ITO, Meerut V. Smt Sudesh Suri, Meerut

ITA 328/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65915 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 06-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 19-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Assessee Lawyers: O P SAPRA
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOU NTANT MEMBER ITA NO. 328/DEL/2011 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, VS. S UDESH SURI, WARD 2(3), MEERUT. KANPUR BAREILLY FREIGHT CARRIER TRANSPORT NAGAR, MEERUT (PAN ABSPS6744E) (APPELLANT) (RESPONDENT) AND C.O. NO. 40/DEL/2011 (ITA NO . 328/DEL/2011) ASSESSMENT YEAR 2006-07 SUDESH SURI, VS. ITO C/O O.P. SAPRA & ASSOCIATES, WARD 2 (3) C-763, NEW FRIENDS COLONY MEERUT NEW DELHI 110 025 (PAN ABSPS6744E) (APPELLANT) (RESPONDENT) APPELLANT BY : DR. PRABHA KANT, SR. DR RESPONDENT BY : SHR I O.P. SAPRA, ADVOCATE DATE OF HEARING : 6.9.2012 DATE OF PRONOUNCEMENT : ORDER PER I.C. SUDHIR, JUDICIAL MEMBER IN THE APPEAL PREFERRED BY REVENUE, FOLLOW ING ISSUES HAVE BEEN RAISED :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN DELETIN G THE ADDITION OF RS. 16,34,792/- IGNORING THE PROVISIONS OF SECTION 5 4F OF THE I T ACT WHEREIN ITA NO. 328/DEL/2011 & CO 40/DEL/2011 2 THE INVESTMENT MADE BY DEPOSING IN CAPITAL GAIN ACC OUNT SCHEME IS ALLOWABLE ONLY AT THE PROPORTIONATE RATE. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN DIRECTI NG TO ADOPT THE ACTUAL SALE CONSIDERATION OF RS. 45,64,208/- INSTEAD OF VA LUE AT RS61,99,000/- AS PER STAMP VALUATION AUTHORITY IN TERMS OF SECTION 5 0C, WHILE COMPUTING THE-CAPITAL GAIN. ON THE GROUND THAT MATTER WAS NOT REFERRED TO THE VALUATION OFFICER BY THE AO,. IGNORING THE FACTS TH AT MAKING REFERENCE TO THE VALUATION CELL IS ONLY A DISCRETIONARY POWER OF THE AO. 3. WHETHER IN THE FACTS & CIRCUMSTANCE S OF THE CASE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET A SIDE AND THAT OF THE A.O, RESTORED. 2. THE ASSESSEE ON THE OTHER HAND IN HER CROSS OBJECTION HAS RAISED FOLLOWING OBJECTIONS :- 1. THAT THE GROUNDS OF APPEAL BY THE REVENUE IS MISCONCEIVED AND THE SAME DESERVES TO BE DISMISSED. 2. THAT THE LD. CIT(A) WAS NOT JUST IFIED IN HOLDING THAT THE AO HAD RIGHTLY DENIED THE DEDUCTION U/S 54F IN RESPECT OF RS. 32,39,850/- CLAIMED AGAINST THE INVESTMENT MADE IN THE PURCHAS E OF FLAT. 3. THAT THE DEDUCTION ALLOWED BY TH E AUTHORITIES BELOW U/S 54F OF I.T. ACT WAS INADEQUATE. 3. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS A DVANCED BY THE PARTY IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MATERI AL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. ISSUE NO. 2 (REVENUE) 4. THE RELEVANT FACTS ARE THAT DURING THE YE AR ASSESSEE HAD SOLD SEVEN TENANTED SHOPS SITUATED AT 132, DELHI ROAD, MEERUT FOR RS. 45,64,208/-. THE ITA NO. 328/DEL/2011 & CO 40/DEL/2011 3 SHOPS WERE PURCHASED FOR RS. 45,000/- EACH BESIDES STAMP DUTY OF RS. 4725/- WITH OTHER CO-OWNER DURING FINANCIAL YEAR 1982-83. THE CONSIDERATION OF RS. 45,64,208/- WAS SHOWN AS PER SALE DEED AS PER WHIC H THE PROPERTY IN QUESTION WAS ON RENT AND EVEN ON THE DATE OF PURCHASE IT WAS RENTED PROPERTY AS MENTIONED IN PURCHASE DEEDS. SALE DEEDS WERE MADE T O THE SITTING TENANTS WHO GOT THEM REGISTERED IN THEIR NAME OR IN THE NAME OF THEIR RELATIVES. THE AO REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE P ROVISIONS OF SECTION 50C OF THE ACT BE NOT INVOKED. IN RESPONSE THE ASSESSEE SU BMITTED THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AT RS. 61. 99 LACS FOR THE PURPOSE OF CHARGING STAMP DUTY DID NOT REPRESENT THE FAIR MARK ET VALUE. THE AO DID NOT AGREE AND ADOPTED THE VALUE OF THE PROPERTY AT RS.6 1,99,000/- ON THE BASIS OF STAMP VALUE AS AGAINST DECLARED BY THE ASSESSEE AT RS. 45,64,208/-. THE AO ACCORDINGLY WORKED OUT THE LONG TERM CAPITAL GAIN. THE LD. CIT(A) HAS HOWEVER ACCEPTED THE ABOVE EXPLANATION OF THE ASSESSEE AFTE R DETAILED DISCUSSION ON THE ISSUE. HE HAS DIRECTED THE AO THAT ACTUAL SALE CONS IDERATION OF RS. 45,64,208/- WAS TO BE TAKEN INTO ACCOUNT WHILE COMPUTING LONG T ERM CAPITAL GAIN. AGAINST THIS ACTION OF THE LD. CIT(A) THE REVENUE HAS RAISED THE ISSUE UNDER ADJUDICATION BEFORE THE TRIBUNAL. 5. THE LD. DR HAS PLACED RELIANCE ON THE ASS ESSMENT ORDER. THE LD. AR ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER IN THIS REGARD. HE PLACED RELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF ITA NO. 328/DEL/2011 & CO 40/DEL/2011 4 CIT VS. CHANDANI BHOCHER 323 ITR 510 (P & H). HE AL SO PLACED RELIANCE ON THE FOLLOWING DECISIONS :- I. 214 ITR 610 (RAJ.) KRISHNA KUMAR RAWAT & OTH ERS VS UOI. II. 223 ITR 572 (BOM) MRS. NIRM AL LAXMINARAYAN GROVCR VS. APPROPRIATE AUTHORITY (1997 ) 111.AIR 1996 SC 1170 (SC) U.P. JA L NIGAM VS. KALRA PROPERTIES (P) LTD. IV. 217 ITR 59 (MAD.) CGT VS. R . JAWAHAR V. 279 ITR 360 (ALL.) CIT VS. SMT. RAJ KUMAR VIMLA DEVI & ANOTHER 6. WE FIND THAT CERTAIN RELEVANT FACTS HAVE NOT BEEN DISPUTED IN THE PRESENT CASE. THESE FACTS ARE THAT ALL THE SEVEN SHOPS I.E. PROPERTY IN QUESTION WHICH WERE SOLD BY THE ASSEESSEE WERE OCCUPIED BY THE TEN ANTS AND THESE TENANTS HAVE PURCHASED THESE SHOPS FOR RS. 45,64,208/-. BES IDES THE AO HAD NOT MADE REFERENCE TO THE VALUATION OFFICER IN TERMS OF SECT ION 50C (2) DESPITE THIS FACT THAT THE ASSESSEE HAD CLAIMED BEFORE THE AO THAT THE VAL UE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS NOT THE FAIR MARKET VALUE O F THE PROPERTY. UNDER THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT LD. CIT(A) R ESPECTFULLY FOLLOWING THE DECISIONS RELIED UPON BY THE ASSESSEE BEFORE HIM HA S RIGHTLY COME TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 50C(1) AR E NOT SACROSANCT SO AS TO APPLY THE SAME WITHOUT REFERENCE TO PECULIAR FACTS OF THE CASE. IN ABSENCE OF REBUTTAL OF THE ABOVE NOTED MATERIAL FACTS OF THE CASE BY TH E REVENUE BEFORE US WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE O RDER. THE SAME IS UPHELD. THE ISSUE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO. 328/DEL/2011 & CO 40/DEL/2011 5 ISSUE NO. 1 (REVENUE ) AND OBJECTIONS (CO) 7. THE RELEVANT FACTS ARE THAT THE ASSESSSE E CLAIMED BENEFIT PROVIDED U/S 54F OF THE ACT ON THE BASIS THAT OUT OF THE SALE CO NSIDERATION RECEIVED SHE HAD MADE INVESTMENT FOR RS. 10,00,000/-IN ICICI PRUDENT IAL LIFE INSURANCE . THE AO HELD THAT INVESTMENT MADE IN ICICI PRUDENTIAL LIFE INSURANCE (ICICI-PLI) DOES NOT FALL WITHIN THE PER-VIEW OF SPECIFIED SECURITIE S/BONDS AS LAID DOWN U/S 54E TO 54ED OF THE I.T.ACT HENCE ASSESSEE CANNOT GET ANY DE DUCTION UNDER THESE PROVISIONS IN THIS REGARD. THE ASSESSEE CLAIMED FU RTHER THAT RS. 32,39,850/- INVESTED IN HOUSE PROPERTY. AS PER HER REPLY RS. 6, 75,000/- WAS ADVANCED BY HER FOR PURCHASING A 200 SQ. YARDS PLOT WITH M/S. ALLIA NCE NIRMAN LTD. BUT SHE COULD NOT FURNISH COMPLETION CERTIFICATE OF CONSTRUCTION OF HOUSE NOR THE SALE DEED. SHE WAS ALSO ASKED TO FURNISH COPY OF POSSESSION CERTIF ICATE OF THE FLAT BOOKED FOR RS. 15,66,632/- WITH M/S. ANSAL LANDMARK TOWNSHIP PVT. LTD.. THE ASSESSEE DID NOT FURNISH THE SAME. THE AO WAS THUS NOT SATISFIED WIT H THE EXPLANATION OF THE ASSESSEE AND DENIED THE CLAIMED DEDUCTION ON THE BA SIS THAT SALE DEED HAS NOT BEEN EXECUTED, WITH REGARD TO PURCHASE OF PLOT OF 2 00 SQ. YDS WITH M/S. ALLIANCE NIRMAN LTD. AND POSSESSION LETTER WAS ALSO NOT ISSU ED AGAINST THE FLAT BOOKED WITH M/S. ANSAL LANDMARK TOWNSHIP PVT. LTD. THE LD. CIT(A) HAS ALSO UPHELD THE SAME. HE HAS HOWEVER HELD THAT THE ASSESSEE IS ELIG IBLE TO GET DEDUCTION IN TERMS OF SECTION EC OF THE ACT FULLY ON RS. 20.00 L ACS DEPOSIT TO CAPITAL GAIN ACCOUNT SCHEME. HE OBSERVED THAT SECTION 54EC CLEARL Y STATES THAT UNUTILIZED ITA NO. 328/DEL/2011 & CO 40/DEL/2011 6 AMOUNT, IF ANY, DEPOSITED IN CAPITAL GAIN ACCOUNT S HOULD BE FULLY ALLOWED WHILE WORKING OUT CAPITAL GAIN. THE AO HAD ALLOWED DEDUCT ION U/S 54F ON THIS DEPOSIT OF RS. 20 LAC IN PROPORTIONATE RATE . THE ACTION OF THE LD. CIT(A) IN THIS REGARD HAS BEEN QUESTIONED BY THE REVENUE. THE ASSESSEE ON THE OTHER HAND HAS OBJECTED THE ACTION OF THE LD. CIT(A) IN UPHOLDING THE FINDING OF THE AO THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION ON THE INVES TMENT OF RS. 32,39,650/- AGAINST PLOT AND FLAT. 8. IN SUPPORT OF THE ISSUE RAISED IN THE APP EAL, LD. DR HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. LD. AR TRIED TO J USTIFY THE RELIEF GIVEN BY THE LD. CIT(A) WITH THE SUBMISSION THAT HE SHOULD HAVE ALSO ALLOWED DEDUCTION CLAIMED U/S 54F OF THE ACT IN RESPECT OF INVESTMENT OF RS. 32,39,650/- MADE IN THE PURCHASE OF THE PLOT AND FLAT. IN SUPPORT HE R EFERRED THE FOLLOWING DECISIONS :- 1. MUKESH G DESAI (HUF) VS ITO (2010) 1 2 ITD 212 (MUM) 2. SHRI GOULI MAHADEVAPPA VS. ITO 128 ITD 503 (BANGALORE) 9. CONSIDERING THE ABOVE SUBMISSIONS WE FIND T HAT UNDISPUTEDLY RS. 20 LAC DEPOSITED TO THE CAPITAL GAIN ACCOUNT WAS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF ORIGINAL ASSET. THE AO IN OUR VIEW WAS THUS JUSTIFIED IN ALLOWING DEDUCTION U/S 54F ON THE AMOUNT OF RS. 20 LAC DEPOS ITED IN THE CAPITAL GAIN ACCOUNT SCHEME IN PROPORTIONATE RATE. THE LANGUAGE OF THE CLAUSE (B) TO SECTION 54EC(1) AND 54F (1) OF THE ACT ARE ALMOST COMMON WHI CH PROVIDES FOR SUCH ITA NO. 328/DEL/2011 & CO 40/DEL/2011 7 ALLOWANCE OF DEDUCTION IN PROPORTIONATE RATE WHERE THE COST OF LONG TERM SPECIFIED ASSET / NEW ASSET IS LESS THAN THE NET CO NSIDERATION ARISING FROM THE TRANSFER OF ORIGINAL ASSET. IN VIEW OF THESE PROVIS IONS WE ARE OF THE VIEW THAT LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT UTILIZED A MOUNT, IF ANY, DEPOSITED IN CAPITAL GAIN ACCOUNT SHOULD BE FULLY ALLOWED WHILE WORKING OUT CAPITAL GAIN. WE THUS SET ASIDE THE FIRST APPELLATE ORDER IN THIS RE GARD AND RESTORE THE ASSESSMENT ORDER ON THE ISSUE. THE ISSUE NO. 1 (REVENUE) IS TH US ALLOWED. 10. SO FAR AS OBJECTION RAISED BY THE ASSES SEE THAT THE DIRECTION U/S 54F IN RESPECT OF RS. 32,39,850/- CLAIMED AGAINST THE INVE STMENT MADE IN THE PURCHASE OF LAND AND FLAT IS CONCERNED ADMITTEDLY THE INVEST MENT OF RS. 6,75,000/- AS ADVANCE FOR PURCHASING OF PLOT WITH M/S. ALLIANCE NIRMAN LTD. AND OF RS. 15,66,632/- FOR PURCHASING OF FLAT WITH M/S. ANSAL LANDMARK TOWNSHIP PVT. LTD. WERE MADE AFTER DUE DATE OF FILING OF THE RETURN ON 31.8.2006. THUS DURING THE YEAR THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIMING DED UCTION U/S 54F OF THE ACT ON THESE INVESTMENTS DURING THE YEAR. OF COURSE THERE IS UTILIZATION AS AND WHEN THE AMOUNT IS BEING DRAWN FOR PURCHASE OF CONSTRUCTION AS LONG AS COMPLETION OF THE OR CONSTRUCTION IS COMPLETED BEFORE THE OUTER TIME LIMIT. AN ADVANCE CAN BE TREATED AS UTILIZATION SUBJECT TO FULFILLMENT OF OT HER CONDITIONS PROVIDED U/S 54E OF THE ACT. SIMILARLY INVESTMENT IN A FLAT UNDER SOME SCHEME WOULD BE CONSTRUCTION FOR THE PURPOSE OF SECTION 54 AND 54F SUBJECT TO FU LFILLMENT OF OTHER REQUIREMENTS PROVIDED IN THE PROVISIONS. DUE TO ABOVE REASONS WE ARE OF THE VIEW THAT THE ITA NO. 328/DEL/2011 & CO 40/DEL/2011 8 AUTHORITIES BELOW HAVE RIGHTLY DENIED THE CLAIMED D EDUCTION U/S 54F OF THE ACT ON THE INVESTMENT OF RS. 6,75,000/- FOR PURCHASE OF TH E PLOT OF RS. 15,66,632/- FOR PURCHASING OF A FLAT AGGREGATING TO RS. 32,39,850/- . THE OBJECTION IS THUS REJECTED. 11. IN THE RESULT APPEAL PREFERRED BY THE RE VENUE IS PARTLY ALLOWED AND CROSS OBJECTION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 .12.2012. SD/- SD/- (SHAMIM YAHYA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 5.12.2012 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT