ITO, New Delhi V. Sh. Manjit Singh Arora, New Delhi

ITA 3026/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91018 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 30-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Salary income; Cost of acquisition
• Section: 54F; 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI C.M. GARG , JUDICIAL MEMBER ITA NO. 3 026 /DEL/201 3 AY: 200 9 - 10 ITO, WARD 37(3) VS. SH. MANJIT SINGH ARORA NEW DELHI 115, A 5/B, SFS FLATS PASCHIM VIHAR NEW DELHI 110 063 (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. DAM KANUNJHA, SR.D.R. RESPONDENT BY : DR. RAKESH GUPTA, ADV. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) - XXVIII, NEW DELHI DATED 01.02.2013 PERTAINING TO THE ASSESSMENT YEAR 2009 - 10 . 2. FACTS OF THE CASE : - THE FACTS OF THE CASE ARE BROUGHT AT PARAS 2 AND 3 OF THE ASSESSMENT ORDER WHICH ARE EXTRACTED FOR READY REFERENCE. THE ASSESSEE IS A LEGAL PROFESSIONAL AND DERIVES INCOME FROM SALARY, INCOME FROM BUSINESS AND PROFESSION, INCOME FROM CAPITAL GAIN AND FROM INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS NOTICED THAT THE ASSESSEE HAS SOLD A PROPERTY BEARING NO.144, AVTAR ENCLAVE, PASCHIM VIHAR, NEW DELHI ON 27.8.2008 FOR A SALE CONSIDERATION OF RS.66,00,000/ - . AFTER DEDUCTING COST OF ACQUISITION AND COST OF IMPROVEMENT (WITH INDEXATION) TOTAL CAPITAL GAIN HAS BEEN CALCULATED FOR RS.53,55,22 3/ - AND DEDUCTION OF THE SAME AMOUNT HAS BEEN CLAIMED BY THE ASSESSEE U/S 54F OF THE INCOME TAX ACT, 1961 (THE ACT) IN HIS RETURN OF INCOME. IN SUPPORT OF THE DEDUCTION CLAIMED U/S 54F OF THE ACT, THE ASSESSEE HAS SUBMITTED THAT HE HAS PURCHASED THE FOLLO WING PROPERTY: 2 1 . A FLAT BEARING NO. M 146, 6 HK NAGAR, PASCHIM VIHAR, NEW DELHI FOR A CONSIDERATION OF RS.17,00,000/ - ON 16.6.2008. 2 . A PLOT AT DLF, PHASE III, GURGAON, HARYANA FOR A CONSIDERATION OF RS.51,00,000/ - ON 03.09.2008. AS THE DEDUCTION U/S 54F IS AP PLICABLE ON PURCHASE OR CONSTRUCTION OF A HOUSE FOR RESIDENTIAL PURPOSE. HENCE THE CLAIM OF THE ASSESSEE IS CONSIDERED TO THE EXTENT OF RS.17,00,000/ - FOR WHICH HE HAS PURCHASED A FLAT IS ALLOWED AND THE BALANCE AMOUNT, WHICH HAS BEEN INVESTED FOR PURCHAS E OF PLOT I.E. RS.36,55,223/ - (53,55,223 - 17,00,000=36,55,223) IS HEREBY REJECTED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PENALTY PROCEEDINGS U/S 271(1)(C ) A RE INITIATED ON THIS POINT. (DISALLOWANCE OF RS.36,55,223/ - ). WITH THESE REMARKS TOTAL INCOME OF THE ASSESSEE COMPUTED AS UNDER: - INCOME AS DECLARED IN RETURN OF INCOME RS. 1,69,529/ - DISALLOWANCE ON ACCOUNT OF S.54F, AS DISCUSSED ABOVE RS.36,55,223/ - TOTAL INCOME RS. 38,24,752/ - TAXABLE INCOME (ROUNDED OFF) RS. 38,24,750/ - .ASSESSED AT A TOTAL INCOME OF RS.38,24,750/ - . GIVE CREDIT FOR PREPAID TAXES AND CHARGE INTEREST AS PER LAW. ISSUE DEMAND NOTICE AND CHALLAN. PENALTY PROCEEDINGS U/S 2 71(1)(C ) INITIATED SEPARATELY. 3. ON APPEAL THE FIRST APPELLATE AUTHORITY AT PARA 4 HAS HELD AS FOLLOWS. THE APPELLANT HAS CONTENDED THAT THE PLOT WAS PURCHASED FOR CONSTRUCTION OF A HOUSE AND HOUSE WAS CONSTRUCTED THERE ON WITH IN A PERIOD OF THREE YEARS. THE APPELLANT HAS CLAIMED EXEMPTION U/S 54 AND NOT U/S 54F. THE APPELLANT S CASE FULLY LIES WITHIN THE PROVISIONS OF S.54. IN VIEW OF THE CIRCULAR NO.667 AND THE CASE LAWS RELIED UPON BY THE APPELLANT, I AM OF THE OPINION THAT THE APPELLANT IS EL IGIBLE TO CLAIM EXEMPTION U/S 54F. ACCORDINGLY, THE DISALLOWANCE MADE IN THE ORDER OF ASSESSMENT OF RS.38,55,223/ - IS DIRECTED TO BE DELETED. THE GROUND RAISED IN APPEAL IS ALLOWED. 4. AGGRIEVED THE REVENUE FILED THIS APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.38,55,223/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S 54 ON PURCHASE OF PLOT SINCE AS PER THE PROVISIONS OF S.54 OF THE ACT ONLY C OST OF CONSTRUCTION OF A RESIDENTIAL HOUSE WILL BE ELIGIBLE FOR THE EXEMPTION AND NOT ON PURCHASE OF A PLOT. 3 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.38,55,223/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S 54 ON PURCHASE OF PLOT SINCE AS PER THE PROVISIONS OF S.54 OF THE ACT , THE EXEMPTION OF LONG TERM CAPITAL GAIN IS ALLOWED TO THE ASSESSEE ON PURCHASE OF CONSTRUCTION OF ONLY ONE RESIDENTIAL HOUSE WHEREAS IN THE CASE OF THE ASSESSEE, EXEMPTION WAS CLAIMED ON PURCHASE OF PLOT OF LAND APART FROM PURCHASE OF ANOTHER RESIDENTIAL FLAT. 3. THE APPEL LANT CRAVES LEAVE TO ADD, AMEND OR MODIFY THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF APPEAL. 5. ADMITTEDLY THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT O N T H E INVESTMENT IN FLAT WHICH WAS PURCHASED ON 16.6.2008 FOR A CONSIDERATIO N OF RS.17 LAKHS. HENCE TO THIS EXTENT THE SUBMISSIONS OF THE LD.SR.D.R. ARE ACCEPTED. AS FAR AS EXEMPTION U/S 54 , FOR INVESTMENT IN PURCHASE OF A PLOT, THE FINDINGS OF THE LD.CIT(A) IN OUR CONSIDERED VIEW HAVE TO BE UPHELD. THE FIRST APPELLATE AUTHOR ITY HAS RIGHTLY OBSERVED THAT THE SECTION RELEVANT IS S.54 AND NOT S.54F OF THE ACT. HE RIGHTLY ACCEPTED THE CLAIM OF THE ASSESSEE BASING HIMSELF ON CIRCULAR NO.667 ISSUED BY THE CBDT. THUS THE CONTENTIONS OF THE REVENUE ARE TO BE REJECTED AND THE ORDER OF THE FIRST APPELLATE AUTHORITY HAS TO BE ACCEPTED TO THIS EXTENT. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED IN PART. 6 . IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 T H MAY, , 2015. S D / - S D / - ( C.M. GARG ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 0 8 T H MAY, 2015 *MANGA 4 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR