Shri. Sanaulla A Khan, Bangalore V. Income Tax Officer, Ward- 1(2)(4), Bangalore

ITA 2645/BANG/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7535 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 27-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ZAREEN SULTANA
• Keywords: Unexplained investment; Cost of acquisition; TDS; FORM 26AS
• Section: 13; 22; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO. 2645 /BAN G/20 19 ASSESSMENT YEAR: 2012 - 13 MR. SANAULLA A KHAN, L/R BY SMT. ZAREEN SULTANA & OTHERS, NO.12/1, 4 TH CROSS, MD BLOCK, CHAMARAJPET, BANGALORE 560 018. PAN: AFMPK 9826P VS. THE INCOME TAX OFFICER, WARD 1(2)(4), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : S HRI H. GURUSWAMY, CA RESPONDENT BY : SHRI PRIYADARSHI MISHRA, A DDL .C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 2 1 .0 1 .202 1 DATE OF PRONOUNCEMENT : 22 .0 1 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-12, BENGALURU FOR THE ASSESSMENT YEAR 2012-13. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS THAT TH E CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.26,50,000 INVOKING SE CTION 69 OF THE INCOME- TAX ACT, 1961 [THE ACT] WITHOUT APPRECIATING THE FA CTS AND CIRCUMSTANCES OF THE CASE AS REGARDS THE SOURCE OF PAYMENT WHICH WAS PAID THROUGH THE BANK ACCOUNT. ITA NO.2645/BANG/2019 PAGE 2 OF 5 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE PURCHASED A PROPERTY SITUATED AT NO 20 (OLD NO 25 & 30) 5TH CRO SS, 1 ST MAIN, CHAMARAJPET, MYSORE ROAD CROSS, BANGALORE, FOR A SU M OF RS. 34,50,000. FOR THE PURCHASE OF THE SAME HE HAD SUFFICIENT AND ADEQUATE SOURCE OF INCOME FROM WHICH THE PAYMENT OF RS. 26,50,000 WAS MADE. HENCE IT WAS STATED THAT THE TAX LIABILITY CORRESPONDING TO THE ADDITION OF RS. 26,50,000/- IS NOT JUSTIFIABLE UNDER LAW ON MERE NOTION THAT TH E PROPERTY IS NOT SHOWN IN THE BALANCE SHEET DATED 31.03.2012 EVEN THOUGH IT I S NOT BUSINESS ASSET. 4. THE AO WAS OF THE VIEW THAT AS PER THE BALANCE S HEET SUBMITTED BY THE ASSESSEE THE BORROWED LOAN OF RS. 12,35,245 FRO M ICICI BANK @ 13.50% WAS TAKEN FOR BUSINESS PURPOSE, NOT FOR THE PURPOSE OF HOUSING. HENCE IT CANNOT BE TREATED TO HAVE BEEN INVESTED IN PROPERTY. ALSO AS PER THE PERSONAL CAPITAL ACCOUNT AND BALANCE SHEET, THE DRAWING IS ONLY RS. 8,00,000/- OUT OF CAPITAL OF RS. 1,65,65,547. BECAU SE OF THE FACT THAT IN SPITE OF ASSESSEE HAVING ENOUGH CAPITAL, BUT DID NOT UTIL IZE IT FOR THE PURPOSE OF INVESTMENT IN THE PROPERTY, ONLY RS. 8,00,000 WAS T REATED AS FOR THE PURPOSE OF INVESTMENT AND THE BALANCE OF RS. 26,50, 000/- WAS TREATED AS UNEXPLAINED INVESTMENT AND BROUGHT TO TAX BY THE AO . 5. ON APPEAL, THE CIT(APPEALS) CONFIRMED THE ADDITI ON MADE U/S 69 OF THE ACT. AGAINST THIS, THE ASSESSEE IS IN APPEAL B EFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE CONTENTION OF THE LD. AR IS THAT THE ASSESSEES PROPERTY SITUATED IN RANASINGHPET, BVK IYENGAR ROAD, BANGALORE WAS ACQUI RED BY THE SPECIAL LAND ACQUISITION OFFICER [SLAO] FOR BENGALURU METRO AND THE ASSESSEE RECEIVED A SUM OF RS.1,24,48,356 (SHOWN AS RS.1,23, 28,356 IN FORM 26AS) AS A COMPENSATION FROM THE AUTHORITIES. OUT OF THIS, A SUM OF RS.1,10,95,520 WAS CREDITED ON 25.07.2011 TO THE AS SESSEES BANK ACCOUNT WITH ICICI BANK, OTC ROAD, NAGARTHAPET, BAN GALORE 560002. ITA NO.2645/BANG/2019 PAGE 3 OF 5 THE ASSESSEE DISCLOSED THIS AMOUNT AS A SALE CONSID ERATION WHILE DECLARING LONG TERM CAPITAL GAIN FROM THE SAID ACQU ISITION OF THE PROPERTY AND OFFERED THE SAME FOR TAXATION. HOWEVER, THE AO WITHOUT CONSIDERING THE AMOUNT RECEIVED BY THE ASSESSEE ON ACQUISITION OF THE SAID PROPERTY BY BANGALORE METRO RAIL CORPORATION LTD. (BMRCL), MADE ADDITION U/S. 69 OF THE ACT ON ACCOUNT OF PURCHASE OF PROPERTY BY THE A SSESSEE VIDE SALE DEED DATED 12.3.2012 FOR WHICH THE ASSESSEE PAID CONSIDE RATION OF RS.34.50 LAKHS AS UNDER:- A) RS.9,50,000 BY CHEQUE BEARING NO.389248 DATED 15.11 .2011 DRAWN ON 1C1CI BANK, N.R. ROAD BRANCH. BANGALORE. B) RS.25,00,000 BY DD/PAY ORDER BEARING NO.010577 DATE D 11-1-2012, DRAWN ON 1CICI BANK, N.R. ROAD BRANCH, BANGALORE. 7. IN OUR OPINION, THE SOURCE OF PAYMENT OF RS.34.5 0 LAKHS IS OUT OF COMPENSATION RECEIVED TOWARDS ACQUISITION OF PROPER TY BY BMRCL AND THIS WAS DULY DISCLOSED BY THE ASSESSEE. THESE RECEIPTS AND PAYMENTS WERE DULY REFLECTED IN THE ICICI BANKS CURRENT A/C NO.6 251050390981, OTC ROAD, BANGALORE 560 002. AS SUCH, IT CANNOT BE C ONSIDERED AS UNEXPLAINED INVESTMENT BY THE ASSESSEE. ACCORDINGL Y, WE DELETE THE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(AP PEALS) U/S. 69 OF THE ACT. THIS GROUND OF THE ASSESSEE IS ALLOWED. 8. THE NEXT ISSUE FOR CONSIDERATION IS ADDITION OF CAPITAL GAIN OF RS.42,87,532 WITHOUT APPRECIATING THE FACT THAT THE COMPENSATION WAS RECEIVED BY METRO RAILWAY AUTHORITIES. 9. THE BRIEF FACTS ARE THAT THE PROPERTY SITUATED I N RANASINGHPET, BVK IYENGAR ROAD, BANGALORE WAS ACQUIRED BY THE SLAO FO R A CONSIDERATION OF RS.1,24,48,356 AND AFTER CLAIMING DEDUCTION INDEXED COST OF ACQUISITION OF RS.81,60,824 AND INDEXED COST OF IMPROVEMENT OF RS. 39,24,288, THE LONG TERM CAPITAL GAIN CAME TO RS.3,63,244. ITA NO.2645/BANG/2019 PAGE 4 OF 5 10. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RECE IVED THE COMPENSATION OF RS. 1,24,48,356 FROM THE METRO RAIL WAY AUTHORITIES FOR HAVING ACQUIRED HIS PROPERTY SITUATED AT B.V.K LYEN GAR ROAD, BANGALORE FOR METRO RAIL PROJECT. THE COMPUTATION OF CAPITAL GAIN S BY AO AT RS. 42,87,532 OUT OF THE COMPENSATION RECEIVED BY THE M ETRO RAILWAY PROJECT IS LIABLE TO BE DELETED AS PER THE CIRCULAR BY THE CBDT NO. 36/2016 DATED 25.10.2016, WHICH IS AS FOLLOWS:- IT IS HEREBY CLARIFIED THAT COMPENSATION RECEIVED IN RESPECT OF AWARD OR AGREEMENT WHICH HAS BEEN EXEMPTED FROM LEV Y OF INCOME TAX VIDE SECTION 96 OF THE RFCTLARR ACT SHAL L ALSO NOT BE TAXABLE UNDER THE PROVISIONS OF INCOME TAX A CT, 1961 EVEN IF THERE IS NO SPECIFIC PROVISION OF EXEMPTION FOR SUCH COMPENSATION IN THE INCOME TAX ACT, 1961. 11. THE LD. DR SUBMITTED THAT ASSESSEE HAS NOT SUB MITTED ANY PROOF THAT THE LAND IS ACQUIRED BY METRO RAILWAY AUTHORIT IES. HE SUBMITTED THAT THOUGH CBDT CIRCULAR NO.36/2016 MANDATES THAT COMPE NSATION RECEIVED BY THE LAND OWNERS FOR ACQUISITION OF LAND UNDER TH E RFCTLAAR ACT IS EXEMPT FROM TAX, HOWEVER, ASSESSEE HAS NOT PRODUCED THE PROOF WITH REFERENCE TO THE SAME. HE THEREFORE SUPPORTED THE ORDER OF THE CIT(APPEALS). 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEES PROPERTY SITUATED AT B.V.K. IYENGAR ROAD, BANGALORE WAS ACQUIRED BY BMRCL. CONSEQUENTLY, FOR THE ASSESSMEN T YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED AN AMOUNT OF R S.1,23,28,356 WHICH WAS DULY REFLECTED IN FORM 26AS IN THE NAME OF ASSE SSEE. THE AO DULY CONSIDERED THIS AMOUNT WHILE GIVING TDS CREDIT OF R S.12,32,836. IN SPITE OF THIS, THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE H AS NOT FURNISHED THE PROOF THAT LAND IS ACQUIRED BY BMRCL. IN OUR OPINI ON, WHEN THE NAME OF BMRCL WAS MENTIONED IN FORM 26AS SHOWING THE DETAIL S OF TDS ON PAYMENT FOR ACQUISITION OF SAID PROPERTY, IT CANNOT BE DOUBTED THAT BMRCL ITA NO.2645/BANG/2019 PAGE 5 OF 5 HAS NOT ACQUIRED THE SAID PROPERTY. IN OUR OPINIO N, THE COMPENSATION RECEIVED BY THE ASSESSEE FROM BMRCL IS EXEMPT FROM TAX IN VIEW OF CBDT CIRCULAR NO.36/2016 DATED 25.10.2016. ACCORDINGLY, THE COMPENSATION RECEIVED BY THE ASSESSEE ON ACQUISITION OF THE PROP ERTY BY BMRCL IS NOT LIABLE FOR CAPITAL GAIN. THIS GROUND OF THE ASSESS EE IS ALLOWED. 13. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY, 2021. SD/- SD/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 22 ND JANUARY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.