Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 3337 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 10 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-10-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
05-10-2021
Assessment Year
2013-2014
Appeal Filed On
22-11-2018
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! . , ! ' BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.3186/CHNY/2018 ( / ASSESSMENT YEAR: 2013-14) MR. B.PURUSHOTHAMAN BRN FLAT A-1, 18/2, RAJARATHINAM STREET, KILPAUK CHENNAI-600 010 . VS THE INCOME TAX OFFICER, NON-CORPORATE WARD-10(3), CHENNAI-600 034. PAN: AIXPP 8973A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS.T.V.MUTHU ABIRAMI, ADVOCATE /RESPONDENT BY : MR. G.JOHNSON, ADDL.CIT /DATE OF HEARING : 05.10.2021 /DATE OF PRONOUNCEMENT : 08.10.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE LEARNED CIT(A)-12, CHENNAI DATED 25.09 .2018 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAVI NG FOUND THAT THE ASSESSEE HAD INHERITED THE PROPERTY BY ONE OF THE MODES MENTIONED IN SECTION 49,OUGHT TO HAVE ALLOWED THE BENEFIT OF INDEXATION FROM 1.4.1981. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N NOT ALLOWING THE INDEXED COST OF IMPROVEMENT WHILE COMP UTING THE CAPITAL GAINS, IGNORING THE EVIDENCES SUBMITTED BEF ORE HIM. 2 ITA NO. 3186/CHNY/2018 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ALLOWING THE INDEXED COST OF AMENITIES OF RS.32,475 /- WHILE COMPUTING THE CAPITAL GAINS. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) EQUAL LY WENT WRONG IN NOT ALLOWING THE SUM OF RS.84,495/- BEING THE EXPENSES INCURRED AT THE TIME OF TRANSFER OF THE PR OPERTY. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED BY CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ENYING THE EXEMPTION U/S.54 CLAIMED IN THE COURSE OF ASSESSMEN T PROCEEDINGS, ALONG WITH A REVISED STATEMENT OF INCO ME. 6. THE OBSERVATION OF THE COMMISSIONER OF INCOME T AX (APPEALS) THAT EVIDENCES IN SUPPORT OF THE CLAIM FO R EXEMPTION U/S.54 HAVE NOT BEEN SUBMITTED, IS INCORRECT AND CO NTRARY TO THE FACTS. 7. THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE EXEMPTION ULS.54 IS NOT AVAILABLE FOR THE REASON THAT CAPITAL GAINS WAS NOT DEPOSITED IN THE SCHEME, BEFO RE THE DUE DATE OF FILING OF THE RETURN, IS UNTENABLE IN LAW. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING PRINTING PRESS FILED HIS RE TURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 30.07.2013 ADMITTIN G TOTAL INCOME OF RS.4,20,820/-, WHICH CONSISTS OF INCOME FROM HOUSE PROPERTY, INCOME FROM BUSINESS, LONG TERM CAPITAL L OSS FROM SALE OF PROPERTY AND INCOME FROM OTHER SOURCES. DURING T HE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2013-14, THE ASSES SEE HAS SOLD PROPERTY ON 09.11.2012 FOR A CONSIDERATION OF RS.1,25,00,000/-. HOWEVER, WHILE COMPUTING CAPITAL GAIN HAS ADOPTED SALE CONSIDERATION RS.1,00,00,000/- ONLY. T HE 3 ITA NO. 3186/CHNY/2018 ASSESSING OFFICER HAS OBTAINED COPY OF SALE DEED F ROM O/O. SUB-REGISTRAR, AS PER WHICH PROPERTY SOLD BEARING F LAT NO.G-1, GROUND FLOOR, ADMEASURING 1559 SQ.FT AND UNDIVIDED SHARE OF LAND OF 723 SQ.FT IN BRN APARTMENTS FOR CONSIDERATI ON OF RS. 1,25,00,000/-. THEREFORE, CALLED UPON THE ASSESSEE TO FILE NECESSARY EVIDENCE, INCLUDING EVIDENCE FOR COST OF ACQUISITION AND COST OF IMPROVEMENT. IN RESPONSE, THE ASSESSEE FILED A LETTER DATED 19.02.2016 AND FILED WORKING FOR COMP UTATION OF CAPITAL GAIN, AS PER WHICH HE HAS ADOPTED COST OF ACQUISITION OF PROPERTY AT RS.11,30,750/- AS ON 01.04.1981 AND CL AIMED BENEFIT OF INDEXATION. THE ASSESSEE HAS ALSO CLAIME D COST OF IMPROVEMENT BEING CONSTRUCTION COST OF BUILDING IN THE YEAR 1996 AND CLAIMED BENEFIT OF INDEXATION. IN SUPPOR T OF HIS COMPUTATION FILED NECESSARY EVIDENCES INCLUDING VAL UATION REPORT FROM REGISTERED VALUER. THE ASSESSEE HAS AL SO MADE A CLAIM U/S.54 OF INCOME TAX ACT, 1961, FOR PURCHAS E OF NEW ASSET, THOUGH SAME WAS NOT CLAIMED IN RETURN OF INC OME FILED FOR RELEVANT ASSESSMENT YEAR, BY WAY OF LETTER DATED 19 .02.2016 FOR A CONSIDERATION RS.54,00,000/- FOR PURCHASE OF A F LAT FROM M/S.INDUS ALLIANCE FOUNDATIONS INDIA P.LTD. 4 ITA NO. 3186/CHNY/2018 4. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINC ED WITH EXPLANATION FURNISHED BY THE ASSESSEE AND ACCORDING TO HIM, THE ASSESSEE HAS NOT JUSTIFIED COST OF IMPROVEMENT CLAIMED FOR THE YEAR 1996 AND HENCE, REJECTED CLAIM OF THE ASSE SSEE ON THE GROUND THAT NO EVIDENCE HAS BEEN FILED TO PROVE COS T OF IMPROVEMENT. AS REGARDS EXEMPTION CLAIMED U/S.54 O F THE ACT, THE ASSESSING OFFICER HAS ADMITTED CLAIM OF THE AS SESSEE, BUT ALLOWED EXEMPTION TO THE EXTENT OF RS.5,00,000/- TO WARDS ADVANCE PAID FOR PURCHASE OF PROPERTY ON 15.07.2013 ONLY ON THE GROUND THAT BALANCE AMOUNT WAS NOT KEPT IN CA PITAL GAIN DEPOSIT ACCOUNT SCHEME ON OR BEFORE FILING RETURN OF INCOME U/S.139(1) OF THE ACT AS REQUIRED U/S.54(2) OF THE INCOME TAX ACT, 1961. THUS, HE HAS RECOMPUTED LONG TERM CAPITA L GAIN BY ADOPTING SALE CONSIDERATION OF RS.1,25,00,000/- AND FURTHER, ALLOWED INDEXED COST OF ACQUISITION OF RS.9,23,994/ - AND FURTHER EXEMPTION U/S.54 OF THE ACT AT RS.5,00,000/-. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE LEARNED CIT(A). BEFORE T HE LEARNED CIT(A), THE ASSESSEE HAS REITERATED HIS ARGUMENTS M ADE BEFORE THE ASSESSING OFFICER ALONG WITH CERTAIN ADDITIONAL EVIDENCES. 5 ITA NO. 3186/CHNY/2018 THE LEARNED CIT(A) HAS FORWARDED ADDITIONAL EVIDENC ES FILED BY THE ASSESSEE TO THE ASSESSING OFFICER FOR HIS REMAN D REPORT. THE ASSESSING OFFICER VIDE HIS REMAND REPORT DATED 01.08.2018 REITERATED HIS FINDINGS RECORDED DURING ASSESSMENT PROCEEDINGS REGARDING COST OF ACQUISITION AND COST OF IMPROVEMENT. HE HAD FURTHER STATED THAT EXCEPT PAYM ENT OF RS.5,00,000/- ADVANCE TO THE BUILDER, THE ASSESSEE HAS NOT MADE ANY PAYMENTS ON OR BEFORE DUE DATE OF FILING R ETURN OF INCOME U/S.139(1) OF THE ACT AND FURTHER, BALANCE S ALE CONSIDERATION WAS NOT KEPT IN CAPITAL GAIN DEPOSIT ACCOUNT SCHEME, AS REQUIRED U/S.54(2) OF THE ACT AND THUS, OBSERVED THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S .54 OF THE INCOME TAX ACT, 1961. 6. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT F ACTS AND AFTER TAKING NOTE OF REMAND REPORT ISSUED BY THE AS SESSING OFFICER OBSERVED THAT SINCE THE ASSESSEE DID NOT HA VE ANY PROOF OF PAYMENT OF COST OF CONSTRUCTION (IMPROVEMENT) FO R THE PROPERTY FOR WHICH LONG TERM CAPITAL GAIN IS COMPUT ED, THE ASSESSING OFFICER HAS RIGHTLY DENIED CLAIM OF COST OF IMPROVEMENT. AS REGARDS CLAIM OF EXEMPTION U/S.54 O F THE ACT, 6 ITA NO. 3186/CHNY/2018 THE LEARNED CIT(A) OBSERVED THAT ALTHOUGH VARIOUS C OURTS HAVE HELD THAT BENEVOLENT CONSIDERATION OF DUE DATE AS P ER SECTION 139(4) IS TO BE TAKEN, BUT THE ASSESSEE DID NOT EVE N MAKE A CLAIM U/S.54 IN THE RETURN OF INCOME AND HENCE, THE ASSESSING OFFICERS REASONS FOR ALLOWING CLAIM OF EXEMPTION T O THE EXTENT OF RS.5.00 LAKHS TOWARDS REINVESTMENT MADE FOR PURC HASE OF NEW ASSET ON OR BEFORE DUE DATE OF FILING RETURN OF INCOME U/S.139(1) OF THE ACT IS IN ACCORDANCE WITH LAW AND THUS, REJECTED ARGUMENTS OF THE ASSESSEE AND CONFIRMED AD DITIONS MADE BY THE ASSESSING OFFICER TOWARDS RECOMPUTATION OF LONG TERM CAPITAL GAIN. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED A.R FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING ARGUME NTS OF THE ASSESSEE THAT BENEFIT OF INDEXATION SHOULD BE ALLOW ED FROM 01.04.1981, WHEN THE PROPERTY WAS INHERITED BY THE ASSESSEE BY ONE OF THE MODES MENTIONED IN SECTION 49 OF THE INCOME TAX ACT, 1961. THE LEARNED AR FURTHER SUBMITTED THAT A LTHOUGH THE ASSESSEE HAS FILED EVIDENCES FOR COST OF IMPROVEMEN T IN THE 7 ITA NO. 3186/CHNY/2018 FORM OF CONSTRUCTION AGREEMENT WITH THE BUILDER, BU T THE LEARNED CIT(A) HAS IGNORED SUCH EVIDENCES ONLY ON THE GROUN D THAT EVIDENCES FILED BY THE ASSESSEE IS FOR ANOTHER PROP ERTY, IGNORING SPECIFIC ARGUMENTS OF THE ASSESSEE THAT CONSTRUCTIO N AGREEMENT RELATED TO IMPUGNED PROPERTY WAS HANDED OVER TO PUR CHASER, WHO IS A NON-RESIDENT AND SAID DOCUMENT WAS IMMEDIA TELY NOT AVAILABLE. THE AR FURTHER REFERRING TO VARIOUS DECI SIONS SUBMITTED THAT IT IS WELL SETTLED PRINCIPLE OF LAW THAT WHEN A PROPERTY WAS ACQUIRED BY INHERITANCE IN ANY ONE OF THE MODES SPECIFIED U/S.49 OF THE ACT, THEN BENEFIT OF INDEXA TION SHOULD BE ALLOWED FROM THE DATE THE PREVIOUS OWNER HAD ACQUIR ED PROPERTY OR FROM 01.04.1981, WHICHEVER IS LATER. IN THIS CAS E, THE ASSESSEE HAS ACQUIRED PROPERTY BY INHERITANCE AND T HUS, BENEFIT OF INDEXATION SHOULD BE ALLOWED FROM 01.04. 1981, BUT NOT FROM 01.04.1996. THE AR FURTHER REFERRING TO NUMBER OF DECISIONS REGARDING CLAIM OF EXEMPTION U/S.54 OF T HE ACT, SUBMITTED THAT IT IS A MATTER OF FACT THAT THE AS SESSEE HAS INVESTED FULL SALE CONSIDERATION FOR PURCHASE OF N EW ASSET AND MADE SUBSTANTIAL PAYMENTS ON OR BEFORE DUE DATE O F FILING RETURN OF INCOME U/S.139(4) OF THE ACT. THOUGH THE ASSESSEE 8 ITA NO. 3186/CHNY/2018 HAS NOT SATISFIED CONDITIONS OF SUB-SECTION (2) OF SECTION 54, BUT CONDITIONS PRESCRIBED FOR CLAIMING EXEMPTION U/S.54 (1) ARE FULLY SATISFIED AND THUS, BENEFIT OF EXEMPTION CLAIMED U/S.54 OF THE ACT CANNOT BE DENIED. 8. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING ORDER OF THE LEARNED CIT(A) SUBMITTED THAT THE ASS ESSING OFFICER AS WELL AS LEARNED CIT(A) HAS APPRISED FAC TS IN LIGHT OF VARIOUS EVIDENCES FILED BY THE ASSESSEE AND HELD TH AT THE ASSESSEE IS NOT ENTITLED FOR COST OF IMPROVEMENT I N ABSENCE OF ANY SPECIFIC EVIDENCE AND HENCE, THERE IS NO ERROR IN THE REASONS GIVEN BY THE LEARNED CIT(A) TO SUSTAIN ADD ITIONS MADE BY THE ASSESSING OFFICER . AS REGARDS EXEMPTION CL AIMED U/S.54 OF THE ACT, HE SUBMITTED THAT LAW IS VERY CLEAR, I NASMUCH AS TO GET BENEFIT OF EXEMPTION, THE ASSESSEE MUST INVEST SALE CONSIDERATION FOR PURCHASE OF ANOTHER HOUSE ON OR B EFORE DUE DATE OF FURNISHING RETURN OF INCOME AND IF CONSIDER ATION IS NOT INVESTED ON OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT, THEN BALANCE CONSIDERATION S HOULD BE DEPOSITED IN CAPITAL GAIN DEPOSIT ACCOUNT SCHEME. S INCE THE 9 ITA NO. 3186/CHNY/2018 ASSESSEE HAS NOT INVESTED BALANCE CONSIDERATION IN CAPITAL GAIN DEPOSIT ACCOUNT SCHEME, AS REQUIRED UNDER SECTION 5 4(2) OF THE ACT, THE ASSESSING OFFICER HAS RIGHTLY DENIED BENEF IT AND HENCE, THERE IS NO ERROR IN THE REASONS GIVEN BY THE ASSES SING OFFICER TO DENY BENEFIT OF EXEMPTION U/S.54 OF THE INCOME T AX ACT, 1961. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO FACT THAT THE ASSESSEE HAS SOLD A PROPERTY FOR CONSIDERATION OF RS.1,25,00 ,000/- AND SAID PROPERTY WAS ACQUIRED BY INHERITANCE FROM HIS GRANDMOTHER BEFORE 01.04.1981. THE DISPUTE IS WITH REGARD TO IN DEXED COST OF ACQUISITION, INDEXED COST OF IMPROVEMENT AND EXEM PTION CLAIMED U/S.54 OF THE INCOME TAX ACT, 1961. AS REGA RDS INDEXED COST OF ACQUISITION, THE ASSESSING OFFICER HAS CONSIDERED ONLY COST OF LAND AND GIVEN BENEFIT OF INDEXATION FROM 01.04.1981. IT WAS CASE OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THERE WAS A BUILDING, WHICH WAS DEMOLISHED IN THE YEAR 1996, AND THEREFORE, PRE-EXI STED BUILDING ALSO NEEDS TO BE CONSIDERED FOR THE PURPOS E OF COST OF 10 ITA NO. 3186/CHNY/2018 ACQUISITION. IN THE REMAND PROCEEDINGS, THE ASSESSI NG OFFICER HAS ADMITTED CLAIM OF THE ASSESSEE THAT THERE WAS A BUILDING WHICH WAS DEMOLISHED AND RECONSTRUCTED IN THE YEAR 1996. THEREFORE, HE HAS CONSIDERED COST OF BUILDING WHICH WAS IN EXISTENCE BEFORE 01.04.1981 AND HAS CONSIDERED COST OF RS.2,33,850/- ON THE BASIS OF VALUATION REPORT SUBM ITTED BY THE ASSESSEE. TO THIS EXTENT, THERE IS NO DISPUTE. THE ONLY DISPUTE IS WITH REGARD TO INDEXATION ALLOWED BY THE ASSESSI NG OFFICER. THE ASSESSING OFFICER HAS ALLOWED INDEXATION FROM 1 996, WHEREAS THE ASSESSEE CLAIMS BENEFIT OF INDEXATION F ROM 01.04.1981. HAVING CONSIDERED ARGUMENTS OF BOTH SID ES, WE FIND MERIT IN THE ARGUMENTS OF THE LEARNED AR FOR T HE ASSESSEE FOR SIMPLE REASON THAT WHEN THE ASSESSING OFFICER H AS NOT DENIED EXISTENCE OF BUILDING PRIOR TO 01.04.1981, T HEN, HE OUGHT TO HAVE ALLOWED BENEFIT OF INDEXATION FROM 01.04.19 81, BECAUSE AS PER PROVISIONS OF SECTION 49 OF THE ACT, IF PRO PERTY IS ACQUIRED BY ANY ONE AT MODE SPECIFIED THEREIN, THE N INDEXATION SHOULD BE GIVEN FROM THE DATE THE PREVIOUS OWNER FI RST ACQUIRED ASSET OR FROM 01.04.1981, WHICHEVER IS LATER. IN THIS CASE, THE ASSESSEE GOT RIGHT OVER PROPERTY BY INHERITANCE BEF ORE 11 ITA NO. 3186/CHNY/2018 01.04.1981. THEREFORE, WE ARE OF THE CONSIDERED VIE W THAT THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) HAS ER RED IN NOT ALLOWING BENEFIT OF INDEXATION TO COST OF ACQUISITI ON OF PROPERTY FROM 01.04.1981 AND HENCE, DIRECT THE ASSESSING OFF ICER TO ALLOW BENEFIT OF INDEXATION TOWARDS COST OF BUILDIN G FROM 01.04.1981 INSTEAD OF 01.04.1996. 10. COMING BACK TO COST OF IMPROVEMENT CLAIMED BY T HE ASSESSEE. THE ASSESSEE HAS CLAIMED COST OF IMPROVEM ENT TO THE BUILDING AT RS.9.57 LAKHS AND HAS APPLIED BENEF IT OF INDEXATION FROM 01.04.1981. THE ASSESSING OFFICER H AS DENIED DEDUCTION CLAIMED TOWARDS COST OF IMPROVEMENT ON THE GROUND THAT NO EVIDENCE HAS BEEN PLACED IN SUPPORT OF COS T OF CONSTRUCTION. THE ASSESSEE CLAIMS THAT IT HAS ENTER ED INTO CONSTRUCTION AGREEMENT WITH M/S. PALACE INVESTMENTS BY REGISTERED DEED DATED 21.08.1995 FOR WHICH AN AMOU NT OF RS.9.57 LAKHS WAS PAID TO BUILDER TOWARDS CONSTRUC TION COST . FOR THIS PURPOSE, CONSTRUCTION AGREEMENT DATED 11.0 3.1996 ENTERED INTO BY THE ASSESSEE WITH M/S. PALACE INVE STMENTS WAS FILED. THE ASSESSEE FURTHER CLAIMED THAT ALTHO UGH AGREEMENT REFERS TO ANOTHER FLAT AT FIRST FLOOR, BU T AGREEMENT 12 ITA NO. 3186/CHNY/2018 RELATED TO IMPUGNED FLAT WAS HANDED OVER TO THE BUY ER, WHO IS A NON-RESIDENT AND SAME WAS NOT AVAILABLE IMMEDIAT ELY. THEREFORE, VALUATION REPORT FROM REGISTERED VALUER WAS FURNISHED, AS PER WHICH VALUE OF THE PROPERTY IN T HE YEAR 1996 WAS ESTIMATED AT RS.19,64,000/-, INCLUDING COST OF LAND, AND SAID VALUATION IS MUCH HIGHER THAN THE AMOUNT OF CO ST INCURRED BY THE ASSESSEE FOR COST OF CONSTRUCTION OF BUILDI NG. 11. WE HAVE CAREFULLY CONSIDERED ARGUMENTS OF THE ASSESSEE IN LIGHT OF REASONS GIVEN BY THE ASSESSING OFFICER TO REJECT CLAIM OF COST OF IMPROVEMENT AND WE DO NOT OURSELVES IN AGREEMENT WITH THE REASONS GIVEN BY THE ASSESSING OFFICER FOR SIMPLE REASON THAT WHEN THE ASSESSING OFFICER IS NOT DISPU TED FACT OF EXISTENCE OF BUILDING AND FURTHER, EVIDENCES PLACED ON RECORD CLEARLY SHOWS THAT BUILDING WAS CONSTRUCTED IN THE YEAR 1996, THEN THERE IS NO REASON FOR THE ASSESSING OFFICER T O DENY DEDUCTION TOWARDS COST OF IMPROVEMENT ONLY FOR THE REASON THAT NO EVIDENCE WAS FILED TO JUSTIFY COST. IT IS AN ADM ITTED FACT AS PER SALE DEED OF IMPUGNED PROPERTY THAT THERE EXISTED A BUILDING ADMEASURING 1559 SQ.FT AND SAID BUILDING WAS CONS TRUCTED IN THE YEAR 1996. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT 13 ITA NO. 3186/CHNY/2018 ONCE HAVING ACCEPTED FACT THAT THERE EXISTED A BUI LDING, THEN THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE , HENCE, WE DIR ECT THE ASSESSING OFFICER TO ALLOW COST OF IMPROVEMENT CLAI MED BY THE ASSESSEE FOR RS.9,57,000/- INCURRED IN THE YEAR 19 96. 12. AS REGARDS EXEMPTION U/S.54 OF THE INCOME TAX A CT, 1961, ADMITTED FACTS ARE THAT THE ASSESSEE HAS NOT MADE ANY CLAIM FOR EXEMPTION IN RETURN OF INCOME FILED FOR RELEVANT ASSESSMENT YEAR. HOWEVER, CLAIM WAS FIRST TIME MADE BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT BY FILING A LETTER ALONG WITH EVIDENCES, AS PER WHICH THE ASSESSEE HAS REINVESTED SALE CONSIDERATION FOR PURCHASE OF NEW ASSET BY ENTERING INTO SALE DEED DATED 29.04.2015 WITH MR. R .BASKAR AND CONSTRUCTION AGREEMENT DATED 29.04.2015 ENTERED IN TO WITH M/S. INDUS ALLIANCE FOUNDATIONS INDIA PVT.LTD. AS P ER SAID AGREEMENT, THE ASSESSEE HAS AGREED TO PURCHASE A FL AT FOR A CONSIDERATION OF RS.54 LAKHS, WHICH INCLUDES RS.11, 52,000/- FOR UNDIVIDED SHARE OF LAND OF 573 SQ.FT AND RS.41,44,8 00/- FOR CONSTRUCTION OF FLAT. THE ASSESSEE HAD ALSO MADE AD VANCE PAYMENT OF RS.5.00 LAKHS ON 15.07.2013. IF YOU GO THROUGH 14 ITA NO. 3186/CHNY/2018 EVIDENCES FILED BY THE ASSESSEE, THERE IS NO DOUBT THAT THE ASSESSEE HAS SATISFIED CONDITIONS PRESCRIBED U/S.5 4(1) OF THE INCOME TAX ACT, 1961 TO BE ELIGIBLE FOR EXEMPTION U /S.54 OF THE ACT. THE ONLY DISPUTE IS WITH REGARD TO PAYMENT OF AGREED CONSIDERATION. ACCORDING TO THE ASSESSING OFFICER, EXCEPT ADVANCE PAYMENT OF RS.5.00 LAKHS, BALANCE SALE CONS IDERATION WAS PAID BEYOND DUE DATE SPECIFIED U/S.139(1) OF TH E ACT FOR FILING RETURN OF INCOME AND FURTHER SAID SALE CONSI DERATION WAS NOT INVESTED IN CAPITAL GAIN DEPOSIT ACCOUNT SCHEM E, AS REQUIRED U/S.54(2) OF THE INCOME TAX ACT, 1961. WE HAVE GONE THROUGH REASONS GIVEN BY THE ASSESSING OFFICER TO D ENY BENEFIT OF EXEMPTION U/S.54 OF THE ACT AND WE OURSELVES DO NOT IN AGREEMENT WITH REASONS GIVEN BY THE ASSESSING OFFI CER FOR SIMPLE REASON THAT IT IS WELL SETTLED PRINCIPLE OF LAW THAT ANY INVESTMENT MADE FOR PURCHASING / CONSTRUCTING A NEW ASSET ON OR BEFORE EXTENDED DUE DATE OF FILING RETURN OF INC OME U/S.139(4) QUALIFIES FOR EXEMPTION U/S.54 OF THE INCOME TAX AC T, 1961. THE HONBLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF VENKATA DILIP KUMAR VS.CIT (2019) 111 TAXMANN.COM 180 (MAD) HAD CONSIDERED AN IDENTICAL ISSUE AND HELD TH AT MERE 15 ITA NO. 3186/CHNY/2018 NON-COMPLIANCE OF PROCEDURAL REQUIREMENT U/S.54(2) ITSELF CANNOT STAND IN WAY OF ASSESSEE IN GETTING BENEFIT U/S.54, IF HE IS, OTHERWISE, IN A POSITION TO SATISFY THAT MANDAT ORY REQUIREMENT U/S.54(1) IS FULLY COMPLIED WITH WITHIN TIME LIMIT PRESCRIBED THEREIN. THE ITAT., CHENNAI BENCHES IN THE CASE OF R.K.P ELAYARAJAN VS. DCIT (2012) 23 TAXMANN.COM 206 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT MERELY BE CAUSE INVESTMENT IS MADE AFTER DUE DATE OF FILING RETURN OF INCOME SECTION 54 EXEMPTION CANNOT BE DENIED, WHERE INVEST MENT IS MADE PRIOR TO FILING OF RETURN OF INCOME U/S.139(4 ) OF THE ACT. 13. IN THIS CASE, THERE IS NO DISPUTE WITH REGARD T O FACT THAT THE ASSESSEE HAS SATISFIED CONDITIONS PRESCRIBED U/S.54 (1) TO BE ELIGIBLE FOR EXEMPTION FOR REINVESTMENT, BUT ONLY LAPSE IS NOT INVESTED BALANCE SALE CONSIDERATION IN CAPITAL GA IN DEPOSIT ACCOUNT SCHEME. HOWEVER, FACT REMAINS THAT THE ASS ESSEE HAS INVESTED SALE CONSIDERATION FOR PURCHASE OF ANOTHER HOUSE PROPERTY AND HAS MADE SUBSTANTIAL PAYMENT ON OR B EFORE EXTENDED DUE DATE OF RETURN OF INCOME U/S.139(4) O F THE INCOME TAX ACT, 1961. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO BY FOLLOWING DE CISION OF THE 16 ITA NO. 3186/CHNY/2018 HONBLE MADRAS HIGH COURT IN THE CASE OF VENKATA D ILIP KUMAR VS.CIT (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED FOR BENEFIT OF EXEMPTION U/S. 54 OF THE INCOME TAX ACT, 1961. HENCE, WE DIRECT THE ASSESSIN G OFFICER TO ALLOW EXEMPTION CLAIMED U/S.54 OF THE ACT. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER, 2021 SD/- SD/- ( . ) ( . ) (DUVVURU RL REDDY) (G.MANJUNATHA) ' % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER ' /CHENNAI, ( /DATED 8 TH OCTOBER, 2021 DS *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .
