Late P.J. Joseph by L/hr Jose Joseph, Calicut V. ACIT, Calicut

ITA 219/COCH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4588 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: R V VEERAMANI
• Section: 54

Judgement Text

1 ITA NO.219/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 219/COCH/2013 (ASSESSMENT YEAR 2008-09) SHRI JOSE JOSEPH VS THE ACIT, CIR.1(1) L/H OF LATE P.J. JOSEPH JR KOZHIKODE JOSCO AGENCIES MOONALINGAL, CALICUT 673 032 PAN : ACGPJ8872R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.V. VEERAMANI RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 25-07-2013 DATE OF PRONOUNCEMENT : 16-08-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), KOZHIKODE DATED 06-02-2013 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2. THE FIRST ISSUE IS WITH REGARD TO REOPENING OF T HE ASSESSMENT. AFTER HEARING THE LD.REPRESENTATIVE FOR THE ASSESSEE AND THE LD.DR, IT APPEARS THAT THE ASSESSEE ACCEPTED THE REASONS FOR REOPENIN G AND AGREED FOR 2 ITA NO.219/COCH/2013 COMPLETION OF THE ASSESSMENT BEFORE THE ASSESSING O FFICER AS EVIDENCED FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER AT PARAGRAPH 5 OF HIS ORDER. SINCE THE ASSESSEE AGREED BEFORE THE ASSESS ING OFFICER AND ACCEPTED THE REASONS FOR REOPENING AND AGREED FOR C OMPLETION OF THE ASSESSMENT, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT HE CANNOT RE- AGITATE THE MATTER ONCE AGAIN EITHER BEFORE THE CIT (A) OR BEFORE THE ITAT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES ON THIS ISSUE. THE ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 3. THE NEXT ISSUE IS WITH REGARD TO CLAIM OF EXEMPT ION U/S 54 OF THE ACT. SHRI RV VEERAMANI, THE LD.REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION U/S 54 OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, MAJOR PORTION OF THE CONSTRUCTIO N WAS COMPLETED. WHEN THE INSPECTOR OF INCOME-TAX VISITED THE PREMISES HE FOUND THAT FINISHING WORK IS GOING ON AND THE ENTIRE WORK WOULD BE FINIS HED IN ANOTHER 20 DAYS. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT ADMITT EDLY, THE WORK RELATING TO CONSTRUCTION OF LAWN IN THE FRONT PORTION OF THE PL OT WAS IN PROGRESS DURING THE VISIT OF THE INSPECTOR. REFERRING TO THE JUDGM ENT OF THE MADRAS HIGH COURT IN CIT VS SARDARMAL KOTHARI & ANR (2008) 302 ITR 286 (MAD), THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY THE SAME. IT IS ENOUGH IF THE 3 ITA NO.219/COCH/2013 ASSESSEE ESTABLISHED THAT THE ASSESSEE HAS INVESTED THE NET CONSIDERATION WITHIN THE STIPULATED PERIOD. IN VIEW OF THIS JUDG MENT OF THE MADRAS HIGH COURT, ACCORDING TO THE LD.REPRESENTATIVE WHEN THE ASSESSEE INVESTED THE ENTIRE MONEY IN THE CONSTRUCTION OF THE HOUSE HE IS ENTITLED FOR EXEMPTION U/S 54 OF THE ACT. THE LD.REPRESENTATIVE FURTHER S UBMITTED THAT THE CBDT CLARIFIED THAT IN RESPECT OF PURCHASE OF PLOT, WHEN THE ALLOTMENT WAS MADE BY THE DEVELOPMENT AUTHORITIES AND THE SALE CONSIDE RATION WAS PAID TO THE DEVELOPMENT AUTHORITIES, THE ASSESSEE IS ENTITLED F OR EXEMPTION U/S 54 OF THE ACT EVEN THOUGH THE CONSTRUCTION WAS NOT COMPLE TED. IN THIS CASE, ADMITTEDLY, THE BUILDING WAS COMPLETED AND WHAT REM AINS IS OUTER FINISHING OF THE PREMISE. IN FACT, THE ASSESSEE WAS WORKING ON THE CONSTRUCTION OF LAWN IN FRONT OF THE HOUSE. 4. ON THE CONTRARY, THE LD.DR, SMT. S VIJAYAPRABHA SUBMITTED THAT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 54 THE ASSESS EE HAS TO PURCHASE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER THE DATE ON WHICH THE TRANSFER TOOK PLACE A RESIDENTIAL HOUSE OR WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF SALE CONSTRUCT A RESIDENTIAL HOUS E. ACCORDING TO THE LD.DR, THE ASSESSEE HAS TO COMPLETE THE CONSTRUCTIO N FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54 OF THE ACT. THE INSPECTO R FROM THE OFFICE OF THE ASSESSING OFFICER WHO VISITED THE PREMISES FOUND TH AT THE CONSTRUCTION WAS IN PROGRESS. THEREFORE, ACCORDING TO THE LD.DR, TH E CIT(A) HAS RIGHTLY 4 ITA NO.219/COCH/2013 CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE LD.DR PLACED HER RELIANCE ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF DP MEHTA VS CIT (2001) 251 ITR 529 (DEL). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLAIMS THAT MAJOR PORTION OF THE CONSTRUCTION WAS OVER AND WHAT WAS P ENDING WAS ONLY CREATION OF LAWN IN FRONT OF THE HOUSE. WE HAVE AL SO CAREFULLY GONE THROUGH THE REPORT SAID TO BE FILED BY THE INSPECTOR, WHO V ISITED THE PREMISES, COPY OF WHICH IS AVAILABLE ON PAGE 3 OF THE PAPER BOOK. FOR CLARITY WE REPRODUCE THE REPORT OF THE INSPECTOR BELOW: AS DIRECTED, ON 19/08/2010 I VISITED THE PREMISES RS NO.68/1, 68/4, WARD 35, VENGERI VILLAGE, KOZHIKODE, WHERE SHRI JOSE JOSEPH IS CONSTRUCTING A HOUSE. THE WORK S GOING ON IN FULL SWING. CARPENTRY WORK, PLUMBING WORK, E LECTRICAL FITTINGS ETC. ARE PRESENTLY BEING DONE. 2. AGAIN ON TODAY, I.E. 23/12/10 I VISITED THE ABOV E PLOT. ABOUT 90% OF CONSTRUCTION WORK HAS BEEN COMPLETED. OUTER PORTION OF THE HOUSE FINISHING WORK IS GOING ON. W ORK RELATING TO CONSTRUCTION OF A LAWN IN THE FRONT PORTION OF T HE PLOT IS IN PROGRESS. LOOKING TO THE PACE AT WHICH THE WORK IS GOING ON, ALL THE WORK MAY BE FINISHED IN ANOTHER 10 OR 20 DA YS. 5 ITA NO.219/COCH/2013 3. IN ORDER TO VERIFY THE DETAILS OF CONSTRUCTION O F RESIDENTIAL HOUSE OF SHRI JOSE JOSEPH, SUCH AS DATE OF SUBMISSI ON OF PLAN, ISSUE OF PERMIT FOR CONSTRUCTION OF THE BUILD ING, COMPLETION REPORT ETC. I VISITED THE CORPORATION OFFICE ON 23/12/2010. ON ENQUIRY IT IS REVEALED THAT THE APP LICATION FOR CONSTRUCTION OF RESIDENTIAL HOUSE AT THE ABOVE MENT IONED LOCATION WAS GIVEN ON 02/06/2009 UNDER ONE DAY SANC TION SCHEME AND THE SANCTION WAS ISSUED ON SAME DAY VIDE E- 9/45841/09. COMPLETION CERTIFICATE FROM THE ARCHIT ECT HAS BEEN OBTAINED ON 10/11/2010, WHICH WAS SUBMITTED TO THE CORPORATION OFFICE. ON ENQUIRY IT IS OBSERVED THAT ASSESSEE HAS REQUESTED FOR PERMIT TO WATER CONNECTION, ELECT RICITY ETC. FOR WHICH NO OBJECTION CERTIFICATE FROM THE REGIONA L TOWN PLANNER IS REQUIRED, THE WORK RELATING TO NOC FROM TOWN PLANNER IS UNDER PROCESS. FROM THE ABOVE REPORT IT APPEARS THAT WORK RELATING TO CONSTRUCTION OF LAWN IN FRONT OF THE HOUSE WAS IN PROGRESS. THE ENTIRE WORK APPEARS TO BE COMPLETED WITHIN 10 TO 20 DAYS. THE ARCHITECT HAS ALSO GIVEN CERTIFICATE WITH REGARD TO THE COMPLETION OF THE BUILDING. HOW EVER, THERE IS NO FINDING BY BOTH THE AUTHORITIES BELOW AS TO WHETHER THE BUI LDING WAS FIT FOR HUMAN HABITATION OR NOT? THE CIT(A) APPARENTLY PLACING R ELIANCE ON THE JUDGMENT OF THE DELHI HIGH COURT IN DR D.P. MEHTA (SUPRA) FO UND THAT A HABITABLE RESIDENTIAL HOUSE TO BE COMPLETED WITHIN THE SPECIF IED TIME. HOWEVER, HE 6 ITA NO.219/COCH/2013 HAS NOT EXAMINED WHETHER THE CONSTRUCTION COMPLETED SO FAR WAS FIT FOR HUMAN HABITATION OR NOT? 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE DELHI HIGH COURT IN DR D.P. MEHTA (SUPRA). IN THE CASE BEFORE THE DELHI HIGH COURT, ADMITTEDLY, WHAT WAS CONSTRUCTED WAS A GARAGE AND S ERVANT QUARTERS AND THE ASSESSEE HIMSELF ADMITTED THAT THE PROPERTY WAS NOT WORTHY OF OCCUPATION. IN THE CASE BEFORE US, WHETHER THE BUI LDING WAS WORTHY OF OCCUPATION OR FIT FOR HUMAN HABITATION WAS NOT EXAM INED BY EITHER OF THE AUTHORITIES BELOW. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO EXAMINE WHETHER THE BU ILDING WHICH WAS CONSTRUCTED WITHIN THE SPECIFIED PERIOD WAS FIT FOR HUMAN HABITATION OR NOT? 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS SARDARMAL KOTHARI & ANR (SUPRA ). THE MADRAS HIGH COURT, AFTER REFERRING TO THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF D.P. MEHTA (SUPRA) FOUND THAT IT IS ENOUGH IF THE A SSESSEE ESTABLISHED THAT THE ASSESSEE HAD INVESTED THE ENTIRE NET CONSIDERAT ION WITHIN THE STIPULATED PERIOD AND COMPLETED THE CONSTRUCTION OF THE HOUSE. FOR THE PURPOSE OF CONVENIENCE, WE REPRODUCE THE OBSERVATIO N MADE BY THE MADRAS HIGH COURT AT PAGES 288 AND 289 OF THE ITR: 7 ITA NO.219/COCH/2013 THE TRIBUNAL HAS ALSO TAKEN NOTE OF ITS OWN EARLI ER ORDER IN THE CASE OF MRS.SEETHA SUBRAMANIAN V. ASST.CIT R EPORTED IN (1996) 59 ITD 94 (MAD), WHEREIN THE TRIBUNAL HAS HELD THAT, IN ORDER TO GET THE BENEFIT UNDER SECTION 54F, THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY THE SAME. IT IS ENOUGH IF THE ASSESSEE ESTABLISHED THAT THE ASSESSEE HAD INVESTED THE ENTIRE NET CONSIDERATION WITHIN THE STIPULATED PERIOD. THE SAID VIEW TAKEN CONSISTENTL Y BY THE TRIBUNAL HAS BEEN APPLIED IN THESE CASES ALSO. THE TRIBUNAL HAS DISTINGUISHED THE DELHI HIGH COURT JUDGMENT IN THE CASE OF D.P. MEHTA V. CIT REPORTED IN (2001) 251 ITR 529, R ELIED ON BY THE REVENUE IN THEIR FAVOUR TO NON-SUIT THE ASSESSE ES FOR EXEMPTION. IN OUR VIEW, THE TRIBUNAL HAS DISTINGUI SHED THE SAME RIGHTLY BECAUSE IN THE CITED CASE, THERE WAS A FACTUAL FINDING BY THE AUTHORITIES THAT THE ASSESSEE HIMSEL F HAS ADMITTED THAT THE CONSTRUCTION PUT UP WAS ONLY A GA RAGE AND SERVICE QUARTERS AND IT WAS NOT FIT ENOUGH FOR OCCU PATION OF THE ASSESSEE. THAT FACTUAL FINDING IS TOTALLY ABSENT I N THESE CASES. THERE IS NO MATERIAL TO ENTERTAIN THESE APPEALS. 8. IN VIEW OF THE ABOVE, IT IS NECESSARY TO EXAMINE WHETHER THE CONSTRUCTION COMPLETED WITHIN THE SPECIFIED PERIOD IS FIT FOR HUMAN HABITATION OR NOT? SINCE LOWER AUTHORITIES HAVE NO T EXAMINED AND RECORDED FINDING TO THIS EFFECT, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDIN GLY, THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. THE ASSESSI NG OFFICER SHALL EXAMINE 8 ITA NO.219/COCH/2013 THE MATERIAL AVAILABLE ON RECORD AND RECORD A SPECI FIC FINDING WHETHER THE CONSTRUCTED BUILDING WITHIN THE SPECIFIED PERIOD IS FIT FOR HUMAN HABITATION OR NOT AND THEREAFTER DECIDE THE ISSUE AFRESH IN AC CORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASS ESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH AUGUST, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 16 TH JULY, 2013 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