Bhagwan Swroop Pathak, Haryana V. ITO ward-1(3), Haryana

ITA 2754/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3510 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 29-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 201; 139(1); 147; 148; 54

Judgement Text

1 ITA NO. 2754/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2) + SM C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 2754/DEL/2019 ( A.Y 2010-11) BHAGWAN SWROOP PATHAK H. NO. 651, 1 ST FLOOR, SECTION 10A, GURGAON, HARYANA PAN: AAPPP6478A (APPELLANT) VS ITO WARD-1(3) GURGAON , HARYANA PIN: 122006 (RESPONDENT) APPELLANT BY SH. M. R. SAHU, CA RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 23/01/2019 PASSED BY CIT(A)-1, GURGAON FOR ASSESSMENT YEAR 201 0-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1 THAT THE LD. C!T(A)-I, GURGAON ERRED IN NOT CONS I DERING THE RULE OF PURPOSIVE AND BENEFICIAL CONSTRUCTION AND ERRED IN INTERPRETING THE PROVISIONS OF SECTION 54, THIS SECTION DOES NOT REQUIRE THAT THE NEW RESI DEN TIAL PROPERTY SHALL BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. IT MERELY SAYS T HAT THE ASSESSEE MOULD HAVE PURCHASED/CONSTRUCTED A RESIDENTIAL HOUS E WITHIN THE PRESCRIBED LIMIT SPECIFIED IN THIS SECTION. 2. THAT THE LD. CIT(A)-I, GURGAON ERRED IN CONCLUDI NG THAT FOR CLAIMING RELIEF DATE OF HEARING 02.03.2020 DATE OF PRONOUNCEMENT 05 .03.2020 2 ITA NO. 2754/DEL/2019 UNDER SECTION 54 THE HOUSE PROPERTY CANNOT BE PURCH ASED IN THE NAME OF YOUNGEST SON OUT OF LOVE AND AFFECTION, IGNORING TH E FACT THAT ASSESSEE IN THE PRESENT CASE HAS PURCHASED THE NEW HOUSE IN THE NAM E OF YOUNGEST SON AS UNDER COMMON LAW FATHER AND SON WHO IS A STUDENT AR E CONSIDERED TO BE ONE AND SAME EVEN THOUGH THEY ARE INDEPENDENT AND DISTI NCT UNDER THE I.T ACT- 1961. 3. THAT THE LD. CIT(A)-I, GURGAON ERRED IN NOT APPLYIN G THE THEORY OF CONSTRUCTIVE OWNERSHIP' PRONOUNCED BY HON'BLE SUPRE ME COURT TO HOLD THAT ASSESSE E FATHER' IS THE REAL OWNER OF THE NEW HOUSE PROPERT Y EVEN IF THE NEW PROPERTY WAS REGISTERED IN THE NAME OF YOUNGEST SON WHO IS A STUDENT OUT OF L OVE AND AFFECTION. 4. THAT THE LD. CIT(A)-I, GURGAON HAS FURTHER GROSSLY ERRED IN RELYING ON THE JUDGMENTS TOTALLY INAPPLICABLE TO THE F ACTS OF THE CASE OF THE ASSESSEE APPELLANT AND HAS FURTHER, PLACED RELIANCE ON THE PROVISIONS NOT APPLICA BLE ON THE FACTS OF THE ASSESSEE APPELLANT. 5. THAT THE LD. CIT(A)-I, GURGAON HAS FURTHER GROSS LY ERRED IN NOT CONSIDERING THE AFFIDAVIT SUBMITTED BY THE ASSESSEE FATHER A ND THAT OF SON CLEARLY STATING THE FACT THAT THE INVESTMENT IN NEW HOUSE P ROPERTY WAS MADE BY THE ASSESSEE FATHER OUT OF SALE PROCEEDS OF THE OLD HO USE PROPERTY AS SON WHO IS A STUDENT HAS NO OSTENSIBLE SOURCE OF INCOME AND ALL PAYMENTS TO THE BUILDER ARE ROUTED THROUGH BANKING CHANNEL, UNDER S UCH CIRCUMSTANCES SOURCE OF INVESTMENT CANNOT BE SAID TO BE UNESTABLISHED. 6. WIT HOUT PREJUDICE POINT NO.5 IT IS SUBMITTED THAT PROV ISION OF SECTION 54 DOES NOT CONTAIN ANY RESTRICTION THAT INVESTMENTS IN THE NEW HOUSE SHALL BE MADE OF SALE PROCEEDS OF OLD HOUSE ACCORDINGLY INVE STMENT IN NEW HOUSE WITHIN PR ESCRIBED TIME OUT OF LOAN AMOUNT IS ALSO ELIGIBLE F OR SECTION 54 RELIEF. 3 ITA NO. 2754/DEL/2019 7. THAT THE ASSESSEE CRAVES THE RIGHT TO AMEND, ADD, D ELETE, REPLACE , ALL OR ANY OF THE GROUNDS OF APPEAL EITHER DURING THE CO URSE OF HEARING OR AT ANY TIME B EFORE HEARING OF THIS APPEAL. PRAYER/RELIEF CLAIMED: 1. TO ALLOW RELIEF UNDER SECTION 54 OF RS.23,27,402/- IN THE HANDS OF THE ASSESSEE FATHER' ON ACCOUNT OF PURCHASE OF NEW HOUS E PROPERTY IN THE NAME OF 'SON' WHO IS A STUDENT. 2. ANY OTHER RELIEF AS DEEMED FIT IN CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE IS AN INDIVIDUAL AND TRANSFERRED A RESIDENTIAL HOUSE PROPERTY THROUGH TRANSFER DEED OF LEASE HOLD RIGHTS SIGNED BETWEEN THE ASSESSEE (TRANSFEROR) AND THE PURCHASER SHRI DINESH PRAKASH SHARMA (TRANSFEREE) ON 24 TH SEPTEMBER, 2009 FOR AN AGREED CONSIDERATION OF RS. 50,00,000/-. THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME FOR ASS ESSMENT YEAR 2010-11 WITHIN THE DUE DATES U/S 139(1) AS WELL AS U/S 139( 4) OF THE INCOME TAX ACT. THE CASE WAS REOPENED U/S 147 AND ASSESSING OFFICER PASSED ORDER DATED 15/12/2017 U/S 147/143(3) AND ASSESSED INCOME OF RS . 35,34,360/- WHICH INCLUDES LONG TERM CAPITAL GAIN OF RS. 33,74,013/- EARNED FROM THE TRANSFER OF OLD HOUSE PROPERTY. DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSEE CLAIMED RELIEF U/S 54 RELATING TO ALLOTMENT OF UNDER CONSTR UCTION NEW RESIDENTIAL HOUSE PROPERTY AMOUNTING TO RS. 27,26,526/-. IMMEDIATELY AFTER THE OLD HOUSE WAS SOLD, THE ASSESSEE BOOKED UNDER CONSTRUCTION RESIDE NTIAL FLAT FROM BUILDER M/S BESTECH INDIA PVT. LTD. IN THE NAME OF HIS SON MR. DIPAK KUMAR. THE SAID NEW HOUSE WAS ALLOTTED IN FAVOUR OF MR. DIPAK KUMAR VID E ALLOTMENT LETTER DATED 28 TH JUNE, 2011. TOTAL COST OF NEW HOUSE AS PER THE AL LOTMENT LETTER DATED 20/6/2011 WAS RS. 24,55,875/-.PAYMENTS RELEASED TO THE BUILDER UP TO 23 RD SEPTEMBER, 2012 I.E. WITHIN 3 YEARS FROM THE TRANSF ER OF OLD HOUSE I.E. 24 TH SEPTEMBER 2009 AS PER PAYMENT RECEIPT STATEMENT COL LECTED FROM THE BUILDER WAS SUBMITTED TO THE ASSESSING OFFICER. POSSESSION OF THE NEW HOUSE WAS GIVEN BY THE BUILDER ON 21 ST JANUARY, 2013, IN FAVOUR OF THE SON. 4 ITA NO. 2754/DEL/2019 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A) AND CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE CLAIMED S ECTION 54 BENEFIT FOR THE AMOUNT EQUAL TO THE AMOUNTS OF INVESTMENT MADE IN THE NAME OF ASSESSEES SON TOWARDS PURCHASE OF NEW UNDER CONSTRUCTION HOU SE PROPERTY WITHIN THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE OLD RESIDENTIAL HOUSE PROPERTY OUT OF LONG TERM CAPITAL GAIN EARNED FROM THE TRANS FER OF OLD RESIDENTIAL HOUSE PROPERTY. THE LD. AR SUBMITTED THAT THE SAID CLAIM CANNOT BE DENIED BY THE ASSESSING OFFICER EVEN IF RETURN OF INCOME WAS FILE D BELATEDLY IN RESPONSE TO NOTICE ISSUED U/S 148. THE LD. AR SUBMITTED THAT S ECTION 54 IS A BENEFICIAL PROVISION AND IS APPLICABLE TO AN ASSESSEE INDIVIDU AL WHEN THE LONG TERM CAPITAL GAIN EARNED ON TRANSFER OLD RESIDENTIAL HOU SE PROPERTY AND IS INVESTED IN THE CONSTRUCTION PURCHASE OF NEW RESIDENTIAL HOUSE PROPERTY WITHIN THE TIME PERIOD SPECIFIED U/S 54. THE LD. AR FURTHER SUBMIT TED THAT ONCE AN ASSESSEE FALLS WITHIN THE AMBIT OF BENEFICIAL PROVISION THEN THE SAID PROVISION SHOULD BE LIBERALLY INTERPRETATED. SECTION 54 DOES NOT MANDA TE THAT THE NEW HOUSE PROPERTY SHOULD BE PURCHASED/CONSTRUCTED IN THE NAM E OF ASSESSEE ALONE. THE LD. AR SUBMITTED THAT INVESTMENT IN NEW RESIDENTIAL HOUSE PROPERTY IN THE NAME OF ASSESSEES SON WHO IS A FAMILY MEMBER CANNO T BE DEBARRED FROM GRANTING CLAIM U/S 54 OF THE ACT. THE LD. AR RELIE D UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF JAGPAL SINGH V S. ITO (186 TAXMAN 26), THE HONBLE ANDHRA PRADESH HIGH COURT IN CASE OF MEER G ULAM ALI KHAN VS. CIT 1(165 ITR 228), THE HONBLE PUNJAB & HARYANA HIGH C OURT IN CASE OF CIT(A) VS. GURNAM SINGH 327, ITR 278). THE LD. AR ALSO RELIED UPON THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. R. L. S OOD (254 ITR 727 & THE HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. SAM BANDAM UDAY KUMAR 345 ITR389. THE LD. AR ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT(A) VS. KAMAL VAHAL 351 ITR 4 W HEREIN THE ASSESSEE 5 ITA NO. 2754/DEL/2019 CLAIMED THE BENEFIT OF SECTION 54 WHEN THE PROPERTY PURCHASED IN THE NAME OF WIFE AND THE HONBLE HIGH COURT ALLOWED THE SAID CL AIM. 6. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGHTLY ADDED THE LONG TERM CAPITAL GAIN AS THE ASSESSEE FAILED TO PROVE T HAT THE PURCHASE OF THE PROPERTY COMES UNDER THE AMBIT OF SECTION 54 OF THE ACT. THE PROPERTY IS NOT IN THE NAME OF THE ASSESSEE BUT WAS PURCHASED IN THE N AME OF SON. SECTION 54 DOES NOT PERMIT THE SAME. THUS, THE LD. DR RELIED U PON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSEE H AS DEMONSTRATED BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) THAT THE PU RCHASE OF PROPERTY IN THE NAME OF THE SON WAS ACQUIRED BY THE ASSESSEE HIMSEL F THROUGH THE CONSIDERATION RECEIVED FROM THE SALE DEED OF EARLIE R OLD PROPERTY. THE BANK STATEMENT AND THE CHEQUE ISSUED TO THE BUILDER AS WELL AS THE CONFIRMATION RECEIVED FROM THE BUILDER DEMONSTRATED THAT THE PAY MENT WAS MADE BY THE ASSESSEE FOR PURCHASE OF NEW PROPERTY WITHIN THE ST IPULATED TIME AS PRESCRIBED U/S 54. THOUGH, THE ASSESSEE IS NOT FILED ANY RETU RN AND AT THAT STAGE NEVER CLAIMED SECTION 54, ONCE THE REOPENING U/S 148 HAS BEEN ISSUED, THE ASSESSEE CANNOT BE DENIED HIS ENTITLEMENT /CLAIM FOR DEDUCTI ON OR EXEMPTION UNDER INCOME TAX STATUTE ON THE SOLE GROUND THAT NO RETUR N WAS FILED. THE BENEFIT OF INCOME TAX ACT AND ITS PROVISIONS RELATED TO EXEMPT ION AND DEDUCTION HAS TO BE TAKEN INTO ACCOUNT WHILE COMPUTING THE INCOME OF TH E ASSESSEE AND IT IS THE PROPER PROCEDURE ON THE PART OF THE ASSESSING OFFIC ER TO FOLLOW ALL THE ASPECT OF TAXATION WITHIN THE CORNERS OF INCOME TAX ACT. AS REGARDS THE NAME UNDER WHOM THE PROPERTY IS PURCHASED, IT CAN BE SEEN THAT THE SON OF THE ASSESSEE IS A DIRECT RELATION AND AS PER THE HONBLE DELHI HIGH COURT DECISION IN CASE OF CIT(A) VS. KAMAL VAHAL 351 ITR 4 WHERE ASSESSEE PUR CHASED NEW HOUSE IN 6 ITA NO. 2754/DEL/2019 NAME OF HIS WIFE, THE CLAIM UNDER SECTION 54 IS HEL D VALID. THUS, THE EXEMPTION COULD NOT BE DENIED IF ENTIRE INVESTMENT HAD COME O UT OF PROCEEDS OF OLD PROPERTY. THUS, THE ORDER OF THE CIT(A) IS NOT JUST IFIED IN LIGHT OF THE DECISION IN CASE OF KAMAL VAHAL (SUPRA). THEREFORE, THE APPEA L OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH MARCH, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05/03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 2754/DEL/2019 DATE OF DICTATION 03.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 0 5 .03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 0 5 .03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 0 5 .03.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER