Suja Ganessan, Chennai V. ITO, Non Corporate Ward 10(4), Chennai

ITA 250/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2020 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 19-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA
• Assessee Lawyers: D ANAND
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.250/CHNY/2018 ( )( / ASSESSMENT YEAR : 2012-13 MRS. SUJA GANESAN, FLAT NO.4A, PETTUCOLA TOWERS, P.H. ROAD, KILPAUK, CHENNAI - 600 010. PAN : AMTPS 9756 N V. THE INCOME TAX OFFICER, NON CORPORATE WARD - 10(4), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI D. ANAND, ADVOCATE -.+, / 0 / RESPONDENT BY : MS. ANITA, JCIT 1 / 2% / DATE OF HEARING : 25.10.2018 3') / 2% / DATE OF PRONOUNCEMENT : 16.11.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -12, CHENN AI, DATED 12.12.2017 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.250/CHNY/18 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DENIA L OF EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54 OF THE INC OME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE SOLD A FLAT OF 1601 SQ.FT. AND UN DIVIDED SHARE OF LAND OF 240 SQ.FT. ALONGWITH COMMON BUILT UP AREA A ND COVERED CAR PARK OF 120 SQ.FT. FOR A TOTAL CONSIDERATION OF 1,39,84,000/- TO ONE SHRI J. ANTONY ON 22.03.2012. IN FACT, ACCORDING T O THE LD. COUNSEL, THE SAID FLAT WAS PURCHASED BY THE ASSESSEE ON 14.0 9.2007 FOR A TOTAL CONSIDERATION OF 11,50,000/- AND INCURRED REGISTRATION CHARGES AT 3,31,528/-. FROM THE SALE PROCEEDS OF THE FLAT, AC CORDING TO THE LD. COUNSEL, THE ASSESSEE HAS PURCHASED 1 ACRE AND 6 CENTRS OF LAND ALONG WITH HER HUSBAND, ON 07.02.2013 FOR A TO TAL CONSIDERATION OF 3,20,00,000/-. THE ASSESSEE HAS ALSO CONSTRUCTED A RESIDENTIAL BUILDING IN THE SAID LAND. 4. REFERRING TO ORDER OF THE CIT(APPEALS), MORE PAR TICULARLY PAGE 7 PARA 5.3, SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE CIT(APPEALS) ACCEPTED THAT THE A SSESSEE HAS CONSTRUCTED 215 SQ.FT. OF BUILDING. REFERRING TO P ARA 5.4 OF THE ORDER OF THE CIT(APPEALS), THE LD.COUNSEL SUBMITTED THAT THE INSPECTOR, 3 I.T.A. NO.250/CHNY/18 WHO WAS SAID TO HAVE INSPECTED THE PREMISES, FOUND THAT THE CONSTRUCTION WAS NOT COMPLETED. REFERRING TO THE J UDGMENT OF MADRAS HIGH COURT IN CIT V. SARDARMAL KOTHARI (2008 ) 302 ITR 286 AND THE DECISION OF THIS BENCH OF THE TRIBUNAL IN M RS. SEETHA SUBRAMANIAN V. ACIT (1996) 59 ITD 94, THE LD.COUNSE L SUBMITTED THAT IT IS NOT NECESSARY THAT RESIDENTIAL BUILDING HAS TO BE COMPLETED BEFORE THE DUE DATE. WHAT IS REQUIRED, ACCORDING T O THE LD. COUNSEL, IS INVESTMENT OF CAPITAL GAIN BEFORE THE DUE DATE. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, INVESTMENT OF CAPITAL GAIN MADE WITHIN DUE DATE IS NOT IN DISPUTE. THEREFORE, ACCORDING T O THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 5. REFERRING TO ORDER OF THE CIT(APPEALS), THE LD.C OUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER FOUN D THAT THE ASSESSEE HAS DEPOSITED IN THE CAPITAL GAIN ACCOUNT AT VIJAYA BANK, VADAPALANI BRANCH ONLY ON 31.07.2012. ACCORDING TO THE LD. COUNSEL, FOR THE ASSESSMENT YEAR 2012-13, THE DUE D ATE FOR FILING OF RETURN OF INCOME WAS EXTENDED BY THE CBDT TILL 31 ST AUGUST, 2012, THEREFORE, THE ASSESSEE CAN DEPOSIT THE MONEY IN TH E BANK ON OR BEFORE 31 ST AUGUST, 2012. IN FACT, THE ASSESSEE DEPOSITED THE 4 I.T.A. NO.250/CHNY/18 MONEY IN THE BANK ACCOUNT ON 27.08.2012, WHICH IS W ITHIN THE DUE DATE FIXED BY THE CBDT FOR FILING RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING T HE CLAIM OF THE ASSESSEE. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, MORE PARTICULARLY AT PARA 5.10, THE LD.COUNSEL SUBMITTED THAT THERE WAS ELECTRICITY SERVICE CONNECTION TO THE RESIDENTIAL B UILDING CONSTRUCTED BY THE ASSESSEE. MERELY BECAUSE THE ASSESSEE CONSU MED ONLY 200 UNITS BETWEEN 11.03.2015 AND 13.05.2015, ACCORD ING TO THE LD. COUNSEL, IT DOES NOT MEAN THAT THERE WAS NO BUILDIN G AT ALL. 6. ON THE CONTRARY, MS. ANITA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE INSPECTOR VISITE D THE PREMISES AND FOUND THAT THERE WAS NO CONSTRUCTION AND IT WAS A VACANT LAND. REFERRING TO THE ORDERS OF THE CIT(APPEALS) AND THE A.O., THE LD. D.R. SUBMITTED THAT THE BUILDING WAS UNDER PROGRESS AND IT WAS NOT COMPLETED. THE ASSESSEE CONSTRUCTED A RESIDENTIAL HOUSE OF 215 SQ.FT. ON A PIECE OF LAND OF 1 ACRE AND 6 CENTS. A CCORDING TO THE LD. D.R., AT THE BEST, THIS MAY BE CALLED AS OUT-HOUSE OR A SERVANT QUARTER AND DEFINITELY IT IS NOT A RESIDENTIAL HOUS E. ACCORDING TO THE LD. D.R., THE ELECTRICITY SERVICE CONNECTION SAID T O BE OBTAINED BY THE ASSESSEE IS ONLY A TEMPORARY CONNECTION DURING THE PERIOD OF 5 I.T.A. NO.250/CHNY/18 CONSTRUCTION. THEREFORE, ACCORDING TO THE LD. D.R. , IT CANNOT BE CONSTRUED TO BE A RESIDENTIAL BUILDING FOR THE PURP OSE OF CLAIMING EXEMPTION UNDER SECTION 54 OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE SOLD HER RESIDENTIAL FLAT ALONGWITH COVERED CAR PAR K AND PROFIT ON SUCH SALE OF FLAT WAS INVESTED ON PURCHASING 1 ACRE AND 6 CENTRS OF LAND IN KAZHIPATTUR VILLAGE, CHENGLEPET TALUK, KANC HIPURAM DISTRICT. THE ASSESSEE HAS CLAIMED THAT A RESIDENTIAL HOUSE W AS CONSTRUCTED. HOWEVER, THIS FACT IS DISPUTED BY THE REVENUE. THE REVENUE CLAIMS THAT WHAT WAS PURCHASED BY THE ASSES SEE IS A VACANT LAND AND ALSO CLAIMS THAT THE CONSTRUCTION A CTIVITY IS IN PROGRESS AND THE BUILDING WAS NOT COMPLETED. THE R EVENUE ALSO CLAIMS THAT THE ASSESSEE HAS OBTAINED ONLY A TEMPOR ARY ELECTRICITY SERVICE CONNECTION FOR THE PURPOSE OF CONSTRUCTION. 8. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF TH E ASSESSEE ON TWO GROUNDS. THE FIRST GROUND OF DISALLOWANCE I S THAT THE CAPITAL GAIN WAS NOT DEPOSITED WITHIN THE DUE DATE FOR FILI NG RETURN OF INCOME, IN THE CAPITAL GAIN ACCOUNT. AS PER THE OR DERS OF BOTH THE AUTHORITIES BELOW, THE ASSESSEE DEPOSITED THE FUNDS ONLY ON 6 I.T.A. NO.250/CHNY/18 27.08.2012 AT VIJAYA BANK, VADAPALANI BRANCH. THE SECOND GROUND OF DISALLOWANCE OF EXEMPTION IS THAT THE BUILDING W AS NOT COMPLETED AND IT WAS IN PROGRESS. 9. LETS NOW EXAMINE THE FIRST GROUND OF DISALLOWAN CE, NAMELY, NON-DEPOSIT OF CAPITAL GAIN IN THE CAPITAL GAIN ACC OUNT WITHIN THE DUE DATE. THE PROVISIONS OF INCOME-TAX ACT VERY CL EARLY SAYS THAT IN CASE THE CAPITAL GAIN WAS NOT INVESTED, IT HAS TO B E DEPOSITED IN A SPECIFIC ACCOUNT WITHIN THE DUE DATE FOR FILING RET URN OF INCOME. THE DUE DATE OF 31.07.2012 WAS FURTHER EXTENDED TO 31.0 8.2012 BY CBDT. THEREFORE, THE ASSESSEE HAD TO DEPOSIT THE M ONEY ON OR BEFORE 31 ST AUGUST, 2012. IN THIS CASE, THE ASSESSEE ADMITTED LY DEPOSITED THE AMOUNT ON 27.08.2012. THEREFORE, THE RE CANNOT BE ANY DISALLOWANCE ON THIS GROUND. 10. NOW COMING TO COMPLETION OF BUILDING, THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT WHAT IS CONTEMPLATED IN THE PROVISIONS OF INCOME-TAX ACT FOR CLAIMING EXEMPTION UNDER SECTION 54 OF THE ACT IS INVESTMENT OF FUNDS FOR THE PURPOSE OF CONSTRUCT ION. THE MOMENT ASSESSEE INVESTED THE ENTIRE CAPITAL GAIN FOR THE P URPOSE OF PURCHASING A RESIDENTIAL HOUSE OR CONSTRUCTION OF R ESIDENTIAL HOUSE, THE CONDITION STIPULATED IN THE PROVISIONS TO CLAIM EXEMPTION IS 7 I.T.A. NO.250/CHNY/18 SATISFIED, THEREFORE, THE ASSESSING OFFICER CANNOT DISALLOW THE CLAIM OF THE ASSESSEE. IN THIS CASE, THE ASSESSING OFFIC ER IS NOT DISPUTING THE FACT THAT THE ASSESSEE HAS INVESTED THE FUNDS. WHAT IS DISPUTED IS THAT THE CONSTRUCTION WAS NOT COMPLETED. IN VIE W OF JUDGMENT OF MADRAS HIGH COURT IN SARDARMAL KOTHARI (SUPRA) AND THE DECISION OF THIS TRIBUNAL IN MRS. SEETHA SUBRAMANIAN (SUPRA) AN D THE CBDT CIRCULAR NO.471 DATED 15 TH OCTOBER, 1986 AND IN NO.672 DATED 16 TH DECEMBER, 1993, MERE INVESTMENT OF THE CAPITAL GAIN IN THE CONSTRUCTION OF RESIDENTIAL PREMISES IS MORE THAN S UFFICIENT FOR CLAIMING EXEMPTION UNDER SECTION 54 OF THE ACT. TH EREFORE, IN THE SECOND GROUND OF DISALLOWANCE ALSO, THE ASSESSING O FFICER FAILS. 11. NOW THE ASSESSING OFFICER CLAIMS THAT THE ASSES SEE HAS CONSTRUCTED ONLY 215 SQ.FT. OF HOUSE. IT IS NOT I N DISPUTE THAT WHAT IS CONSTRUCTED IS 215 SQ.FT. OF RESIDENTIAL HOUSE. TH E CIT(APPEALS) REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND TH AT IT IS NOT FIT FOR HUMAN HABITATION. SINCE THE CONSTRUCTION WAS ADMIT TEDLY IN PROGRESS, IT MAY NOT BE FIT FOR HUMAN HABITATION AS CLAIMED BY THE REVENUE AUTHORITIES. BUT, THE FACT IS THAT THE ASS ESSEE HAS INVESTED THE ENTIRE CAPITAL GAIN IN PURCHASING THE LAND AND TO CONSTRUCT THE 8 I.T.A. NO.250/CHNY/18 BUILDING, WHICH IS NOT IN DISPUTE. THE MADRAS HIGH COURT IN SARDARMAL KOTHARI (SUPRA) HAS OBSERVED AS FOLLOWS:- 6. THE TRIBUNAL HAS ALSO TAKEN NOTE OF ITS OWN EARLI ER ORDER IN THE CASE OF MRS. SEETHA SUBRAMANIAN VS. AS STT. CIT (1996) 56 TTJ (MAD) 417 : (1996) 59 ITD 94 (MAD), WHEREIN THE TRIBUNAL HAS HELD THAT, IN ORDER TO GET THE BENEFIT UNDER S. 54F, THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY THE SAME. IT IS ENOUGH IF THE ASSESSEE ESTABLISHES THAT THE ASSESSE E HAD INVESTED THE ENTIRE NET CONSIDERATION WITHIN THE ST IPULATED PERIOD. THE SAID VIEW TAKEN CONSISTENTLY BY THE TR IBUNAL HAS BEEN APPLIED IN THESE CASES ALSO. THE TRIBUNAL HAS DISTINGUISHED THE DELHI HIGH COURT JUDGMENT IN THE CASE OF D.P. MEHTA VS. CIT (2001) 168 CTR (DEL) 321 : (2001) 251 ITR 529 (DEL), RELIED ON BY THE REVENUE IN THEIR FAVOU R TO NON SUIT THE ASSESSEES FOR EXEMPTION. IN OUR VIEW THE TRIBUNAL HAS DISTINGUISHED THE SAME RIGHTLY BECAUSE IN THE CITED CASE, THERE WAS A FACTUAL FINDING BY THE AUTH ORITIES THAT THE ASSESSEE HIMSELF HAS ADMITTED THAT THE CONSTRUCTION PUT UP WAS ONLY A GARAGE AND SERVICE Q UARTERS AND IT WAS NOT FIT ENOUGH FOR OCCUPATION OF THE ASS ESSEE. THAT FACTUAL FINDING IS TOTALLY ABSENT IN THESE CAS ES. THERE IS NO MATERIAL TO ENTERTAIN THESE APPEALS. THE APP EALS FAIL AND THE SAME ARE DISMISSED. CONSEQUENTLY, CONNECTE D MISCELLANEOUS PETITION IS ALSO DISMISSED. 12. IN VIEW OF THE ABOVE FINDING OF MADRAS HIGH COU RT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SINCE TH E ASSESSEE HAS INVESTED THE ENTIRE FUNDS IN PURCHASING THE LAND TO CONSTRUCT THE RESIDENTIAL PROPERTY, THERE CANNOT BE ANY DENIAL OF EXEMPTION UNDER SECTION 54 OF THE ACT. THE CONSTRUCTION WAS ADMITT EDLY IN PROGRESS AND THE ASSESSEE ALSO OBTAINED TEMPORARY ELECTRICIT Y SERVICE 9 I.T.A. NO.250/CHNY/18 CONNECTION WHICH ALSO SUPPORTS THE CASE OF THE ASSE SSEE. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE OR DERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF BOTH THE A UTHORITIES BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER IS DELETED. THE ASSESSING OFFICER IS DIRECTED TO GRAN T EXEMPTION UNDER SECTION 54 OF THE ACT AS CLAIMED BY THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 16 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 16 TH NOVEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.