ACIT, Najibabad V. Shri Mahendra Pal Singh, Bijnor

ITA 2567/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65793 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP KUMAR SINGH SENIOR
• Assessee Lawyers: V K GOEL
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMEBR AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2567/DEL./2011 (ASSESSMENT YEAR : 2008-09) ACIT, CIRCLE, VS. SHRI MAHENDRA PAL SINGH, NAJIBABAD. C/O SETHI AUTOMOBILES, DHAMPUR. (PAN : AFSPS1591K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. GOEL, ADVOCATE REVENUE BY : SHRI AROOP KUMAR SINGH, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS), BAREILLY DATED 03.03.2011 FOR THE AS SESSMENT YEAR 2008- 09. 2. THE ASSESSEE IS AN INDIVIDUAL. RETURN OF INCOME FILED ON 30.09.2008 DECLARING INCOME AT RS.11,46,540/-. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE INCOME-TAX ACT, 19 61 OF RS.18,87,032/- ON THE LONG TERM CAPITAL GAIN OF RS.28,05,960/-. T HE ASSESSING OFFICER ALLOWED ONLY RS.2,78,557/-. THE CIT (A) GRANTED TH E RELIEF BY HOLDING AS UNDER :- ITA NO.2567/DEL/2011 2 THE BASIC CONDITION FOR CLAIM OF DEDUCTION U/S 54 F IS THAT THE ASSESSEE SHOULD BE AN INDIVIDUAL OR A H UF, THE CAPITAL GAIN SHOULD ARISE FROM TRANSFER OF ANY LONG TERM CAPITAL ASSET, OTHER THAN RESIDENTIAL HOUSE, AND TH E ASSESSEE SHOULD PURCHASE OR CONSTRUCT NEW ASSET WIT HIN THE SPECIFIED PERIOD BEFORE OR AFTER THE TRANSFER O F THE LONG TERM ASSET. IF THE COST OF THE NEW ASSETS IS N OT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGIN AL ASSET, THEN THE TAX LIABILITY WOULD BE NIL. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE A.O. TREATED THE CONSIDERATION OF PURCHASE OF HOUSE AND THE PORTION OF THE PLOT UPON WHICH THE HOUSE WAS CONSTRUCTED. THUS, HE CONSIDERED THE ENTIRE AREA OF THE PLOT AS TWO SEPARATE ASSETS I.E. THE CONSTRUCTED AR EA AND THE AREA REMAINING VACANT. THE REASONING GIVEN BY THE A.O. WAS THAT THE STATE REVENUE AUTHORITIES DETERMI NED STAMP VALUE OF THE ASSET IN TWO CATEGORIES. THE FIR ST CATEGORY WAS THAT OF THE CONSTRUCTED AREA AND THE O THER WAS OF THE VACANT AREA. THEREFORE, HE CONCLUDED THA T THE PLOT AND HOUSE REPRESENTED TWO SEPARATE ASSETS, ONE WAS THE CONSTRUCTED AREA AND THE OTHER WAS THE VACANT A REA OF THE PLOT RESPECTIVELY. ACCORDINGLY, THE CLAIM WAS A LLOWED TO THE EXTENT OF THE CONSIDERATION OF THE CONSTRUCT ED PLOT. IN ORDER TO DECIDE THE ISSUE, IT IS NECESSARY TO RE FER TO THE CIRCULAR NO. 667 (SUPRA) OF CBDT. THE BOARD AFTER EXAMINATION OF THE HOUSE DECIDED VIEW THAT 'THE BOARD HAS EXAMINED THE ISSUE WHETHER, IN CASES WHERE THE RESIDENTIAL HOUSE IS CONSTRUCTED WITHIN T HE SPECIFIED PERIOD, THE COST OF SUCH RESIDENTIAL HOUS E CAN BE TAKEN TO INCLUDE THE COST OF THE PLOT ALSO. THE BOA RD ARE OF THE VIEW THAT THE COST OF THE LAND IS AN INTEGRA L PART OF THE COST OF THE RESIDENTIAL HOUSE, WHETHER PURCHASE D OR BUILT. ACCORDINGLY, IF THE AMOUNT OF CAPITAL GAIN F OR THE PURPOSES OF SECTION 54 AND THE NET CONSIDERATION FO R THE PURPOSES OF SECTION 54F, IS APPROPRIATED TOWARDS PURCHASE OF A PLOT AND ALSO TOWARDS CONSTRUCTION OF A RESIDENTIAL HOUSE THEREON, THE AGGREGATE COST SHOUL D BE CONSIDERED FOR DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 54/54F, PROVIDED THAT THE ACQUISITION OF ITA NO.2567/DEL/2011 3 PLOT AND ALSO THE CONSTRUCTION THEREON, ARE COMPLET ED WITHIN THE PERIOD SPECIFIED IN THESE SECTIONS. ' THE CONTENTS OF THE CIRCULAR MAKE IT ABUNDANTLY CLE AR THAT THE COST OF THE PLOT IS AN INTEGRAL PART OF THE COS T OF THE HOUSE CONSTRUCTED ON IT. THE FACTS, AS DISCUSSED AB OVE, ARE SQUARELY COVERED BY THE CONTENTS OF THE CIRCULA R OF THE BOARD. THE PROPERTY WAS PURCHASED ALONG WITH CONSTRUCTED HOUSE ON IT WITHIN THE PRESCRIBED PERIO D. THE PLOT WAS A SINGLE INDIVISIBLE UNIT WHICH WAS PURCHA SED THROUGH SINGLE DEED. THE HOUSE WAS CONSTRUCTED ON I T BY THE SELLER PRIOR TO ITS SELLING TO THE APPELLANT. T HE APPELLANT PURCHASED THE SAID HOUSE ON THE PLOT IN T HE EXISTING POSITION. THE NOTIONAL CATEGORIZATION OF T HE PLOT WAS MADE BY THE STATE REVENUE AUTHORITIES FOR SPECI FIC AND CONFINED PURPOSE TO DETERMINE THE VALUE OF THE PROPERTY FOR LEVY OF STAMP DUTY. THEREFORE, THE SAI D CATEGORIZATION OF THE PROPERTY DID NOT BRING ABOUT ANY CHANGE IN ITS BASIC STRUCTURE, IDENTIFICATION, AREA AND PLAN. IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES OF THE C ASE, IN MY CONSIDERED OPINION, THE TWO RATES ADOPTED FOR TH E PURPOSE OF LEVY OF STAMP DUTY DID NOT HAVE .ANY NEG ATIVE BEARING TO THE FACTS OF THE CASE AND THE APPLICATIO N OF THE ABOVE CIRCULAR OF CBDT. THE ASSESSEE CLAIMED BENEFI T IN THE RETURN FILED U/S 139(1). AFTER TAKING INTO ACCO UNT ALL THE FACTS OF THE CASE, CONTENTION OF THE APPELLANT AND POSITION OF LAW ON THE ISSUE, IT IS MY CONSIDERED V IEW THAT THE APPELLANT WAS ELIGIBLE FOR BENEFIT OF SECTION 5 4F OF THE ACT. THEREFORE, THE APPEAL IS ALLOWED. 3. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE PROPERTY (CAPITAL ASSET) ON WHICH CAPITAL GAIN AROSE WAS SITUATED OUT SIDE THE MUNICIPAL AREA OF DHAMPUR AT VILLAGE MAUJAMPUR, JAITRA. THE ASSESSEE HAS FILED THE RETURN OF INCOME AND PAID PARTLY THE CAPITAL GAIN T AX AND ALSO CLAIMED PARTLY EXEMPTION U/S 54F OF THE ACT. THE ASSESSEE MADE REINVESTMENT IN THE PROPERTY LAND AND BUILDING WHICH WAS PURCHASED BY SINGLE PURCHASE DEED. THE STATE REVENUE AUTHORITIES ONLY WORKED OU T THE STAMP DUTY ITA NO.2567/DEL/2011 4 VALUATION BY BIFURCATING THE CONSTRUCTED AND VACANT PLOT AREA. IN OUR CONSIDERED VIEW THIS WILL NOT EFFECT THE REINVESTME NT POSITION OF ASSESSEE FOR CLAIM U/S 54F OF THE ACT. THE ASSESSEE HAS MADE FURTHER CONSTRUCTION ON THIS VACANT PLOT ALSO. THE PLOT WAS INTEGRAL PAR T OF THE CONSTRUCTED HOUSE PURCHASED BY ASSESSEE. THIS PLOT WAS A SINGL E UNDIVISIONABLE UNIT WHICH WAS PURCHASED BY SINGLE SALE DEED. IN VIEW O F THESE FACTS WE HOLD THAT THE ISSUE IS SQUARELY COVERED BY THE SPIRIT OF BOARD CIRCULAR NO. 667 DATED 18.10.1993. IN VIEW OF THESE FACTS, THE CIT ( A) WAS JUSTIFIED BY HOLDING THAT ASSESSEE WAS ELIGIBLE FOR BENEFIT OF S ECTION 54F OF THE ACT. IN THE RESULT, WE SUSTAIN THE ORDER OF THE CIT (A) AND DISMISS THE REVENUES APPEAL. 4. THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 26 TH DAY OF OCTOBER, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 26 TH DAY OF OCTOBER, 2012 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), BAREILLY. 5.CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI