ITO, Gurgaon V. Dr. Smita Swarup, Gurgaon

ITA 2690/DEL/2011

• Counselvise Citation: 269020114 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 09-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Keywords: Salary income
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2960/DEL/2011 ASSESSMENT YEAR : 2007-08 ITO, DR. SMITA SWARUP, WARD-II, D/O SHRI SHANTI SWARUP, GURGAON. V. X-45, REGENCY PARK-II, DLF-4, GURGAON. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.ARJPS ARJPS ARJPS ARJPS- -- -0094 0094 0094 0094- -- -G GG G APPELLANT BY : SMT. SURJANI MOHANTY, SR. DR. RESPONDENT BY : NONE. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER O F LD CIT(A) DATED 14.3.2011. THE GROUNDS RAISED BY THE REVENUE AR E AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AMOUNTING TO ` .22,49,585/- ( ` .58,56,567/- - ` .36,636,982/- BEING PAYMENT BEFORE 19.10.2005) WHEN THE ASSESSEE HAS WRONGLY CLAIMED EXEMPT ION IN VIOLATION OF PROVISIONS SPECIFIED U/S 54 OF THE INCO ME TAX ACT, 1961 AND THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED TH E ITA NO2960/DEL/2011 2 EXEMPTION WRONGLY CLAIMED HOLDING THAT THE INVESTMEN T IN THE NEW HOUSE/APARTMENT HAS NOT BEEN MADE DURING THE PERI OD STIPULATED U/S 54 OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AMOUNTING TO ` .22,49,585/- ( ` .58,56,567/- - ` .36,636,982/- BEING PAYMENT BEFORE 19.10.2005) AS TO CLAIM EXEMPTION U/S 54 THE ASSESSEE SHO ULD HAVE INVESTED THE LTCG IN ANOTHER HOUSE PROPERTY DURI NG THE PERIOD 19.10.2005TO 19.10.2008 I.E. WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OF PRO PERTY BUT THE ASSESSEE HAS PURCHASED ANOTHER HOUSE PROPERTY VIDE AGREEME NT DATED 4.12.2004. 3. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD , DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES HER INCOME FROM SALARY, HOUSE PROPERTY AND LONG TERM CAPI TAL GAIN AND RETURN FOR THE YEAR ENDED 31.3.2007 WAS FILED ON 31. 7.207 DECLARING TOTAL INCOME OF ` .4,83,448/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR COMPULSORY SCRUTINY IN VIEW OF CBDT INSTRUCTION AS THE DECLARED CAPITAL GAIN WAS MORE THAN LIMIT PRESCRIBED IN THE ACTION PLA N. THE ASSESSEE HAD SHOWN IN THE IT RETURN A SALE OF FLAT FOR A SUM O F ` .1,01,00,000/- WHICH WAS PURCHASED ON 20.9.2002 FOR AN AMOUNT OF ` .36,34,941/- AND HAD SHOWED CAPITAL GAIN OF ` .42,13,538/- AND HAD CLAIMED EXEMPTION U/S 54 OF THE ACT, AS SHE HAD CLAIMED TO HAVE INVESTED THE AMOUNT OF CAPITAL GAIN IN HOUSE PROPERTY. THE ASSESSING OFFICER AR RIVED AT THE ITA NO2960/DEL/2011 3 AMOUNT OF CAPITAL GAIN AT ` .45,34,045/- AND OBSERVED THAT ASSESSEE HAD NOT MADE INVESTMENT IN THE NEW HOUSE PROPERTY AS P ER PROVISIONS OF SECTION 54. AS PER THE SECTION 54, THE ASSESSEE WAS RE QUIRED TO INVEST IN THE NEW HOUSE PROPERTY BETWEEN THE PERIOD 1 9.10.2005 TO 19.10.08. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD I NVESTED IN THE HOUSE PROPERTY WHICH WAS AGREED TO BE PURCHASE D VIDE AGREEMENT DATED 7.11.2004 WHICH WAS BEFORE 19.10.200 5. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER MADE A FINDING THAT I NVESTMENT WAS NOT AS PER PROVISIONS OF SECTION 54 AND THEREFORE, HE M ADE AN ADDITION OF ` .45,34,045/- TO THE INCOME OF THE ASSESSEE (BEING CAPIT AL GAIN EARNED BY ASSESSEE NOT UTILIZED AS PER PROVISIONS OF SECTIO N 54. 3. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED AS UNDER:- A) THAT PAYMENT FOR PURCHASE OF HOUSE HAS BEEN MADE OVER A PERIOD OF TIME STARTING FROM NOVEMBER, 2004 TO AUGUST , 2008. THE DEDUCTION U/S 54 CANNOT BE DENIED SIMPLY BECAUSE T HE FEW PAYMENTS HAVE BEEN MADE AS PER TERMS OF BUYERS AGREEME NT PRIOR TO THE PERIOD STIPULATED UNDER THE ACT. B) THAT IT IS VERY IMPORTANT TO DISTINGUISH BETWEEN BUYE RS AGREEMENT AND CONVEYANCE DEED. A CONVEYANCE DEED IS A DOCUMENT FOR TRANSFER OF THE ABSOLUTE TITLE OF THE P ROPERTY FOR CERTAIN AGREED PRICE WHEREAS THE BUYERS AGREEMENT IS A CONTRACT THAT DEFINES FUTURE SALE. C) THAT A BUYERS AGREEMENT IS A PROMISE TO BUY SOMETHIN G FROM SOME ONE WHEREAS A CONVEYANCE DEED IS OF FAR MORE IMPO RTANCE AND HAS FAR MORE LEGAL VALUE. D) THAT CONVEYANCE DEED IS A GENERIC TERM AND INCLUDES B OTH AN ACTUAL SALE, WHERE THE OWNERSHIP IN THE GOODS PASSES T O THE BUYER IMMEDIATELY WHEREAS A BUYERS AGREEMENT IS AN ITA NO2960/DEL/2011 4 AGREEMENT WHERE THE OWNERSHIP OF THE GOODS IS TO PASS SUBSEQUENT TO THE MAKING OF THE CONTRACT. E) THAT IN THIS PARTICULAR CASE, THE BUYERS AGREEMENT WA S EXECUTED BETWEEN THE APPELLANT AND THE BUILDER ON 7.11.2004. AS PER THE TERMS OF AGREEMENT OF PAYMENT WAS TO BE MADE LINKED T O CONSTRUCTION. CERTAIN PAYMENTS WERE MADE ON 7 TH NOVEMBER AND THEREAFTER. F) THAT BUILDER GAVE LETTER OF OFFER OF POSSESSION ON 15 TH OCTOBER, 2007 AND FINALLY HANDED OVER THE POSSESSION TO THE ASSES SEE ON 29.1.2008 AND PROPERTY WAS REGISTERED IN THE NAME OF ASSESSEE ON 5 TH MAY, 2008. RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS:- I) CIT V. H.K. KAPOOR (1998) 234 ITR 753(ALL.) II) CIT V. J.R. SUBRAMANYA BHATT (1987) 165 ITR 571 (KA RN.). III) CIT V. SHAHZADA BEGUM (1998) M173 ITR 397 (AP). IV) CIT V. VASUDEVAN CHETTIAR (1998) 234 ITR 705 (MAD.). V) BOMBAY HOUSING CORPN. V. ACIT (2002) 81 ITD 454 (BOM .). VI) MRS. PREMA P. SHAHM SANJIV P. SHAH V. ITO 282 ITR (A T) 211. 4. THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS O F LD AR PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PARA O F LD CIT(A)S ORDER IS REPRODUCED BELOW:- I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT, IT IS SEEN THAT THE PROPERTY IN QUESTION HA S BEEN PURCHASED BY MAKING PAYMENTS FROM THE PERIOD STARTING 7 TH NOVEMBER, 2004 TO AUGUST,2008. THE OFFER OF POSSESSION OF THE APARTMENT WAS GIVEN ON 29 TH JANUARY, 2008. THE PROPERTY HAS BEEN REGISTERED ON 5.5.2008. AS PER SECTION 54 OF THE ACT THE ITA NO2960/DEL/2011 5 CAPITAL GAIN EARNED FROM SALE OF A RESIDENTIAL HOUSE IS NOT CHARGEABLE TO TAX IF THE ASSESSEE PURCHASES WITHIN A PERI OD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRAN SFER OR CONSTRUCTS WITHIN A PERIOD OF THREE YEARS AFTER THE DA TE OF TRANSFER, A HOUSE PROPERTY. THE EXEMPTION OF COURSE IS LIMITED TO THE AMOUNT OF CAPITAL GAINS INVESTED IN THE NEW HOUSE. THUS FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54 OF THE ACT, COST OF THE NEW HOUSE AND THE TIME PERIOD DURING WHICH THE NEW H OUSE IS CONSTRUCTED/PURCHASED IS TO BE KEPT IN MIND. IN THE IN STANT CASE, IT IS SEEN THAT THE APPELLANT STARTED MAKING PAYMENTS W .E.F. 7.11.2004 THOUGH THE ELIGIBLE TIME PERIOD STARTS FROM 19.10.2005 I.E. ONE YEAR BEFORE THE DATE OF TRANSFER. FURTHER THE PERIOD OF TWO YEARS AFTER THE DATE OF TRANSFER OF HOUSE ENDS ON 1 9.10.2008. THE PROPERTY HAS THUS BEEN CONSTRUCTED / PURCHASED WITH IN TWO YEARS AFTER THE DATE OF TRANSFER. THEREFORE, THE APPE LLANT IS ENTITLED TO EXEMPTION U/S 54 HAVING MET THE CONDITI ON OF MAKING THE INVESTMENT WITHIN TWO YEARS FROM THE DATE OF TRAN SFER. IT IS MENTIONED THAT THE MAIN PURPOSE OF SECTION 54 IS TO GI VE RELIEF IN RESPECT OF PROFITS ON THE SALE OF A RESIDENTIAL HOUSE. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. ARVINDA REDDY HA S SUMMED UP THE OBJECT PURPOSE AND SYMMETRY OF THE SECTION IS FO LLOWING WORDS :- 'IF YOU SELL YOUR HOUSE TO MAKES PROFIT, PAY CAESAR WHA T IS DUE TO HIM. BUT IF YOU BUY OR BUILD ANOTHER, SUBJECT TO THE CONDITIONS OF SECTION 54(1) YOU ARE EXEMPT. ' THE LANGUAGE, THE PURPOSE AND THE SYMMETRY WAS THEREF ORE HELD TO BE PLAIN. THUS, IF THE ASSESSEE BUYS OR CONSTRUCTS A H OUSE ITA NO2960/DEL/2011 6 WITHIN THE STIPULATED PERIOD AS GIVEN U/S 54 THE EXEMP TION CANNOT BE DENIED. IT MAY BE MENTIONED THAT PURCHASE OF HOUSE UNDER SELF FINANCING SCHEME IS ALSO TREATED AS A CONSTRUC TION OF THE HOUSE IN VIEW OF CIRCULAR NO. 672 DATED 16.12.19 93. IN THE INSTANT CASE, THOUGH THE PROPERTY HAS BEEN HANDED OVE R TO THE APPELLANT WITHIN THE STIPULATED PERIOD HOWEVER IT IS SEEN THAT A PORTION OF INVESTMENT IN THE HOUSE HAS BEEN MADE EVEN PRIOR TO ONE YEAR FROM THE DATE OF TRANSFER. THEREFORE, IT IS HELD THAT THE AMOUNT PAID BY THE APPELLANT PRIOR TO THE PERIOD 19 .10.2005 WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. SUP PORT IN THIS REGARD IS DRAWN FROM THE DECISION OF HON'BLE DELHI HI GH COURT IN THE CASE OF VIPIN MALIK VS. CIT 183 TAXMAN 296 RENDER ED IN THE CONTEXT OF SECTION 54F, WHEREIN THE HON'BLE HIGH COU RT UPHOLDING THE ORDER OF HON'BLE ITAT DELHI OBSERVED AS UNDER :- 'WHERE MOST OF AMOUNT HAD ALREADY BEEN PAID TO CO-OP ERATIVE SOCIETY FOR PURCHASE OF A FLAT BEFORE ONE YEAR OF SALE OF AGRICULTURAL LAND, AMOUNT, WHICH WAS AVAILABLE TO BE TAXED AS CAPITAL GAIN, COULD NOT BE SAID TO HAVE BEEN UTILIZE D FOR PURCHASE OF FLAT EITHER ONE YEAR BEFORE SALE OF AGRICULTURAL LAND OR TWO YEARS AFTER SALE OF AGRICULTURAL LAND AND THUS ASSESSEE WO ULD NOT BE ELIGIBLE TO CLAIM EXEMPTION U/S 54F IN RESPECT OF SUCH CAPITAL GAIN.' AS REGARDS, THE APPELLANT'S RELIANCE ON THE VARIOUS DEC ISIONS AS ENUMERATED IN THE PRECEDING PARA, THE SAME DO NOT HE LP IN ADVANCING THE CASE OF THE APPELLANT AS THOSE DIFFER O N FACTS. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION IT IS CON SIDERED JUST AND FAIR IF THE EXEMPTION U/S 54 IS RESTRICTED TO THE AMOUNT INVESTED AFTER 19.10.2005 I.E. ONE YEAR PRIOR TO DAT E OF TRANSFER. ITA NO2960/DEL/2011 7 THE AO IS DIRECTED TO WORK OUT THE EXEMPTION U/S 54 K EEPING IN VIEW THE ABOVE DIRECTIONS. THE CONTENTION OF THE APP ELLANT IS ACCEPTED TO THAT EXTENT. 5. AGGRIEVED THE REVENUE FILED APPEAL BEFORE THIS TR IBUNAL. 6. THE LD DR READ THE GROUNDS FORCEFULLY AND SUBMITTE D THAT HE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND IN V IEW THEREOF HE SUBMITTED THAT ORDER OF LD CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER BE UPHELD. 7. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. 8. WE HAVE HEARD THE ARGUMENTS OF LD DR AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED T HAT THE AMOUNT OF CAPITAL GAIN HAS BEEN INVESTED BY THE ASSESSEE IN NEW HOU SE PROPERTY. HOWEVER, THE PAYMENT HAD STARTED FROM NOVEMBER, 2004 AND WERE PAID IN INSTALLMENTS UP TO AUGUST, 2008. THE ABOVE PAY MENTS WERE MADE IN VIEW OF THE AGREEMENT ENTERED INTO BY THE A SSESSEE WITH THE DEVELOPER IN NOVEMBER, 2004 WHEREAS THE POSSESSION OF TH E HOUSE WAS HANDED OVER TO THE ASSESSEE IN JANUARY, 2008AND PROP ERTY WAS REGISTERED IN THE NAME OF THE ASSESSEE IN MAY, 2008. AS PER SECTION 54, THE ASSESSEE WAS REQUIRED TO INVEST IN THE NEW HOUSE P ROPERTY BETWEEN THE PERIOD 19.10.2005 TO 19.10.2008. THE A SSESSING OFFICER IN VIEW OF THE DATE OF AGREEMENT BEING BEFORE 19.10 .2005 DISREGARDED THE CLAIM OF ASSESSEE IGNORING THE FACT THAT ACTUAL CON VEYANCE DEED WAS EXECUTED BETWEEN THIS PERIOD OF 19.10.2005 & 19.1 0.208. THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED SIMPLY BECAUSE OF THE FACT THAT CERTAIN PAYMENTS WERE MADE BEFORE THE PERIOD 19 .10.2005. THE LD CIT(A) THOUGH HAS CONSIDERED THE INVESTMENT IN THE HOUSE AS ITA NO2960/DEL/2011 8 ELIGIBLE INVESTMENT U/S 54 BUT HAS EXCLUDED THE PAYMEN TS MADE BY THE ASSESSEE BEFORE 19.10.2005. IN OUR VIEW, LD CIT(A) WAS JUSTIFIED IN DOING SO AND WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DAY OF SEPTEMBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 28.9.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 9.8.2012 DATE OF DICTATION 21.9.2012 DATE OF TYPING 24.9.2012 DATE OF ORDER SIGNED BY 28.9.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 28.9.2012 & SENT TO THE BENCH CONCERNED. ITA NO2960/DEL/2011 9