MRS. RAJYASHREE SHYAM, CHENNAI V. ACIT, CORPORATE CIRCLE - 18 (1), CHENNAI

ITA 2114/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3313 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 16-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Search and seizure; Capital Gains
• Section: 54; 143(3); 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NO.2114/CHNY/2019 ! / ASSESSMENT YEAR : 2016-2017. RAJYASHREE SHYAM, NO.A-1405, RADIANCE MANDARIN, NO.1, PALLAVARAM THIORAIPAKKAM RAIDAL ROAD, CHENNAI 600 097. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 18(1) CHENNAI 600 034. [PAN AGCPS 0649F] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI.R. VIJAYARAGHAVAN AND SHRI. SAROJ KUMAR PARIDA, ADVOCATES. &' '# $ % /RESPONDENT BY : SHRI. AR.V. SREENIVASAN, JCIT. ( ) $ * /DATE OF HEARING : 24-10-2019 +,! $ * /DATE OF PRONOUNCEMENT : 08-11-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 5, CHENNAI (CIT(A) FOR SHORT) DATED 30.05.2019 FOR THE ASS ESSMENT YEAR (AY) 2016-2017. ITA NO.2114/CHNY/2019 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) IS CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE DISALLOWANCE OF THE DEDUCTION UNDER SECTION 54 IN RESPECT OF THE AMOUNT OF RS 70.32 LAKHS BEING CO NTRIBUTED BY THE APPELLANTS HUSBAND TOWARDS REINVESTMENT IN NEW HOUSE PROPERTY. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE LEGISLATIVE INTENTION IS TO PROVIDE DEDUCT ION UNDER SECTION 54 ONLY IN RESPECT OF REINVESTMENT IN A NEW HOUSE PROPERTY OUT OF THE LONG TERM CAPITAL GAINS, AND TH IS CANNOT INCLUDE THE AMOUNT CONTRIBUTED BY THE SPOUSE, THOUG H IT MAY INCLUDE LOANS BORROWED FROM BANK. 2.3 THE COMMISSIONER OF INCOME TAX (APPEALS) HAS AC CEPTED THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS REQUIRED UNDER THE SECTION TO AVAIL THE DEDUCTION, THAT IS, (I) THE NEW PROPERTY PURCHASED IS RESIDENTIAL HOUSE PROPERTY IN HER NAME. (II) THE PROPERTY WAS SOLD IN APRIL 2015 AND UTILIZ ATION OF SALE PROCEEDSFOR PURCHASE OF NEW PROPERTY WAS MADE FROM JANUARY 2016, ONWARDS. TOTAL AMOUNT OF RS.1.55 CRS WAS PAID TO THE BUILDER FOR THE ACQUISITION OF THE NEW PROPERTY. (III) AN AMOUNT OF RS.22 LACS WAS DEPOSITED INTO TH E CAPITAL GAIN ACCOUNT SCHEME (CGAS) BEFORE THE DUE DATE OF F ILING RETURN OF INCOME FOR ASSESSMENT YEAR 2016-17. (IV) THE NEW PROPERTY WAS ACQUIRED WITHIN THE TIME LIMITS SPECIFIED UNDER SECTION 54. 2.4 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE IS NOT REQUIRED UNDER THE PROVISIONS OF SECTION 54 TO ESTABLISH THE NEXUS BET WEEN THE AMOUNT OF SALE CONSIDERATION AND THE COST OF NEW AS SET. ITA NO.2114/CHNY/2019 :- 3 -: 2.5 THE APPELLANT SUBMITS THAT SECTION 54 OF THE AC T IS A BENEFICIAL PROVISION WHICH SHOULD BE INTERPRETED LI BERALLY IN FAVOUR OF THE EXEMPTION/DEDUCTION TO THE TAXPAYER A ND DEDUCTION SHOULD NOT BE DENIED ON HYPER TECHNICAL G ROUND. 2.6 THE APPELLANT SUBMITS THAT THE SUPREME COURT IN BAJAJ TEMPO LTD., 196 ITR 0188 HAS HELD THAT THE STATUTE SHOULD BE CONSTRUED LIBERALLY; AND SINCE THE PROVISION FOR PR OMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, RE STRICTIONS ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJ ECTIVE OF THE PROVISIONS AND NOT TO FRUSTRATE IT. 3. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GROUNDS AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL. THE RETURN OF INCOM E FOR THE AY 2016-17 WAS FILED ON 30.07.2016 DISCLOSING TOTAL IN COME OF RS. 15,08,810/-. AGAINST THE SAID RETURN OF INCOME, TH E ASSESSMENT WAS COMPLETED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORP. CIRCLE 18(1) CHENNAI VIDE ORDER DATED 22.12.2018 PA SSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) A T TOTAL INCOME OF RS. 1,07,41,750/- BY RESTRICTING CAPITAL GAINS U/S.54 OF THE ACT TO H79,13,000/- AS AGAINST THE CLAIM OF H1,74,45,939/ - ON THE GROUND THAT NEW HOUSE WAS BROUGHT BY THE ASSESSEE NOT OUT OF SALE PROCEEDS OF ORIGINAL ASSET BUT OUT OF FUNDS PROVIDED BY SPOU SE. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A). THE LD. CIT(A) VIDE IMPUGNED ORDER DIR ECTED THE ASSESSING OFFICER TO ALLOW EXEMPTION TO THE EXTENT OF H22,00, 000/- DEPOSITED IN ITA NO.2114/CHNY/2019 :- 4 -: CAPITAL GAINS SCHEME ACCOUNT AND CONFIRMED THE DEN IAL OF BENEFIT U/S.54 OF THE ACT TO THE EXTENT OF AMOUNT BORROWED FROM APPELLANTS HUSBAND TO THE EXTENT OF H70,32,000/-. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. LD. C OUNSEL ARGUED THAT ASSESSEE HAD COMPLIED WITH THE CONDITIONS PRESCRIBE D U/S.54 OF THE ACT AND THE PROVISIONS OF SECTION 54 OF THE ACT DOES NO T POSTULATES ESTABLISHING THE NEXUS BETWEEN AMOUNT RECEIVED ON SALE OF ORIGINAL ASSET AND THE COST OF NEW ASSET. HE ALSO PLACED R ELIANCE ON THE DECISIONS OF HONBLE GAUHATI HIGH COURT IN THE CAS E OF CIT VS. RAJESH KUMAR JALAN, (2006) 286 ITR 0274, HONBLE KERALA H IGH COURT IN THE CASE OF ITO VS. K.C. GOPALAN, (1999) 107 TAXMAN 05 91, HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS . KAPIL KUMAR AGARWAL & ORS, (2016) 382 ITR 0056. 6. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL RELATES TO THE ALLOWANCE OF DEDUCTION U/S.54 OF THE ACT. ASSESSEE HAD SOLD H OUSE PROPERTY LOCATED AT MARIGOLD CO-OPERATIVE HOUSING SOCIETY LT D, FLAT NO.803, ITA NO.2114/CHNY/2019 :- 5 -: SAPODILA, VADAGAON SHERI, PUNE FOR A CONSIDERATION OF H2,90,00,000/-. THE CAPITAL GAINS WERE COMPUTED AT H1.71 CRORES AF TER REDUCING COST OF INDEXATION OF H1.19 CRORES. ASSESSEE BOUGHT N EW RESIDENTIAL PROPERTY FOR H1,88,00,000/- AT NO.A-1405, RADIANCE MANDARIN, NO.1, PALLAVARAM THORAIPAKKAM RADIAL ROAD, CHENNAI-97 AND CLAIMED EXEMPTION OF CAPITAL GAINS U/S.54 OF THE ACT AS ASS ESSEE BROUGHT NEW RESIDENTIAL PROPERTY FOR CONSIDERATION OF H1.88 CRO RES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER FOUND THAT SALE CONSIDERATION RECEIVED WAS INVESTED IN MUTUAL FUNDS AND BONDS. HE FURTHER FOUND THAT NEW RESIDENTIAL HOUSE WAS BOU GHT OUT OF MONEY OF H92,32,939/- RECEIVED FROM THE SPOUSE OF THE AS SESSEE. BASED ON THIS INFORMATION, HE CONCLUDED THAT ASSESSEE IS EN TITLED TO DEDUCTION U/S.54 OF THE ACT ONLY TO THE EXTENT OF AMOUNT INV ESTED IN NEW RESIDENTIAL HOUSE OUT OF HIS OWN SOURCE AND ACCORD INGLY HE DENIED THE EXEMPTION U/S.54 OF THE ACT TO THE EXTENT OF H92,32 ,939/-. EVEN ON APPEAL BEFORE LD. CIT(A), THE LD. CIT(A) UPHELD TH E SAME VIEW, HOWEVER DIRECTED THE ASSESSING OFFICER TO ALLOW DE DUCTION U/S.54 OF THE ACT TO THE EXTENT OF AMOUNT DEPOSITED IN CAPITA L GAINS SCHEME ACCOUNT OF H22,00,000/-. 8. THEREFORE, THE ISSUE THAT COMES UP FOR CONSIDERATIO N IS WHETHER EXEMPTION U/S.54 OF THE ACT ARE TO BE DENI ED IN THE ABSENCES OF NEXUS BETWEEN SALE CONSIDERATION RECE IVED ON SALE OF OLD ITA NO.2114/CHNY/2019 :- 6 -: ASSET AND SOURCE OF INVESTMENT IN NEW HOUSE. ON MERE READING OF PROVISIONS OF SECTION 54 OF THE ACT, IT WOULD BE C LEAR THAT STATUTE HAS NOT LAID DOWN CONDITION FOR THE ASSESSEE IN ORDER TO GET THE BENEFIT OF SECTION 54 OF THE ACT, THE ACTUAL SALE CONSIDERAT ION RECEIVED ON SALE OF ORIGINAL ASSET SHOULD BE UTILIZED FOR ACQUISITIO N OF NEW HOUSE PROPERTY. THE ONLY CONDITION REQUIRED TO BE FULFIL LED IS THAT ASSESSEE SHOULD PURCHASE A NEW HOUSE PROPERTY WITHIN A PERI OD OF ONE YEAR BEFORE OR AFTER THE DATE ON WHICH THE TRANSFER OF H IS PROPERTY TOOK PLACE OR HE SHOULD HAVE CONSTRUCTED A HOUSE PROPER TY WITHIN A PERIOD OF TWO YEARS AFTER THE SALE OF ORIGINAL ASSET. TH ERE IS NO PROVISIONS UNDER SECTION 54 OF THE ACT STIPULATING THAT ASSE SSEE SHOULD UTILIZE THE AMOUNT WHICH HE OBTAINED BY WAY OF SALE FOR MEETING THE COST OF NEW HOUSE. IT IS SETTLED PRINCIPLE OF INTERPRETA TION OF STATUTE THAT COURT DO NOT HAVE POWER TO GO BEYOND THE TERMS OF S TATUTE WHERE THE BENEFITS ARE GRANTED SUBJECT TO FULFILLMENT OF CERT AIN CONDITIONS. THE COURTS CANNOT IMPOSE SOME OTHER CONDITIONS IN ORDER TO GIVE BENEFIT CONFERRED BY THE STATUTE. 9. WE ALSO PLACE RELIANCE ON THE DECISION OF HONBLE K ERALA HIGH COURT IN THE CASE OF K.C. GOPALAN (SUPRA) WHEREIN IT WAS HELD AS FOLLOWS:- THE ASSESSEE HAS TO CONSTRUCT OR PURCHASE A HOUSE PRPERTY FOR HIS OWN RESIDENCE IN ORDER TO GET THE BENEFIT O F S. 54. THE ITA NO.2114/CHNY/2019 :- 7 -: WORDING OF THE SECTION ITSELF WOULD MAKE IT CLEAR T HAT THE LAW DOES NOT INSIST THAT THE SALE CONSIDERATION OBTAINE D BY THE ASSESSEE ITSELF SHOULD BE UTILISED FOR THE PURCHASE OF HOUSE PROPERTY. THE MAIN PART OF S. 54 PROVIDES THAT THE ASSESSEE HAS TO PURCHASE A HOUSE PROPERTY FOR THE PURPOSE OF HIS OWN RESIDENCE WITHIN A PERIOD OF ONE YEAR BEFORE OR AFT ER THE DATE ON WHICH THE TRANSFER OF HIS PROPERTY TOOK PLACE OR HE SHOULD HAVE CONSTRUCTED A HOUSE PROPERTY WITHIN A PERIOD O F TWO YEARS AFTER THE DATE OF TRANSFER. CLAUSES (I) AND ( II) OF S. 54 WOULD ALSO MAKE IT CLEAR THAT NO PROVISION IS MADE BY THE STATUTE THAT THE ASSESSEE SHOULD UTILISE THE AMOUNT WHICH HE OBTAINED BY WAY OF SALE CONSIDERATION FOR THE PURPO SE OF MEETING THE COST OF THE NEW ASSET. 6. A READING OF SS. 53 AND 54 OF THE ACT WOULD MAKE IT CLEAR THAT A SPECIAL PROVISION IS MADE IN RESPECT OF CAPI TAL GAINS ARISING OUT OF TRANSFER OF PARTICULAR TYPE OF CAPIT AL ASSET, NAMELY, HOUSE PROPERTY WHICH WAS BEING USED BY THE ASSESSEE OR A PARENT OF HIS FOR THE PURPOSE OF THEIR RESIDEN CE. ENTITLEMENT OF THE EXEMPTION UNDER S. 54 RELATES TO THE COST OF THE ACQUISITION OF A NEW ASSET IN THE NATURE OF A H OUSE PROPERTY FOR THE PURPOSE OF HIS OWN RESIDENCE WITHI N THE SPECIFIED PERIOD. THE THREE DECISIONS RELIED ON BY THE LEARNED STANDING COUNSEL FOR THE REVENUE HAVE NO APPLICATIO N TO THE ISSUE RAISED IN THIS APPEAL. THE STATUTORY PROVISIO N IS CLEAR THAT IT DOES NOT CALL FOR A DIFFERENT INTERPRETATION FRO M WHAT HAS BEEN GIVEN TO IT BY THE CIT(A) AND THE TRIBUNAL. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE C ASE OF KAPIL KUMAR AGARWAL & ORS (SUPRA) REFERRING TO THE JUDGM ENT OF HONBLE KERALA HIGH COURT IN THE CASE OF K.C. GOPOLAN(SUP RA) HELD AS FOLLOWS:- 14. THE ASSESSEE HAS TO PURCHASE OR CONSTRUCT A H OUSE PROPERTY DURING THE PERIOD SPECIFIED UNDER SECTION 54F OF THE ACT IN ORDER TO GET BENEFIT THERE UNDER. SECTION 54 F OF THE ACT NOWHERE ENVISAGES THAT THE SALE CONSIDERATION OBTAI NED BY THE ASSESSEE FROM THE ORIGINAL CAPITAL ASSET IS MAN DATORILY REQUIRED TO BE UTILISED FOR THE PURCHASE OR CONSTRU CTION OF A HOUSE PROPERTY. NO PROVISION HAS BEEN MADE BY THE S TATUTE THAT IN ORDER TO AVAIL OF THE BENEFIT OF SECTION 54 F OF THE ACT, THE ASSESSEE HAS TO UTILISE THE AMOUNT RECEIVED BY HIM ON ITA NO.2114/CHNY/2019 :- 8 -: SALE OF ORIGINAL CAPITAL ASSET FOR THE PURPOSES OF MEETING THE COST OF THE NEW ASSET. ONCE THAT IS SO, THE ASSESSE E WAS ENTITLED FOR BENEFIT UNDER SECTION 54F OF THE ACT . RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT BENEFIT U/S.54 OF THE ACT CANNOT BE DENIED ON THE GROUND THAT SAL E PROCEEDS OF THE ORIGINAL ASSET SOLD WAS NOT UTILIZED FOR THE PURPO SE OF PURCHASE OF NEW ASSET. ACCORDINGLY, WE REVERSE THE FINDINGS OF THE LOWER AUTHORITIES AND DIRECT ASSESSING OFFICER TO ALLOW THE BENEFIT U/S. 54 TO THE EXTENT OF INVESTMENT MADE IN NEW HOUSE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ST ANDS ALLOWED. ORDER PRONOUNCED ON 08 TH DAY OF NOVEMBER, 2019, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED: 08 TH NOVEMBER, 2019 KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF