M S Veena , Tumkur V. Assistant Commissioner of Income Tax Circle-1 , Tumkur

ITA 2845/BANG/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5653 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-06-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 15-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R.N SIDDAPPAPJI
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Gift; Valuation report; Onus to prove; Capital Gains
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2845/BANG/2018 ASSESSMENT YEAR: 2015-16 M.S VEENA, 4 TH CROSS, ASHOKA NAGAR, TUMAKURU-572 103. PAN AAHPV 2127 Q. VS. THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1, TUMAKURU. APPELLANT RESPONDENT APPELLANT BY : SHRI S RAMASUBRAMANIAN, C.A RESPONDENT BY : SHRI R.N SIDDAPPAPJI, ADDL. CIT (DR) DATE OF HEARING : 25.07.2019 DATE OF PRONOUNCEMENT : 01.10.2019 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13- 08-2018 PASSED BY LD CIT(A)-7, BENGALURU AND IT REL ATES TO THE ASSESSMENT YEAR 2015-16. THE GROUNDS OF APPEAL URGE D BY THE ASSESSEE RELATES TO THE REJECTION OF CLAIM FOR DEDUCTION U/S 54F OF THE ACT. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE A RE STATED IN BRIEF. THE ASSESSEE HAD PURCHASED A SITE ON 25-05-1994 AT IDEA L HOME LAYOUT, BANGALORE FOR A SUM OF RS.2,28,030/-. THE SAID SIT E WAS SOLD BY THE ASSESSEE ON 26.11.2014 FOR A SUM OF RS.1,68,00,000/ -. THUS THE ASSESSEE EARNED LONG TERM CAPITAL GAINS ON SALE OF ABOVE SAID SITE. THE ASSESSEE CLAIMED DEDUCTION OF RS.1,43,84,307/- U/S 54F OF THE ACT ITA NO.2845/BANG/2018 PAGE 2 OF 7 AGAINST THE LONG TERM CAPITAL GAIN WITH THE PLEA TH AT SHE HAS CONSTRUCTED A RESIDENTIAL HOUSE DURING THE YEAR ENDING 31.3.201 5. THE SAID RESIDENTIAL HOUSE WAS CLAIMED TO HAVE BEEN CONSTRUC TED ON A LAND ADMEASURING 1 ACRE AND 5 GUNTAS, WHICH WAS OBTAINED FROM D.BASAVARAJU (HUF) ON LEASE FOR A PERIOD OF 29 YEAR S. THE SAID LEASE DEED WAS UNREGISTERED ONE. SHRI D. BASAVARAJU IS T HE SPOUSE OF THE ASSESSEE HEREIN. IN SUPPORT OF CLAIM OF CONSTRUCTI ON OF RESIDENTIAL HOUSE, THE ASSESSEE FURNISHED A VALUATION REPORT OB TAINED FROM A REGISTERED VALUER NAMED SHRI N.V. RAMAMURTHY. 3. THE ASSESSEE HAD HELD A RESIDENTIAL HOUSE PR OPERTY PRIOR TO THE SALE OF ABOVE SAID SITE. SHE TRANSFERRED THE SAME TO HI S SON ON 10-01-2014 BY WAY OF UNREGISTERED GIFT DEED. 4. THE AO NOTICED THAT VALUATION CERTIFICATE FU RNISHED BY THE ASSESSEE DESCRIBED PROPERTY CONSTRUCTED BY THE ASSESSEE AS GUEST HOUSE, A FARM HOUSE, A MEDITATION HALL, A COCONUT GODOWN AND LAND SCAPED AREA WITH PAVEMENTS, KERBS AND STONE MONUMENTS AND COMPOUND H ALL. BEFORE THE AO, THE ASSESSEE COULD NOT FURNISH THE BILLS AN D VOUCHERS RELATING TO CONSTRUCTION EXCEPT FEW BILLS FOR PURCHASE OF BATHR OOM ITEMS TO THE TUNE OF RS.61,000/- AND CERTAIN ESTIMATES. HENCE THE AO TOOK THE VIEW THAT THE CLAIM OF THE ASSESSEE REQUIRES FURTHER INVESTIG ATION. 5. THE AO DOWNLOADED SATELLITE PICTURES OF THE B UILDING AS ON 12-04- 2014 FROM THE INTERNET AND NOTICED THAT THE BUILDIN G STRUCTURE WAS AVAILABLE ON THE IMPUGNED LAND AS ON THAT DATE ALSO . THE AO NOTICED THAT ASSESSEE HAD ALSO NOT OBTAINED ANY PLAN APPROV AL FROM THE LOCAL PANCHAYAT/MUNICIPALITY. WHEN QUESTIONED, IT WAS CO NTENDED BY THE ITA NO.2845/BANG/2018 PAGE 3 OF 7 ASSESSEE THAT SUCH KIND OF APPROVAL IS NOT REQUIRED IN THE VILLAGE AREAS. THE AO ALSO NOTICED THAT THE ELECTRICITY CONNECTION WAS AVAILABLE IN THE NAME OF HER HUSBAND ONLY, WHO IS THE OWNER OF THE L AND AND THE CONNECTION WAS OBTAINED IN 2007 ITSELF. THE AO ALS O MADE LOCAL ENQUIRIES THROUGH HIS INSPECTOR AND THE SAID ENQUIR IES REVEALED THAT THE PROPERTY EXISTED IN THAT LAND FOR QUITE A LONG TIME . ACCORDINGLY, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS NOT CONSTRUCTED ANY NEW RESIDENTIAL BUILDING AS CLAIMED BY HER AND SHE MIGHT HAVE DONE SOME RENOVATION WORK IN THE ALREADY EXISTING STRUCTURES. THE AO AL SO TOOK THE VIEW THAT THE GUEST HOUSE AND OTHER STRUCTURES ARE NOT RESIDE NTIAL BUILDINGS. ACCORDINGLY, HE HELD THAT THE ASSESSEE IS NOT ELIGI BLE FOR DEDUCTION U/S 54F OF THE ACT AND ACCORDINGLY REJECTED THE CLAIM O F RS.1,43,84,307/- MADE UNDER THE ABOVE SAID SECTION. THE LD CIT(A) A LSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL B EFORE US. 6. THE LD A.R SUBMITTED THAT THERE EXISTED TWO BUILDING STRUCTURES IN THE ABOVE SAID LAND, AN OLD STRUCTURE OWNED BY BASA VARAJU AND A NEW STRUCTURE BUILT BY THE ASSESSEE. HE SUBMITTED THAT THE AO HAS NOT CARRIED OUT PHYSICAL VERIFICATION OF THE BUILDINGS IN ORDER TO ASCERTAIN THIS FACT. THE INSPECTOR ALSO HAS MADE ENQUIRIES W ITH SOME LOCAL PEOPLE ONLY AND HAS GIVEN HIS REPORT WITHOUT CONDUCTING AN Y PHYSICAL VERIFICATION. HE SUBMITTED THAT THE AO HAS REJECTE D THE VALUATION REPORT WITHOUT EXAMINING THE SAME IN PROPER PERSPECTIVE. ACCORDINGLY HE SUBMITTED THAT THE REJECTION OF CLAIM FOR DEDUCTION U/S 54F OF THE ACT WAS NOT JUSTIFIED. 7. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE ASSESSEE HAS FAILED TO PROVE THAT SHE HAS ACTUALLY CONSTRUCTED A NEW RE SIDENTIAL HOUSE. HE ITA NO.2845/BANG/2018 PAGE 4 OF 7 SUBMITTED THAT THE STRUCTURES WERE ALREADY EXISTING , WHICH WERE PROVED BY SATELLITE IMAGES AND LOCAL ENQUIRIES. THE VALUA TION CERTIFICATE IS A SELF SERVING DOCUMENT AND THE VALUER MIGHT HAVE VALUED T HE EXISTING STRUCTURES ALSO. THE ASSESSEE COULD NOT FURNISH AN Y BILLS AND VOUCHERS RELATING TO CONSTRUCTION OF RESIDENTIAL HOUSE. THE LD D.R SUBMITTED THAT, IN ANY CASE, GUEST HOUSE, MEDITATION HALL, COCONUT GODOWN ARE A COMMERCIAL BUILDINGS AND HENCE THE CLAIM FOR DEDUCT ION U/S 54F OF THE ACT WAS REJECTED ON SEVERAL GROUNDS. 8. WE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORD. WE NOTICE THAT THE ASSESSEE HAS FURNISHED FOLLOWING DOCUMENTS IN ORDER TO CLAIM THAT SHE HAS CONSTRUCTED A RESIDENTIAL HOUSE AND AC CORDINGLY CLAIMED DEDUCTION U/S 54F OF THE ACT. (A) UNREGISTERED LEASE DEED FOR TAKING LEASE OF LAN D OF 1 ACRE AND 5 GUNTAS. (B) VALUATION CERTIFICATE OBTAINED FROM A REGISTE RED VALUER. THE LAND WAS TAKEN ON LEASE BY THE ASSESSEE FROM HE R SPOUSE FOR A PERIOD OF 29 YEARS AND THE SAME IS ALSO UNREGISTERE D. 9. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COULD NOT FURNISH COPIES OF PLAN APPROVAL, ELECTRICITY CONNECTION, BILLS AND VOUCHERS RELATING TO CONSTRUCTION OF BUILDING. THE CASE OF THE REVENUE IS THAT THE UNREGISTERED LEASE DEED AND THE VALUATION CERTIFICA TE ARE SELF SERVING DOCUMENTS, WHICH SHOULD HAVE BEEN CORROBORATED BY T HE ASSESSEE BY PRODUCING OTHER EVIDENCES. WE FIND MERIT WITH THE VIEW TAKEN BY THE REVENUE. THOUGH THE ASSESSEE HAS FURNISHED COPIES O F CERTAIN VOUCHERS, YET THEY WERE RELATED TO PLUMBING ITEMS, WHICH COUL D HAVE BEEN USED ON THE EXISTING BUILDING STRUCTURE ALSO. WE NOTICE THA T THE AO HAS MADE ITA NO.2845/BANG/2018 PAGE 5 OF 7 LOCAL ENQUIRIES, WHICH REVEALED THAT THE IMPUGNED B UILDINGS WERE EXISTING FOR MANY YEARS. THE AO HAS ALSO FOUND THAT THE ASSESSEE HAS NOT TAKEN ANY NEW ELECTRICITY CONNECTION AND THE EX ISTING ELECTRICITY CONNECTION WAS GIVEN IN 2007 ITSELF IN THE NAME OF SPOUSE OF THE ASSESSEE. THE AO HAS ALSO RELIED ON SATELLITE IMAG ES TO BUTTRESS HIS VIEWS. WE NOTICE FROM THE VALUATION REPORT FURNISH ED BY THE ASSESSEE THAT THE CONSTRUCTED AREA WAS ABOUT 9000 SQ.FT., AN D IT HAS BEEN CLAIMED THAT THE SAME WAS CONSTRUCTED WITHIN A PERI OD OF 11 MONTHS, WHICH IS DIFFICULT IN NORMAL CIRCUMSTANCES. WE HAV E EARLIER NOTICED THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SUPP ORT HER CLAIM OF CONSTRUCTION OF A NEW RESIDENTIAL HOUSE EXCEPT THE UNREGISTERED LEASE DEED FOR LEASE OF LAND FROM HER SPOUSE AND A VALUAT ION REPORT. THERE SHOULD NOT BE ANY DISPUTE THAT THE BURDEN TO PROVE THE CLAIM OF CONSTRUCTION OF NEW RESIDENTIAL HOUSE IS PLACED UPO N THE SHOULDERS OF THE ASSESSEE, WHICH THE ASSESSEE HAS FAILED TO PROV E. ON THE CONTRARY, WE NOTICE THAT THE AO HAS BROUGHT ON RECORD MANY EV IDENCES IN ORDER TO PROVE THAT THE ASSESSEE HAS NOT CONSTRUCTED ANY NEW RESIDENTIAL BUILDING, AS CLAIMED. 10. WE ALSO AGREE WITH THE VIEW TAKEN BY THE TAX AUTHORITIES THAT THE GUEST HOUSE, MEDITATION HALL AND COCONUT GODOWN ETC ., WHICH IS CLAIMED TO HAVE BEEN CONSTRUCTED, CANNOT BE TAKEN A S RESIDENTIAL BUILDING, EVEN IF THE CLAIM OF THE ASSESSEE THAT SH E HAS CONSTRUCTED A NEW BUILDING IS ACCEPTED FOR A MOMENT. 11. IN VIEW OF THE FOREGOING DISCUSSIONS, WE AR E OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE REJECTION OF CLAIM FOR DEDUCTION U/S 54F OF THE ACT. ACCORDINGLY WE CONFIRM HIS ORDER. ITA NO.2845/BANG/2018 PAGE 6 OF 7 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST OCTOBER, 2019. (BEENA PILLAI) JUDICIAL MEMBER (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 1 ST OCTOBER, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. ITA NO.2845/BANG/2018 PAGE 7 OF 7 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. DICTATION NOTE ENCLOSED . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER .