Smt.Thulasi Subash, Thrikkakkara, V. The iTO, Kochi

ITA 286/COCH/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6980 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 06-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTHAM BOSE
• Section: 54; 263; 143(3); 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George Mathan, JM & Shri M. Balaganesh, AM ITA No. 286/Coch/2020 (Assessment Year: 2015-16) Smt. Thulasi Subash 6/460A, Chellam Kollamkudimugal Thrikkakara Kochi 682021 Vs. The Income Tax Officer Ward-1(5), Range 1 Non Corporate Kochi PAN – CTAPS0080B Appellant Respondent Appellant by: Shri Savio George, CA Respondent by: Shri Shantham Bose, CIT-DR Date of Hearing: 14.03.2022 Date of Pronouncement: 14.03.2022 O R D E R Per: Bench This is an appeal filed by the assessee against the order of the learned Principal CIT-2, Kochi under Section 263 of the Income Tax Act, 1961 dated 13.05.2020 for AY 2015-16. 2. Shri Savio George, CA represented the assessee and Shri Shantham Bose, CIT-DR represented Revenue. 3. It was submitted by the learned A.R. that the assessee is an individual who along with her siblings sold her ancestral property during AY 2015-16. It was the submission that out of the consideration the assessee had invested Rs.40 lakhs in prescribed bond and the balance Rs.60 lakhs had been invested by the assessee in construction of a residential house above her residential house which had been constructed during AY 2012-13. It was the submission that the new residential house which had been constructed was consisting of two floors which was capable of being rented out as two separate portions or as a single unit. It ITA No. 286/Coch/2020 Smt. Thulasi Subash 2 was the submission that the assessment was originally completed under Section 143(3) of the Income Tax Act, 1961 on 28.11.2017 wherein the AO had, after examining the facts and details, had made a disallowance of Rs.2,90,000/- in respect of supervision charges paid by the assessee. It was the submission that the said assessment was the subject matter of revision under Section 263 of the Act wherein in para 7 of his order the Pr. CIT had held as under: - “It appears from the records that the Assessing Officer had not conducted a proper enquiry or verification whether the transfer of capital assets was a residential house or not, and investment made in the new house property whether it qualifies for claiming exemption u/s 54 as required in that section. The Assessing Officer has failed to do necessary enquiry/ verification, which should have been made while allowing the claim u/s 54 of the Income Tax Act.” It was the submission that thus the issue raised by the Principal CIT was not one of any error in the assessment order, much less an order prejudicial to the interest of Revenue. It was also submitted that the Pr. CIT adopted a view that the new construction being 915 G2 and 915 G3 were two separate properties. It was the submission that the Corporation Tax Receipt, which was shown at pages 31 to 33 of the paper book, the same was shown as two separate portions. It was the submission that the Hon'ble Delhi Court in the case of Gita Duggal reported in 357 ITR 153 has categorically held that for the purpose of Section 54 of the Act what is mentioned is a residential house and not a residential unit. It was further submitted that there are various decisions which have held that for the purpose of Section 54 of the Act multiple residential houses can also be considered. It was the submission that the issue itself being a debatable issue and the learned AO had taken one possible view the order under Section 54 of the Act is liable to be quashed. 4. In reply the learned D.R. vehemently supported the order of the Principal CIT. It was the submission that the assessee had constructed two residential houses and if at all what was available is only exemption under Section 263 of the Act in respect of one residential house. ITA No. 286/Coch/2020 Smt. Thulasi Subash 3 5. We have considered the rival contentions. A perusal of the order under Section 263 of the Act clearly shows that even before the Pr. CIT the assessee had brought out the issue as also the decision in the case of Gita Duggal (supra) but the Pr. CIT has not countered the said decision either but has proceeded in para 7 to say that proper verification has not been done. In fact the wordings used by the Pr. CIT are “it appears from the records. The words of Section 263 of the Act are “if he considers that any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of Revenue”. There is no question of making a prima facie view in the revision order. The error has to be specific. Also the issue raised by the Pr.CIT in the present case being a highly debatable issue the same cannot be considered as an issue which is erroneous or prejudicial to the interest of Revenue. Consequently, as the AO has taken one of the possible views it is not susceptible to the provision of revision under section 263 of the Act. The order passed under Section 263 stands quashed. 6. In the result, the appeal filed by the assessee is allowed. Dictated and pronounced in the open Court on 14 th March, 2022. Sd/- Sd/- (M. Balaganesh) (George Mathan) Accountant Member Judicial Member Cochin, Dated: 14 th March, 2022 Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) - 4. The Pr.CIT - 2, Kochi 5. Guard File By Order //True Copy// Assistant Registrar ITAT, Cochin n.p.