A.C.Shyam Sundar, CHENNAI V. JCIT, CHENNAI

ITA 2279/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9393 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: R GANESAN
• Keywords: Sale consideration of property below Jantri Value; Salary income; Cost of acquisition
• Section: 50C; 54F; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO. 2279/MDS/2015. ! / ASSESSMENT YEAR : 2011-2012. SHRI. A.C. SHYAM SUNDAR, PLOT NO.25, III CROSS STREET, BAGYATHAMMAL NAGAR, CHENNAI 600 050. VS. THE JOINT COMMISSIONER OF INCOME TAX, RANGE XIV, CHENNAI. [PAN ANZPS 5274L] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI. R. GANESAN, C.A. &''# $ % /RESPONDENT BY : SHRI.A.V. SREEKANTH, IRS, JCIT ( $ )* /DATE OF HEARING : 25-04-2016 +! $ )* /DATE OF PRONOUNCEMENT : 06-05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-7, CHENNAI IN ITA NO.7/CIT(A)7/2014-15, DT 29.10.2015 FOR THE ASSESS MENT YEAR 2011- ITA NO.2279/MDS/2015. :- 2 -: 2012 PASSED U/S.143(3) AND 250 OF THE INCOME TAX A CT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED SUBSTANTIAL GROUNDS THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE FINDINGS OF THE ASSESSING OFFICER ON DENIAL OF EXEMPTION U/S.54 F OF THE ACT AS <36,00,000/- WAS NOT DEPOSITED IN CAPITAL GAINS ACC OUNT SCHEME BEFORE DUE DATE U/SEC. 139(1) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAVING INCOME FROM SALARY, LONG TERM CAPITAL GAINS AND INTEREST INCOME AND FILED RETURN OF INCOME ON 03.11.2011 DISCLOSING TOTAL INCOME OF <5,72,246/- THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT, SUBSEQUENTLY, THE NOTICE U/S.143(2) AND 142(1) OF THE ACT ARE ISSUED. IN COMPLIANCE TO NOTICES, THE LD. AUTHORISED REPRES ENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED DETAI LS AS PER QUESTIONNAIRE ISSUED BY THE REVENUE. THE ASSESSEE HAS SOLD VACANT LAND AT SHOLINGANALLUR FOR A CONSIDERATION OF <64,50,000 /- ON 02.10.2010. AFTER CONSIDERING THE COST OF ACQUISITION INCLUDING STAMP PAPER AND REGISTRATION CHARGES AND INDEX COST OF ACQUISITION THE NET CAPIT AL GAINS WORKED OUT TO <44,12,820/-. THE ASSESSEE CLAIMED EXEMPTION U/S.54 F OF THE ACT ON INVESTMENT IN THE CONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY. THE ASSESSEE HAS COMPLIED THE CONDITIONS U/S.54F OF T HE ACT BY ENTERING ITA NO.2279/MDS/2015. :- 3 -: INTO CONSTRUCTION AND UNDIVIDED SHARE OF LAND AGREE MENTS ON 03.02.2011 FOR TOTAL VALUE OF <66,64,457/- AND ASSESSEE HAS I NVESTED <59,88,000/- IN CONSTRUCTION WORKS. BUT THE LD. ASSESSING OFFICER FOUND THE GUIDELINE VALUE OF THE PROPERTY AS <82,28,252/- AS PER THE S UB-REGISTRAR OFFICE, NEELANKARAI, CHENNAI ON THE DATE OF EXECUTION OF S ALE DEED AND DEEMING PROVISIONS U/S. 50C OF THE ACT AND CALCULATED LONG TERM CAPITAL GAINS <62,91,672/-. FURTHER, THE ASSESSING OFFICER PERUS ED THE PURCHASE DEED OF THE NEW RESIDENTIAL PROPERTY AT PONDICHERRY ALO NGWITH CONSTRUCTION AGREEMENT WITH BUILDER. THE LD. AUTHORISED REPRESE NTATIVE FILED DETAILS OF PAYMENTS BY LETTER DATED 18.02.2014 MADE TO THE BUI LDER <30,00,000/- BY 31.07.2011 BEFORE DUE DATE OF FILING RETURN U/S.139 (1) OF THE ACT, AND REMAINING AMOUNT OF <36,00,000/- WAS PAID ON 23.09. 2011 <10,00,000/-, 03.02.2012 < 6,00,000/- AND ON 10.03.2012 <20,00,0 00/- TOTAL AGGREGATING <36,00,000/- AND ALSO OBTAINED CONFIRMA TION FROM BUILDER. THE ASSESSING OFFICER ALLEGED THAT ASSESSEE HAS INV ESTED IN THE CONSTRUCTION OF PROPERTY <30,00,000/- BEFORE DUE DA TE OF FILING RETURN AND VIOLATED CONDITIONS OF SEC. 54F BY NOT DEPOSITING T HE REMAINING IN CAPITAL GAIN ACCOUNT SCHEME AND RESTRICTED EXEMPTION U/SEC. 54F OF THE ACT TO THE EXTENT OF INVESTMENT OF <30,00,000/- AND DISALLOWED LONG TERM CAPITAL GAINS <32,91,672/- ALONGWITH OTHER DISALLOWANCE AND PASSED ASSESSMENT ORDER U/S.143(3) OF THE ACT ON 28.03.2014. AGGRIEVE D BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INC OME TAX (APPEALS). ITA NO.2279/MDS/2015. :- 4 -: 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED RE PRESENTATIVE OF ASSESSEE ARGUED ON THE GROUNDS AND SUBSTANTIATE D HIS ARGUMENTS WITH THE EVIDENCE OF SALE AND PURCHASE OF PROPERTY AND FILED WRITTEN SUBMISSIONS ON 27.10.2015 REFERRED AT PAGE NO. 4 CO MMISSIONER OF INCOME TAX (APPEALS) ORDER WERE LD. AUTHORISED REPR ESENTATIVE SUPPORTED THE SUBMISSIONS RELYING ON JUDICIAL DECISIONS. TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE FACTUAL ISSUES , GROUNDS, WRITTEN SUBMISSIONS AND FINDINGS OF THE ASSESSING OFFICER HAS ELABORATIVELY DISCUSSED IN HIS ORDER AND CONCURRED WITH THE ORDE R OF ASSESSING OFFICER AND UPHELD. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS ASSAILED AN APPEAL BEFO RE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITE RATED THE SUBMISSIONS, OF THE ASSESSMENT AND APPELLATE PROCEE DINGS AND EXPLAINED THAT ASSESSEE IS ENTITLED FOR EXEMPTION U/S.54F CON SIDERING THE PROVISIONS OF INVESTMENT IN THE HOUSE PROPERTY. THE ASSESSEE E NTERED INTO AGREEMENT ON 03.02.2011 FOR PURCHASE OF RESIDENTIAL FLAT FOR A TOTAL CONSIDERATION OF <66,00,000/- AND AS PER THE CONSTRUCTION AGREEMENT ASSESSEE HAS PAID <30,00,000/- BEFORE DUE DATE OF FILING OF RETURN U/ S.139(1) OF THE ACT AND BALANCE WAS PAID BY INSTALLMENTS BEFORE 31.03.201 2. THE INVESTMENT WAS MADE WITHIN THE EXTENDED PERIOD AND BEFORE END OF ASSESSMENT YEAR ITA NO.2279/MDS/2015. :- 5 -: AND ASSESSEE UNDER A BELIEF THAT THE PROVISION OF C APITAL GAIN ACCOUNT SCHEME ARE NOT APPLICABLE AND PRAYED FOR DELETION O F ADDITIONS. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE ARGUED THAT THE ASSESSEE HAS NOT UTILIZED THE SALE CONSIDERATION BE FORE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT OR INVESTED IN THE CAPITAL GAIN ACCOUNTS SCHEME AND RELIED ON THE ORDERS OF THE LO WER AUTHORITIES AND PLEADED FOR DISMISSAL OF APPEAL. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. AUTHORISED RE PRESENTATIVE CONTENTION THAT THE ASSESSEE IS AN EMPLOYEE AND DUE DATE OF FI LING OF RETURN APPLICABLE FOR THE ASSESSMENT YEAR 2011-12 IS 31.07 .2011. THE ASSESSEE HAS SOLD THE PROPERTY AND INVESTED IN PURCHASE OF R ESIDENTIAL FLAT AS PER BUILDER AGREEMENT ENTERED ON 03.02.2011. THE ASSESS EE HAS PAID <30,00,000/- BEFORE 31.07.2011 AS PER THE EVIDENCE PRODUCED BY BUILDER IN LETTER DATED 18.02.2014 AND REMAINING AMOUNT PAID IN THREE INSTALMENTS BEFORE 31.03.2012 WHICH IS NOT DISPUTED BY THE ASSESSING AUTHORITY. THE CRUX OF THE DISPUTED ISSUE ARISE BE FORE ASSESSING OFFICER THAT THE ASSESSEE SHOULD HAVE DEPOSITED THE AMOUN T IN THE CAPITAL GAIN ACCOUNTS SCHEME BEFORE 139(1) OF THE ACT, THEREFORE THE LD. ASSESSING OFFICER HAS RESTRICTED EXEMPTION U/SEC. 54F AND DEN IED THE BALANCE. ON ITA NO.2279/MDS/2015. :- 6 -: PERUSAL OF THE SEC. 54F(1) OF THE ACT THE EXEMPTION IS ALLOWED TO THE ASSESSEE AS UNDER:- 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDE D FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPI TAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERR ED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR B EFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED , OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE [ CONSTRUCTED, A RESIDENTIAL HOUSE ] (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET C ONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPIT AL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTIO N AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45 : [ PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THA N THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANS FER OF THE ORIGINAL ASSET; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER T HAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY.] ITA NO.2279/MDS/2015. :- 7 -: CONSIDERING THE DATE OF INVESTMENTS AND PROVISIONS OF LAWS AS UNDER:- (I) DATE OF TRANSFER OF VACANT LAND : 02.10.2010. (II) THE DATE OF FILING OF RETURN BY ASSESSEE : 03.11.2011. (III) DUE DATE OF FILING RETURN FOR THE ASSESSMENT YEAR 2011-12 : 31.07.2011. (IV) DATE OF BUILDER AGREEMENT FOR CONSTRUCTION OF HOUSE PROPERTY : 03.02.2011. (V) DUE DATE OF FILING OF BELATED RETURN : 31.03.2013. U/SEC. 139(4) OF THE ACT CONSIDERING THE ABOVE FACTS AND PROVISIONS OF LAW, THE ASSESSEE HAS INVESTED TOTAL CONSIDERATION OF <66,64,457/- BEFORE DUE DATE U/SEC. 139(4) OF THE ACT BEING 31.03.2013. THE INVESTMENT IN RESI DENTIAL PROPERTY HAS TO BE WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF VACANT LAND ON 02.10.2010. THE ASSESSEE HAS NOT DEPOSITED IN CAPI TAL GAIN ACCOUNTS SCHEME <36,00,000/- BEFORE 139(1) OF THE ACT BUT CO MPLIED WITH THE CONDITIONS U/S.54F(1) OF THE ACT ON PURCHASING AND CONSTRUCTION OF RESIDENTIAL FLAT WITHIN THREE YEARS FROM THE TRANSF ER OF ORIGINAL ASSET WHICH IS NOT DISPUTED BY THE REVENUE. THE PROVISIONS OF SEC. 54F OF THE ACT ARE BENEFICIAL AND ARE TO BE CONSIDERED LIBERALLY FOR R EASONABLE BONAFIDE CAUSE BUT INVESTMENT IN RESIDENTIAL PROPERTY IS MANDATORY WHICH THE ASSESSEE HAS PROVED WITH SUBSTANTIAL EVIDENCE BEFORE THE LOW ER AUTHORITIES. PRIME FACIE THE CONSTRUCTION OF THE PROPERTY HAS BEEN COM PLIED THOUGH ITA NO.2279/MDS/2015. :- 8 -: INVESTMENT WAS MADE SUBSEQUENTLY BUT BEFORE EXTENDE D DUE DATE U/S.139(4) OF THE ACT. THE ASSESSEE HAS DIRECT IN VESTMENT IN HOUSE PROPERTY AND THEREFORE NOT OPTED CAPITAL GAIN ACCO UNT SCHEME. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBSTANTIATED AR GUMENTS WITH JUDICIAL DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. R.L. SOOD 245 ITR 727 (DE L) WERE THE DATE OF AGREEMENT TO PURCHASE SHOULD BE TAKEN AS THE DATE OF PURCHASE. ON APPLYING THE RATIO TO CURRENT CIRC UMSTANCES, THE ASSESSEE ENTERED INTO AGREEMENT WITH BUILDER FOR UNDIVIDED SHARE OF LAND AND CONSTRUCTION AGREEMENT ON 03.02.2011 WHICH IS VERY MUCH BEFORE PROVISIONS OF SEC. 139(4) OF THE ACT. IN THE CASE OF JAGTAR SINGH CHAWLA OF PUNJAB AND HARYANA HIGH COURT IN ITA NO.71 OF 20 12, DATED 20.03.2013 THE ASSESSEE HAS PAID SUBSTANTIAL AMOUNT FOR PURCHA SE OF RESIDENTIAL PROPERTY BEFORE THE EXTENDED DUE DATE OF FILING OF RETURN AND THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION AND NOT LIABLE TO PAY AN Y CAPITAL GAIN TAX. CONSIDERING THE FACTUAL ASPECTS, GENUINESS OF TRAN SACTIONS AND BENEFICIAL AND LIBERAL ASPECTS OF THE PROVISIONS AND THE JUDIC IAL DECISIONS RELIED BY THE ASSESSEE. WE ARE OF THE OPINION THAT ASSESSEE C OMPLIED THE CONDITIONS AND IS ELIGIBLE FOR EXEMPTION U/S.54F OF THE ACT. W E SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO GRANT EXEMPTION U/S.54F OF THE ACT ON THE REMAINING CONSTRUCTION COST ITA NO.2279/MDS/2015. :- 9 -: WHICH WAS INVESTED IN THE RESIDENTIAL PROPERTY BEFO RE DUE DATE U/S.139(4) OF THE ACT AND ALLOW THE GROUNDS OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON FRIDAY, THE 6TH DAY OF MAY, 20 16 AT CHENNAI. SD/- SD/- ( . !' # ) (A. MOHAN ALANKAMONY) % & / ACCOUNTANT MEMBER ( ' . ( ) ) (G. PAVAN KUMAR) * & / JUDICIAL MEMBER ,( / CHENNAI - / DATED: 6TH MAY, 2016. KV . $ &)0 1 21!) / COPY TO: 1 . '# / APPELLANT 2. &''# / RESPONDENT 3. 3) ( ) / CIT(A) 4. 3) / CIT 5. 167 &)8 / DR 6. 79 :( / GF