Sri Subhash Chand Agarwal, Bengaluru V. Income-Tax Officer, Ward-5(2)(2), Bengaluru

ITA 2200/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1080 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 16-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Sale consideration of property below Jantri Value; Question of law
• Section: 50C; 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 2 2 00 / BANG/201 8 ASSESSMENT YEAR : 2 0 13 - 14 SHRI SUBHASH CHAND AGARWAL, #27/6, NEW BAMBOO BAZAAR, 3 RD CROSS, BANGALORE 560 002. PAN: ACHPA1073E VS. THE INCOME TAX OFFICER, WARD 5 [2] [2], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, ADVOCATE RESPONDENT BY : SHRI R.N. SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 0 7 .0 3 .2019 DATE OF PRONOUNCEMENT : 15 .0 3 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OFLD. CIT(A)-5, BANGALORE DATED 26.04.2018FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ORDER OF RECTIFICATION PASSED U/S.154 OF THE ACT, DATED 08/12/2017 BY WHICH THE COMPUTATION OF CAPITAL GAINS ON SALE OF A RESIDENTIAL HOUSE BY ADOPTING THE SALE CONSIDERATION AT RS.1,61,00,000/- IN TERMS OF SECTION 50C OF THE ACT AS AGAINST THE ACTUAL CONSIDERATION OF RS.1,57,00,000/- RECEIVED BY THE APPELLANT WAS MODIFIED, APART FROM PARTIALLY WITHDRAWING THE EXEMPTION U/S.54 OF THE ACT ALLOWED IN RESPECT OF THE SECOND FLAT PURCHASED BY THE APPELLANT IN THE SAME BUILDING THAT WAS ACCEPTED IN THE ORIGINAL ORDER PASSED U/S.143[3] OF THE ACT, DATED 18/03/2016 UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. THE LEARNED CIT[A] OUGHT TO HAVE APPRECIATED THAT THE AFORESAID 2 ISSUES WITH REGARD TO ADOPTION OF THE SALE CONSIDERATION U/S. 50C OF THE ACT AND ALLOWANCE OF EXEMPTION U/S. 54 OF THE ACT FOR MULTIPLE ITA NO. 2200/BANG/2018 PAGE 2 OF 5 HOUSE PURCHASED WERE HIGHLY DEBATABLE AND THEREFORE, THE SAME WAS NOT AMENABLE TO RECTIFICATION U/S. 154 OF THE ACT AND CONSEQUENTLY, THE ORDER PASSED U/S.154 OF THE ACT, OUGHT TO HAVE BEEN QUASHED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ADOPTION OF THE SALE CONSIDERATION OF RS.1,61,00,000/- AS PER THE PROVISIONS OF SECTION 50C OF THE ACT IN PLACE OF THE SUM OF RS.1,57,00,000/- ACTUALLY RECEIVED BY THE APPELLANT BY INVOKING SECTION 50C OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE DENIAL OF EXEMPTION IN RESPECT OF THE SECOND FLAT NO.705 PURCHASED BY THE APPELLANT FROM ETA CONSTRUCTIONS IN THE SAME BUILDING ON THE GROUND THAT THE APPELLANT COULD NOT PURCHASE MORE THAN ONE RESIDENTIAL FLAT IN TERMS OF THE PROVISIONS OF SECTION 54 OF THE ACT, AS IT STOOD AT THE RELEVANT POINT OF TIME UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 6. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HON'BLE CCIT/DG, THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S. 234-A AND 234-B OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND THE LEVY DESERVES TO BE CANCELLED. 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT GROUND NO. 1 IS GENERAL FOR WHICH NO SEPARATE ADJUDICATION IS CALLED FOR. HE ALSO SUBMITTED THAT GROUND NOS. 2 AND 3 ARE NOT PRESSED AND ACCORDINGLY THESE TWO GROUNDS ARE REJECTED AS NOT PRESSED. REGARDING GROUND NO. 4, HE SUBMITTED THAT DIFFERENCE BETWEEN THE SALE VALUE AS PER THE SALE DEED AND AS PER THE STAMP DUTY VALUATION IS ONLY RS. 4 LAKHS WHICH IS ABOUT 2.5% OF THE VALUE AS PER SALE DEED. HE SUBMITTED THAT FOR SUCH A SMALL DIFFERENCE BEING LESS THAN 5%, NO ADDITION IS CALLED FOR. IN THIS REGARD, HE SUBMITTED THAT AS PER THE THIRD PROVISO TO SECTION 50C INSERTED RECENTLY W.E.F. 01.04.2019 ALSO, THIS IS PROVIDED THAT FOR SUCH DIFFERENCE UP TO 5%, NO ADDITION IS CALLED FOR. HE ALSO PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI B. S, SANJAY (HUF) VS. ITO IN ITA NO. 1141/BANG/2018 DATED 04.05.2018. HE SUBMITTED THE COPY OF THIS TRIBUNAL ORDER. HE POINTED ITA NO. 2200/BANG/2018 PAGE 3 OF 5 OUT THAT IN THIS CASE, THE TRIBUNAL HAS FOLLOWED ANOTHER TRIBUNAL ORDER RENDERED IN THE CASE OF M/S JOHN FOWLER (INDIA) PVT. LTD. VS. DCIT IN ITA NO. 7545/MUM/2014 DATED 25.01.2017 AND POINTED OUT THAT AS PER THIS TRIBUNAL ORDER, IT WAS HELD THAT FOR A DIFFERENCE OF LESS THAN 15% BETWEEN THE VALUE AS PER SALE DEED AND STAMP DUTY VALUE, NO ADDITION IS CALLED FOR. HE ALSO SUBMITTED THAT THE TRIBUNAL HAS ALSO FOLLOWED ANOTHER TRIBUNAL ORDER OF JAIPUR BENCH RENDERED IN THE CASE OF SMT. SITA BAI KHAITAN VS. ITO AS REPORTED IN 181 TTJ 549 (JP) AND ION THIS CASE ALSO, THE TRIBUNAL ORDER IS ON SIMILAR LINE. HE SUBMITTED THAT IN THESE CASES, THE TRIBUNAL ORDERS ARE PRIOR TO THE AMENDMENT AND HENCE, THE SAME ARE APPLICABLE IN THE PRESENT CASE. 4. REGARDING GROUND NO. 5, HE PLACED RELIANCE ON THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT & ANOTHER VS. SMT. K.G. RUKMINIAMMA AS REPORTED IN [2011] 331 ITR 211 (KARN). AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIRST DECIDE GROUND NO. 5 BECAUSE IF ASSESSEE SUCCEEDS ON THIS GROUND THEN GROUND NO. 4 WILL BECOME OF ACADEMIC INTEREST BECAUSE AS PER THE COMPUTATION OF INCOME FILED BY THE ASSESSEE AVAILABLE ON PAGES 2 TO 4 OF THE PAPER BOOK, THE LONG TERM CAPITAL GAIN IS OF RS. 1,08,47,866/- AND THE EXEMPTION CLAIMED BY THE ASSESSEE U/S. 54 IS TO THE EXTENT OF RS. 1,30,64,565. IF IT IS FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 54 IN RESPECT OF INVESTMENT IN BOTH FLATS THEN EVEN AFTER INVOKING SECTION 50C AND MAKING ADDITION OF RS. 4 LAKHS ON ACCOUNT OF DIFFERENCE IN VALUE AS PER SALE DEED AND AS PER STAMP DUTY VALUE THEN ALSO THE NET LONG TERM CAPITAL GAIN WILL BE NIL BECAUSE THE ELIGIBLE EXEMPTION / DEDUCTION U/S. 54(1) WILL BE HIGHER THAN THAT AMOUNT OF CAPITAL GAIN. WHEN WE EXAMINE THE APPLICABILITY OF THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT & ANOTHER VS. SMT. K.G. RUKMINIAMMA (SUPRA), WE FIND THAT AS PER THE FOLLOWING PARAS OF THIS JUDGMENT, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. 10. THE CONTEXT IN WHICH THE EXPRESSION 'A RESIDENTIAL HOUSE' IS USED IN S. 54 MAKES IT CLEAR THAT, IT WAS NOT THE INTENTION OF THE LEGISLATION TO CONVEY THE MEANING THAT IT REFERS TO A SINGLE RESIDENTIAL HOUSE. IF THAT WAS THE INTENTION, THEY WOULD HAVE USED THE WORD 'ONE'. AS IN THE EARLIER PART, THE WORDS USED ARE BUILDINGS OR LANDS WHICH ARE PLURAL IN NUMBER AND THAT IS REFERRED ITA NO. 2200/BANG/2018 PAGE 4 OF 5 TO AS 'A RESIDENTIAL HOUSE', THE ORIGINAL ASSET. AN ASSET NEWLY ACQUIRED AFTER THE SALE OF THE ORIGINAL ASSET ALSO CAN BE BUILDINGS OR LANDS APPURTENANT THERETO, WHICH ALSO SHOULD BE 'A RESIDENTIAL HOUSE'. THEREFORE THE LETTER 'A' IN THE CONTEXT IT IS USED SHOULD NOT BE CONSTRUED AS MEANING 'SINGULAR''. BUT, BEING AN INDEFINITE ARTICLE, THE SAID EXPRESSION SHOULD BE READ IN CONSONANCE WITH THE OTHER WORDS 'BUILDINGS' AND 'LANDS' AND, THEREFORE, THE SINGULAR 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VIRTUE OF S. 13(2) OF THE GENERAL CLAUSES ACT. THIS IS THE VIEW WHICH IS TAKEN BY THIS COURT IN THE AFORESAID CASE IN IT APPEAL NO. 113 OF 2004, DISPOSED OF ON 20TH SEPT., 2008 [REPORTED AS CIT VS. D. ANANDA BASAPPA (2009) 223 CTR (KAR) 186 : (2009) 20 DTR (KAR) 266ED.] 11. WE, THEREFORE, DO NOT SEE ANY MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE. 12. IN THE INSTANT CASE, THE FACTS ARE NOT IN DISPUTE. ON A SITE MEASURING 30'X110', THE ASSESSEE HAD A RESIDENTIAL PREMISES. UNDER A JOINT DEVELOPMENT AGREEMENT, SHE GAVE THAT PROPERTY TO A BUILDER FOR PUTTING UP FLATS. UNDER THE AGREEMENT EIGHT FLATS ARE TO BE PUT UP IN THAT PROPERTY AND FOUR FLATS REPRESENTING 48 PER CENT IS THE SHARE OF THE ASSESSEE AND THE REMAINING 52 PER CENT REPRESENTING ANOTHER FOUR FLATS IS THE SHARE OF THE BUILDER. SO, THE CONSIDERATION FOR SELLING 52 PER CENT OF THE SITE IS FOUR FLATS REPRESENTING 48 PER CENT. ALL THE FOUR FLATS ARE SITUATE IN A RESIDENTIAL BUILDING. THESE FOUR RESIDENTIAL FLATS CONSTITUTE 'A RESIDENTIAL HOUSE'' FOR THE PURPOSE OF S. 54. PROFIT ON SALE OF PROPERTY IS USED FOR RESIDENCE. THE FOUR RESIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSES FOR THE PURPOSE OF S. 54. IT HAS TO BE CONSTRUED ONLY AS 'A RESIDENTIAL HOUSE' AND THE ASSESSEE IS ENTITLED TO THE BENEFIT ACCORDINGLY. 13. IN THAT VIEW OF THE MATTER, THE 'TRIBUNAL AS WELL AS THE APPELLATE AUTHORITY WERE JUSTIFIED IN HOLDING THAT THERE IS NO LIABILITY TO PAY CAPITAL GAIN TAX AS THE CASE SQUARELY FALLS UNDER S. 54 OF THE IT ACT. HENCE, WE DO NOT SEE ANY SUBSTANTIAL QUESTION OF LAW ARISING FOR CONSIDERATION IN THIS APPEAL. ACCORDINGLY, THE APPEAL IS DISMISSED. 6. RESPECTFULLY FOLLOWING THIS JUDGMENT, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. GROUND NO. 5 IS ALLOWED AND WE DO NOT DECIDE GROUND NO. 4 BECAUSE THAT IS ACADEMIC NOW SINCE GROUND NO. 5 IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH MARCH, 2019. /MS/ ITA NO. 2200/BANG/2018 PAGE 5 OF 5 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.