I.Basheer, Aluva V. ITO, Aluva

ITA 300/COCH/2002

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52333 (ITAT-COCHIN)
• Duration Of Justice: 9 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 20-10-2011
• Assessment Year: 1992-1993
• Appeal Filed On: 19-08-2002
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 300/COCH/2002 ASSESSMENT YEAR:1992-93 I.BASHEER, PUTHIYEDATH HOUSE, MUTTOM, ALUVA. VS. THE INCOME TAX OFFICER, WARD-3, ALWAYE. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY NONE REVENUE BY MS. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 20/10/2011 DATE OF PRONOUNCEMENT 30/12/2011 O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOCHI (CIT(A) FOR SHORT) DATED 05-07-2002, DISMISSING THE ASSESSEES APPEAL CONTESTING THE ASSESSMENT U/S. 14 3(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (`THE ACT HEREINAFTER) DATED 04-03-1999 FOR T HE ASSESSMENT YEAR (A.Y.) 1992-93. 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE WHEN HIS APPEAL WAS CALLED OUT FOR HEARING, EVEN AS THE NOTICE OF HEARING STOOD DU LY SERVED (COPY OF THE ACKNOWLEDGMENT ON RECORD). THE INSTANT POSTING FOR HEARING WAS MA DE ONLY ON THE REQUEST OF THE LATE ASSESSEE, WHO IS NOW BEING REPRESENTED BY HIS SON A ND LEGAL HEIR, SHRI P.B.ARAF, VIDE HIS LETTER DATED 05-08-2011. THE APPEAL COMES UP FOR HE ARING BEFORE THIS TRIBUNAL IN PURSUANCE TO THE DIRECTION BY THE HONBLE JURISDICT IONAL HIGH COURT (VIDE ITS JUDGMENT IN I.T.A. NO. 307 OF 2009 DATED 24-10-2010/COPY ON REC ORD). THE ASSESSEE, IN THE FIRST I.T.A. NO.300 /COCH/2002 I.BASHEER VS. ITO, ALWAYE 2 ROUND BEFORE THE APPELLATE TRIBUNAL, AGITATED THE C ONFIRMATION OF HIS ASSESSMENT FOR THE YEAR ON BOTH, THE LEGAL GROUND, I.E., QUA THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS, AS WELL AS ON QUANTUM; IT CLAIMING DEDUCTION U/S. 54 O F THE ACT IN RESPECT OF DISPUTED CAPITAL GAINS ARISING ON THE ACQUISITION OF LAND (WITH THE RESIDENTIAL BUILDING THEREON) BY THE GOVERNMENT UNDER THE LAND ACQUISITION ACT. THE TRIB UNAL HAD VIDE ITS ORDER DATED 29-04- 2003 SET ASIDE THE ASSESSMENT, HOLDING THE RE-OPENI NG AS BAD IN LAW. THE HON'BLE JURISDICTIONAL HIGH COURT, VIDE ITS AFORE-REFERRED DECISION IN THE REVENUES APPEAL, HOWEVER, HELD THE ASSESSMENT AS VALID. THE TRIBUNAL HAVING NOT ADJUDICATED THE ISSUE ON QUANTUM, THE HONBLE COURT RESTORED THE APPEAL BACK TO ITS FILE TO CONSIDER THE ELIGIBILITY FOR EXEMPTION U/S. 54(1) ON THE INVESTMENT ON PURCH ASE OF LAND AND CONSTRUCTION OF BUILDING THEREON. IT IS UNDER THESE CIRCUMSTANCES T HAT THIS TRIBUNAL ASSUMES JURISDICTION TO DECIDE THIS APPEAL. 3.1 THE ONLY ISSUE, THEREFORE, BEFORE US, IN TERMS OF THE RESTORATION, IS THE ELIGIBILITY OF THE ASSESSEES CLAIM FOR DEDUCTION U/S. 54 IN RESPE CT OF THE CAPITAL GAINS. THE MATTER HAS BEEN DECIDED BY THE LD. CIT(A) VIDE PARA 6.D OF HIS ORDER, WHICH READS AS UNDER:- 6.D AS REGARDS THE CLAIM OF THE APPELLANT FOR EXE MPTION U/S. 54, I OBSERVE THE FOLLOWING FACTS. THE APPELLANT RECEIVED AN AMOUNT OF RS.8,83,900/- BEING PART COMPENSATION BY CHEQUE DT. 30.3.1992, OUT OF THE T OTAL COMPENSATION AMOUNT OF RS. 12,61,859/-. THE APPELLANT CLAIMS THAT THE CHE QUE WAS ENCASHED AND RS.5,25,000/- WAS DEPOSITED IN THE SBT, ALUVA BR. ON 31.3.1992. SUBSEQUENTLY, THE APPELLANT RECEIVED THE BALANCE AMOUNT OF RS. 3 ,77,959/- IN CASH ON 18.6.1993. IT IS STATED THAT THE APPELLANT HAD PURCHASED 33.5 7 CENTS OF LAND SY. NO. 354/7 ON 24.2.1992 AND 25.2.1992 AT MUTTOM (ALUVA WEST VILL AGE) FOR A TOTAL CONSIDERATION OF RS. 3,40,000/-. THIS AMOUNT HAD BEEN DRAWN FRO M THE FIRM, M/S. PUTHIYEDATHU CONSTRUCTIONS. IN ORDER TO BE ELIGIBLE FOR EXEMPTI ON U/S. 54 OF THE I.T. ACT THE APPELLANT HAS TO PURCHASE WITHIN A PERIOD OF ONE Y EAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OR WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER CONSTRUCT A RESIDENTIAL HOUSE. THE APPELLANT HAS N OT PURCHASED A RESIDENTIAL HOUSE EITHER WITHIN ONE YEAR BEFORE OR TWO YEARS AFTER T HE DATE ON WHICH TRANSFER TOOK PLACE, NAMELY 26.3.1992, I.E., THE APPELLANT HAS N OT MADE ANY PURCHASE OF RESIDENTIAL PROPERTY WITHIN THE PERIOD FROM 26.3.1 991 TO 26.3.1994. THE APPELLANT HAS ALSO NOT CONSTRUCTED ANY RESIDENTIAL HOUSE WI THIN 3 YEARS OF THE DATE OF TRANSFER, I.E., BY 26.3.1995. FURTHER, THE APPEL LANT HAS NOT DEPOSITED THE UAPPROPRIATED CAPITAL GAINS IN ANY SPECIFIED ACCOU NT AS REQUIRED BY SEC. 54(2) OF I.T.A. NO.300 /COCH/2002 I.BASHEER VS. ITO, ALWAYE 3 THE I.T. ACT. FOR THESE REASONS, THE CLAIM OF THE APPELLANT FOR EXEMPTION U/S. 54 IS NOT IN ORDER AND IS HENCE REJECTED. THEREFORE, TH E ORDER OF THE ASSESSING OFFICER ASSESSING THE CAPITAL GAINS OF RS.8,56,880/- IN A. Y. 1992-93 IS UPHELD. 3.2 WE FIND THAT THE PRIMARY FACTS IN RELATION TO T HE SAID CLAIM, DULY NOTED IN THE IMPUGNED ORDER, ARE UNDISPUTED. AS WE OBSERVE, THE SAME STAND SUPPLIED BY THE ASSESSEE HIMSELF. THE AUTHORITIES BELOW, AS APPARENT, HAVE E XAMINED THE ASSESSEES ALTERNATE CLAIM FOR DEDUCTION U/S. 54, WHICH HE PRESSES THROUGHOUT, BOTH U/S. 54(1) AS WELL AS U/S. 54(2), FINDING IT AS NOT ELIGIBLE UNDER EITHER. FURTHER, W E FIND THAT THERE HAS BEEN NO CLAIM FOR COMPLETION OF RESIDENTIAL HOUSE BY MARCH, 1995, AND THE BASIS FOR THE ASSESSEES CLAIM U/S. 54 IS WITH REFERENCE TO DEPOSIT U/S. 54(2), WH ICH WAS FOUND TO BE IN A NON-SCHEDULED BANK AND, THUS, NOT QUALIFIED TO BE CONSIDERED AS T OWARD S. 54(2). IN FACT, THAT WOULD BY ITSELF OPERATE TO DISQUALIFY THE ASSESSEES CLAIM F OR EXEMPTION U/S. 54, WHICH CONTEMPLATES, AS A PRECONDITION, THE DEPOSIT OF THE FUNDS INURING ON THE TRANSFER OF THE CAPITAL ASSET UNDER REFERENCE, IN A SPECIFIED ACCOU NT WITH A SCHEDULED BANK. FURTHER ON, THE DEPOSIT IS ONLY FOR THE INTERIM PERIOD, SO THAT THE ESSENTIAL CONDITION OF THE USER OF FUNDS FOR THE DEFINED PURPOSE, I.E., PURCHASE OR CO NSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THE SPECIFIED TIME FRAME STIPULATED THEREFOR, HAS T O BE COMPLIED WITH. IN THE INSTANT CASE THERE IS NO PURCHASE OF RESIDENTIAL HOUSE, EVEN AS THE ASSESSEE CLAIMS TO BE CONSTRUCTING A RESIDENTIAL HOUSE, AND OF HAVING INVESTED ADEQUATE AMOUNT THEREIN. SO HOWEVER, THE ENTITLEMENT FOR EXEMPTION U/S. 54 WOULD ARISE OR BE COME EXIGIBLE ONLY WHERE THE RESIDENTIAL HOUSE HAS BEEN CONSTRUCTED WITHIN THREE YEARS OF THE TRANSFER DATE, WHICH, IN THE INSTANT CASE, EVEN AS NOTED BY THE LD. CIT(A), EXPIRES ON 26-03-1995. EVEN CONSIDERING THE RECEIPT DATE OF 30/3/1992 AS THE RE LEVANT DATE, THOUGH THE SAME HAS BEEN RIGHTLY CONSIDERED WITH REFERENCE TO DATE OF DELIVE RY OF POSSESSION, THE SAID PERIOD WOULD EXPIRE ON 29/3/1995. THERE IS NOTHING ON RECORD TO SHOW THAT THE CONSTRUCTION HAS BEEN COMPLETED BY THAT DATE/S. IN FACT, THE ASSESSEES C ONTENTION PER ITS GROUND (NO. 11), VIDE WHICH IT AGITATES THE DENIAL OF ITS CLAIM FOR EXEMP TION U/S. 54, IS THAT IT IS NOT NECESSARY THAT THE BUILDING SHOULD BE COMPLETED WITHIN THREE YEARS; ITS RELEVANT GROUND READING AS UNDER:- I.T.A. NO.300 /COCH/2002 I.BASHEER VS. ITO, ALWAYE 4 11. WITHOUT PREJUDICE TO THE ABOVE IT IS ALSO SUBM ITTED THAT IT IS NOT NECESSARY THAT THE BUILDING SHOULD BE COMPLETED WITHIN 3 YEARS. T HE AMOUNT SPENT FOR THE CONSTRUCTION OF BUILDING HAS TO BE CONSIDERED FOR GRANTING EXEMPTION U/S. 54. 3.3 THAT, IN FACT, SUMS UP THE ASSESSEES CASE; IT TACITLY ADMITTING TO THE CONSTRUCTION OF HIS NEW RESIDENTIAL HOUSE HAVING NOT BEEN COMPLETED BY THE END OF MARCH, 1995. WE FIND NO SUBSTANCE IN THE ASSESSEES CASE. THE TERMS OF T HE SECTION, CONVEYED PER ITS LANGUAGE, ARE CLEAR AND UNAMBIGUOUS, AND THE CONSTRUCTION OF THE RESIDENTIAL HOUSE HAS TO BE COMPLETED WITHIN THE PRESCRIBED TIME. IN FACT, THE HONBLE COURT ITSELF CLARIFIES THIS ASPECT OF THE MATTER, WHEN IT (AT PARA 5, PG. 6 OF ITS DEC ISION (SUPRA)) STATES THAT IF THE ASSESSEE IS ABLE TO PRODUCE EVIDENCE ABOUT THE COMPLETION OF TH E CONSTRUCTION WITHIN THE TIME PERIOD AS SPECIFIED U/S. 54(1), THEN IT SHALL BE ENTITLED TO EXEMPTION. WE HAVE ALREADY NOTED THAT NO MATERIAL TOWARD THE SAME, I.E., THE COMPLETION O F CONSTRUCTION BY THE SPECIFIED DATE, HAS BEEN PRODUCED AT ANY STAGE, EVEN AS THE CLAIM I N ITS RESPECT STANDS MADE FROM THE INITIAL STAGE, SO THAT THERE IS NO QUESTION OF HAVI NG NOT BEEN ALLOWED SUFFICIENT OPPORTUNITY FOR THE SAME; THE APPEAL BEFORE THE TRIBUNAL ITSELF BEING ALMOST A DECADE OLD. THE ASSESSEE, IN FACT, PRESSES ITS CLAIM U/S. 54 ON A WRONG NOTIO N AND UNDERSTANDING OF THE REQUIREMENT OF THE PROVISION, AND WITHOUT OBSERVING THE MANDATO RY PROCEDURE OF DEPOSITING THE SALE (TRANSFER) PROCEEDS IN A SEPARATE, DESIGNATED ACCOU NT WITH A SCHEDULED BANK. THERE IS AS SUCH NO VALID CLAIM FOR DEDUCTION U/S. 54(1); RATHE R, NO BASIS FOR MAKING A CLAIM THERE- UNDER. THE DENIAL OF EXEMPTION U/S. 54 TO THE ASSES SEE BY THE REVENUE IS, THUS, IN ACCORDANCE WITH LAW. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 30TH DECEMBER, 2011 GJ COPY TO: I.T.A. NO.300 /COCH/2002 I.BASHEER VS. ITO, ALWAYE 5 1. SHRI P.B. ARAF, L/H OF LATE SHRI I.BASHEER, C/O SHERIFF & CO., PLOT NO. 30, JAWAHAR MAIN AVENUE, JAWAHAR NAGAR, KADAVANTHRA, COCHIN-682 020. 2. THE INCOME TAX OFFICER, WARD-3, ALWAYE. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .