ITO Non Corporate Ward 3(1), CHENNAI V. Ahmed, CHENNAI

ITA 2440/CHNY/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8340 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-05-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V M MAHIDAR
• Assessee Lawyers: U MOHAMED KHALILULLAH
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 56(2)(vii)(b); 50C; 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! .#$#%, ' !( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.2440/CHNY/2017 % *% / ASSESSMENT YEAR : 2014-15 THE INCOME TAX OFFICER, NON CORPORATE WARD - 3(1), CHENNAI - 600 034. V. SHRI AHMED, 81/82, VALLUVARKOTTAM HIGH ROAD, NUNGAMBAKKAM, CHENNAI - 600 034. PAN : AAGPA 2893 M (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI V.M. MAHIDAR, JCIT ./,- 0 1 / RESPONDENT BY : SHRI U. MOHAMED KHALILULLAH, C A 2 0 3' / DATE OF HEARING : 20.12.2018 45* 0 3' / DATE OF PRONOUNCEMENT : 02.01.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -4, CHENNA I, DATED 14.07.2017 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2 I.T.A. NO.2440/CHNY/17 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DEDUCTION OF COST OF ACQUISITION. 3. SHRI V.M. MAHIDAR, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT THE ASSESSEE ALONG WITH HIS WIFE SOL D A COMMERCIAL PROPERTY AT NO.174/38, ANGAPPA NAICKEN STREET, GEOR GE TOWN, CHENNAI, FOR A TOTAL CONSIDERATION OF 2,20,00,000/-. THE ASSESSEES SHARE COMES TO 1,10,00,000/-. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER ADOPTED THE VALUE OF THE PROPERTY AT 1,24,02,181/- AS PER SECTION 50C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSING OFFICER HAS NOT AL LOWED ANY COST OF ACQUISITION AND IMPROVEMENT SINCE THE ASSESSEE, ACC ORDING TO THE LD. D.R., HAS NOT FURNISHED ANY DETAILS. MOREOVER, ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED DEDUCTION UNDER SECT ION 54 OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE NEW PROPERTY WAS PURCHASED BEFO RE THE SALE OF THE ASSET BY THE ASSESSEE. THEREFORE, ACCORDING TO THE LD. D.R., BY PLACING RELIANCE ON THE DECISION OF HYDERABAD BENCH OF THIS TRIBUNAL IN SMT. NIMMAGADDA SRIDEVI V. DCIT (2013) 33 TAXMAN N.COM 306, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE. MOREOVER, BY APPLYING SECTION 56(2)(VII)(B) OF THE ACT, THE ASSESSING 3 I.T.A. NO.2440/CHNY/17 OFFICER MADE ADDITION OF 17,50,000/- AS THE ASSESSEES INCOME. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) DELETED THE ADDITION ON THE GROUND THAT PROVISIONS OF SECTION 56(2)(VII)(B) SHOULD BE APPLICABLE FOR ASSESSMENT YEAR 2015-16 AND NOT FOR THE YEAR UNDER CONSIDERATION. 4. ON THE CONTRARY, SHRI U. MOHAMED KHALILULLAH, TH E LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN THE ENTIRE SALE CONSIDERATION AS CAPITAL GAIN WITHOUT ALLOWING THE COST OF ACQUISITION OF THE PRO PERTY. ACCORDING TO THE LD. REPRESENTATIVE, WHILE COMPUTING THE CAPITAL GAIN, THE COST OF ACQUISITION AND IMPROVEMENT HAVE TO BE NECESSARILY ALLOWED. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE H AS FURNISHED ALL THE DETAILS AND THE COPY OF SALE DEED BEFORE THE AS SESSING OFFICER. THEREFORE, IT IS FOR THE ASSESSING OFFICER EITHER T O ALLOW AS CLAIMED BY THE ASSESSEE OR COMPUTE HIS OWN WORKING WITH REG ARD TO COST OF ACQUISITION AND IMPROVEMENT. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN TAKING TH E ENTIRE SALE CONSIDERATION AS CAPITAL GAIN OF THE ASSESSEE. MOR EOVER, THE ASSESSEE IS ADMITTEDLY IN THE REAL ESTATE BUSINESS. THEREFORE, THE PROPERTY IN QUESTION IS STOCK-IN-TRADE. SINCE IT I S A STOCK-IN-TRADE, 4 I.T.A. NO.2440/CHNY/17 ACCORDING TO THE LD. REPRESENTATIVE, THE PROVISIONS OF SECTION 50C OF THE ACT MAY NOT BE APPLICABLE AT ALL. THEREFORE, T HE ASSESSING OFFICER IS NOT JUSTIFIED IN TAKING THE GUIDELINE VA LUE AS PROVIDED UNDER SECTION 50C OF THE ACT. THE LD. REPRESENTATIVE FUR THER SUBMITTED THAT THE ASSESSEE IS HOLDING ONLY 50% OF SHARE IN T HE PROPERTY. IN RESPECT OF OTHER 50%, THE ASSESSEES WIFE IS HOLDIN G THE TITLE. ACCORDING TO THE LD. REPRESENTATIVE, THE DEPARTMENT HAS ACCEPTED THE CAPITAL GAIN CLAIMED BY THE ASSESSEE IN THE HAN DS OF THE ASSESSEES WIFE, THEREFORE, THE DEPARTMENT CANNOT T AKE ANY DIFFERENT STAND IN THE CASE OF THE ASSESSEE ALONE. 5. SHRI U. MOHAMED KHALILULLAH, THE LD. REPRESENTAT IVE FOR THE ASSESSEE, FURTHER SUBMITTED THAT THE ASSESSEE HAS A LSO INVESTED THE CAPITAL GAIN IN A PROPERTY AT NO.2, GOPAL CHETTY LA NE, GEORGE TOWN, MUTHIALPET, CHENNAI. ACCORDING TO THE LD. REPRESEN TATIVE, THE CLAIM OF THE ASSESSEE UNDER SECTION 54 OF THE ACT WAS REJ ECTED BY THE ASSESSING OFFICER ONLY ON THE GROUND THAT THE PROPE RTY WAS PURCHASED BEFORE THE DATE OF SALE. IN FACT, ACCORD ING TO THE LD. REPRESENTATIVE, THE ASSESSEE AND HIS WIFE DISPOSED OF THE PROPERTY ON 10 TH AND 11 TH DECEMBER, 2013 AND INVESTED IN THE NEW PROPERTY ON 20 TH AND 27 TH SEPTEMBER, 2013. THIS PERIOD IS WITHIN ONE YEAR 5 I.T.A. NO.2440/CHNY/17 FROM THE DATE OF SALE OF THE ASSET, THEREFORE, ACCO RDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER IS NOT JUSTIF IED IN DISALLOWING THE CLAIM OF THE ASSESSEE UNDER SECTION 54F OF THE ACT. MOREOVER, THE PROVISIONS OF SECTION 56(2)(VII)(B) O F THE ACT CAME INTO EFFECT FROM THE ASSESSMENT YEAR 2015-16. THER EFORE, THERE CANNOT BE ANY DISALLOWANCE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE DISALLOWANCE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS HOLDING 50% OF SHARE I N A PROPERTY AT 174/38, ANGAPPAN NAICKAN STREET, GEORGE TOWN, CHENN AI. THE SAID PROPERTY WAS SOLD BY THE ASSESSEE ALONG WITH H IS WIFE ON 10 TH AND 11 TH DECEMBER, 2013. THE ASSESSEE ALSO ADMITTEDLY PURCHASED A NEW PROPERTY AT NO.2, GOPAL CHETTY LANE , GEORGE TOWN, MUTHIALPET, CHENNAI ON 20 TH AND 27 TH SEPTEMBER, 2013. THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT ON THE GROUND THAT THE PROPERTY WAS PURCHASED BEFORE ONE Y EAR FROM THE DATE OF SALE OF THE PROPERTY. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN C. 6 I.T.A. NO.2440/CHNY/17 ARYAMA SUNDARAM V. CIT (2018) 97 TAXMANN.COM 74, TH E LAND PURCHASED BEFORE THE SALE OF PROPERTY IS ALSO ELIGI BLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. IN VIEW OF THE ABOVE, THE JUDGMENT OF JURISDICTIONAL HIGH COURT IS BINDING ON THIS TRIBUN AL AND HENCE, THE DECISION OF HYDERABAD BENCH OF THIS TRIBUNAL MAY NO T BE APPLICABLE TO THE FACT. 7. MOREOVER, THE COST OF ACQUISITION HAS TO BE ALLO WED. EVEN FOR ARGUMENT SAKE, IF THE ASSESSEE HAS NOT FURNISHED AL L THE DETAILS, IT IS FOR THE ASSESSING OFFICER TO FIND OUT COST OF ACQUI SITION BEFORE WORKING FOR CAPITAL GAIN AFTER TAKING INTO CONSIDER ATION THE MATERIAL AVAILABLE ON RECORD. THEREFORE, THIS TRIBUNAL DO N OT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. MOREOVER, AS OBSERVED BY THE CIT(APPEALS), THE PROVISIONS OF SEC TION 56(2)(VII)(B) CAME INTO EFFECT ONLY FROM THE ASSESSMENT YEAR 2015 -16. THEREFORE, IT IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, THIS TRIBUNAL DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 7 I.T.A. NO.2440/CHNY/17 ORDER PRONOUNCED IN THE COURT ON 2 ND JANUARY, 2019 AT CHENNAI. SD/- SD/- ( !.#$#% ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 2 ND JANUARY, 2019. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 9< .3 /DR 6. =% > /GF.