Shri Manmohan Gambhir, Indore V. ACIT-5(1), Indore

ITA 293/Ind/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4768 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 06-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 54

Judgement Text

[ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.293/IND/2018 ASSESSMENT YEAR: 2012-13 SHRI MANMOHAN GAMBHIR PROPOSITION,. SHIV SAGAR COAL DEPOT 234, LABIRA BHERU DHAR ROAD INDORE / VS. ACIT - 5(1) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. ADPPG2116H APPELLANT BY SHRI S.S. DESHPANDE, A.R. RESPONDENT BY SHRI R.P. MAURYA, SR.DR DATE OF HEARING: 15.05.2019 DATE OF PRONOUNCEMENT: 30.05.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-2, INDORE DATED 4.12.2017 PERTAINING TO T HE [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 2 ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED IN MAINTAINING THE DISALLO WANCE OF DEDUCTION CLAIMED U/S 54EC. 1.1 IT WAS PROVED BEFORE THE LOWER AUTHORITIES THAT THE CHEQUE WAS ISSUED WITHIN SIX MONTHS FOR THE PURCHASE OF THE BO ND WHICH IS ESTABLISHED FROM THE COPY OF THE BOND AND THE BA NK STATEMENT. 2. THE LD. CIT(A) HAS ERRED IN MAINTAINING THE ADDITIO N U/S 50C WHEN IT WAS ACCEPTED THAT THE SALE CONSIDERATION WAS IN CON FIRMATION WITH THE PREVAILING MARKET VALUE. 3. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE EXPENS ES INCURRED BY THE ASSESSEE, DISCOUNT ALLOWED AND THE REGISTRATION CHA RGES BORNE BY THE SELLER. THE DEDUCTIONS CLAIMED AT RS.24,86,670/- M AY PLEASE BE ALLOWED. 4. THE DISALLOWANCE OF BROKERAGE OF RS.200000/- IS UNC ALLED FOR. THE ADDITION MAY PLEASE BE DELETED. 5. THE ASSESSEE PRAYS TO ALTER, AMEND, ADD OR DELETE A NY OF THE GROUNDS OF APPEAL. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSM ENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 5.3.2015. THE ASSESSING OFFICER WHILE FRAMING T HE ASSESSMENT MADE ADDITION BY DISALLOWING THE DEDUCTIONS CLAIMED BY THE ASSESSEE IN RESPECT OF THE INVESTMENT MADE IN REC BONDS, DISALLOWANCE ON BROKERAGE EXPENSES AND ADDITION MADE U/S 50C OF THE ACT AMOUNTING TO [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 3 RS.26,86,670/-. THUS, THE A.O. MADE THE ADDITION OF RS.48,86,670/- AND ASSESSED INCOME AT RS.88,28,940/- AGAINST THE INCOME DECLARED AT RS.39,42,269/-. THE ASSESSEE AGGRIEVED BY THIS PREFERRED AN APPEAL BEFORE TH E LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. 3. GROUND NOS.1 & 1.1 ARE AGAINST DISALLOWING THE DEDUCTION CLAIMED IN RESPECT OF THE INVESTMENT MADE I N THE REC BOND. LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE YE AR UNDER APPEAL, THE ASSESSEE HAD SOLD TWO PROPERTIES AND CAPITAL GAIN WAS SHOWN. IN RESPECT OF THE SALE OF AGRICULTURAL LAND, THE ASSESSEE CLAIMED DEDUCTION U/S 54EC OF THE ACT IN RESPECT OF THE PURCHASE OF RURAL ELECTRIFICATION BONDS AND IN RESPECT OF SALE OF PLOT T HE ASSESSEE CLAIMED REGISTRATION EXPENSES OF RS.10,96,359 /-, PAYMENT OF PROPERTY TAX OF RS.10,89,911/- AND DISCOU NT [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 4 ALLOWED FOR DISTRESS SALE OF THE PLOT AT RS.6 LAKHS. HE SUBMITTED THAT IT WAS STATED BEFORE THE A.O. THAT ASSESS EE HAD SOLD LAND ON 19.7.2011 AND HANDED OVER CHEQUE ON 18.1.2012 FOR PURCHASE OF THE RURAL ELECTRICITY BONDS , WHICH WAS ENCASHED ON 21.1.2012. HE SUBMITTED THAT THE REQUISITE FUND WAS AVAILABLE IN THE BANK ACCOUNT, THEREF ORE, THE AUTHORITIES BELOW ERRED IN NOT GRANTING DEDUCTION U/S 54EC OF THE ACT. 4. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. HE SUBMITTED THAT DEDUCTION U/S 54 EC OF THE ACT WOULD BE AVAILABLE ONLY IN THE EVENT WHEN THE ASSESSEE INVESTED THE AMOUNT WITHIN 6 MONTHS OF THE SALE OF THE PROPERTY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. BEFORE LD. CIT(A), IT WAS STATED BY THE ASSESSEE THAT THE AGRICULTURAL LAND WAS TRANSFERRED O N 19.7.2011 AT A SALE CONSIDERATION OF RS.49,25,000/-. THE [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 5 A.O. ALLOWED THE DEDUCTION OF RS.20 LAKHS CLAIMED U/S 54EC OF THE ACT FOR REASONS THAT HE WAS OF THE VIEW TH AT SUCH REC BOND WAS PURCHASED AFTER THE PERIOD OF 6 MONTHS. IT WAS STATED THAT A SUM OF RS.20 LAKHS WAS CREDITED IN THE ACCOUNT OF REC ON 21.1.2012. ASSESS EE HAD HANDED OVER THE CHEQUE ON 18.1.2012, WHICH WAS PRESENTED BY THE REC AND WAS CREDITED THE SUM ON 21.1.2012. IT IS ARGUED THAT THE LIMITATION WOULD EXP IRE ONLY ON 20.1.2012, HOWEVER, THE ASSESSEE HAD ISSUED CHEQUE ON 18.1.2012 AND HANDED OVER TO THE REC WHICH WAS BEFORE THE EXPIRY OF 6 MONTHS. THIS EXPLANATION O F THE ASSESSEE WAS NOT ACCEPTED BY THE AUTHORITIES BELOW. LD . CIT(A) HAS DECIDED THIS ISSUE IN PARA 4.1, 4.2 & 4.3 AS UNDER: [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 6 [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 7 6. THE ISSUE TO BE DECIDED IS WHETHER THE ASSESSEE H AS INVESTED MONEY WITHIN THE TIME PRESCRIBED UNDER THE ACT. AS PER THE ASSESSEE, CHEQUE BEARING NO.71638 DATED 18.1.2012 DRAWN ON INDORE PARASPAR SAHAKARI BANK LTD. WAS HANDED OVER TO THE REC ALONG WITH APPLICATION FOR ALLOTMENT OF THE BOND. WE FIND THAT AS PER REC ALLOTME NT ADVICE DATED 9.4.2012, THE BOND WAS ALLOTTED TO THE ASSESSEE ON 21.1.2012 AND AMOUNT WAS ALSO DEBITED FROM THE BANK ACCOUNT OF THE ASSESSEE ON 21.1.2012. THERE IS [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 8 NOTHING ON RECORD AS TO WHEN THE APPLICATION FOR ALLOTM ENT OF BOND WAS MADE AND CHEQUE WAS HANDED OVER TO REC. THE ASSESSING OFFICER HAS ALSO NOT MADE ANY ENQUIRY FROM REC TO VERIFY THE DATE WHEN APPLICATION ALONG WITH THE REQUISITE CHEQUE WAS GIVEN TO REC FOR MAKING INVESTMENT IN THE BOND. IN OUR VIEW, MERELY FURNISHING A CHEQUE DATED 18.1.2012 WOULD NOT BE SUFFICIENT TO CONCLUDE THAT T HE ASSESSEE HAD MADE INVESTMENT BEFORE THE DATE PRESCRIBED UNDER THE ACT. HOWEVER, IN THE INTEREST OF JUSTICE , WE RESTORE THIS ISSUE TO THE FILE OF THE A.O. FOR A LI MITED PURPOSE TO VERIFY AS TO WHEN APPLICATION FOR ALLOTMENT OF BOND WAS MADE BY THE ASSESSEE AND THE DATE OF PRESENTATION OF CHEQUE FOR ENCASHMENT. IN CASE THE APPLICATION ALONG WITH CHEQUE IS GIVEN ON 18.1.2012, TH E A.O. WOULD ALLOW DEDUCTION TO THE ASSESSEE. [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 9 7. GROUND NOS.2 & 3 ARE INTER-RELATED AND ARE AGAINST SUSTAINING THE ADDITION MADE BY INVOKING THE PROVISION S OF SECTION 50C OF THE ACT AMOUNTING TO RS.26,86,670/-. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS AS WELL AS THE SUBMISSION S MADE BEFORE LD. CIT(A). LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE A.O. WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. HE SUBMITTED THAT THE SALE CONSIDERATION WAS CORRECTLY REFLECTED IN THE SALE DEED AS PER THE MARKET VALUE OF RS.1,23,02,500/-. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE SAL E DEED AT PAGE 18, WHEREIN THE SALE CONSIDERATION IS STATE D TO BE RS.1,23,02,500/-. HOWEVER, THE A.O. OBSERVED TH AT ONLY A SUM OF RS.96,15,830/- HAS BEEN RECEIVED BY CHEQUE. THEREFORE, HE INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AND ADOPTED THE MARKET VALUE, THEREBY HE MADE ADDITION OF RS.26,86,670/-. [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 10 8. LD. D.R. OPPOSED THESE SUBMISSIONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN COMPUTATION OF INCOME, THE ASSESSEE HAS DISCLOSED FULL CONSIDERATION AT RS.1,23,02,500/-. HOWEVER, HE HAS REDUCED EXPENDITU RE OF RS.26,86,670/-. THE BIFURCATION OF THIS EXPENDITURE AS PER THE ASSESSEE INCLUDES PROPERTY TAX OF RS.10,84,010/- AND DISCOUNT OF RS.6 LAKHS. THE CONTENTION OF THE ASSESS EE IS THAT BOTH THESE EXPENSES ARE DEDUCTIBLE FROM THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN . IN OUR CONSIDERED VIEW, THIS EXPENDITURE WOULD NOT QUAL IFY FOR DEDUCTION PROVIDED U/S 48 OF THE ACT AS THE EXPENDIT URE AS CLAIMED IS NOT IN CONNECTION WITH THE TRANSFER. THER EFORE, THIS SUM HAS BEEN RIGHTLY DISALLOWED BY THE A.O. HO WEVER, THE REST OF THE EXPENDITURE I.E. STAMP DUTY CHARGES AN D [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 11 OTHER EXPENSES OF DRAFTING OF THE SALE DEED, ETC. WOU LD BE ALLOWABLE EXPENDITURE SINCE THE SAME IS IN CONNECTION WITH THE TRANSFER OF THE PROPERTY. THE CASE LAWS AS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE ON TH E FACTS OF THE PRESENT CASE AS THE EXPENDITURE IS NOT IN CONN ECTION WITH THE TRANSFER OF THE PROPERTY SINCE DISCOUNT AND THE PAYMENT OF PROPERTY TAX BY NO STRETCH OF IMAGINATION CAN BE HELD AS THE EXPENDITURE IN CONNECTION WITH THE TR ANSFER OF THE PROPERTY. HENCE, GROUND NOS.2 & 3 ARE PARTLY ALLOWED. THE A.O. IS DIRECTED TO DELETE DISALLOWANCE OF RS.9,96,359/- OUT OF ADDITION OF RS.26,86,670/-. 10. GROUND NO.4 IS AGAINST DISALLOWANCE OF BROKERAGE OF RS.2 LAKHS. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. 11. PER CONTRA, LD. D.R. SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 12 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE H AS FILED SODA CHITTI BEFORE THE AUTHORITIES BELOW. THIS WAS NOT ACCEPTED. WE FIND THAT THE A.O. HAS NOT MADE ANY ENQUIR Y BEFORE DISCARDING THE SUBMISSION OF THE ASSESSEE, WE, THEREFORE, CANNOT SUSTAIN THE DISALLOWANCE MADE ON ADHOC AND CASUAL BASIS, ACCORDINGLY, THE A.O. IS DIRECTED TO D ELETE THIS DISALLOWANCE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30. 05.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 30/05/2019 VG/SPS [ITA NO.293/IND/2018] [SHRI MANMOHAN GAMBHIR, INDORE] 13 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE