Smt. K. Venkateswari Devi, Hyd, Hyderabad V. ACIT, Cir-6(1), Hyderabad

ITA 261/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59207 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MYTHILI RANI
• Keywords: Cost of acquisition
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.261/HYD/2011 ASSESSMENT YEAR: 2007-08 SMT. VENKATESWARI DEVI, VS. ACIT, CIR- 6(1), HYDERABAD. HYDERABAD. (PAN:AEHPK 0544A) (APPELLANT) (RESPONDENT) APPELLANT BY : MOHD. AFZAL RESPONDENT BY: : SMT. K. MYTHILI RANI DATE OF HEARING : 27-12-2011 DATE OF PRONOUNCEMENT : 25- 01-2012 ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 13-01-2011 OF THE CIT (A)-IV, HYDERABAD AND IT PERTAINS TO THE ASSESSMENT YEAR 2007-08. THE ASSESS EE RAISED THE FOLLOWING GROUNDS BEFORE US:- 1. THE ORDER OF THE LD. CIT (A) IS AGAINST LAW, AN D PROBABILITIES OF CASE. 2. THE CIT (A) ALSO ERRED IN CONFIRMING THE ADDITION OF RS.2,44,67,354/- MADE BY THE ASSSSING OFFICER BY DISALLOWING THE DEDUCTION CLAIMED BY THE APPELLANT. 3. THE CIT (A) ERRED IN NOT ALLOWING THE EXEMPTION CLAIMED UNDER SECTION 54F OF THE IT ACT, IN SPITE OF SATISFYING THE CONDITIONS LAID DOWN IN THE SECTION. ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 2 4. THE CIT (A) ERRED IN ASSUMING THAT THE PAYMENTS MADE BY MR. C.V. SANDEEP REDDY IS NOT FOR THE PROPERTY OF THE ASSESSEE BUT FOR PROPERTY OF HIS OWN I.E., MR. C.V. SANDEEP REDDY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO LD A PLOT OF LAND ON 12-3-2007 FOR AN AMOUNT OF RS.2.5 CRORES . THE SAID LAND HAS BEEN PURCHASED BY THE ASSESSEE FOR RS.6,40,536/- ON 10-3-2000. AFTER CONSIDERING THE INDEXATION OF THE COST OF ACQUISITION, THE ASSESSEE ARRIVED AT CAPITAL GAINS OF RS.2,44,67,354/- WHICH WAS CLAIMED EXEMPT UNDER SECTION 54 OF THE INCOME-TAX ACT FOR AN INVESTMENT MADE IN THE HOUSE PROPERTY. THE ASSESS ING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE DETAIL S REGARDING INVESTMENT IN THE HOUSE PROPERTY AGAINST WHICH DEDUCTION UNDER SECTION 54 OF THE ACT WAS CLAIMED. IN RESPONSE TO THIS, THE ASSESSEE PRODUCED SOME RECEIP TS FROM M/S HAWK ESTATE & DEVELOPERS, SHOWING RECEIPT OF RS .2.5 CRORES ON DIFFERENT DATES. THE RECEIPTS MENTIONED T HAT THE AMOUNTS HAD BEEN RECEIVED BY WAY OF CHEQUES. HOWEV ER, THE ASSESSING OFFICER NOTED THAT IN NONE OF THEM TH E CHEQUE NUMBERS HAD BEEN MENTIONED. IN ADDITION TO THE REC EIPTS, THE ASSESSEE ALSO PRODUCED A COPY OF AN UN-REGISTER ED AGREEMENT OF SALE DATED 23-6-2007 BETWEEN THE ASSES SEE AND M/S HAWK ESTATE DEVELOPERS WHEREIN IT WAS MENTI ONED THAT WHEREAS THE VENDOR DUE TO FINANCIAL NECESSITIES OFF ERED AND AGREED TO SELL THE SCHEDULE PROPERTY TO THE VEN DEE FOR A TOTAL SALE CONSIDERATION OF RS.2.5 CRORES TOWARDS LAND AND CONSTRUCTION OF A BUILDING. ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 3 BESIDES, IN THE SCHEDULE OF THE PROPERTY OF THE AGR EEMENT, THE FOLLOWING MENTION WAS MADE: ALL THAT AGRICULTURAL LAND BEARING SY. NO. 51,52,5 3 & 54 AN EXTENT OF 4000 SQ. YARDS SITUATED AT AZIZ NAGAR, MAINABAD MANDAL, RANGA REDDY DISTRICT. FURTHER, THE ASSESSING OFFICER REQUIRED THE ASSESSE E TO PRODUCE BANK ACCOUNT COPIES. HOWEVER, NO FURTHER INFORMATION WAS FURNISHED BY THE ASSESSEE EXCEPT BA NK STATEMENT FOR THE PART OF THE YEAR. IN ORDER TO CA RRY OUT FURTHER VERIFICATION OF THE CLAIM, THE ASSESSING OF FICER ISSUED SUMMONS TO M/S HAWK ESTATES & DEVELOPERS. IN RESPO NSE, ONE SRI LAXMAN APPEARED WITH THE BANK STATEMENT COP Y, AS ALSO THE LEDGER ACCOUNT COPY OF THE ASSESSEE IN THE BOOKS OF M/S HAWK ESTATES AND DEVELOPERS, AND COPIES OF THE RECEIPTS. ON A PERUSAL OF THE BANK STATEMENT, THE A SSESSING OFFICER FOUND THAT THE AMOUNTS SHOWN TO HAVE BEEN R ECEIVED FROM THE ASSESSEE AND CLAIMED BY THE ASSESSEE AS HE R INVESTMENTS HAD ACTUALLY BEEN PAID BY ONE SRI CHAN DAGARI SANDEEP REDDY. HE NOTED THAT ALL THE PAYMENTS ON DIFFERENT DATES WERE FROM THE SAID PERSON ONLY AND NONE OF THEM WERE MADE BY THE ASSESSEE HERSELF. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER DISALLOWED THE CLAIM U NDER SECTION 54 OF THE ACT. 3. ON APPEAL, THE CIT (A) CONFIRMED THE ORDER OF TH E ASSESSING OFFICER. AGAINST THE ORDER OF THE CIT ( A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. I N THIS CASE, THE ASSESSEE SOLD THE PROPERTY ON 12-3-2007 T O AVAIL THE BENEFIT UNDER SECTION 54F OF THE ACT. THE ASSE SSEE IS ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 4 REQUIRED TO CONSTRUCT THE HOUSE ON OR BEFORE 12-3-2 010. IN THIS CASE, THE ASSESSEE ENTERED INTO AN AGREEMENT W ITH M/S. HAWK ESTATES DEVELOPERS ON 23-6-2007 AND THEREAFTER THE ASSESSEE PRODUCED THE FOLLOWING DOCUMENTS TO SUBSTA NTIATE THE CLAIM OF THE ASSESSEE THAT THERE WAS A CONSTRU CTION OF A HOUSE AS FOLLOWS:- I) SANCTION OBTAINED FROM AZIZ NAGAR GRAM PANCHAYAT DATED 5-10-2009. II) POWER CONNECTION OBTAINED FROM CENTRAL POWER DISTRIBUTION COMPANY OF A.P DATED 9-3-2010. III) TELEPHONE CONNECTION OBTAINED FROM THE BSNL IN APRIL, 20120. IV) LETTER DATED 26-3-2010 OF HE APPELLANT TO THE SARPANCH, AZIZ NAGAR VILLAGE INTIMATING THE COMPLETION OF CONSTRUCTION BEFORE 12-3-2010 AND REQUESTING ASSESSMENT OF GRAMPANCHAYAT TAX. V) PHOTOGRAPHS OF THE BUILDING CONSTRUCTED THE ASSESSEE PLEADED BEFORE US THAT EVEN THE PAYMEN T OF ADVANCE PAID FOR PURCHASE OF THE HOUSE IS TO BE CON SIDERED AS INVESTMENT IN THE CONSTRUCTION OF THE HOUSE FOR THE PURPOSE OF DEDUCTION UNDER SECTION 54F OF THE ACT. 5. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTAT IVE CONTENDED THAT THE ASSESSEE VIDE AGREEMENT DATED 26 -3- 2007 WITH M/S HAWK ESTATE AND DEVELOPERS PAID AN AMOUNT TOWARDS PURCHASE OF THE LAND AND CONSTRUCTIO N OF THE BUILDING THEREON BEARING SURVEY NOS. 51,52,53 A ND 54 TO THE EXTENT OF 4000 SQ. YARDS SITUATED AT AZIZ NA GAR, MOINABAD MANDAL, RANGA REDDY DISTRICT. FURTHER, H E SUBMITTED THAT NO DETAILS OF CONSTRUCTION OF THE BU ILDING ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 5 WAS MENTIONED BY THE ASSESSEE AND ONLY ADVANCING THE MONEY FOR PURCHASE OF THE LAND CANNOT BE CONSTRUED AS INVESTMENT AS ENVISAGED UNDER SECTION 54 OF THE ACT . EVEN OTHERWISE, PAYMENT HAS BEEN MADE TO M/S HAWK ESTATE S & DEVELOPERS BY THE SON OF THE ASSESSEE SRI C. SANDEE P REDDY. BUT, THE FACTS ARE THAT THE MONEY GIVEN BY SRI SANDEEP REDDY IN HIS NAME CANNOT BE CONSIDERED AS THE MONEY PROVIDED BY THE ASSESSEE HERSELF OR THE ASSES SEE USED HER SON TO MAKE SUCH INVESTMENT. BEING SO, ON LY IF THE FUND IS MOVED OUT OF SALE CONSIDERATION TOWARDS THE PURCHASE AND CONSTRUCTION OF THE RESIDENTIAL HOUSE, THAT INVESTMENT IS TO BE CONSIDERED AS INVESTMENT BY THE ASSESSEE HERSELF AND THEN THE CLAIM OF THE ASSESSEE IS TO BE ALLOWED 6. IN THIS CASE, THERE IS NO DISPUTE THAT THE ASSES SEE ENTERED INTO AN AGREEMENT WITH M/S HAWK ESTATES DEVELOPERS ON 23-6-2007 TO AVAIL THE BENEFIT UNDER SECTION 54/54F, THE ASSESSEE HAS TO CONSTRUCT THE RESIDENTI AL BUILDING ON OR BEFORE 12-3-2010 TO BENEFIT U/S 54 A S THE ASSESSEE SOLD THE PROPERTY ON 12-3-2007. THERE IS NO DISPUTE REGARDING THE ASSESSEE ENTERING INTO AN AGR EEMENT TO PURCHASE THE PROPERTY. THE ONLY CONTENTION OF T HE DEPARTMENT IS THAT THE CONSIDERATION PAID TO M/S HA WK ESTATES & DEVELOPERS IS NOT MOVED OUT OF ASSESSEES BANK ACCOUNT. ON THE OTHER HAND, IT IS MOVED OUT OF ASS ESSEES SON BANK ACCOUNT VIZ., SRI SANDEEP REDDY. THE ASSE SSEE HAS TAKEN A PLEA BEFORE US THAT THE SALE CONSIDERAT ION RECEIVED BY THE ASSESSEE HAS BEEN TEMPORARILY USED BY HER SON AND LATER TO PURCHASE THE PROPERTY, HE RETURNED THE MONEY BY MAKING DIRECT PAYMENT TO M/S HAWK ESTATE & DEVELOPERS. IN OUR OPINION, BEING THE ASSESSEES S ON, IT IS ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 6 NOT UN-NATURAL TO USE THE FUND OF HIS MOTHER AND TO RETURN THE SAME WHEN IT IS REQUIRED BY HER. THE ASSESSEE CANNOT BE PENALISED FOR LENDING MONEY TEMPORARILY TO HER S ON AND GETTING THE PROPERTY PURCHASED BY MAKING PAYMENT TH ROUGH HER SONS ACCOUNT. FURTHER, FOR CLAIMING DEDUCTION UNDER SECTION 54F, THE FOLLOWING CONDITIONS ARE TO BE FUL FILLED: (A) THE ASSESSEE SHOULD BE INDIVIDUAL OR HUF, (B) CAPITAL GAIN SHOULD ARISE FROM TRANSF ER OF LONG TERM CAPITAL GAIN, (C ) THE ASSESSEE WITHIN A PERIOD OF ONE YEAR PRIOR TO OR TWO YEARS AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET, PURCHASED RESIDENTIAL HOUSE PROPERTY OR WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET CONSTRUCTED RESIDENTIAL PROPERTY. SUBJECT TO THE FULFILMENT OF THE ABOVE THREE CONDIT IONS, IF THE INVESTMENT IS MORE THAN NET CONSIDERATION, FULL CAP ITAL GAIN IS EXEMPT, OTHER WISE PROPORTIONATE CAPITAL GAIN IS EXEMPT. THE SAID PROVISION DOES NOT ENVISAGE THE NET CONSID ERATION HAS TO BE INVESTED. 7. IN THE PRESENT CASE, WHEN WE EXAMINE THE FACTUAL CONDITION ALONG WITH THE ABOVE PROVISIONS, IN OUR O PINION, THE ASSESSEE MADE AN INVESTMENT SO AS TO GRANT DEDU CTION UNDER SECTION 54F OF THE ACT. FURTHER, CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES, THE CLAIM OF THE ASSESSEE IS TO BE A LLOWED AS THERE IS ENOUGH EVIDENCE BROUGHT ON RECORD BY THE A SSESSEE TO SHOW THAT THE ASSESSEE HAS PURCHASED NEW RESIDEN TIAL PROPERTY AS DISCUSSED EARLIER. IN OUR OPINION, THE APPARENT RECORDS PRODUCED BY THE ASSESSEE ARE TO BE CONSIDER ED AS REAL UNTIL IT WAS SHOWN THAT THERE WERE REASONS TO BELIEVE ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 7 THAT THE APPARENT WAS NOT THE REAL. IN THE PRESEN T CASE, THE AUTHORITIES HAVE NOT BROUGHT ANY THING ON RECOR D TO SHOW THAT THE DOCUMENTS PRODUCED BY THE ASSESSEE TO SUBSTANTIATE HER CONTENTION OF COMPLETION OF CONSTR UCTION BEFORE 12-3-2010 IS INCORRECT. IN THE CIRCUMSTANCE S, THE CLAIM OF THE ASSESSEE IS TO BE BELIEVED AND THE DED UCTION IS TO BE ALLOWED UNDER SECTION 54F OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 -01-20 12. SD/- (ASHA VIJAYA RAGHAVAN) SD/- (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 25 TH JANUARY, 2012. COPY FORWARDED TO: 1. C/O MOHD. AFZAL, ADVOCATE, 11-5-465, FLAT NO.402, SHERSONS RESIDENCY, CRIMINAL COURT ROAD, RED HILLS , HYDERABAD. 2. ACIT, CIR-6(1), HYDERABAD. 3. CIT CONCERNED, HYDERABAD. 4. THE CIT(A)-IV, HYDERABAD. 5. THE DR, ITAT, HYDERABAD JMR* ITA NO.261/H/2011 SMT. VENKATESWARI DEVI, HYD. =============================== 8