Sidharth Bhushan Khurana, Faridabad V. ITO, Faridabad

ITA 2679/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6479 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BEDOBINA CHAUDHARI
• Keywords: Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 54F

Judgement Text

ITA NO. 2679 /DEL./201 3 ASSESSMENT Y EAR: 2009 - 10 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SM C NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMB E R ITA NO. 2679 /DEL./201 3 ASSESSMENT YEAR: 20 0 9 - 1 0 SIDHARTH BHUSHAN KHURANA HOUSE NO. 1349, SECTOR 14 FARIDABAD VS. ITO WARD - 1 (1), FARIDABAD (APPLICANT) (RESPONDENT) (PAN: A DPPK5316D ) ASSESSEE BY: SH. NARENDER CHHILAR, ADVOCATE REVENUE BY: MS. BEDOBINA CHAUDHARI, SR. DR DATE OF HEARING 0 8 / 0 3 /201 7 DATE OF PRONOUNCEMENT 0 9 / 0 3 /201 7 ORDER PER B.P. JAIN , ACCOUNTANT MEMBER : 1. THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD. CIT(A) - 2 , FARIDABAD VIDE ORDER DATED 18 . 0 2 .201 3 FOR THE A.Y. 20 0 9 - 1 0 . THE ASSESSEE HAS RAISED THE FOLLOWING REVISED GROUNDS OF APPEAL : - 1. THAT THE CIT(A) - FARIDABAD ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER WHILE HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO THE EXEMPTION UNDER SECTION 54F OF THE INCOME TAX ACT, 1961 ( THE ACT ) WITHOUT APPRECIATING THAT: A ) THE ASSESSEE HAS INVESTED RS.38,21,650/ - OUT OF RS.38,79,475/ - IN PURCHASE OF RESIDENTIAL PLOT AND ADDED PAGE 2 OF 7 BALANCE OF CAPITAL GAINS OF RS.20,786/ - IN TAXABLE INCOME FOR THE RELEVANT ASSESSMENT YEAR. B ) THE COST OF VACANT PLOT IS AN INSEPARABLE ONE AND HAS TO BE INCLUDED IN THE COST OF NEW ASSET I.E. A RESIDENTIAL HOUSE, IN VIEW OF THE BOARD S CIRCULAR NO.667 DATED 18.10.1993 . C ) A S THE POSSESSION OF THE PLOT WAS NOT HANDED OVER TO THE ASSESSEE IN TIME THE RESIDENTIAL UNIT REMAINED UNCONSTRUCTED DUE TO THE CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. D ) IN EXCEPTIONAL CIRCUMSTANCES, IF AT ALL, THE ASSESSING OFFICER INTENDS TO TAX THE CAPITAL GAINS, THE SAME BECOMES TAXABLE IN THE ASSESSMENT YEAR 2012 - 13, IN WHICH THE PRESCRIBED PERIOD OF THREE YEARS FROM THE ASSESSMENT YEAR EXPIRED, BUT THE REVENUE FAILED TO DO SO. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE SOL D HIS HOUSE FOR RS. 56,00,000/ - AND AFTER INDEXATION, DECLARED LONG TERM CAPITAL GAINS OF RS. 38,79,475/ - IT CLAIMED DEDUCTION UNDER SECTION 54 OF THE INCOME TAX ACT TO THE TUNE OF RS. 38,21,650/ - ON ACCOUNT OF PURCHASE OF PLOT OF LAND FROM BPTP LTD. FOR A SUM OF RS.38,21,650/ - . THE ASSESSING OFFICER DENIED EXEMPTION U/S 54 SINCE HE HELD THAT ONLY A PLOT OF LAND WAS PURCHASED AND NEIT HER A RESIDENTIAL HOUSE WAS PURCHASED NOR CONSTRUCTED WITH IN THE SP ECIFIED TIME, PERIOD AS LAID DOWN IN SECTION 54 OF THE INCOME TAX ACT. FURTHERMORE, THE AO HELD THAT IF THE APPELLANT WAS NOT IN A POSITION PAGE 3 OF 7 TO CONSTRUCT OR PURCHASE A RESIDENTIAL HOUSE, HE COULD HAVE DEPOSITED THE CAPITAL GAINS AMOUNT IN ANY S CHEME AS PER THE PROVISIONS OF SECTION 54(2) OF INCOME TAX ACT. ON ACCOUNT OF THIS REA SONING, THE AO AFTER DENYING EXEMPTION U/S 54 OF THE ACT, ENHANCED THE RETURNED INCOME OF THE APPELLANT TO 48,94,910/ - . 3. THE LD. CIT (A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE ASSESSEE HAS DECLARED LONG TERM GAIN OF RS. 38,79,475/ - AND PURCHASE D OF PLOT OF LAND FOR RS. 38,21,650/ - . ON T HE BALANCE AMOUNT THE ASSESSEE HAS PAID TAXES. THE SAID INVESTMENT HAS BEEN DONE WITHIN THE STIPULATED PERIOD OF 3 YEARS . AS PER CIRCULAR NO. 667 DATED 18.10.1993 OF THE CENTRAL BOARD OF DIRECT TAXES IF THE AMOUNT IS INVESTED WITH THE PLOT OF LAND AND THE CONSTRUCTION IS COMPL ETED WITHIN THE SPECIFIED PERIOD, AND THEN NO CAPITAL GAIN TAXES WILL BE LEVIABLE. THE RELEVANT PART OF THE CIRCULAR IS REPRODUCED HEREIN ABOVE: - THE BOARD HAS EXAMINED THE ISSUE WHETHER, IN CASES WHERE THE RESIDENTIAL HOUSE IS CONSTRUCTED WITHIN THE SPE CIFIED PERIOD, THE COST OF SUCH RESIDENTIAL HOUSE CAN BE TAKEN TO INCLUDE THE COST OF THE PLOT ALSO. THE BOARD ARE OF THE VIEW THAT THE COST OF THE LAND IS AN - INTEGRAL PART OF THE COST OF THE RESIDENTIAL HOUSE, WHETHER PAGE 4 OF 7 PURCHASED OR BUILT. ACCORDINGLY, IF THE AMOUNT OF CAPITAL GAIN FOR THE PURPOSES OF SECTION 54, AND THE NET CONSIDERATION FOR THE PURPOSES OF SECTION 54F, IS APPROPRIATED TOWARDS PURCHASE OF A PLOT AND ALSO TOWARDS CONSTRUCTION OF A RESIDENTIAL HOUSE THEREON, THE AGGREGATE COST SHOULD BE CONS IDERED FOR DETERMINING THE QUANTUM OF DEDUCTION UNDE R SECTION 54/54F, PROVIDED THAT THE ACQUISITION OF PLOT AND ALSO THE CONSTRUCTION THEREONTAFE COMPLETED WITHIN THE PERIOD SPECIFIED IN THESE SECTIONS . 5. IN THE CASE OF SMT. PUSHPA DEVI TIRBREWALA VS. INCOME TAX OFFICER REPORTED IN 2713 158 TTJ 46 (HYDERABAD) (UO) ON THE IDENTICAL ISSUE THE CAPITAL GAIN TAX WAS HELD TO BE EXEMPTED THE RELEVANT PORTION IS OF THE ORDER IS REPRODUCED HEREIN BELOW: - ASSE SSEE ENTERED INTO AGREEMENT WITH DEVELOPER FOR DEVELOPMENT OF LAND OWNED BY 5 0:50 SHARING BASIS FIVE FLATS FELL TO ASSESSEE'S SHARE, WHICH WERE CLAIMED TO HAVE BEEN SOLD BY HER WHILE COMPUTING LONG TERM CAPITAL GAINS ASSESSEE CLAIMED EXEMPTION U/S 54 TOWARDS PURCHASE OF PLOT AND CONSTRUCTION OF HOUSE B ESIDES DEPOSIT IN CAPITAL GAINS SCHEME AO HELD EXEMPTION U/S 54 IS AVAILABLE ONLY WHERE ASSESSEE PURCHASES RESIDENTIAL HOUSE WITHIN PERIOD OF ONE YEAR, AFTER DATE OF TRANSFER OR SALE O F ORIGINAL ASSET AND THAT ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S 54 SINCE IT HAD PURCHASED ONLY AN OPEN PLOT FOR CONSTRUCTION OF A HOUSE OVER IT AND NOT A RESIDENTIAL HOUSE PAGE 5 OF 7 CIT(A) DISALLOWED CLAIM OF EXEMPTION HOLDING THAT ASSESSEE HAS PURCHASED PLOT BY UTILIZING FUND FROM DIFFERENT SOURCE AND NOT OUT OF SALE CONSIDERATION RECEIVED FROM SALE OF FLATS HELD, EXEMPTION U/S 54 CANNOT BE DENIED ON GROUND THAT ASSESSEE HAD NOT UTILIZED SALE CONSIDERATION RECEIVED FROM SALE OF FLATS ITSELF, IN PURCHASING PLOT INVESTMENT IN PURCHASE OF PLOT FOR CONSTRUCTION OF HOUSE WOULD ENTITLE A N ASSESSEE TO CLAIM EXEMPTION U/S.54 OR 54F ASSESSEE'S CLAIM THAT CONSTRUCTION WAS COMPLETED WITHIN STIPULATED PERIOD OF THREE YEARS AS PER SECTION 54 WAS ACCEPTED CONSIDERING CATEGORICAL SUBMISS ION AND EVIDENCE AND INFORMATION PRODUCED BY ASSESSEE FURTHER EVEN IF ASSUMED THAT CONSTRUCTION WAS NOT COMPLETED WITHIN PERIOD OF THREE YEARS, DISALLOWANCE CAN BE MA DE IN THE YEAR IN WHICH PERIOD OF THREE YEARS EXPIRES AND NOT IN THE IMPUGNED ASSESSMENT YEAR - ASSESSEE S APPEAL ALLOWED. 6. IN THE CIRCUMSTANCES AND FACTS OF THE CASE I HAVE NO HESITATION TO SAY THAT THE ASSESSEE HAS INVESTED CAPITAL GAIN FOR THE CONSTRUCTION OF THE HOUSE AND ON THE FIRST OCCASION IN THE INVESTMENT OF PLOT WHICH IS MEANT FOR THE CONSTRUCTION OF THE HOUSE AND THEREFORE NO CAPITAL GAIN T AX IS LEVIABLE. THE ORDER OF THE LD. CIT(A) AND THAT OF THE ASSESSING OFFICER IS DIRECTED TO BE REVERSED AND ALL THE ADDITIONS MADE ARE DIRECTED TO BE DELETED. THUS ALL GROUNDS OF ASSESSEE ARE ALLOWED. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PAGE 6 OF 7 8 . P RONOUNCED IN THE OPEN COURT ON 0 9 . 0 3 .201 7. S D / - ( B.P. JAIN ) ACCOUNTANT MEMB E R DATED: 0 9 . 0 3 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON 8 .0 3 .2017 DRAFT PLACED BEFORE AUTHOR 9 .0 3 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 9 .3.2017 KEPT FOR PRONOUNCEMENT ON PAGE 7 OF 7 FILE SENT TO THE BENCH CLERK 9 .3.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.