Shri M. Kumarasamy, Trichy V. ITO, Trichy

ITA 2257/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6294 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation
• Section: 54F; 234B; 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 2256/MDS/2013 / ASSESSMENT YEAR : 2009-10 SMT. K.JOTHIRANI, OLD NO.90; NEW NO.21, FORT STATION ROAD, THILLAINAGAR, TRICHY-620 018 [PAN: ADEPJ 2657 H] VS THE INCOME TAX OFFICER, WARD III(1), TRICHY . / I.T.A. NO. 2257/MDS/2013 / ASSESSMENT YEAR : 2009-10 SRI M.KUMARASAMY, NEW NO.93; OLD NO.48, TAMIL SANGAM BUILDINGS, WEST BOULEWARD ROAD, MAIN GUARD GATE, TRICHY [PAN: AGTPK 9691 E] ( !% /APPELLANT) VS THE INCOME TAX OFFICER, WARD II(1), TRICHY ( &'!% /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE / RESPONDENT BY : MR. SHAJI P. JACOB, ADDL.CIT / DATE OF HEARING : 21-04-2014 ! / DATE OF PRONOUNCEMENT : 20-06-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE ASSESSEES HAVE FILED APPEALS ASSAILING THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-TIRUCHIRAPALLI, DATED 12-11-2013 FOR THE ASSESSMENT YEAR (AY) 2009-10 PAS SED IN THE I.T.A. NOS. 2256 & 2257/MDS/2013 2 APPEALS OF THE RESPECTIVE ASSESSEES. THE ASSESSEES ARE HUSBAND AND WIFE. ITA NO.2256/2013 HAS BEEN FILED BY SMT.K.JOTHIRANI & ITA NO.2257/2013 HAS BEEN FILED B Y SHRI M.KUMARASAMY, HUSBAND OF SMT.K.JOTHIRANI. IN ITA NO .2256/2013, THE ASSESSEE HAS IMPUGNED THE ORDER OF CIT(APPEALS) ON THE FOLLOWING GROUNDS: I. DENIAL OF EXEMPTION U/S.54F OF THE INCOME TAX AC T, 1961 (HEREIN AFTER REFERRED TO AS THE ACT); II. INCOME OF ` 37,85,000/- RECEIVED FROM SALE OF TREES ASSESSED AS UN-EXPLAINED INCOME; III. TREATING AGRICULTURAL INCOME OF ` 30,000/- AS NON- AGRICULTURAL INCOME; IV. ADDITION OF INCOME ` 67,645/- ALLEGEDLY ADMITTED BY THE ASSESSEE; AND V. LEVY OF INTEREST U/S.234A, 234B & 234C OF THE AC T. 2. IN ITA NO.2257/MDS/2013, THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES: I. DENIAL OF EXEMPTION U/S.54F OF THE ACT; II. ADDITION OF ` 22.00 LAKHS RECEIVED FROM SALE OF TREES AS UN-EXPLAINED INCOME/-; III. ADDITION OF ` 11,03,608/- AS UN-EXPLAINED INVESTMENT; AND IV. LEVY OF INTEREST U/S.234A, 234B & 234C OF THE A CT. I.T.A. NOS. 2256 & 2257/MDS/2013 3 SINCE IN BOTH THE APPEALS, CERTAIN COMMON ISSUES AR E INVOLVED AND HAVE INTER LINKED FACTS THE APPEALS ARE TAKEN UP TO GETHER FOR ADJUDICATION. THE FACTS AS PUT-FORTH BY LD.COUNSEL FOR THE ASSESSEE IN BOTH THE APPEALS ARE AS UNDER: THE ASSESSEE IN ITA NO.2256/2013 HAD PURCHASED A RESIDENTIAL PROPERTY AT MOGAPPAIR, CHENNAI FOR A CO NSIDERATION OF ` 43.00 LAKHS. THE ASSESSEE HAD PURCHASED THE SAID P ROPERTY ON 18-06-2008 FROM THE SALE PROCEEDS ARISING FROM SALE OF VACANT PLOTS AT ARUL SOLAI NAGAR AND THIRUVENAIKOVIL, TRIC HY. THE ASSESSEE PURCHASED RESIDENTIAL PROPERTY AT MOGAPPAI R, CHENNAI IN JOINT NAME WITH HER HUSBAND. THE ASSESSEE CLAIMED EXEMPTION U/S.54F ON THE LONG TERM CAPITAL GAINS FROM THE SAL E OF PLOTS. THE RESIDENTIAL PROPERTY WAS PURCHASED WITHIN THE T IME LIMIT, AS PRESCRIBED UNDER THE PROVISIONS OF SECTION 54F. TH E HUSBAND OF ASSESSEE ALSO PURCHASED A RESIDENTIAL PROPERTY AT S UNDAR NAGAR, TRICHY ON 23-03-2009. THE HUSBAND OF THE ASSESSEE HAD PURCHASED THE SAID RESIDENTIAL HOUSE FROM THE SALE PROCEEDS OF FOUR PLOTS OWNED BY HIM AT ARUL SOLAI NAGAR, TRICHY . THE HUSBAND OF THE ASSESSEE ALSO PURCHASED RESIDENTIAL PROPERTY JOINTLY IN THE NAME OF HIS WIFE. THE ASSESSING OFFICER DENIED EXE MPTION U/S.54F TO BOTH HUSBAND AND WIFE ON THE GROUND THAT, BOTH T HE ASSESSEES I.T.A. NOS. 2256 & 2257/MDS/2013 4 HAVE PURCHASED ANOTHER RESIDENTIAL HOUSE I.E., SECO ND NEW ASSET WITHIN ONE YEAR FROM THE PURCHASE OF RESIDENTIAL HO USE I.E., THE FIRST NEW ASSET AND THUS, ARE INELIGIBLE TO CLAIM EXEMPTI ON BY VIRTUE OF PROVISO TO SECTION 54F(1). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE ASSESSEES HAD PURCHASED RES IDENTIAL HOUSES FROM THEIR OWN SOURCES. WIFE INCLUDED THE N AME OF HER HUSBAND AND THE HUSBAND INCLUDED THE NAME OF HIS WI FE FOR THE SAKE OF CONVENIENCE, SENTIMENTS AND SECURITY. SIN CE BOTH THE ASSESSEES HAD ACQUIRED NEW ASSETS FROM THEIR RESPEC TIVE SOURCES THEY ARE ENTITLED FOR CLAIMING EXEMPTION U/S.54F. THE RESIDENTIAL PROPERTY AT MOGAPPAIR, CHENNAI WAS PURCHASED BY THE ASSESSEE SMT.K.JOTHIRANI AND THE RESIDENTIAL HOUSE AT SUNDAR NAGAR, TRICHY WAS PURCHASED BY SHRI M.KUMARASAMY. IN ORDER TO SU PPORT HIS CONTENTIONS, THE LD.COUNSEL RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SASIKLAL N.SATRA REPORTED AS 280 ITR (A.T) 243. 3. ON THE OTHER HAND, SHRI SHAJI P. JACOB, APPEARIN G ON BEHALF OF THE REVENUE STRONGLY SUPPORTED THE ORDERS OF CIT (APPEALS) IN THE RESPECTIVE APPEALS. THE LD.DR SUBMITTED THAT B OTH THE ASSESSEES BY INCLUDING EACH OTHERS NAME IN THE NEW RESIDENTIAL I.T.A. NOS. 2256 & 2257/MDS/2013 5 PROPERTY PURCHASED BY THEM HAVE MADE THEMSELVES INE LIGIBLE FOR CLAIMING EXEMPTION U/S.54F OF THE ACT. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT TH AT SMT.K.JOTHIRANI HAS PURCHASED A HOUSE AT MOGAPPAIR, CHENNAI BY INVE STING THE FUNDS RECEIVED BY HER FROM THE SALE OF PLOTS OWNED BY HER AT TRICHY. SIMILARLY, IT HAS NOT BEEN DISPUTED THAT T HE ASSESSEE SHRI M.KUMARASAMY HAS PURCHASED A RESIDENTIAL PROPERTY A T SUNDAR NAGAR, TRICHY BY INVESTING THE SALE PROCEEDS OF PLO TS OWNED BY HIM AT ARUL SOLAI NAGAR, TRICHY. BOTH THE ASSESSEE S HAVE CLAIMED EXEMPTION U/S.54F. THE ASSESSING OFFICER HAS DENIE D EXEMPTION TO THE ASSESSEES ON THE GROUND THAT THE ASSESSEES H AVE ACQUIRED SECOND RESIDENTIAL PROPERTY WITHIN ONE YEAR FROM TH E DATE OF PURCHASE OF FIRST NEW ASSET AND THUS ARE NOT ELIGIB LE TO CLAIM THE BENEFIT OF SECTION 54F. THE DENIAL OF BENEFIT MERE LY ON THE GROUND THAT THE ASSESSEES WHO ARE HUSBAND AND WIFE HAVE PU RCHASED SECOND RESIDENTIAL HOUSES IN THEIR JOINT NAMES, IN OUR CONSIDERED OPINION, IS NOT JUSTIFIED. THE HUSBAND HAS INCLUDE D THE NAME OF HIS WIFE WHILE PURCHASING RESIDENTIAL PROPERTY OUT OF L OVE, AFFECTION AND SENTIMENTS. SIMILARLY, THE WIFE HAS INCLUDED THE N AME OF HUSBAND I.T.A. NOS. 2256 & 2257/MDS/2013 6 IN THE RESIDENTIAL PROPERTY ACQUIRED OUT OF HER OWN FUNDS OUT OF LOVE AND AFFECTION AND SENTIMENTS. MOREOVER, A PARTIAL INTEREST IN THE NEW RESIDENTIAL ASSET ACQUIRED WILL NOT DISENTITLE THE ASSESSEE FROM CLAIMING EXEMPTION U/S.54F OF THE ACT. THE WORDS U SED IN THE PROVISO TO SECTION ARE ANY RESIDENTIAL HOUSE. THE LEGISLATURE IN ITS WISDOM HAS EXCLUDED PARTIAL INTEREST IN THE NEW ASSET. WHEREVER, THE LEGISLATURE INTENDED TO INCLUDE INTE REST IN PART IN ANY SECTION, IT HAS SPECIFICALLY PROVIDED FOR IT. OUR VIEW IS FURTHER FORTIFIED BY THE VIEW EXPRESSED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SASIKLAL N.SATRA (SUPRA) WHEREIN IT HAS BEEN OBSERVED AS UNDER: THE ONLY QUESTION REMAINS AS TO WHETHER THE ASSESS EE CAN BE SAID TO BE THE OWNER OF THAT RESIDENTIAL HOU SE. THE LEGISLATURE HAS USED THE WORD A BEFORE THE WORDS RESIDENTIAL HOUSE. IN OUR OPINION, IT MUST MEAN A COMPLETE RE SIDENTIAL HOUSE AND WOULD NOT INCLUDE A SHARED INTEREST IN A RESIDENTIAL HOUSE. WHERE THE PROPERTY IS OWNED BY MORE THAN ON E PERSON, IT CANNOT BE SAID THAT ANY OF THEM IS THE O WNER OF THE PROPERTY. IN SUCH CASE, NO INDIVIDUAL PERSON OF HI S OWN CAN SELL THE ENTIRE PROPERTY. NO DOUBT, HE CAN SELL HI S SHARE OF INTEREST IN THE PROPERTY BUT AS FAR AS THE PROPERTY IS CONSIDERED, IT WOULD CONTINUED TO BE OWNED BY CO-OW NERS. JOINT OWNERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHI P. IN THE CASE OF A RESIDENTIAL UNIT, NONE OF THE CO-OWNERS C AN CLAIM THAT HE IS THE OWNER OF RESIDENTIAL HOUSE. OWNERSHIP OF A RESIDENTIAL HOUSE, IN OUR OPINION, MEANS OWNERSHIP TO THE I.T.A. NOS. 2256 & 2257/MDS/2013 7 EXCLUSION OF ALL OTHERS. THEREFORE, WHERE A HOUSE IS JOINTLY OWNED BY [SIC] OR MORE PERSONS, NONE OF THEM CAN BE SAID TO BE THE OWNER OF THE HOUSE. THIS VIEW OF OURS IS FO RTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F SETH BANARSI DASS GUPTA V. CIT [1987] 166 ITR 783, WHERE IN, IT WAS HELD THAT A FRACTIONAL OWNERSHIP WAS NOT SUFFIC IENT FOR CLAIMING EVEN FRACTIONAL DEPRECIATION UNDER SECTION 32 OF THE ACT. THEREFORE, IN OUR CONSIDERED OPINION, THE AUTHORITI ES BELOW HAVE ERRED IN NOT GRANTING THE BENEFIT OF SECTION 54F TO BOTH THE ASSESSEES. BOTH THE ASSESSEES SUCCEED ON THIS ISSU E. 5. THE OTHER ISSUES RAISED IN ITA NO.2256/2013 ARE ADDITION OF ` 37.85 LAKHS FROM SALE OF TREES TREATED AS UN-EXPLAI NED INCOME. THE ASSESSEE IS ALLEGEDLY HAVING AGRICULTURAL LAND MEASURING 12 ACRES APPROXIMATELY, FROM WHICH SHE HAS EARNED ` 37.85 LAKHS BY SALE OF CAUSARINA TREES. THE CIT(APPEALS) IN HIS O RDER HAS CATEGORICALLY MENTIONED THAT THE ASSESSEE HAS NOT PLACED ON RECORD ANY DOCUMENTARY EVIDENCE TO SHOW THAT THE AS SESSEE HAS RECEIVED ANY AMOUNT FROM SALE OF TREES. THE ASSESS EE HAS PLACED ON RECORD, CONFIRMATION LETTER FROM ONE MR.TAMILARA SAN STATING THAT HE HAD CONTRACTED WITH THE ASSESSEE FOR SALE OF TRE ES. AFTER DEDUCTING HIS COMMISSION, HE HAS PAID THE SALE PROC EEDS OF THE I.T.A. NOS. 2256 & 2257/MDS/2013 8 TREES COLLECTED FROM VARIOUS PERSONS TO THE ASSESSE E. THE ASSESSEE HAS PRODUCED RECEIPTS ACKNOWLEDGED BY HER HUSBAND AS UNDER: DATE AMOUNT RECEIVED 18/2/2008 ` 5,00,000 21/2/2008 `7,00,000 14/3/2008 `6,00,000 24/3/2008 `7,00,000 30/3/2008 `9,85,000 21/4/2008 `3,00,000 `37,85,000 A PERUSAL OF THE ABOVE SHOWS THAT EXCEPT FOR PAYMEN T OF ` 3.00 LAKHS RECEIVED ON 21-04-2008 WHICH IS ASSESSABLE TO TAX IN THE AY.2009-10, THE REST OF THE AMOUNT ` 34,85,000/- HAS BEEN RECEIVED IN THE PERIOD RELEVANT TO AY.2008-09. HOW EVER, THE ASSESSEE HAS NOT ACCOUNTED THE SAME IN HER BOOKS OF ACCOUNT. FURTHER, THE CONTRACTOR IN HIS CONFIRMATION LETTER HAS STATED THAT THE AMOUNTS HAVE BEEN PAID BY WAY OF CASH, CHEQUE AND D EMAND DRAFT. THE ASSESSING OFFICER HAS OBSERVED THAT THE BANK STATEMENT GIVEN BY THE ASSESSEE DOES NOT REFLECT TH E RECEIPT OF ANY SUCH PAYMENTS. IN THE ABSENCE OF ANY COGENT EVIDEN CE, THIS GROUND OF APPEAL OF THE ASSESSEE IS LIABLE TO BE DI SMISSED. I.T.A. NOS. 2256 & 2257/MDS/2013 9 6. THE NEXT ISSUE RAISED IN APPEAL BY THE ASSESSEE IS TREATING OF AGRICULTURAL INCOME ` 30,000/- AS NON-AGRICULTURAL INCOME. THE ADDITION HAS BEEN MADE ON THE BASIS OF SOME STATEME NT ALLEGEDLY MADE BY THE ASSESSEE, WHICH IS CONTRARY TO THE FACT S ON RECORD. THE ASSESSEE OWNS 3.5 ACRES OF AGRICULTURAL LAND AT KULAMANGALAM AND PANAKKULAM, PUDIKKOTTAI DIST. THI S FACT HAS NOT BEEN DISPUTED BY THE REVENUE. THE AGRICULTURAL INCOME WORKED OUT BY THE ASSESSEE IS ` 10,000/- PER ACRE. WE FIND THAT THE ESTIMATION MADE BY THE ASSESSEE IS FAIR AND REASONA BLE. THEREFORE, THE ADDITION MADE ON THIS ACCOUNT IS DEL ETED. 7. THE NEXT ISSUE IN APPEAL OF THE ASSESSEE IS WITH REGARD TO ADDITION OF INCOME ADMITTED BY ASSESSEE ` 67,645/-. THE ASSESSEE DURING THE COURSE OF EXAMINATION MADE STATEMENT U/S .131 THAT, THE INCOME FROM M/S.ARUL MURUGAN REAL MERCHANTS WAS IN FACT ` 1.00 LAKH WHEREAS, IN HER RETURN OF INCOME SHE HAS ADMIT TED ` 32,355/-. THE ASSESSEE HAD AGREED FOR ADDITION OF ` 67,645/-. SUBSEQUENTLY, SHE RETRACTED FROM THE SAID STATEMENT. THE ASSESSE E HAS OFFERED EXPLANATION THAT HER REAL INCOME FROM M/S.ARUL MURU GAN REAL MERCHANTS WAS IN FACT ONLY ` 32,355/- AND NOT ` 1.00 LAKH. HOWEVER, NO EXPLANATION WAS OFFERED FOR ACCEPTING T HE ADDITIONS OF ` 67,645/- AND THEREAFTER, RETRACTING FROM THE SAME. THE ASSESSEE I.T.A. NOS. 2256 & 2257/MDS/2013 10 HAD ADMITTED ADDITIONAL INCOME IN STATEMENT MADE UN DER OATH. THERE WOULD BE NO SANCTITY OF THE STATEMENT MADE ON OATH, IF THE SAME IS SUBSEQUENTLY WITHDRAWN CASUALLY, WITHOUT GI VING PERSUASIVE REASON. WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS MADE BY THE LD.COUNSEL ON THIS GROUND OF APPEAL, TH EREFORE, THE SAME IS DISMISSED. 8. IN ITA NO.2257/2013, APART FROM THE ISSUE OF EXE MPTION U/S.54F WHICH HAS ALREADY BEEN DISCUSSED ABOVE, ADD ITIONS WERE MADE ON ACCOUNT OF: - INCOME FROM SALE OF TREES ` 22,00,000/-; - UN-EXPLAINED INVESTMENT ` 11,03,608/-. THE ASSESSEE HAS ASSAILED THE ADDITION OF ` 22.00 LAKHS FROM THE SALE OF TREES AS UN-EXPLAINED INCOME. AFT ER PERUSAL OF IMPUGNED ORDER AND THE ASSESSMENT ORDER IT IS EVIDE NT THAT THE ASSESSEE HAS NOT PRODUCED ANY RELIABLE EVIDENCE TO SHOW THE SALE OF TREES. THE ASSESSING OFFICER HAS MADE DETAILED ENQUIRY FROM THE LOCALS AND VILLAGE ADMINISTRATIVE OFFICER (VAO) WITH REGARD TO NATURE OF ACTIVITIES BEING CARRIED OUT BY ASSESSEE ON THE AGRICULTURAL LAND. THE REVENUE RECORDS AS WELL AS STATEMENT I.T.A. NOS. 2256 & 2257/MDS/2013 11 RECORDED BY ASSESSING OFFICER ARE CONTRARY TO THE C LAIM OF ASSESSEE. EXCEPT FOR THE STATEMENT OF ASSESSEE AND THE CONFIRMATION LETTER GIVEN BY ONE SHRI THANGASAMY, T HERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAS EARNED INCO ME FROM SALE OF TREES. THE CONTENTS OF THE CONFIRMATION LETTER ARE NOT SUPPORTED BY THE DETAILS OF PAYMENT AND BANK STATMENT OF THE ASSESSEE. WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL, THE SAME IS DISMISSED. 9. THE NEXT ISSUE IN APPEAL IS UN-EXPLAINED INVESTM ENT OF ` 11,03,608/- IN THE RESIDENTIAL PROPERTY. THE ADDIT ION HAS BEEN MADE FOR MAKING INVESTMENT IN PURCHASE OF SECOND RE SIDENTIAL HOUSE AT MOGAPPAIR, CHENNAI. IT HAS COME ON RECORD THAT THE SAID HOUSE HAS BEEN PURCHASED BY THE WIFE OF THE ASSESSE E FROM HER OWN SOURCES. THEREFORE, ADDITION MADE BY THE REVEN UE IN THE HANDS OF THE ASSESSEE FOR FUNDING OF THE SAID HOUSE DOES NOT SUSTAIN. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN BOTH THE APPEALS, THE ASSESSEES HAVE IMPUGNE D THE LEVY OF INTEREST U/S.234A, 234B & 234C. THE LEVY OF INT EREST UNDER I.T.A. NOS. 2256 & 2257/MDS/2013 12 AFORESAID SECTIONS IS CONSEQUENTIAL. THEREFORE, TH IS GROUND IN THE APPEALS OF THE ASSESSEES IS DISMISSED. IN VIEW OF OUR DETAILED FINDINGS, THE APPEALS OF TH E ASSESSEES ARE PARTLY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON FRIDAY, THE 20 TH JUNE, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) '#$ / VICE PRESIDENT % &' / JUDICIAL MEMBER (% /CHENNAI, )& /DATED: 20 TH JUNE, 2014 TNMM &* +,-, /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ./0 /CIT(A) 4. . /CIT 5. ,12 3 /DR 6. 245 /GF