ITO, CHENNAI V. V.Sivakumar, CHENNAI

ITA 3074/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90392 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 54F; 147; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 3074/MDS/2014 ( / ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER, INTERNATIONAL TAXATION-2(2) 121, MG ROAD, CHENNAI-34. VS MR. V.SIVAKUMAR, 37 (OLD NO16) FIRST STREET, BALAJI NAGAR,ROYAPETTAH CHENNAI-14. PAN: AAHPS8804R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. N.MADHAVAN, JCIT /RESPONDENT BY : MR. B.RAMAKRISHNAN, C.A. /DATE OF HEARING : 26 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 22 ND MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VII, CHENN AI DATED 6.8.2014 FOR THE ASSESSMENT YEAR 2007-08. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT COMM ISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ENTIR E AMOUNT OF ` 65,00,000/- INVESTED BY THE ASSESSEE QUALIFIED FOR EXEMPTION UNDER SECTION 54FOF THE ACT. 2. IN THIS CASE, ASSESSMENT WAS REOPENED UNDER SECT ION 147 OF THE ACT FOR THE REASON THAT ASSESSEE HAS NOT ADOPTED 50C WHILE COMPUTING CAPITAL GAINS AND CLAIMING EXEM PTION 2 ITA NO.3074/MDS/2014 UNDER SECTION 54F OF THE ACT. ASSESSMENT WAS REOPEN ED UNDER SECTION 147 AND COMPLETED THE ASSESSMENT UND ER SECTION 143(3) READ WITH SECTION 147 ON 20.03.2013 .WHILE COMPLETING THE REASSESSMENT, THE ASSESSING OFFICER RESTRICTED THE CLAIM OF EXEMPTION UNDER SECTION 54F TO ` 32,21,442/- AS AGAINST ` 65,79,698/- CLAIMED BY THE ASSESSEE ON THE GROUND THAT ASSESSEE PURCHASED A NE W PROPERTY ALONG WITH HIS RELATIVES MRS. VIJAYALAKSHM I VEERAPPAN AND MR. RAJESH KRISHNAMURTHY. THE ASSESSI NG OFFICER TRIED TO RESTRICT THE EXEMPTION UNDER SECTI ON 54F OF THE ACT TO 1/3 RD OF THE TOTAL INVESTMENT IN THE PROPERTY, AS ACCORDING TO HIM, EXEMPTION SHOULD BE ALLOWED ONLY TO THE ASSESSEE. IT WAS THE SUBMISSION OF THE ASSESSEE BEF ORE THE ASSESSING OFFICER THAT NOWHERE IN THE PROVISIONS OF SECTION 54F IT IS STIPULATED THAT NEW HOUSE PROPERTY SHOUL D BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. THE ASS ESSEE PLACED RELIANCE ON THE DECISION OF THE DELHI HIGH C OURT IN THE CASE OF CIT VS. RAVINDER KUMUAR ARORA (342 ITR 38). THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE A SSESSEE. THE ASSESSING OFFICER OBSERVED THAT IN THE CASE CIT ED BY THE ASSESSEE PROPERTY WAS PURCHASED BY THE ASSESSEE AN D HIS 3 ITA NO.3074/MDS/2014 WIFE JOINTLY BUT IN THE ASSESSEES CASE, INVESTMENT WAS NOT MADE BY ASSESSEE AND HIS WIFE, BUT ALONG WITH RELA TIVES AS CO-OWNERS. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE UNDER SECTION 54F OF THE ACT ON THE WHOLE AMOUNT OF ` 65,00,000/- PAID BY THE ASSESSEE WITHOUT RESTRICTING TO 1/3 RD OF THE VALUE OF THE PROPERTY ON THE GROUND THAT ASSESSEE PAID THE SAID AMOUNT FROM HIS OWN FUNDS TO THAT EXTENT. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO OBSERVED THAT THOUGH THE PROPERTY WAS PURCHASED ALONG WITH RELATIVES, IT IS A FACT TH AT ` 63,04,000/- WAS PAID OUT OF ASSESSEES FUNDS AND TH EREFORE, ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 54 F OF THE ACT TO THAT EXTENT OF INVESTMENT MADE BY HIM. 3. COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND TH E DECISIONS OF THE DELHI HIGH COURT IN THE CASE OF CI T VS. KAMAL WAHAL (351 ITR 4) AND CIT VS. RAVINDER KUMAR ARORA (342 ITR 38)(DEL). 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN RESTRICTING THE C LAIM FOR 4 ITA NO.3074/MDS/2014 EXEMPTION UNDER SECTION 54F OF THE ACT TO 1/3 RD OF THE TOTAL VALUE OF THE PROPERTY. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISIONS RELIED ON. THE CRUX OF THE ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER THE ASSESSEE IS E NTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT WHEN THE PRO PERTY WAS PURCHASED IN THE NAME OF ASSESSEE AND HIS RELAT IVES. NO DOUBT, IN THE CASE OF CIT VS. KAMAL VAHAL (SUPRA) AND CIT VS. RAVINDER KUMAR ARORA (SUPRA), THE HONBLE DE LHI HIGH COURT HELD THAT PROVISIONS OF SECTION 54F SHOULD B E CONSTRUED LIBERALLY AS THEY ARE BENEFICIAL PROVISI ONS AND EXEMPTION UNDER SECTION 54F SHOULD BE ALLOWED WHEN THE PROPERTY IS REGISTERED IN THE NAME OF THE ASSESSEE S WIFE OR JOINTLY. THOSE DECISIONS WERE RENDERED WHEN THE ASS ESSEE WAS PURCHASED PROPERTY IN HIS WIFES NAME OR JOINT LY WITH HIS WIFE. IN THE CASE ON HAND, THE ASSESSEE PURCHASED PROPERTY ALONG WITH HIS RELATIVES. THEREFORE, THE DECISIONS RELIED ON BY THE ASSESSEE ARE CLEARLY DISTINGUISHABLE ON FACTS. THE PROVISIONS OF SECTION 54F CANNOT BE CONSTRUED SO LI BERALLY SO AS TO GRANT EXEMPTION WHEN THE PROPERTY WAS REGISTE RED IN 5 ITA NO.3074/MDS/2014 THE NAME OF THE ASSESSEE AND HIS RELATIVES. IT IS A LSO NOT ON RECORD AS TO HOW THE CO-OWNERS OF THE PROPERTY AR E CLOSELY RELATED TO THE ASSESSEE OR ATLEAST THEY ARE LEGAL H EIRS OF THE ASSESSEE . FURTHER IN THE ABSENCE OF SALE DEED COPY PLACED BEFORE US, IT IS ALSO NOT KNOWN WHETHER THE ASSESSE E IS THE OWNER OF THE PROPERTY TO THE EXTENT OF HIS INVESTME NT OF ` 63,04,000/- WHEN THE VALUE OF THE TOTAL PROPERTY PU RCHASED WAS SHOWN AT ` 1,35,00,000/-. THUS WE HOLD THAT THE ASSESSING OFFICER IS CORRECT IN RESTRICTING THE EXE MPTION UNDER SECTION 54F OF THE ACT TO 1/3 RD OF THE VALUE OF THE PROPERTY PURCHASED. THUS, WE REVERSE THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND RESTORE T HAT OF THE ASSESSING OFFICER IN RESTRICTING THE EXEMPTION TO 1 /3 RD OF THE TOTAL INVESTMENT MADE IN THE PROPERTY. 6. THUS THE REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 22 ND MAY, 2015 SOMU 6 ITA NO.3074/MDS/2014 ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .