K.N.Ravishankar, CHENNAI V. ACIT, CHENNAI

ITA 2363/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9260 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 31-12-2015
• Court: TRIBUNAL
• Department Lawyers: JAYARAGHAVANJ
• Assessee Lawyers: P RANGA RAMANUJAMFCA
• Keywords: Capital asset; Business income
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , ! ' , # $% & [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2363/MDS./2015 / ASSESSMENT YEAR :2011-12 MR.K.N.RAVISHANKAR, 47,BALU NAGAR, MOGAPPAIR WEST, CHENNAI 600 037. VS. ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORAE-7,CHENNAI. [PAN AAFPK 0980 N ] ( '( / APPELLANT) ( )*'( /RESPONDENT) / APPELLANT BY : MR.P.RANGA RAMANUJAM,FCA /RESPONDENT BY : MR.JAYARAGHAVAN,JCIT,DR / DATE OF HEARING : 18 - 05 - 201 6 / DATE OF PRONOUNCEMENT : 25 - 05 - 2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-7, DATED 26.11 .2015 PERTAINING TO ASSESSMENT YEAR 2011-12. 2. THE GRIEVANCE OF ASSESSEE IN HIS APPEAL IS WIT H REGARD TO NON- GRANTING OF EXEMPTION U/S.54F OF THE ACT. ITA NO.2363/MDS./2015 :- 2 -: 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, AND HIS SOURCE OF INCOME IS BUSINESS INCOME AND INCOME FROM HOUSE PROPERTY. THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 30.04.2012 ADMITTING HIS TOTAL INCOME OF ` 18,84,157/-. SUBSEQUENTLY, THE CASE SELECTED FOR SCRUTINY. DURIN G THE ASSESSMENT PROCEEDINGS, AO FOUND THAT THE ASSESSEE WAS DERIVIN G RENT FROM TWO FACTORY PREMISES, AND THE SAME WAS OFFERED TO TAX U NDER THE HEAD INCOME FROM HOUSE PROPERTY AND THE ASSESSEE HAD SOL D TWO PROPERTIES IN THE RELEVANT ASSESSMENT YEAR AND UTILIZED THE PR OCEEDS TOWARDS INVESTMENT IN HOUSE PROPERTY AND CLAIMED DEDUCTION U/S.54F OF THE ACT. IN THE ASSESSMENT ORDER, THE AO REJECTED THE CLAIM OF THE ASSESSEE THAT THE IMPUGNED PREMISES WERE NON-RESIDE NTIAL, AND HELD THE PROPERTY AS RESIDENTIAL ON THE BASIS OF CLASSIF ICATION OF LAND BY THE REGISTRATION DEPARTMENT OF TAMIL NADU AS RESIDENTIA L. FURTHER, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAD MADE A CLA IM OF DEDUCTION FOR THE FOLLOWING LANDS: A) VACANT LAND MEASURING TO AN EXTENT OF 2.02 HECT ARES OF THERVAI KANDIGAL GUMMINDIPOONDI TALUK FOR A CONSIDERATION O F ` 1,00,00,000/- ON 25 TH AUGUST, 2010; THE ASSESSEES SHARE BEING ` 50,00,000/- B) 16 PLOTS MEASURING AN EXTENT OF 23,899 SQ. FT. AT AYNAMBAKKAM VILLAGE, AMBATTUR TALUK FOR TOTAL CONSIDERATION OF ` 95.59.600/- ON VARIOUS DATES AND THE ASSESSEES SHARE BEING RS.47, 49,800/-. ITA NO.2363/MDS./2015 :- 3 -: ACCORDINGLY THE AO, THE CLAIM OF DEDUCTION WITH RES PECT TO MULTIPLE PROPERTIES IS NOT TENABLE UNDER THE PROVISIONS OF T HE SECTION 54F OF THE ACT. AGGRIEVED WITH THE ACTION OF THE AO, THE ASSE SSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) C ONFIRMED THE ORDER OF THE AO BY PLACING RELIANCE ON THE FOLLOWING JUDG MENTS:- I) IN THE CASE OF CIT VS. V.R.KARPAGAM (373 ITR 127 )(MAD.) II) IN THE CASE OF RAJESH KESHAV PILLAI VS. ITO (44 SOT 617)(MUM.) AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE MAIN CONTENTION OF THE ASSESSEE IS THAT SEV ENTEEN (17) PROPERTIES SOLD BY THE ASSESSEE ARE LOCATED IN A SI NGLE PIECE OF LAND AND THESE 17 PROPERTIES ARE PLOTS IN THE SINGLE PRO PERTIES AND IT SHOULD BE CONSIDERED AS ONE PROPERTY SO AS TO GRANT EXEMPT ION U/S.54F OF THE ACT. THE LD.A.R PLACED HIS RELIANCE IN THE DECISIO NS OF MUMBAI TRIBUNAL IN RAJESH KESHAV PILLAI VS. ITO REPORTED IN (2011) 44 SOT 617(MUM.) AND IN SHRI HUMAYUN S. RANGILA VS. ITO IN ITA NO.12 39/MUM./2010 DATED 23.02.2011. 5. LD.D.R ON THE OTHER HAND, SUBMITTED THAT 17 PRO PERTIES HAVE BEEN SOLD TO ACQUIRE ONE RESIDENTIAL PROPERTY AND E ACH ONE IS INDEPENDENT AND DISTINCT PROPERTY AND AGGREGATE OF INVESTMENT OUT OF SALE CONSIDERATION OF 17 PROPERTIES CANNOT BE CONSI DERED AS ONE AND ONLY CAPITAL GAINS ARISING FROM THE TRANSFER OF ONE PLOT TO BE CONSIDERED ITA NO.2363/MDS./2015 :- 4 -: FOR INVESTMENT IN RESIDENTIAL HOUSE AS PER SEC.54F( 1) OF THE ACT TO GRANT EXEMPTION UNDER THIS SECTION. FURTHER, HE SU BMITTED THAT THE WORD ANY USED IN SECTION-54F REFERS TO TYPE OF CA PITAL ASSET I.E. OTHER THAN RESIDENTIAL HOUSE AND IT DOES NOT REFER TO NUM BERS OF CAPITAL ASSETS. HE ALSO SUBMITTED THAT IT REFERS TO SINGLE CAPITAL ASSET AND NOT TO CAPITAL ASSETS. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE THE MAIN ISSUE IS WITH REGARD TO ALLOWABILITY OF DEDUCTION U/S.54F OF THE ACT ON INVESTMENT OF CAPIT AL GAINS ARISING OUT OF SALE OF 17 PLOTS TOWARDS INVESTMENT IN PURCHASE OR CONSTRUCTION OF RESIDENTIAL HOUSE. THE BENCH AT THE TIME OF HEARIN G PUT A SPECIFIC QUESTION TO LD.A.R THAT WHETHER ASSESSEE SOLD PROPE RTY, WHICH IS IN THE NATURE OF CAPITAL ASSET OR STOCK IN TRADE. THE ASS ESSEES COUNSEL IS NOT ABLE TO PLACE NECESSARY EVIDENCE BEFORE THIS TRIBUN AL TO SHOW THAT THE PROPERTY NAMELY, 17 PROPERTIES ARE IN THE NATURE OF CAPITAL ASSET. IF THE PROPERTY SOLD BY THE ASSESSEE IS IN NATURE OF STOCK IN TRADE OR COMMERCIAL PROPERTY, THEN PROVISIONS OF THE SECTION 54F DID NOT APPLY. SINCE THE ASSESSEE HAS NOT PLACED NECESSARY EVIDENC E TO SHOW THAT IT IS A CAPITAL ASSET, WE ARE NOT IN A POSITION TO APP RECIATE ANY ARGUMENT OF ASSESSEES COUNSEL AT THIS STAGE. IN OTHER WORD S, BEFORE CONSIDERING THE ARGUMENT OF ASSESSEES COUNSEL THAT EXEMPTION H AS TO BE CALCULATED CONSIDERING THE AGGREGATE OF CAPITAL GAI NS ARISING OUT OF SALE ITA NO.2363/MDS./2015 :- 5 -: PROCEEDS OF 17 PLOTS, HE HAS TO SATISFY FIRST, IT I S A CAPITAL ASSET, THEREAFTER ONE HAS TO DECIDE MEANING OF WORD ANY USED IN SEC.54F(1) OF THE ACT THAT CAPITAL GAINS ARISING FR OM THE TRANSFER OF ANY NUMBER LONG TERM CAPITAL ASSETS IS ELIGIBLE F OR EXEMPTION U/S.54F, IF IT IS INVESTED IN PURCHASE OR CONSTRUCTION OF RE SIDENTIAL HOUSE. WITH THIS OBSERVATION, WE REMIT THE ENTIRE ISSUE IN DISP UTE TO THE FILE OF AO FOR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2016, AT CHENNAI. SD/ - SD/ - ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! ' ) (CHANDRA POOJARI) # / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 25 TH MAY, 2016 K S SUNDARAM %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF