ITO, CHENNAI V. Gaurav Syal, CHENNAI

ITA 301/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5892 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R LAKSHMI RATAN
• Keywords: Gift; Principle of natural justice; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , ' , & ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.301/MDS/2017 &' ' /ASSESSMENT YEAR: 2012-13 THE INCOME TAX OFFICER, NON-CORPORATE WARD-16(3), CHENNAI-600 034. VS. SHRI GAURAV SYAL, NO.8/24, III MAIN ROAD, THIRUVALLUVAR NAGAR, THIRUVANMIYUR, CHENNAI-600 041. [PAN: BCVPS 2326 H ] ( ) /APPELLANT) ( *+) /RESPONDENT) DEPARTMENT BY : MR.ARV.SREENIVASAN, JCIT ASSESSEE BY : MR.R.LAKSHMI RATAN - /DATE OF HEARING : 01.11.2017 - /DATE OF PRONOUNCEMENT : 02.11.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.301/MDS/2017 IS AN APPEAL FILED BY THE REVE NUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4 , CHENNAI, IN ITA NO.73/2015-16/AY 2012-13/CIT(A)-4 DATED 18.11.2016 FOR THE AY 2012- 13. 2. SHRI ARV.SREENIVASAN, JCIT REPRESENTED ON BEHALF OF THE REVENUE AND SHRI R.LAKSHMI RATAN, REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO.301/MDS/2017 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.DR THAT IN THE COURSE OF THE ASSESSMENT THE AO HAD DENIED THE ASSESSEE THE BENEFIT OF DEDUC TION U/S.54 IN RESPECT OF CONSTRUCTION OF A RESIDENTIAL HOUSE CLAIMED BY T HE ASSESSEE ON THE GROUND THAT THE CONSTRUCTION HAS NOT BEEN COMPLETED TILL THE DATE OF ASSESSMENT. IT WAS A FURTHER SUBMISSION THAT THE A O HAD DISALLOWED THE CLAIM OF DEDUCTION U/S.80C. 4. IT WAS A SUBMISSION THAT IN GROUND NOS.2 TO 2.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN HOLDING T HAT THE COST INFLATION INDEX IS TO BE APPLIED FROM 01.04.1981. IT WAS A S UBMISSION THAT THE ASSESSEE HAD RECEIVED A PROPERTY BY WAY OF FAMILY S ETTLEMENT ON 27.02.2009. THE ASSESSEE HAD CLAIMED HIS SHARE OF COST OF ACQUISITION AT RS.3,57,500/-. IT WAS A SUBMISSION THAT THE PROPER TY BELONGED TO THE GRAND-MOTHER OF THE ASSESSEE AND THE SAME WAS SETTL ED ON 27.02.2009. IT WAS A SUBMISSION THAT THE ASSESSEE HAD SOLD THIS PROPERTY ON 16.05.2011. IT WAS A SUBMISSION THAT WHEN COMPUTIN G THE CAPITAL GAINS, THE AO HAD APPLIED THE COST INFLATION INDEX RELEVAN T TO THE AY 2009-10. IT WAS A SUBMISSION THAT THE LD.CIT(A) HAD RELIED U PON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH REPORTED IN 16 TAXMANN.COM TO HOLD THAT THE COST INFLATION INDEX W AS TO BE APPLIED BY TAKING THE DATE OF OWNERSHIP AS ON 01.04.1981. THE LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 5. IN REPLY, THE LD.AR SUPPORTED THE ORDER OF THE L D.CIT(A). ITA NO.301/MDS/2017 :- 3 -: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF THE LD.CIT(A) MORE SPECIFIC AT PAGE NO.10 OF HIS OR DER CLEARLY SHOWS THAT THE LD.CIT(A) WHILE APPLYING THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH HAS TAKEN INTO CONSIDERATION THE FACT THAT THE PROPERTY WAS ORIGINALLY OWNED BY THE ASSES SEES GRAND-MOTHER AND IN VIEW OF THE PROVISIONS OF EXPLANATION-1(I)(B ) TO SEC.2(42A) HAS HELD THAT IN DETERMINING THE PERIOD FOR WHICH ANY ASSET IS HELD BY ASSESSEE UNDER A GIFT, THE PERIOD FOR WHICH THE ASSET WAS HE LD BY THE PREVIOUS OWNER HAS TO BE INCLUDED. THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS NOR HAS ANY OTHER DECISION ON THIS ISSUE B EEN PLACED BEFORE US. THIS BEING SO, AS IT IS NOTICED THAT THE LD.CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MAN JULA J. SHAH, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A ) ON THIS ISSUE. 7. IN REGARD TO GROUND NOS.3 TO 3.3 OF THE REVENUE APPEAL, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN DIRECTING THE AO TO ALLOW THE DEDUCTION U/S.54F OF THE ACT. IT WAS A S UBMISSION THAT THE ASSESSEE HAS NOT PROVED THE CONSTRUCTION OF THE RES IDENTIAL PROPERTY TILL THE DATE OF THE COMPLETION OF THE ASSESSMENT ORDER BEING 31.03.2015. IT WAS A SUBMISSION THAT FOR BEING ELIGIBLE FOR DEDUCT ION U/S.54F IT WAS COMPULSORY THAT THE CONSTRUCTION SHOULD HAVE BEEN C OMPLETED WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASS ET. IT WAS A SUBMISSION THAT THE ORIGINAL ASSET HAD BEEN SOLD BY THE ASSESS EE ON 16.05.2011 AND ITA NO.301/MDS/2017 :- 4 -: THE THREE YEARS PERIOD EXPIRED ON 15.05.2014. IT W AS A SUBMISSION THAT TILL 31.03.2015, THE CONSTRUCTION HAD NOT BEEN COMP LETED. IT WAS A SUBMISSION THAT THE LD.CIT(A) HAD DIRECTED THE AO T O ALLOW THE CLAIM OF DEDUCTION U/S.54 ON THE GROUND THAT THE CAPITAL GAI NS AMOUNT HAD BEEN DEPOSITED BY THE ASSESSEE TO THE EXTENT OF RS.50.00 LAKHS IN THE RURAL ELECTRIFICATION CORPORATION LTD. BONDS (REC BONDS) AND THE REMAINING CAPITAL GAINS HAD BEEN DEPOSITED IN THE CAPITAL GAI NS ACCOUNT AND AN AMOUNT OF RS.24,31,000/- WAS INVESTED IN THE PURCHA SE OF LAND FOR THE CONSTRUCTION OF A NEW RESIDENTIAL HOUSE. IT WAS A S UBMISSION THAT OUT OF RS.95,30,000/- DEPOSITED IN THE CAPITAL GAINS ACCOU NT, THE ASSESSEE HAD WITHDRAWN AN AMOUNT OF RS.95,53,249/- TOWARDS PAYME NT TO THE BUILDER FOR THE CONSTRUCTION OF THE NEW HOUSE PROPERTY DURI NG THE PERIOD FROM 15.03.2013 TO 21.04.2014. THUS, THE LD.CIT(A) HAD DIRECTED THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION IN RESP ECT OF CAPITAL GAINS. IT WAS A SUBMISSION THAT THE CONSTRUCTION OF THE HOUSE PROPERTY ITSELF WAS IN QUESTION. THE ASSESSEE HAS NOT BEEN ABLE TO PROVE T HE CONSTRUCTION OF THE HOUSE PROPERTY OR THE COMPLETION OF THE SAME ON OR BEFORE 15.05.2014. 8. IN REPLY, THE LD.AR PLACED BEFORE US A COMPLETIO N CERTIFICATE ISSUED BY M/S.ARR CONSTRUCTIONS DATED 16.04.2015 WHEREIN T HEY HAVE MENTIONED THAT THEY HAVE COMPLETED THE CONSTRUCTION AND THE S AME HAS BEEN HANDED OVER TO THE ASSESSEE AT PAGE NO.16 OF THE PAPER BOO K. HE DREW OUR ATTENTION TO THE PLAN IN RESPECT OF THE SAID CONSTR UCTION. ON A SPECIFIC QUERY, AS TO WHETHER THE ASSESSEE HAS AN APPROVED P LAN, SANCTIONED COPY ITA NO.301/MDS/2017 :- 5 -: OR COPIES OF THE TAX RECEIPTS IN RESPECT OF THE NEW HOUSE OR EVIDENCES IN THE FORM OF AN ELECTRICITY CONNECTION, THE LD.AR SU BMITTED THAT NONE OF THEM WERE IMMEDIATELY AVAILABLE. IT WAS A SUBMISSI ON THAT OTHER THAN THE SAID LETTER OF THE CONTRACTOR, NO OTHER EVIDENCE WA S AVAILABLE WITH THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE CAPITAL GAINS ACCOUNT IN THE ASSESSEES CASE WITH SBI SHOWS THAT THE FIRST ENTRY IS OF 27.07.2012 WHEREIN THERE WAS A DEPOSIT OF RS.25, 000/- AND THEN THERE ARE VARIOUS OTHER DEPOSITS. ON 15.03.2013, THERE IS A WITHDRAWAL OF RS.90,12,733/- AND SUBSEQUENTLY ANOTHER WITHDRAWAL OF RS.5,01,500/- ON 21.04.2014. A PERUSAL OF THE ORDER OF THE LD.CIT(A) AT PARA NO.12 TALKS OF DEPOSITS IN CAPITAL GAINS SCHEME ACCOUNT OF RS.95,3 0,000/-. HOWEVER, THE BANK ACCOUNT MENTIONED IN THE SAID PARAGRAPHS C OMPLETELY VARIES. FURTHER, AS PER THE PAPER BOOK, THE CAPITAL GAINS A CCOUNT WITH SBI IS SHOWN AS 32449616206. HOW THE LD.CIT(A) HAS TREATE D THE OTHER BANK ACCOUNTS AS CAPITAL GAINS ACCOUNT IS UNKNOWN? THE SAID CAPITAL GAINS ACCOUNT HAS SHOWN IN THE PAPER BOOK SHOWS TOTAL DEP OSIT OF NEARLY RS.96,21,714/-. HOW THE LD.CIT(A) HAS ARRIVED AT T HE FIGURE OF RS.95,30,000/- IS ALSO NOT COMING OUT OF ANY EVIDEN CES? THE LD.AR HAS NOT BEEN ABLE TO PLACE BEFORE US ANY EVIDENCE TO SH OW THAT THE RESIDENTIAL HOUSE HAD BEEN CONSTRUCTED. THE LD.AR WAS UNABLE T O EXPLAIN, IF THE COMPLETION CERTIFICATE WAS RECEIVED ON APRIL 16, 20 15, WHY THE SAME HAD NOT BEEN PRODUCED BEFORE THE LD.CIT(A)? HOWEVER, N O REPLY WAS GIVEN. ITA NO.301/MDS/2017 :- 6 -: FURTHER, A PERUSAL OF THE CAPITAL GAINS ACCOUNT, ON LY TWO WITHDRAWALS ONE IS RS.90,12,733/- AND ANOTHER IS RS.5,01,500/-. HO W THIS AMOUNT WAS WITHDRAWN, ON THE BASIS OF WHAT INVOICE IS ALSO NOT PRODUCED BEFORE US. THIS BEING SO, AS THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO SUBSTANTIATE THE CONSTRUCTION OF THE RESIDENTIAL HOUSE, THE ORDER OF THE LD.CIT(A) ON THIS ISSUE IS REVERSED AND THAT OF THE AO RESTORED. 10. IN REGARD TO GROUND NOS.4 & 4.1, IT WAS SUBMITT ED BY THE LD.DR THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD.CIT(A) I N GRANTING THE RELIEF TO THE ASSESSEE U/S.80E OF THE ACT TO THE EXTENT OF RS .1,85,000/-. IT WAS A SUBMISSION THAT THE LD.CIT(A) HAS ENTERTAINED THE F RESH EVIDENCE IN THE FORM OF THE LETTER ISSUED FROM SBI REGARDING THE DE POSIT OF SUM OF RS.1,85,000/- TOWARDS THE EDUCATIONAL LOAN ACCOUNT OF SHRI GUARAV SYAL AND SHRI RAJAN SYAL. IT WAS A SUBMISSION THAT THE EVIDENCE WAS NOT PRODUCED BEFORE THE AO. 11. IN REPLY, THE LD.AR SUBMITTED THAT HE HAD NO OB JECTION, IF THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATI ON. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS T HE SAID EVIDENCE HAS NOT BEEN PRODUCED BEFORE THE AO FOR EXAMINATION, IN THE INTEREST OF NATURAL JUSTICE, THE ISSUE IN RESPECT OF THE DEDUCT ION U/S.80E IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTI NG ADEQUATE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. ITA NO.301/MDS/2017 :- 7 -: 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 02, 2017, AT CHENNAI. SD/- SD/- ( ) ( SANJAY ARORA ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) & /JUDICIAL MEMBER /CHENNAI, 1 /DATED: NOVEMBER 02, 2017. TLN - *&23 43 /COPY TO: 1. ) /APPELLANT 4. 5 /CIT 2. *+) /RESPONDENT 5. 3 *&& /DR 3. 5 ( ) /CIT(A) 6. ' /GF