The ITO, Cochin V. Sri.K.Thomas Joy, Ernakulam

ITA 205/COCH/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8786 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: K K CHANDRASEKHARAN
• Keywords: Capital asset; Fair market value; Valuation report
• Section: 54B; 54F

Judgement Text

1 ITA NO.189&205/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 189/COCH/2014 (ASSESSMENT YEAR 2008-09) SHRI K THOMAS JOY VS THE ITO, WD.2(1) SEENA TRAVELS, 26/174 ERNAKULAM KANATTU ROAD, THEVARA KOCHI 682 013 PAN : ADZPJ5562A (APPELLANT) (RESPONDENT) I.T.A NO. 205/COCH/2014 (ASSESSMENT YEAR 2008-09) THE ITO, WD.2(1) VS SHRI K THOMAS JOY ERNAKULAM THEVARA, ERNAKULAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. CHANDRASEKHARAN REVENUE BY : SHRI K.K. JOHN DATE OF HEARING : 11-11-2014 DATE OF PRONOUNCEMENT : 06-02-2015 O R D E R PER N.R.S. GANESAN (JM) BOTH, ASSESSEE AND REVENUE FILED THE APPEALS AGAIN ST THE ORDER OF THE CIT(A)-II, KOCHI DATED 10-12-2013 FOR THE ASSES SMENT YEAR 2008-09. 2 ITA NO.189&205/COCH/2014 THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND D ISPOSE THEM OF BY THIS COMMON ORDER. 2. LET US FIRST TAKE THE ASSESSEES APPEAL. THE ON LY ISSUE ARISES FOR CONSIDERATION IS DETERMINATION OF FAIR MARKET VALUE AS ON 01-04-1981 FOR COMPUTATION OF CAPITAL GAIN. 3. SHRI K.K. CHANDRASEKHARAN, THE LD.COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SOLD 14.365 CENTS O F LAND ON 25-05-2007 FOR A SALE CONSIDERATION OF RS.2,16,25,180. ACCORD ING TO THE LD.COUNSEL, THE ENTIRE SALE PROCEEDS WERE DEPOSITED IN STATE BA NK OF INDIA. ACCORDING TO THE LD.COUNSEL, THE ASSESSEE HAS PURCHASED 9.66 CENTS OF LAND AND AN OLD BUILDING ON 05-09-2007 FOR RS.17,32,500. THE A SSESSEE HAS ALSO CONSTRUCTED A NEW RESIDENTIAL BUILDING AFTER DEMOLI SHING THE OLD BUILDING IN THE MONTH OF OCTOBER, 2007. ACCORDING TO THE LD.CO UNSEL, THE CONSTRUCTION OF THE NEW RESIDENTIAL BUILDING WAS STARTED IN PURS UANCE TO THE BUILDING PERMIT GRANTED BY THE COCHIN CORPORATION ON 28-11-2 007. THE TOTAL AREA CONSTRUCTED WAS 622.53 SQ.MTR. THE CONSTRUCTION WA S COMPLETED ON 27-09- 2009 AS PER THE COMPLETION CERTIFICATE ISSUED BY TH E CORPORATION OF COCHIN. THE LD.COUNSEL FURTHER SUBMITTED THAT THE TOTAL COS T OF CONSTRUCTION OF THE BUILDING IS RS.1,27,50,000. AFTER CLAIMING EXEMPTI ON U/S 54F, THE ASSESSEE RETURNED A TOTAL INCOME OF RS.6,61,135. F OR THE PURPOSE OF 3 ITA NO.189&205/COCH/2014 CAPITAL GAIN, ACCORDING TO THE LD.COUNSEL, THE ASSE SSEE TOOK THE FAIR MARKET VALUE AS ON 01-04-1981 AT RS.1 LAKH PER CENT. HOWE VER, THE ASSESSING OFFICER FIXED THE FAIR MARKET VALUE AS ON 01-04-198 1 AT RS.36,000 PER CENT. THE ASSESSEE HAS ALSO CLAIMED RS.6,48,750 TOWARDS C OMMISSION PAID TO THE AGENTS FOR SELLING THE LAND. HOWEVER, THE ASSE SSING OFFICER RESTRICTED THE SAME AT RS.4,32,500 WITHOUT ANY REASON. 4. ACCORDING TO THE LD.COUNSEL, THE SUBJECT LAND IS SITUATED FACING NATIONAL HIGHWAY 49 ON THE COCHIN MADURAI HIGHWAY. THE ASSESSEE HAS FILED COPY OF THE PLAN AT PAGES 14 & 15 OF THE PAPE R BOOK. HOWEVER, ACCORDING TO THE LD.COUNSEL, THE ASSESSING OFFICER RESTRICTED THE FAIR MARKET VALUE AT RS.36,000 PER CENT AS ON 01-04-1981 ON THE BASIS OF THE INFORMATION SAID TO BE OBTAINED FROM THE SUB REGIST RAR. REFERRING TO THE ASSESSMENT ORDER, THE LD.COUNSEL SUBMITTED THAT THE ASSESSING OFFICER PLACED RELIANCE ON THE COPY OF THE SALE DEED SAID T O BE EXECUTED IN THE YEAR 1981 IN RESPECT OF ONE CENT OF LAND SITUATED I N SURVEY NO.1009. ACCORDING TO THE LD.COUNSEL, THIS PROPERTY EXTENT I S ONLY ONE CENT AND DOES NOT FACE THE NATIONAL HIGHWAY. ACCORDING TO THE LD .COUNSEL, ONE CENT OF LAND CANNOT BE EQUATED WITH 14.365 CENTS OF LAND. REFERRING TO THE SALE DEED IN RESPECT OF THAT ONE CENT OF LAND, COPY OF W HICH IS AVAILABLE AT PAGE 8 OF THE PAPER BOOK, TRANSLATED COPY OF WHICH IS AV AILABLE AT PAGE 5, ACCORDING TO THE LD.COUNSEL, AS PER THIS SALE DEED WHAT WAS SOLD IS LAND OF 4 ITA NO.189&205/COCH/2014 TWO ACRES AND 04 CENTS OF LAND AT MURUNGOOR, THEKKU MMURI. THE ONE CENT OF LAND WHEREIN THE ASSESSING OFFICER PLACED HIS RE LIANCE IS SHOWN AS SCHEDULE B PROPERTY. ACCORDING TO THE LD.COUNSEL, SCHEDULE B PROPERTY IS NOT SUBJECT MATTER OF SALE AT ALL. PROBABLY THIS M IGHT HAVE BEEN MENTIONED FOR THE PURPOSE OF SECURITY. THE RECITAL IN THE SA LE DEED, ACCORDING TO THE LD.COUNSEL, WHAT WAS SOLD IS SCHEDULE A PROPERTY WH ICH IS NO WAY NEARER TO THE SUBJECT MATTER OF THE LAND IN THE PRESENT APPEA L BEFORE THE TRIBUNAL. THEREFORE, THE DOCUMENT ON WHICH THE ASSESSING OFFI CER PLACED RELIANCE IS NOT RELATED TO SURVEY NO.1009 BUT TO THE ONE WHICH RELATES TO SURVEY NO.631 IN MURINGOOR, THEKKUMMURI VILLAGE. THEREFOR E, ACCORDING TO THE LD.COUNSEL, THE REFERENCE MADE BY THE ASSESSING OFF ICER IS NOT CORRECT. EVEN FOR ASSUMING FOR ARGUMENT SAKE, ACCORDING TO T HE LD.COUNSEL, IF SURVEY NO.1009 WAS SUBJECT MATTER OF SALE, STILL, T HE EXTENT OF LAND IS ONLY ONE CENT, THEREFORE, THE PRICE SHOWN FOR ONE CENT O F LAND CANNOT BE COMPARED FOR THE ASSESSEES PROPERTY WHICH IS TO TH E EXTENT OF 14.365 CENTS. THEREFORE, ACCORDING TO THE LD.COUNSEL, THE VALUATION ADOPTED BY THE ASSESSEE HAS TO BE ACCEPTED IN THE ABSENCE OF ANY O THER MATERIAL. 5. THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESS EE HAS ALSO OBTAINED VALUATION REPORT FROM ONE R.V. MOHAN THAMP URAN, A REGISTERED VALUER. THE REGISTERED VALUER VALUED THE PROPERTY AT RS.1,50,540 PER CENT BY ADOPTING 10% OF THE PRESENT VALUE AS PER THE PRA CTICE FOLLOWED IN 5 ITA NO.189&205/COCH/2014 VALUATION. THE VALUER HAS ALSO FOUND THAT THIS PRO PERTY IS SITUATED ON NH 49 AND HAS CLOSE PROXIMITY TO COCHIN SHIPYARD, M.G. ROAD, NAVAL BASE AND COCHIN AIRPORT. ACCORDING TO THE LD.COUNSEL, T HE SUBJECT LAND IS WELL DEVELOPED RESIDENTIAL LOCALITY AND HAVING PROXIMITY TO EDUCATIONAL INSTITUTIONS, SUCH AS SACRED HEART COLLEGE, THEVARA . SINCE THE ASSESSING OFFICER HAS NOT TAKEN ANY PAIN TO ASCERTAIN THE MAR KET VALUE OTHER THAN GETTING THE INFORMATION FROM THE SUB REGISTRARS OF FICE, THE MARKET RATE ADOPTED BY THE ASSESSEE AT RS.1 LAKH HAS TO BE ACCE PTED. 6. ON THE CONTRARY, SHRI K.K. JOHN, THE LD.DR SUBMI TTED THAT THE ASSESSEE CLAIMED THE FAIR MARKET VALUE AS ON 01-04- 1981 AT RS.1 LAKH. HOWEVER, THE ASSESSING OFFICER OBTAINED INFORMATION FROM THE SUB REGISTRARS OFFICE AND FOUND THAT ONE CENT OF LAND WAS SOLD FOR RS.36,000 IN THE SAME LOCALITY. ACCORDINGLY, THE ASSESSING OFFI CER ADOPTED RS.36,000 INSTEAD OF RS.1 LAKH. SINCE THE ASSESSING OFFICER HAS TAKEN THE VALUE ON THE BASIS OF THE INFORMATION OBTAINED FROM THE SUB- REGISTRAR, ACCORDING TO THE LD.DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADD ITION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ASSESSEE HAS SOLD 14.365 CENTS OF LAND. IT IS ALSO NOT IN DISPU TE THAT THE ASSESSEE HAS THE OPTING OF ADOPTING ESTIMATED COST AS ON 01-04-1 981 FOR THE PURPOSE OF 6 ITA NO.189&205/COCH/2014 COMPUTATION OF CAPITAL GAIN. THE LOCATION OF THE P ROPERTY ON NH 49S IS ALSO NOT IN DISPUTE. THE ASSESSEE CLAIMS THAT THIS PROP ERTY HAS CLOSE PROXIMITY TO SACRED HEART COLLEGE, COCHIN SHIPYARD, M.G. ROAD , NAVAL BASE AND AIRPORT. IT IS WELL SETTLED PRINCIPLES OF LAW THAT THE MARKET PRICE IS NOTHING BUT A PRICE THAT MAY BE AGREED BETWEEN A WILLING PU RCHASER AND A WILLING SELLER. THE MARKET PRICE IS NOT A STATIC FIGURE. IT MAY FLUCTUATE FREQUENTLY DEPENDING UPON VARIOUS FACTORS SUCH AS THE NECESSIT Y OF THE VENDER TO SELL THE PROPERTY AND THE URGENCY OF THE PURCHASER TO PU RCHASE THE PROPERTY. THE MARKET PRICE WOULD ALSO DEPEND UPON OTHER FACTO RS SUCH AS THE AREA OF THE LAND, LOCATION OF THE LAND, ACCESS TO INFRAS TRUCTURE FACILITY, POTENTIAL FOR FUTURE DEVELOPMENT, ETC. IN THE CASE BEFORE US , THE FACT THAT THE LAND IS SITUATED ON NH 49 IS NOT IN DISPUTE. THE ASSESSING OFFICER COMPARED THE SALE PRICE OF THE LAND IN SURVEY NO.1009/5 FOR THE PURPOSE OF FIXING THE VALUE OF ONE CENT AT RS.36,000. SURVEY NO.1009 IS ON THE WESTERN SIDE OF THE SUBJECT MATTER OF LAND. FROM THE MATERIAL AVAI LABLE ON RECORD, MORE PARTICULARLY, THE INFORMATION SAID TO BE OBTAINED B Y THE ASSESSING OFFICER FROM THE SUB REGISTRAR IT APPEARS THAT SURVEY NO.10 09 WAS SUB DIVIDED INTO VARIOUS SUB DIVISIONS. IT APPEARS, THERE ARE 32 SUB DIVISIONS IN SURVEY NO.1009. THE REVENUE COULD NOT BRING ON RECORD WHI CH SUB DIVISION OF SURVEY NO.1009 HAS ACCESS TO NH 49. THE FACT THAT SURVEY NO.1009 WAS SUB DIVIDED INTO 32 PLOTS MEASURING OF ONE CENT AND TWO CENTS SHOWS THAT THE AREA OF THE LAND WHICH IS COMPARED BY THE ASSES SING OFFICER IS VERY 7 ITA NO.189&205/COCH/2014 LESSER THAN THE LAND SOLD BY THE ASSESSEE. THEREFO RE, ONE OF THE FACTORS WHICH HAS TO BE COMPARED IS AREA OF THE LAND, WHICH IS NOT COMPARABLE IN THIS CASE. THE COMPARABLE CASE TAKEN BY THE ASSESS ING OFFICER DID NOT HAVE THE EQUIVALENT AREA OF THE LAND AS IT WAS SOLD BY THE ASSESSEE. THE DETAILS FURNISHED BY THE SUB REGISTRAR ALSO SHOWS T HAT 0.40 CENT (1 ARE) WAS SOLD FOR RS.36,000. THE VERY SAME DOCUMENT SHO WS 5.26 CENTS (13 ARES) IN THE VERY SAME SURVEY NUMBER WAS SOLD FOR R S.48,000. THEREFORE, THE AMOUNT DISCLOSED IN THE DETAILS FURNISHED BY TH E ASSESSING OFFICER IS NOT UNIFORM. WHEN 1 ARE OF LAND WAS SOLD FOR RS.36,000 IT IS NOT KNOWN HOW 13 ARES OF LAND WAS SOLD FOR RS.48,000. THE INFORM ATION FURNISHED BY THE SUB REGISTRAR ALSO SHOWS THAT SOME PART OF THE LAND IN SURVEY NO.1009 WAS SOLD FOR RS.16,000 AND THE OTHER PART WAS RS.30 ,000. THE INFORMATION FURNISHED BY THE SUB REGISTRAR DOES NOT INSPIRE CON FIDENCE WITH REGARD TO THE MARKET VALUE SAID TO BE MENTIONED THEREIN. IN OTHER WORDS, THE INFORMATION FURNISHED BY THE SUB REGISTRAR DOES NOT DISCLOSE A UNIFORM VALUE IN RESPECT OF THE EQUIVALENT AREA OF THE LAND . NO DOUBT, THE INFORMATION OBTAINED BY THE ASSESSING OFFICER IS AL SO ONE OF THE FACTOR TO BE CONSIDERED FOR THE PURPOSE OF DETERMINATION OF MARK ET VALUE. IT DOES NOT MEAN THAT THE ASSESSING OFFICER HAS TO TAKE THE VAL UE SHOWN THEREIN. AS FOUND BY THIS TRIBUNAL IN THE CASE OF KURIAN JOSEPH VS DY.CIT IN ITA NO.137/COCH/2014 DATED 17-10-2014 BOTH THE MEMBERS ARE PARTY TO THE ORDER TAKING 10% OF THE SALE CONSIDERATION IS ALSO ONE OF THE APPROVED 8 ITA NO.189&205/COCH/2014 METHODS OF VALUATION. IN THIS CASE, THE PROPERTY W AS SOLD FOR A SALE CONSIDERATION OF RS.2,16,25,000. THE VALUE OF ONE CENT OF LAND COMES TO ONLY RS.15,05,325. 10% OF THIS COMES TO RS.1,50,54 0. HOWEVER, THE ASSESSEE CLAIMS ONLY RS.1 LAKH PER CENT. SINCE THI S TRIBUNAL IN THE CASE OF KURIAN JOSEPH (SUPRA) FOUND THAT TAKING 10% OF THE SALE PRICE AS MARKET VALUE AS ON 01-04-1981 IS ALSO ONE OF THE APPROVED METHODS OF VALUATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT FIX ING THE MARKET VALUE AS ON 01-04-1981 AT RS.1,50,540 PER CENT IS JUSTIFIED. HO WEVER, THE ASSESSEE IS CLAIMING ONLY RS.1 LAKH PER CENT, THEREFORE, THE AS SESSING OFFICER MAY NOT BE CORRECT IN FIXING THE VALUE AT RS.36,000 PER CEN T ON THE BASIS OF THE INFORMATION GATHERED FROM THE SUB REGISTRAR OFFICE WHICH DOES NOT DISCLOSE A UNIFORM RATE FOR THE AREA OF THE LAND DISCLOSED T HEREIN. IN THE CASE OF KURIAN JOSEPH (SUPRA), THE ASSESSEE OBTAINED A VALU ATION REPORT FROM SHRI R.V. MOHAN THAMPURAN, A REGISTERED VALUER. THE VAL UE ADOPTED BY SHRI R.V. MOHAN THAMPURAN TAKING 10% OF THE SALE PRICE A S MARKET VALUE AS ON 01-04-1981 IS ACCEPTED BY THIS TRIBUNAL. IN THE CASE BEFORE US, THE ASSESSEE HAS ALSO OBTAINED A VALUATION REPORT FROM THE VERY SAME VALUER SHRI R.V. MOHAN THAMPURAN. HOWEVER, THE REPORT WAS OBTAINED AFTER COMPLETION OF THE ASSESSMENT, I.E. ON 21-09-2013. UNDER NORMAL CIRCUMSTANCES, THIS TRIBUNAL WOULD HAVE REMANDED BA CK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION I N THE LIGHT OF THE VALUATION REPORT OBTAINED AFTER THE COMPLETION OF THE ASSESSM ENT. IN THIS CASE, 9 ITA NO.189&205/COCH/2014 REMANDING BACK THE MATTER TO THE FILE OF THE ASSESS ING OFFICER MAY NOT SERVE ANY PURPOSE IN VIEW OF THE ORDER OF THIS TRIB UNAL IN SHRI KURIAN JOSEPH (SUPRA). IN OTHER WORDS, IN VIEW OF THE ORD ER OF THE TRIBUNAL IN THE CASE OF SHRI KURIAN JOSEPH, THE ASSESSING OFFICER H AS NO OTHER WAY EXCEPT TO ACCEPT THE VALUE AS ON 01-04-1981 BY TAKING 10% OF THE SALE CONSIDERATION. THEREFORE, IT WOULD REMAIN ONLY AS AN ACADEMIC ISSUE AND WOULD NOT SERVE ANY PURPOSE TO BOTH THE PARTIES. B Y TAKING INTO CONSIDERATION OF THE INTEREST OF THE PARTIES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SINCE THE ASSESSEE HAS CLAI MED ONLY RS.1 LAKH PER CENT WHICH IS FAR BELOW 10% OF THE SALE PRICE, THE SAME NEEDS TO BE ACCEPTED. ACCORDINGLY, THE ORDERS OF THE LOWER AUT HORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE MARKET PRICE AS ON 01- 054-1981 AT RS.1 LAKH PER CENT. 8. THE ASESSEE HAS TAKEN ONE MORE GROUND WITH REGAR D TO DISALLOWANCE OF RS.2,16,250 TOWARDS COMMISSION PAID TO BROKERS FOR SELLING THE LAND. 9. SHRI K.K. CHANDRASEKHARAN, THE LD.COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID 3% AS COMMISSI ON TO LAND BROKERS FOR SALE OF THE LAND. HOWEVER, THE ASSESSING OFFIC ER HAS ALLOWED ONLY 2%. THE ASSESSEE HAS FILED THE DETAILS OF THE BROKERS, THEIR ADDRESSES, ETC. 10 ITA NO.189&205/COCH/2014 BEFORE THE ASSESSING OFFICER, COPY OF WHICH IS AVAI LABLE AT PAGE 24 OF THE PAPER BOOK. THERE IS NO REASON TO REDUCE THE COMMI SSION PAID BY THE ASSESSEE TO 2%. ACCORDING TO THE LD.COUNSEL, THE P REVAILING RATE OF COMMISSION IS 3% IN KERALA. THEREFORE, THE ASSESSI NG OFFICER HAS NO JUSTIFICATION FOR RESTRICTING THE CLAIM OF THE ASSE SSEE AT 2%. 10. ON THE CONTRARY, SHRI K.K. JOHN, THE LD.DR SUBM ITTED THAT THE ASSESSEE HAS CLAIMED RS.6,48,750 TOWARDS PAYMENT OF COMMISSION. HOWEVER, THE ASSESSING OFFICER ALLOWED ONLY RS.4,32 ,500 BEING BROKERAGE / COMMISSION. IN THE ABSENCE OF ANY OTHER MATERIAL, ACCORDING TO THE LD.DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLAIMED RS.6,48,750 TOWARDS COMMISSION PAYMENT FOR SALE OF THE LAND. THIS APPEARS TO BE 3% OF THE TOTAL SALE CONSIDERATION. THE ASSESSING OFFICER HAS ALLOWED RS.4,32,500 AND DISALLOWED A SUM OF RS. 2,16,250 BY RESTRICTING THE CLAIM TO 2% OF THE SALE CONSIDERATI ON. IN FACT, THE ASSESSING OFFICER ACCEPTED THAT THERE WAS A COMMISSION PAYMEN T. THE DISPUTE IS ONLY WITH REGARD TO QUANTUM. THERE IS A PRACTICE O F PAYMENT OF COMMISSION FOR SALE OF LAND. THE COMMISSION IS RAN GING FROM 1% TO 3% 11 ITA NO.189&205/COCH/2014 DEPENDING UPON THE AREA, TERMS AGREED UPON BETWEEN THE VENDOR AND THE BROKER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT BY TAKING INTO CONSIDERATION OF THE PRACTICE OF PAYMENT OF COMMISS ION RANGING FROM 1% TO 3% ON THE SALE PRICE AND THE DETAILS FURNISHED BY T HE ASSESSEE WITH NAMES AND ADDRESSES BEFORE THE ASSESSING OFFICER, COPY OF WHICH IS AVAILABLE AT PAGE 24, THE ASSESSING OFFICER IS NOT JUSTIFIED IN RESTRICTING THE CLAIM AT 2% WITHOUT MAKING ANY FURTHER ENQUIRY. THE ASSESSING OFFICER OUGHT TO HAVE MADE ENQUIRY BY CALLING FOR THE BROKERS. MOREOVER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT EXAMINING THE BROKERS AT TH IS STAGE MAY NOT ALSO BE POSSIBLE. NORMALLY THE LAND BROKERS ARE FROM PO OR FAMILIES AND THEY WILL MIGRATE FROM ONE PLACE TO ANOTHER. THEREFORE, REMA NDING BACK THE MATTER AT THIS STAGE MAY NOT ALSO SERVE ANY PURPOSE. HAD ANY CORPORATE COMPANY WAS INVOLVED IN ARRANGING THE SALE OF THE P ROPERTY, THEN THE MATTER WOULD HAVE STOOD ON A DIFFERENT FOOTING. TH E VERY FACT THAT THE PAYMENT WAS MADE TO SIX BROKERS SHOWS THAT THEIR WH EREABOUTS ALSO COULD NOT BE TRACED OUT IN THE EFFLUX OF TIME. BY TAKIN G INTO CONSIDERATION ALL THE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT DISALLOWANCE OF RS. 2,16,250 MAY NOT HAVE JUSTIFIED. ACCORDINGL Y, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE DISALLOWANC E OF RS.2,16,250 IS DELETED. 12 ITA NO.189&205/COCH/2014 12. NOW COMING TO THE REVENUES APPEAL, THE ONLY IS SUE ARISES FOR CONSIDERATION IS WITH REGARD TO CLAIM OF THE ASSESS EE U/S 54F OF THE ACT IN RESPECT OF INVESTMENT MADE. 13. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE CI T(A) ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.1,77,50,0 00 ON THE ASSUMPTION THAT THE ENTIRE MONEY WAS SPENT FOR CONSTRUCTION ON A NEW RESIDENTIAL PREMISES. ACCORDING TO THE LD.DR FROM NOVEMBER, 20 08 TO OCTOBER, 2009 THE ASSESSEE HAS SPENT ONLY RS.70 LAKHS. THE BALAN CE AMOUNT WAS NOT DEPOSITED IN THE CAPITAL GAIN ACCOUNT U/S 54F(4) OF THE ACT. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR ANY EXEMPTION. THE LD .DR PLACED HIS RELIANCE ON THE DECISION OF THIS TRIBUNAL IN SMT. ROSAMMA KO RAH IN ITA NO.646/COCH/2013 DATED 07-03-2014 AND ALSO THE JUDG MENT OF THE KERALA HIGH COURT IN DR XAVIER J PULIKKAL ITA NO.10 OF 201 4 JUDGMENT DATED 20- 02-2014, COPY OF WHICH IS AVAILABLE ON RECORD. ACC ORDING TO THE LD.DR, IF THE MONEY COULD NOT BE SPENT BEFORE THE DUE DATE FO R FILING THE RETURN OF INCOME, THE SAME HAS TO BE DEPOSITED IN THE CAPITAL GAIN ACCOUNT AS REQUIRED U/S 54F(4) OF THE ACT. 14. ON THE CONTRARY, SHRI K.K. CHANDRASEKHARAN, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE STARTED THE CO NSTRUCTION IN NOVEMBER, 2007 AND THE SAME WAS ACTUALLY COMPLETED ON 27-10-2009. FROM NOVEMBER, 2007 TO OCTOBER, 2008 THE ASSESSEE H AS SPENT NEARLY 13 ITA NO.189&205/COCH/2014 RS.50 LAKHS. FROM NOVEMBER, 2008 TO OCTOBER, 2009 THE ASSESSEE HAS SPENT NEARLY RS.120 LAKHS. THE LD.COUNSEL SUBMITTE D THAT UPTO OCTOBER, 2008, MAJOR PORTION OF THE CONSTRUCTION WAS COMPLET ED. FROM NOVEMBER, WHAT WAS DONE IS CONSTRUCTION OF WALL, PLASTERING, ELECTRICAL WORK AND CONSTRUCTION OF COMPOUND WALL, ETC. THEREFORE, ACC ORDING TO THE LD.COUNSEL THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASS ESSEE. THE LD.COUNSEL SUBMITTED THAT THE ENTIRE DETAILS OF CONSTRUCTION W AS AVAILABLE IN THE LETTER FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ON 02-09-2010 COPY OF WHICH IS AVAILABLE AT PAGE 10 OF THE PAPER BOOK. A CCORDING TO THE LD.REPRESENTATIVE, BEFORE THE DUE DATE FOR FILING T HE RETURN OF INCOME, THE ASSESSEE HAS ACTUALLY SPENT RS.50 LAKHS. THE BALAN CE RS.60 LAKHS FOR CONSTRUCTION WAS SPENT AFTER THE DUE DATE. THEREFO RE, ACCORDING TO THE LD.COUNSEL, ONLY FOR THE SUM OF RS.60 LAKHS THE ASS ESSING OFFICER MAY CLAIM THAT IT WAS USED FOR CONSTRUCTION AFTER THE DUE DAT E. ACCORDING TO THE LD.COUNSEL, WHEN THE CONSTRUCTION WAS STARTED AND M AJOR PORTION OF CONSTRUCTION WAS COMPLETED, DEPOSITING THE AMOUNT I N THE CAPITAL GAIN ACCOUNT MERELY BECAUSE THE CONSTRUCTION COULD NOT B E COMPLETED BEFORE THE DUE DATE FOR FILING THE RETURN MAY NOT BE POSSI BLE SINCE THE ASSESSEE NEEDS LIQUID CASH FOR CONTINUING THE CONSTRUCTION. IF THE BALANCE AMOUNT WAS DEPOSITED IN CAPITAL GAIN ACCOUNT, ACCORDING TO THE LD.COUNSEL, THE ASSESSEE MAY NOT BE ABLE TO CONTINUE THE CONSTRUCTI ON. THEREFORE, ACCORDING TO THE LD.COUNSEL, IT MAY NOT BE THE INTE NTION OF THE PARLIAMENT TO 14 ITA NO.189&205/COCH/2014 DEPOSIT THE AMOUNT IN CAPITAL GAIN ACCOUNT, WHERE T HE ASSESSEE ACTUALLY STARTED THE CONSTRUCTION AND IT WAS GOING ON. ACCO RDING TO THE LD.COUNSEL, WHEN THE CONSTRUCTION WAS STARTED AND MAJOR PORTION OF THE CONSTRUCTION WAS COMPLETED, THE ASSESSEE NEEDED LIQUID CASH FOR COMPLETING THE CONSTRUCTION AS PLANNED. DEPOSITING THE REMAINING AMOUNT IN THE CAPITAL GAIN ACCOUNT MAY NOT BE THE INTENTION OF THE PARLIA MENT SINCE SUCH DEPOSIT MAY NOT ALLOW THE ASSESSEE TO COMPLETE THE CONSTRUC TION AS INTENDED BY THE PARLIAMENT. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLAIMS DEDUCTION U/S 54F ON THE GROUND THAT THE CAPITAL GAIN AROSE O N SALE OF LAND WAS USED FOR CONSTRUCTION OF RESIDENTIAL HOUSE. HOWEVER, TH E ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS USED THE FUNDS FOR PURCHASING OTHER LAND / BUILDING. THE ASSESSEE ALSO APPEARS TO HAVE CLAIMED THAT HE P URCHASED AGRICULTURAL LAND AND IS ELIGIBLE FOR DEDUCTION U/S 54B OF THE A CT. HOWEVER, ON APPEAL BY THE ASSESSEE THE CIT(A) FOUND THAT THE ASSESSEE HAS SHOWN WITHDRAWAL FROM THE BANK ACCOUNT TO THE EXTENT OF RS.2,46,54,3 66. THE ASSESSEE HAS ALSO FILED A COMPLETION CERTIFICATE FROM THE COCHIN CORPORATION SHOWING THAT THE BUILDING WAS COMPLETED ON 15-07-2009. ACCORDIN GLY, THE CIT(A) ALLOWED THE ENTIRE CLAIM OF RS.1,27,50,000. 15 ITA NO.189&205/COCH/2014 16. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS O F SECTION 54F(4). SECTION 54F(1) CLEARLY SAYS THAT THE CAPITAL GAIN A RISING FROM TRANSFER OF LONG TERM CAPITAL ASSET IS EXEMPT FROM CAPITAL GAIN TAX PROVIDED THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER PURCHASED OR HAS WITHIN A PERIOD OF 3 Y EARS CONSTRUCTED A RESIDENTIAL HOUSE. SECTION 54F(4) CLEARLY SAYS THA T THE NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS T HE PURCHASE OF NEW ASSET WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF ORIGINAL ASSET TOOK PLACE OR WHICH IS NOT UTILIZED BY HIM FO R PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT, THE SAME SHALL BE DEPOSITED IN T HE CAPITAL GAIN ACCOUNT. THIS TRIBUNAL IN THE CASE OF SMT. ROSAMMA KORAH (SU PRA) HAS AN OCCASION TO CONSIDER THE SAME. THIS TRIBUNAL FOUND AFTER CO NSIDERING THE JUDGMENT OF THE KERALA HIGH COURT IN CIT VS V.R. DESAI (2011 ) 197 TAXMAN 52 (KER) AND PRAKASH NATH KHANNA AND ANOTHER VS CIT (2004) 2 66 ITR 1 (SC) THAT THE MATTER NEEDS TO BE RE-EXAMINED IN THE LIGHT OF THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF V.R. DESAI (SUPRA) AND THE JUDGMENT OF THE APEX COURT IN THE CASE OF PRAKASH NATH KHANNA & ANOTHER (SUPRA). THE KERALA HIGH COURT IN DR XAVIER J PULIKKAL (SUPR A) EXAMINED THIS ISSUE AND FOUND THAT THE SCHEME OF DEPOSIT UNDER CAPITAL GAIN IS CONTEMPLATED U/S 54F(4) AND IT DEPENDS UPON WHEN THE PROPERTY OF THE ASSESSEE WAS SOLD AND WHEN EXACTLY THE AMOUNT WAS INVESTED. IT A LSO DEPENDS UPON 16 ITA NO.189&205/COCH/2014 WHETHER IT IS INVESTED IN RESIDENTIAL HOUSE OR OTHE RWISE. ALL THESE FACTS HAVE TO BE CONSIDERED WITH REFERENCE TO PROVISIONS OF SECTION 54F(4) ALONG WITH SECTION 139(1) OF THE ACT, AS THE DUE TIME WOU LD BE UNDER SECTION 139(1) ONLY NOT UNDER SECTION 139(4) OF THE ACT. T HE KERALA HIGH COURT FURTHER FOUND THAT THE DUE DATE WOULD BE U/S 139(1) ONLY AND NOT U/S 139(4) OF THE ACT. THE HIGH COURT FURTHER FOUND THAT THE TRIBUNAL HAS ACCORDED ONE MORE OPPORTUNITY TO THE ASSESSEE TO PLACE ON RE CORD RELEVANT MATERIAL AND IT IS ALWAYS OPEN TO THE ASSESSEE TO PLACE THE RELEVANT MATERIAL AND FACTS BEFORE THE ASSESSING OFFICER FOR CONSIDERATIO N. IN THIS CASE, THE ASSESSEE CLAIMS THAT A SUM OF RS.50 LAKHS WAS SPENT BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME AND WHAT WAS SPE NT AFTER FILING THE RETURN OF INCOME IS ONLY RS.60 LAKHS. THIS FACT WAS NOT CONS IDERED BY BOTH THE AUTHORITIES BELOW. THE ASSESSEE HAS ALSO EXPRESSED DIFFICULTY FOR DEPOSITING THE AMOUNT IN THE CAPITAL GAIN ACCOUNT W HEN THE CONSTRUCTION WAS GOING ON. THEREFORE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED IN THE LIGHT OF THE DECISION OF THIS TRIBUNAL IN SMT. ROSAMMA KORAH (SUPRA) AND THE JUDGMENT OF T HE KERALA HIGH COURT IN DR XAVIER J PULIKKAL (SUPRA). ACCORDINGLY , THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE ON THIS ISSUE AND THE ISS UE OF CLAIM OF THE ASSESSEE U/S 54F IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER. IT IS OPEN TO THE ASSESSEE TO PLACE ALL THE MATERIAL FACT S WHICH ARE RELEVANT BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL RECONSIDER THE 17 ITA NO.189&205/COCH/2014 ISSUE IN THE LIGHT OF THE MATERIAL AVAILABLE ON REC ORD IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED; APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 TH FEBRUARY, 2015. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 06 TH FEBRUARY, 2015 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH 18 ITA NO.189&205/COCH/2014 1. DATE OF DICTATION : 2. DATE OF PLACING THE DRAFT ORDER BEFORE THE MEMBE R : 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.PS : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER: 5. DATE OF RETURN OF THE ORDER TO PS AFTER APPROVAL : 6. DATE OF PRONOUNCEMENT : 7. DATE ON WHICH THE FILE ALONG WITH THE ORDER SENT TO BC : 8. NO. OF PAGES OF DICTATION PADS ATTACHED TO THE F ILE : 9. NO. OF PAGES OF DRAFT COPY OF THE ORDER ATTACHED TO THE FILE :