT ION U/S 54F OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS AS A DEVELOPER UNDER THE NAME AND STYL E OF HIS PROPRIETARY CONCERN M/S. DAYAL & CO. THE ASSESSEE HAD INHERITED A PIECE OF LAND ADMEASURING 29 KATHAS AND THE SAME WAS CONVERTED IN TO STOCK-IN-TRADE IN THE FINANCIAL YEAR 2003-04 AT A TOTAL PRICE OF RS.4 3,50,000/-. THE FAIR MARKET VALUE OF THE SAID LAND AS OF 1981 WAS TAKEN AT RS.33,333/- AND THE LONG-TERM CAPITAL GAIN ARISING ON CONVERSION AS COM PUTED AT RS.41,95,667/- IN THE RETURN OF INCOME FOR A.Y. 200 4-05 WAS DEFERRED TO THE SUBSEQUENT YEARS BY TAKING THE BENEFIT OF SECTI ON 45(2) AND 54. DURING THE YEARS UNDER CONSIDERATION, THE ASSESSEE SOLD THREE SHOPS OF THE BUILDING CONSTRUCTED ON THE LAND FOR A CONSIDER ATION OF RS.10,80,500/- IN A.Y. 2006-07 AND 46 FLATS AND 3 SHOPS IN A.Y. 20 07-08. IN THE RETURNS OF INCOME FILED FOR A.YS. 2006-07 AND 2007-08, THE PRO PORTIONATE LONG-TERM CAPITAL GAIN ARISING FROM THE PORTION OF LAND ATTRI BUTABLE TO THE FLATS AND SHOPS SOLD IN THE RELEVANT YEARS WAS DECLARED BY TH E ASSESSEE AT RS.85,927/- AND RS.51,96,678/- AS PER THE PROVISION S OF SECTION 45(2) AND THE SAME WAS CLAIMED TO BE EXEMPT UNDER SECTION 54F ON THE GROUND THAT THE ASSESSEE CONTINUED TO INVEST THE SALE PROCEEDS OF THE PORTION OF LAND IN THE CONSTRUCTION OF FLATS IN THE SAME BUILDING. IN THE ASSESSMENTS COMPLETED UNDER SECTION 143(3) FOR BOTH THE YEARS U NDER CONSIDERATION I.E. A.Y. 2006-07 AND 2007-08, THE CLAIM OF THE ASS ESSEE FOR EXEMPTION UNDER SECTION 54F WAS DENIED BY THE ASSESSING OFFIC ER ON THE GROUND THAT THE ASSESSEE WAS ALREADY THE OWNER OF MORE THAN ONE RESIDENTIAL HOUSE PROPERTY AS APPEARED IN THE BALANCE-SHEET. I.T.A. NOS. 2046 & 2047/KOL./2013 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 3 OF 5 4. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 143(3) FOR BOTH THE YEARS UNDER CONSIDERATION, APPE ALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGIN G THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING HIS CLAIM FOR EXEM PTION UNDER SECTION 54F. DURING THE COURSE OF APPELLATE PROCEEDINGS BEF ORE THE LD. CIT(APPEALS), IT WAS SUBMITTED BY THE ASSESSEE THA T HIS FIRST HOUSE WAS NOT COMPLETE AT THE RELEVANT TIME AND SINCE IT WAS NOT FIT FOR OCCUPATION/HABITATION, THE ASSESSING OFFICER WAS NO T JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 54F ON THE GROUND THAT THE ASSESSEE WAS THE OWNER OF MORE THAN ONE RESIDENTIAL HOUSE. IN VIEW OF THE SUBMISSION MADE BY THE ASSESS EE, THE LD. CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO MAKE SUITABLE VERIFICATION IN ORDER TO FIND OUT THAT THE FIRST HOUSE WAS NOT C OMPLETE AND THE SAME IN ANY CASE WAS NOT RESIDENTIAL AS CLAIMED BY THE ASSE SSEE AND TO DECIDE ACCORDINGLY AS TO WHETHER THE CONDITIONS STIPULATED IN SECTION 54F(1)(A)(I) WAS SATISFIED OR NOT. THE LD. CIT(APPE ALS) ALSO PROCEEDED FURTHER TO VERIFY AS TO WHETHER THE OTHER CONDITION S STIPULATED IN SECTION 54(1)(A)(II) & (III) ARE SATISFIED BY THE ASSESSEE OR NOT IN ORDER TO CLAIM EXEMPTION UNDER SECTION 54F. AS PER THE SAID CONDIT IONS, THE ASSESSEE WAS REQUIRED, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE, TO PURCHASE OR WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE, CONSTRUCT A RESIDENTIA L HOUSE. IN THIS REGARD, HE HELD THAT THE CONTINUED EXPENDITURE CLAIMED TO B E INCURRED BY THE ASSESSEE OUT OF THE PROCEEDS IN THE COMMERCIAL VENT URE COMPRISING SEVERAL RESIDENTIAL UNITS BUILT AS STOCK-IN-TRADE I N THE REMAINING PART OF THAT VENTURE COULD NOT BE CONSTRUED AS INVESTMENT I N A NEW ASSET WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE ON WHICH THE TRANSFER TOOK PLACE. HE ACCORDINGLY HELD THAT THE R ELEVANT CONDITIONS STIPULATED IN SECTION 54F(1) WERE NOT SATISFIED BY THE ASSESSEE AND, THEREFORE, THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 54F WAS NOT ALLOWABLE. AGGRIEVED BY THE ORDERS OF THE LD. C IT(APPEALS), THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRI BUNAL. I.T.A. NOS. 2046 & 2047/KOL./2013 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 4 OF 5 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THERE IS NO DISPUTE ABOUT THE COMPUTA TION OF LONG-TERM CAPITAL GAIN ARISING FROM THE CONVERSION OF LAND OW NED BY THE ASSESSEE INTO STOCK-IN-TRADE IN A.Y. 2004-05 AS OFFERED IN T HE YEARS UNDER CONSIDERATION, I.E. A.YS. 2006-07 AND 2007-08 AS PE R THE PROVISIONS OF SECTION 45(2). THE DISPUTE IS ONLY RELATING TO THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 54F ON ACCOUNT OF THE SAID CAPITAL GAIN, WHICH WAS DENIED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE ASSESSEE WAS THE OWNER OF MORE THAN ONE RESIDENTIAL HOUSE AT THE RELEVANT TIME. BY HIS IMPUGNED ORDERS, THE LD. CIT(APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO CONSIDER THIS ASPECT AFRESH AFTER VERIFYING THE CLAIM OF THE ASSESSEE THAT THE FIRST HOUSE WAS NOT COMPLETE AT THE RELEVA NT TIME AND THE SAME IN ANY CASE WAS A COMMERCIAL UNIT AND NOT A RESIDENTIA L HOUSE AND THE DEPARTMENT HAS NOT CHALLENGED THE DECISION OF THE L D. CIT(APPEALS) ON THIS ASPECT OF THE MATTER BY FILING APPEALS BEFORE THE TRIBUNALS. THE LD. CIT(APPEALS), HOWEVER, PROCEEDED FURTHER TO VERIFY AS TO WHETHER THE OTHER CONDITIONS AS STIPULATED IN SECTION 54F(1)(A) (II) & (III) WERE SATISFIED BY THE ASSESSEE OR NOT AND HELD IN THIS R EGARD THAT THE CONTINUED EXPENDITURE INCURRED BY THE ASSESSEE ON CONSTRUCTIO N OF PART OF THE COMMERCIAL VENTURE COULD NOT BE CONSTRUED AS INVEST MENT MADE BY THE ASSESSEE IN A NEW ASSET WITHIN THE PERIOD PRESCRIB ED IN THE RELEVANT PROVISION. HE ACCORDINGLY DENIED THE CLAIM OF THE A SSESSEE FOR EXEMPTION UNDER SECTION 54F. 6. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE HAS SUBMITTED THAT THE ENTIRE BUILDING CONSTRUCTED BY T HE ASSESSEE AS A COMMERCIAL VENTURE WAS SOLD EXCEPT ONE RESIDENTIAL FLAT, WHICH WAS RETAINED BY THE ASSESSEE. HE HAS CONTENDED THAT SIN CE THE CONSTRUCTION OF THE SAID FLAT WAS COMPLETED WITHIN THE TIME LIMITS SPECIFIED IN THE RELEVANT PROVISION AND THE PROCEEDS OF SALE OF LAND WERE UTILIZED FOR SUCH CONSTRUCTION, THE CONDITIONS STIPULATED IN SECTION 54F(1)(A)(II) & (III) WERE DULY SATISFIED BY THE ASSESSEE. AS RIGHTLY CON TENDED BY THE LD. I.T.A. NOS. 2046 & 2047/KOL./2013 ASSESSMENT YEARS: 2006-2007 & 2007-2008 PAGE 5 OF 5 COUNSEL FOR THE ASSESSEE, IT APPEARS THAT THIS FACT UAL POSITION WAS NOT APPRECIATED BY THE LD. CIT(APPEALS) IN THE RIGHT PE RSPECTIVE AND EVEN THE LD. D.R. HAS NOT DISPUTED THE SAME. HOWEVER, KEEPIN G IN VIEW THAT THE CLAIM NOW MADE ON BEHALF OF THE ASSESSEE BEFORE US SPECIFICALLY ABOUT THE INVESTMENT MADE IN ONE RESIDENTIAL HOUSE WITHIN THE STIPULATED PERIOD IN THE OWN VENTURE WAS NOT RAISED BY THE ASSESSEE BEFO RE THE LD. CIT(APPEALS), WE ARE OF THE VIEW THAT IT WOULD BE J UST AND PROPER TO GIVE AN OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY T HE SAME. WE, ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER OF THE LD . CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASS ESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING THE CLAIM OF THE ASSES SEE OF HAVING MADE INVESTMENT IN THE CONSTRUCTION OF A FLAT IN HIS OWN PROJECT WITHIN THE STIPULATED PERIOD. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 20, 2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 20 TH DAY OF JULY, 2016 COPIES TO : (1) SHRI BASUDEB SENGUPTA, BURNPUR ROAD, BURNPUR, BURDWAN (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, ASANSOL (3) CIT(APPEALS), ASANSOL, (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.