ACIT, CHENNAI V. Shri R. Vijay Krishnan, CHENNAI

ITA 3168/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4229 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 16-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: R SIVARAMAN
• Keywords: Capital asset
• Section: 143(3); 54F; 142(1); 54

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 3168 /MDS/201 6 / ASSESSMENT YEAR :20 12 - 1 3 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON - CO RPORATE CIRCLE 1 5 , CHENNAI. VS. SHRI R. VIJAY KRISHNAN, NO. 17A - 2, SAI KRUPA APARTMENTS MAIN ROA D, ADYAR, CHENNAI. [PAN:A BBPV9714C ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A.V. SREEKANTH , J CIT / RESPONDENT BY : SHRI R. SIVARAMAN, ADVOCATE / DATE OF HE ARING : 11 . 0 4 .201 7 / DATE OF P RONOUNCEMENT : 28 . 0 6 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 15 , C H ENNAI DATED 19 .0 8 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 1 3 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DISALLOWANCE UNDER SECTION 54 AND UNDER SECTION 54F OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. I.T.A. NO . 3168 /M/ 16 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF .16,77,280/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 07.08.2013. THEREAFTER, NOTICE UNDER SE CTION 142(1) R.W.S 129 OF THE ACT WAS ISSUED ON 24.02.2015 CALLING FOR VARIOUS DETAILS. IN RESPONSE THERETO, THE ASSESSEE HAS FILED ALL THE DETAIL AND ON VERIFICATION OF THE PARTICULARS FURNISHED BY THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 17.03.2015 BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .3,14,63,830/ - AFTER DISALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT AT .65,27,441/ - AS WELL AS CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT AT .2,30,62,707/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS FACTS OF THE CASE, THE LD. CIT(A) HAS DELETED BOTH THE DISALLOWANCES UNDER SECTION 54/54F OF THE ACT. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR HAS SUBMITTED TH AT THE LD. CIT(A) HAS NOT ADJUDICATED ON THE ISSUE OF THE CLAIM OF DEDUCTION U/S. 54 OF THE ACT THAT THE CAPITAL ASSET I.T.A. NO . 3168 /M/ 16 3 TRANSFERRED IS NOT RESIDENTIAL HOUSE PROPERTY AND THE CAPITAL ASSET TRANSFERRED WAS ONLY VACANT LAND. IT WAS ALSO SUBMITTED THAT WHILE GR ANTING DEDUCTION UNDER SECTION 54/54F OF THE ACT, THE LD. CIT(A) HAS FAILED TO NOTICE THAT THE CONDITIONS CONTAINED THEREIN WERE NOT FULFILLED BY THE ASSESSEE AND PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE SET ASIDE AND THAT OF THE ASSESSING OFFICE R IS RESTORED. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS SOLD TWO RESIDENTIAL LAND, ONE AT NOOMBAL MATHURA, PULIAMBEDU VILLAGE FOR A SUM OF .72,60,600/ - AND ANOTHER AT NAGPUR FOR A SUM OF .2,65,21,000/ - DURING THE FINANCIAL YEAR 2011 - 12 . THE ASSESSEE HAS REPORTED A LONG TERM CAPITAL GAIN OF . 65,27,441/ - TOWARDS NOOMBAL MATHURA RESIDENTIAL PLOT AND A LONG TERM CAPITAL GAIN OF .2,30,62,707/ - FOR NAGPUR PROPERTY. THE ENTIRE VALUE OF THE SALE CONSIDERATION WAS KEPT AS BANK DEPOSIT UNDER THE CAPITAL GAINS DEPOSIT SCHEME. THEREAFTER, THE ASSESSEE U TILIZED THE SALE CONSIDERATION FOR ACQUISITION OF LAND AND CONSTRUCTION OF RESIDENTIAL HOUSE AT CHENNAI IN MARCH, 2013. I.T.A. NO . 3168 /M/ 16 4 6.1 T O CLAIM EXEMPTION UNDER THE PROVISIONS O F SECTION 54/54F OF THE ACT, THE ASSESSEE HAS TO EITHER PURCHASE A NEW RESIDENTIAL HOUSE PROPERTY EITHER ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET OR SHOULD CONSTRUCT A NEW RESIDENTIAL HOUSE PROPERTY WITHIN THE PERIOD OF 3 YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET. IN THE ASSESSEE'S CASE, THOUGH THE ENTIRE CONSIDERATION WAS UTILIZED IN THE ACQUISITION OF THE LAND, IT IS NOT SUFFICIENT IF THE CONSIDERATION IS INVESTED I N THE LAND BUT THE ASSESSEE SHOULD HAVE CONSTRUCT ED THE NEW RESIDENTIAL HOUSE PROPERTY WITHIN THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL PROPERTY. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT T HE ASSESSEE HAS SOLD THE PROPERTIES IN JUNE, 2011 AND IN DEC. 2 0 11 AND THE NEW RESIDENTIAL HOUSE PROPERTY HAS TO BE CONSTRUCTED BY JUNE 2014 / DEC.2014. MOREOVER, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS SUBMITTED AN APPLICATION FOR BUILDING APPROVAL TO THE CMDA AUTHORITIES ONLY ON 30 .0 1 . 2014 AND THE APPROVAL OF THE CMDA WAS GIVEN ONLY ON 14 .0 3 . 2014. SINCE THE ASSESSEE COULD NOT HAVE CONSTRUCTED THE BUILDING BEFORE JUNE, 2 014 , T HE INCOME - TAX INSPECTOR WAS DEPUTED TO HAVE A PHYSICAL INSPECTION OF THE LAND AND REPORT AS TO WHETHER THE BUILDING WAS COMPLETED AND A NEW RESIDENTIAL HOUSE PROPERTY EXISTED IN THE SAID LAND. THE INSPECTOR VISITED THE PLACE ON 05 . 03 . 2015 AND SUBMITT ED A REPORT. AS PER HIS REPORT, THE CONSTRUCTION IS UNDER PROGRESS AND ONLY PILLARS ARE ERECTED AND THE CONSTRUCTION OF THE HOUSE IS NOT COMPLETED. SINCE THE APPROVAL FOR CONSTRUCTION WAS TAKEN ONLY ON 14.03.2014 I.E., ALMOST 2 YEARS I.T.A. NO . 3168 /M/ 16 5 AND 9 MONTHS AFTER TRA NSFER OF ORIGINAL ASSETS, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 54 AND 54F OF THE ACT AND DISALLOWED THE SAME AND BROUGHT TO TAX. HOWEVER, BY CONSIDERING VARIOUS DECISIONS, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE ON THIS ACCOUNT. BEFORE OBTAINING BUILDING APPROVAL FROM THE CMDA ON 14.03.2014 , IT IS NOT POSSIBLE FOR THE ASSESSEE TO START CONSTRUCTION WORK. IN THIS CASE, THE ASSESSEE HAS NOT ENTRUSTED THE CONSTR UCTION WORK TO ANY BUILDER. THE CONTENTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAS UTILIZED IN THE ACQUISITION OF THE LAND, BUT, IT WAS NOT SUFFICIENT IF THE CONSIDERATION IS INVESTED IN THE LAND BUT THE ASSESSEE SHOULD HAVE CONSTRUCT ED THE NEW RESIDENTIAL HOUSE PROPERTY WITHIN THREE YEARS FROM THE DATE OF SALE OF THE ORIGINAL PROPERTY. HOWEVER, THE DETAILS WITH REGARD TO THE TOTAL AMOUNT INVESTED FOR ACQUISITION OF LAND AND AMOUNT SPENT FOR CONSTRUCTION WITHIN THE TIME LIMIT AVAILABLE FOR CLAIMI NG EXEMPTION ARE NOT AVAILABLE IN THE ORDERS OF AUTHORITIES BELOW. THE LD. CIT(A) HAS ALSO NOT BOTHERED TO BR ING ON RECORD THE ABOVE DETAILS. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY T HE DETAILS AS OBSERVED HEREINABOVE AND TO ALLOW THE CLAIM OF DEDUCTION TO THE EXTENT THE ASSESSEE HAS UTILIZED THE SALE CONSIDERATION BEFORE THE TIME LIMIT AVAILABLE FOR CLAIMING EXEMPTION UNDER THE PROVISIONS OF ACT. THE ASSESSEE IS ALSO DIRECTED TO FURNI SH COMPLETE PARTICULARS BEFORE THE I.T.A. NO . 3168 /M/ 16 6 ASSESSING OFFICER FOR VERIFICATION. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRON OUNCED ON THE 28 TH JUNE , 201 7 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 28 . 0 6 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.