SOUNDARIAMMAL, CHENNAI V. ITO NON CORPORATE WARD 2(4), CHENNAI

ITA 3003/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1206 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARI GOVIND
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Set aside; Capital Gains
• Section: 54F; 139(1); 148; 139

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL C SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.3003/CHNY/2018 ' #$' / ASSESSMENT YEAR : 2008-09 SMT. SOUNDARIAMMAL, NO.32, AVVAI COLONY, MANNAPPA STREET, KOTTURPURAM, CHENNAI - 600 085. PAN : GFAPS 3892 M V. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(4), CHENNAI - 600 006. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ()&' * + / RESPONDENT BY : SHRI K. HARI GOVIND, JCIT , # * -. / DATE OF HEARING : 11.07.2019 /0$ * -. / DATE OF PRONOUNCEMENT : 03.09.2019 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -2, CHENNA I, DATED 05.09.2018 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS REOP ENING OF ASSESSMENT. 2 I.T.A. NO.3003/CHNY/18 3. DURING THE COURSE OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THIS ISS UE. THE LD.COUNSEL HAS ALSO MADE AN ENDORSEMENT TO THAT EFF ECT IN THE APPEAL FOLDER. 4. I HAVE GONE THROUGH THE ORDERS OF BOTH THE AUTHO RITIES BELOW THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS N OT FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09. HOWEVER, ON THE BASIS OF THE SALE DEED REGISTERED, THE ASSESSING OFFICER ISS UED NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 (IN SHORT ' THE ACT') FOR REOPENING OF ASSESSMENT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS R IGHTLY REOPENED THE ASSESSMENT. ACCORDINGLY, THE REOPENING IS CONF IRMED. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DETE RMINATION OF SALE CONSIDERATION. 6. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN 30 LAKHS AS SALE CONSIDERATION. ACCORDING TO THE LD. COUNSEL, THE A SSESSEE HAS 1/5 TH SHARE IN THE PROPERTY. IN RESPECT OF ONE OF THE CO -OWNER SHRI S. SATHYAMURTHYS APPEAL, THIS TRIBUNAL FOUND THAT THE SALE CONSIDERATION IS ONLY 25 LAKHS AND NOT 30 LAKHS. THEREFORE, 3 I.T.A. NO.3003/CHNY/18 ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN ADOPTING 30 LAKHS AS SALE CONSIDERATION. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO CLAI M OF DEDUCTION UNDER SECTION 54F OF THE ACT. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAS INVESTED ALONG WITH SHRI S. SATHYAMURTHY. WHEN HIS CASE CAME BEFORE TH IS TRIBUNAL IN I.T.A. NO.1281/CHNY/2018, ACCORDING TO THE LD. COUN SEL, THIS TRIBUNAL BY AN ORDER DATED 30.10.2018, FOUND THAT S HRI SATHYAMURTHY IS ELIGIBLE FOR DEDUCTION UNDER SECTIO N 54F OF THE ACT. THEREFORE, THE LD.COUNSEL SUBMITTED THAT THE VERY S AME ORDER MAY BE FOLLOWED. 8. ON THE CONTRARY, SHRI K. HARI GOVIND, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R HAS TAKEN 30 LAKHS AS SALE CONSIDERATION. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE DECISION OF TH IS TRIBUNAL IN SHRI S. SATHYAMURTHY (SUPRA) MAY NOT BE APPLICABLE. 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ONE OF THE CO-OWNERS A MONG FOUR 4 I.T.A. NO.3003/CHNY/18 OTHERS. IN OTHER WORDS, THE ASSESSEES INTEREST IN THE PROPERTY IS 1/5 TH . THIS TRIBUNAL IN THE CASE OF SHRI S. SATHYAMURTH Y, ONE OF THE CO-OWNERS, FOUND THAT THE SALE CONSIDERATION IS ONL Y 25 LAKHS. IN FACT, THIS TRIBUNAL HAS OBSERVED AS FOLLOWS AT PARA 4 OF ITS ORDER DATED 30.10.2018:- 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE ORDERS OF THE AUTHORITIES BELOW. CONTENTION OF THE ASSESSEE IS THAT THE SUM RECEIVED WAS ERRONEOUSLY C ONSIDERED BY HIM AS 30,00,000/-, AGAINST ACTUAL AMOUNT OF 25,00,000/- MENTIONED IN THE DEED. IT IS NOT DISPUTED THA T THE VALUE FIXED FOR THE PROPERTY BY THE DEPARTMENTA L VALUATION OFFICER U/S.50C OF THE ACT WAS ONLY 18,77,000/- THOUGH HE ADOPTED A HIGHER VALUE OF 25,00,000/- CONSIDERING WHAT WAS MENTIONED IN THE SALE DEED. I AM OF THE OPINION THAT LOWER AUTHORITIES OUGHT NOT HAVE T AKEN ADVANTAGE OF THE MISTAKE COMMITTED BY THE ASSESSEE IN SHOWING THE CONSIDERATION AT A HIGHER AMOUNT THAN W HAT WAS MENTIONED IN THE SALE DEED. ESPECIALLY SO, SINCE V ALUATION CELL OF THE DEPARTMENT VALUED THE PROPERTY AT 18,77,000/-. I THEREFORE DIRECT THE LOWER AUTHORITIES TO RECOMPUTE THE CAPITAL GAINS ADOPTING 1/5 TH CONSIDERATION OF 25,00,000/- AS THE SUM RECEIVED BY THE ASSESSEE ON SALE OF THE PRO PERTY AT VELACHERY, CHENNAI. GROUND NO.3 IS TREATED AS PARTLY ALLOWED. 10. IN VIEW OF THE ABOVE DECISION OF THIS TRIBUNAL IN ONE OF THE CO-OWNERS CASE, THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE CAPITAL GAINS BY ADOPTING 1/5 TH SHARE IN 25,00,000/- ON SALE OF PROPERTY AT VELACHERY, CHENNAI. 5 I.T.A. NO.3003/CHNY/18 11. NOW COMING TO THE CLAIM OF DEDUCTION UNDER SECT ION 54F OF THE ACT, I HAVE GONE THROUGH THE PROVISIONS OF SECT ION 54F OF THE ACT WHICH READS AS FOLLOWS:- 54F.(1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HI NDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER O F ANY LONG- TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE ( HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AN D THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEAR S AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA (HEREAFTER IN THIS SECTI ON REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN T HE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL G AIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO TH E NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45 : PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY WHERE(A) THE ASSESSEE,(I) OWNS MORE THAN ONE RESI DENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRA NSFER OF THE ORIGINAL ASSET ; OR(II) PURCHASES ANY RESIDENTIAL H OUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER TH E DATE OF TRANSFER OF THE ORIGINAL ASSET ; OR(III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET ; AND(B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL 6 I.T.A. NO.3003/CHNY/18 ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HO USE PROPERTY. EXPLANATION FOR THE PURPOSES OF THIS SECTION, NET CONSIDERATION, IN RELATION TO THE TRANSFER OF A CAPITAL ASSET MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS RE DUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNEC TION WITH SUCH TRANSFER. (2) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIOD OF TWO YEARS AFTER THE DATE OF THE TRANSFER OF THE ORIGINA L ASSET, OR CONSTRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOUSE, THE INCOME FROM WHICH IS CHA RGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A), OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1), SH ALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAI NS RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WHICH SUCH RESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED. (3) WHERE THE NEW ASSET IS TRANSFERRED WITHIN A PERI OD OF THREE YEARS FROM THE DATE OF ITS PURCHASE OR, AS THE CASE MAY BE, ITS CONSTRUCTION, THE AMOUNT OF CAPITAL GAIN ARISING FR OM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SE CTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPI TAL GAINS RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOU S YEAR IN WHICH SUCH NEW ASSET IS TRANSFERRED. (4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE O F THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISH ING SUCH RETURN SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATE R THAN THE 7 I.T.A. NO.3003/CHNY/18 DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE S PECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH T HE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILISED BY THE ASSESSEE FO R THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B-SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR C ONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SE CTION (1), THEN,(I) THE AMOUNT BY WHICH(A) THE AMOUNT OF CAP ITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAU SE (B) OF SUB- SECTION (1),EXCEEDS(B) THE AMOUNT THAT WOULD NOT HAV E BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILISED BY THE ASS ESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHI N THE PERIOD SPECIFIED IN SUB-SECTION (1) BEEN THE COST OF THE N EW ASSET,SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TH E TRANSFER OF THE ORIGINAL ASSET EXPIRES ; AND(II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILISED AMOUNT IN ACCOR DANCE WITH THE SCHEME AFORESAID. 12. SECTION 54F OF THE ACT DOES NOT REQUIRE FILING THE RETURN OF INCOME BEFORE THE DUE DATE UNDER SECTION 139(1) OF THE ACT. THE REQUIREMENT OF SECTION 54F OF THE ACT IS THAT THE A SSESSEE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE OF TRANSFER TOOK PLACE, SHALL PURCHASE OR WITHIN A PERIOD OF THREE Y EARS AFTER THE DATE, SHALL CONSTRUCT ONE RESIDENTIAL HOUSE IN INDIA. IF FOR ANY REASON, THE 8 I.T.A. NO.3003/CHNY/18 ASSESSEE COULD NOT APPROPRIATE THE CAPITAL GAIN FOR PURCHASE OF NEW ASSET WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER IS ORIGINALLY TOOK PLACE OR WHICH IS NOT UTILISED IN P URCHASE OF NEW ASSET BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME UNDER SECTION 139 OF THE ACT, SHALL DEPOSIT IN THE APPROPRIATE ACCOUN T BEFORE THE DUE DATE FOR FILING RETURN OF INCOME UNDER SECTION 139( 1) OF THE ACT. THEREFORE, THE PARLIAMENT IN THEIR WISDOM DOES NOT PROVIDE ANY CONDITION FOR FILING OF RETURN OF INCOME BEFORE THE DUE DATE PROVIDED UNDER SECTION 139(1) OF THE ACT. 13. IT MAY BE USEFUL TO REFER TO SECTION 10A OF THE ACT. FIFTH PROVISO TO SECTION 10A OF THE ACT CLEARLY SAYS THAT NO DEDUCTION SHALL BE ALLOWED IN CASE THE ASSESSEE DOES NOT FURN ISH RETURN OF INCOME ON OR BEFORE THE DUE DATE PRESCRIBED UNDER S ECTION 139(1) OF THE ACT. IT IS OBVIOUS FROM THE ABOVE THAT WHER EVER THE PARLIAMENT FEELS THAT RETURN HAS TO BE FILED UNDER SECTION 139(1) OF THE ACT, THEY ARE SO SPECIFIC FOR THE PURPOSE OF CL AIMING BENEFIT UNDER THAT SCHEME. FOR THE PURPOSE OF DEDUCTION UN DER SECTION 54F OF THE ACT, THE PARLIAMENT SPECIFICALLY OMITTED TO SAY THAT RETURN OF INCOME HAS TO BE FILED UNDER SECTION 139(1) OF T HE ACT. THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER TO REJECT THE CLAIM OF THE ASSESSEE IS NOT JUSTIFIED. 9 I.T.A. NO.3003/CHNY/18 14. NOW THE ASSESSEE ALONG WITH OTHER CO-OWNERS, HA S INVESTED IN THE VERY SAME PROPERTY. THIS TRIBUNAL IN THE CA SE OF SHRI S. SATHYAMURTHY, ONE OF THE CO-OWNERS, ALSO FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF THE ACT AND THE ASSESSING OFFICER WAS DIRECTED ACCORDINGLY. IN VIE W OF THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, THE PRES ENT ASSESSEE IS ALSO ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF TH E ACT. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 3 RD SEPTEMBER, 2019 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 3 RD SEPTEMBER, 2019 KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-2, CHENNAI-34 4. PRINCIPAL CIT-1, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.