The ITO Ward-4(2) Visakhapatnam, Visakhapatnam V. Sri M Bose Babu, Visakhapatnam

ITA 317/VIZ/2011

• Counselvise Citation: 31725314 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 09-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BABU RAO
• Assessee Lawyers: C V S MURTHY
• Keywords: Capital asset

Judgement Text

ITA NO. 317/VIZAG/2011 SRI M. BOSE BABU, VISAKHAPATNAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 317 /VIZAG/ 20 1 1 ASSESSMENT YEAR : 2004 - 05 ITO WARD - 4(2) VISAK HAPATNAM VS. SRI M. BOSE BABU VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AGNPM 8595R ASSESSEE BY : SHRI C.V.S. MURTHY, CA REVENUE BY : SHRI B. BABU RAO, JCIT DATE OF HEARING : 10.12.2013 DATE OF PRONOUNCEMENT : 13 .12.2013 ORDER PER B. R AMAKOT AIAH, : - THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDERS OF THE CIT(A), VISAKH A PATNAM DATED 24. 0 8.2011. THE REVENUE HAS RAISED THE GROUNDS THAT THE CIT(A) ERRED IN TREATING THE FIRST FLOOR OF THE PROPERTY AS CAPITAL ASSET IN THE HANDS OF ASSESSE E ON THE REASON THAT HE DOES NOT HAVE ANY RIGHT OVER THE LAND. FURTHER, IT WAS ALSO CONTESTED THAT ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION U/S 54EC OF THE INCOME - TAX ACT . 2. BRIEFLY STATED , THE AO NOTICED THAT ASSESSEE S WIFE SMT. M. PARVATHI PURCH ASED LAND ON 25.3.1972 AND DEVELOPED GROUND FLOOR IN THE YEAR 1984. ASSESSEE CONSTRUCTED FIRST FLOOR FOR A COST OF RS.2,20,000/ - IN THE YEAR 1986. THE COUPLE SOLD THE PROPERTY AS PER THE REGISTERED DOCUMENT DATED 8.3.2004 AND ASSESSEE RECEIVED RS.14 LAKH S TOWARDS CONSIDERATION OF THE ABOVE PROPERTY. THE ASSESSING OFFICER , IGNORING THE DOCUMENTARY EVIDENCE IN THE FORM OF SALE DEED, WHICH CONFIRM S THE RIGHT OF TITLE AND INTEREST OF THE STATUS OF ASSESSEE IN RESPECT OF THE ABOVE PROPER TY, TREATED THE AMOUNT RECEIVED AS INCOME FROM OTHER SOURCES ' AND NOT AS SALE PROCEEDS OUT OF THE ABOVE ITA NO.317/VIZAG/2011 SRI M. BOSE BABU, VISAKHAPATNAM 2 PROPERTY. ACCORDINGLY, THE DEDUCTION CLAIMED BY ASSESSEE WAS DENIED. BEFORE THE LD. CIT(A), THE FACTS WERE SUBMITTED AND FURTHER STATED THAT AS PER THE NOTE ATTACHED TO THE RETURN , ASSESSEE ALONG WITH HIS WIFE SOLD THE PROPERTY ON 8.3.2004 FOR AN AMOUNT OF RS. 49 , 63 , 000/ - , SALE CONSIDERATION FOR THE SITE AT RS. 31 , 65 , 000/ - AND BALANCE OF RS.17 , 98 , 000/ - FOR GROUND AND FIRST FLOOR. THE CONSIDERATION FOR THE ENTIRE 5807 SQ.F T. WAS DIVIDED BETWEEN THE HUSBAND AND WIFE IN THE RATIO OF FLOOR SPACE AND ACCORDINGLY SALE PROCEEDS RELATING TO ASSESSEE WERE TAKEN AT RS.7 , 24 , 526/. - . 3. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS HELD AS UNDER: 7. I HAVE GONE THROUGH THESE D ETAILS AND THE COPY OF SALE DEED WHICH IS FILED. IN THE SALE DEED, IT IS CLEARLY WRITTEN THAT IT IS JOINT SALE OF THE PROPERTY AND DR. BOSE BABU IS PAID RS.14,00,000/ - WHEREAS SMT. M. PARVATHI IS PAID RS.35,63,000/ - . FROM THESE FACTS, IT IS CLEAR THAT TH E ASSESSEE CONSTRUCTED FIRST FLOOR OUT OF HIS OWN FUNDS AND THE SAME WAS BEING TREATED AS HOUSE PROPERTY BY THE ASSESSEE. THUS, THE FIRST FLOOR PROPERTY BECAME A CAPITAL ASSET IN THE HANDS OF THE ASSESSEE FROM THE YEAR 1986 AND THE SALE OF WHICH YIELDED L ONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. IT IS NOT CORRECT ON THE PART OF THE AO TO TREAT THIS SALE CONSIDERATION AS INCOME FROM OTHER SOURCES. ASSESSEE IN THE RETURN TREATED ONLY RS.7,24,526/ - AS SALE PROCEEDS TOWARDS HIS PART OF ASSET OF TH E JOINT PROPERTY. HOWEVER, THIS IS ONLY AN ARTIFICIAL DIVISION OF THE SALE PROCEEDS. FROM THE SALE DEED, IT IS CLEAR THAT THE ASSESSEE RECEIVED RS.14,00,000/ - TOWARDS HIS PORTION OF PROPERTY. THIS FACT IS NOT DISPUTED BY THE AO. IN SHORT WHAT WAS SOLD BY THE ASSESSEE IS HIS OWN PORTION OF HOUSE PROPERTY FOR WHICH HE RECEIVED RS.14 LAKHS IN CHEQUE. 8. AFTER CONSIDERING THE ENTIRE FACTS OF THE CASE, I AM OF THE OPINION THAT WHAT WAS SOLD BY THE ASSESSEE IS LONG TERM CAPITAL ASSET AND THE AMOUNT OF RS.14 ,00,000/ - RECEIVED SHOULD BE TREATED AS CONSIDERATION TOWARDS SALE OF LONG TERM CAPITAL ASSET. THE ASSESSEE HAVING INVESTED RS.17,00,000/ - IN THE REC BONDS IS NOT LIABLE FOR ANY CAPITAL GAINS TAX AS THE ASSESSEE IS ENTITLED TO 54EC. THUS, THE AO IS DIREC TED TO ASSE4SS THE INCOME ACCORDINGLY. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS , WE DO NOT SEE ANY MERIT IN THE REVENUE CONTENTIONS. ENTIRE SALE CO NSIDERATION RECEIVED BY BOTH PARTIES HAS BEEN OFFERED TO CAPITAL GAINS AND FOR ARRIVING AT THE CAPITAL G AINS IN RESPECTIVE HANDS , SEGREGATIO N OF THE A MOUNTS WERE MADE. THEREFORE, THE STAND OF THE ASSESSING OFFICER THAT ASSESSEE DOES NOT HAVE ANY RIGHT OVER THE BUILDING CAN NOT BE ACCEPTED AS IT WAS ACCEPTE D BY AO THAT ASSESSEE CONSTRUCTED ITA NO.317/VIZAG/2011 SRI M. BOSE BABU, VISAKHAPATNAM 3 SAME WAY BACK IN 1 986. THERE IS ALSO NO BASIS TO TREAT THE ENTIRE RS.14 LAKHS AS INCOME FROM OTHER SOURCES WHEN THE SALE DOCUMENTS DO INDICATE THAT THE AMOUNT WAS RECEIVED CONSEQUENT TO THE SALE OF THE PROPERTY BY BOTH HUSBAND AND WIFE. ON THESE FACTS, WE DO NOT SEE ANY R EASON TO UPHOLD THE REVENUE CONTENTIONS. ACCORDINGLY, THE REVENUE APPEAL IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13 TH DEC13 SD/ - SD/ - ( SAKTIJIT DEY ) ( B. RAMAKO TAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 13 TH DECEMBER , 20 1 3 COPY TO 1 ITO WARD - 4(2), RANGE - 4, VISAKHPATNAM 2 SRI M. BOSE BABU, D.NO.39 - 3 - 40, MURALINAGAR, VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VIS AKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM