Suresh Jayaraman, CHENNAI V. ITO, CHENNAI

ITA 3343/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4772 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 14-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL IRS
• Assessee Lawyers: B SURESH
• Keywords: Cost of acquisition
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMB ER ] ./I.T.A. NO. 3343/MDS/2016 / ASSESSMENT YEAR : 2013-2014. SHRI. SURESH JAYARAMAN, 57, 3D, CEE DEE YES, CHENNAI PATTINAM, AMMAPET VILLAGE, KOTAMEDU POST, THIRUPORUR TALUK, KANCHEEPURAM DIST 603 108. [ PAN AXKPS 9700N ] VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 2(2) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. B. SURESH, C.A /RESPONDENT BY : DR B. NISCHAL, IRS, JCIT /DATE OF HEARING : 20-04-2017 !' /DATE OF PRONOUNCEMENT : 26-04-2017 % / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, IT IS AGGRIE VED ON COMPUTATION OF CAPITAL GAINS IN RESPECT OF A PROPER TY SOLD BY IT. 2. FACTS APROPOS ARE THAT ASSESSEE A NON RESIDENT HAD FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR D ISCLOSING INCOME OF A2,24,400/-. APART FROM INCOME FROM HOUSE PROPE RTY, ASSESSEE ALSO HAD INCOME FROM CAPITAL GAINS AND OTHER SOURCES. I NCOME FROM CAPITAL ITA NO. 3343/MDS/2016. :- 2 -: GAINS AROSE OUT OF SALE OF TWO PROPERTIES ONE OF A HOUSE SITE AT VENGADAMANGALAM VILLAGE AND OTHER OF A LAND AT MADI PAKKAM VILLAGE. GROUNDS RAISED BY THE ASSESSEE ARE IN RELATION TO C OMPUTATION OF CAPITAL GAINS ARISING OUT OF SALE OF LAND OF MADIPA KKAM VILLAGE. THIS LAND WAS SOLD BY THE ASSESSEE ON 17.08.2012 FOR A S ALE CONSIDERATION OF A1,00,00,000/-. ASSESSEE HAD AFTER SETTING-OFF INDEXED COST OF LAND, WORKED OUT A LONG TERM CAPITAL GAIN OF A84,55,732/ -. ON SUCH CAPITAL GAINS ASSESSEE HAD CLAIMED EXEMPTION BOTH U/S.54EC AND 54F OF THE ACT. IN SO FAR AS EXEMPTION U/S.54EC OF THE ACT IS CONCERNED THERE IS NO DISPUTE. DISPUTE IS WITH REGARD TO CLAIM OF EX EMPTION CLAIMED U/S.54F OF THE ACT. ASSESSEE IS ALSO AGGRIEVED THA T FULL VALUE OF SALE CONSIDERATION WAS TAKEN AT A1,00,00,000/- WITHOUT D EDUCTING BROKERAGE OF A1,00,000/- PAID. FURTHER AS PER THE ASSESSEE, WHILE COMPUTING THE EXEMPTION U/S.54F OF THE ACT, INVESTM ENT MADE BY THE ASSESSEE IN THE NEW HOUSE PROPERTY WAS CONSIDERED A T A70,89,580/- DISREGARDING ITS CLAIM OF RENOVATION EXPENDITURE OF A3,72,500/-. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. ASS ESSING OFFICER HAD COMPUTED EXEMPTION U/S.54F OF THE ACT A FTER DEDUCTING CLAIM OF THE ASSESSEE U/S.54EC OF THE ACT FROM THE LONG TERM CAPITAL GAINS. AS PER LD. AUTHORISED REPRESENTATIVE THIS M ETHODOLOGY ADOPTED BY THE LD. ASSESSING OFFICER WAS WRONG. DEDUCTION H AD TO BE WORKED OUT, IN THE OPINION OF THE LD. AUTHORISED REPRESENT ATIVE ON THE LONG ITA NO. 3343/MDS/2016. :- 3 -: TERM CAPITAL GAINS WITHOUT REDUCING THE CLAIM U/S. 54EC OF THE ACT. AS PER LD. AUTHORISED REPRESENTATIVE SUCH A GROUND TH OUGH PRESSED BY THE ASSESSEE BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), WAS NOT CONSIDERED. 4. CONTINUING HIS SUBMISSIONS, LD. AUTHORISED REPRESEN TATIVE SUBMITTED THAT SALE CONSIDERATION WAS TAKEN AT A1,0 0,00,000/- WITHOUT DEDUCTING BROKERAGE OF A1,00,000/- WHICH WAS PAID B Y CHEQUE. IN SO FAR AS, CLAIM OF EXEMPTION U/S.54F OF THE ACT WAS C ONCERNED, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT COST OF TH E NEW PROPERTY SHOULD HAVE BEEN CONSIDERED AFTER TAKING INTO ACCOU NT THE RENOVATION EXPENDITURE OF A3,25,000/-. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FIRST DEALING WITH THE QUESTION WHETHER BROKERAGE OF A1,00,000/- PAID CAN BE DEDUCTED FROM SALE CONSIDERATION WHILE COMPUTING LONG TERM CAPITAL GAINS, I FIND TH AT ASSESSEE HAS PRODUCED A RECEIPT WHICH SHOW PAYMENT OF A1,00,000 /- BY ACCOUNT PAYEE CHEQUE TO ONE SHRI. J. SURESH. IT MAY BE TRU E THAT ASSESSEE MIGHT NOT HAVE PRODUCED THE RECEIPT BEFORE LOWER AUTHORITIES. HOWEVER, ASSESSEE HAD PRODUCED THE BANK ACCOUNT WH ICH REFLECTED THE ABOVE PAYMENT. IN SUCH A SITUATION, IN MY OPINI ON THE NET SALE ITA NO. 3343/MDS/2016. :- 4 -: CONSIDERATION ON THE SALE OF THE LAND AT MADIPAKKAM VILLAGE HAS TO BE AT A99,00,000/-. 7. COMING TO THE ASPECT OF INVESTMENT IN THE RESIDENTI AL HOUSE FOR WHICH EXEMPTION U/S.54F OF THE ACT HAS BEEN CLA IMED, I FIND THAT LD. ASSESSING OFFICER HAD CONSIDERED THE VALUE OF T HE INVESTMENT AT A70,89,580/-, REJECTING ASSESSEES SUBMISSION REGA RDING RENOVATION EXPENDITURE OF A3,72,500/-. THE CLAIM NOW MADE BEFO RE ME IS FOR RENOVATION EXPENDITURE OF A3,25,000/-. APART FROM THE INDEFINITE NATURE OF THE CLAIM, LOWER AUTHORITIES HAVE ALSO GIVEN A CLEAR FINDING THAT NO EVIDENCE WAS FURNISHED BY THE ASSESSEE IN SUPPORT SUCH EXPENDITURE. HENCE, I AM OF THE OPINION THAT, SUCH CLAIM WAS RIGHTLY DISALLOWED BY THE LOWER AUTHORITIES AND COST OF TH E NEW ASSET CONSIDERED AT A70,89,580/-. 8. COMING TO THE ASPECT OF COMPUTATION OF EXEMPTION U/ S.54F OF THE ACT, THE SAID SECTION CLEARLY INDICATE THE F ORMULA THROUGH WHICH EXEMPTION HAS TO BE CALCULATED. THIS IS REPRODUCED HEREUNDER:- LONG TERM CAPITAL GAIN X AMOUNT INVESTED IN RESIDENTIAL HOUSE. NET CONSIDERATION. SO, WHAT IS TO BE CONSIDERED IS THE LONG TERM CA PITAL GAINS APART FROM THE AMOUNT INVESTED IN RESIDENTIAL HOUSE, IN THE NUMERATOR AND NET CONSIDERATION IN DENOMINATOR. IN SO FAR AS INV ESTMENT IN ITA NO. 3343/MDS/2016. :- 5 -: RESIDENTIAL HOUSE IS CONCERNED, I AM ONE WITH LOWE R AUTHORITIES THAT SUCH INVESTMENT HAD TO BE CONSIDERED AT A70,89,580 /. HOWEVER, LONG TERM CAPITAL GAINS, WAS TAKEN BY THE ASSESSING OFFI CER AT A69,54,407/- VIZ AFTER EXCLUDING ASSESSEES CLAIM UNDER SECTION 54EC OF THE ACT, WHEREAS ACTUAL SUM SHOULD HAVE BEEN A83,55,733/- ( NET CONSIDERATION OF A99,00,000/- LESS INDEXED COST OF ACQUISITION A15,44,267/-). SIMILARLY, THE NET CONSIDERATION WHICH COMES IN TH E DENOMINATOR SHOULD BE TAKEN AS A99,00,000/-. HENCE, I SET ASID E THE ORDERS OF THE LOWER AUTHORITIES IN SO FAR AS IT RELATES TO LONG T ERM CAPITAL GAINS COMPUTATION EXEMPTION U/S.54F OF THE ACT AND REMIT IT BACK TO THE LD. ASSESSING OFFICER FOR CORRECTLY COMPUTING IT, IN AC CORDANCE WITH LAW. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 26TH DAY OF A PRIL, 2017, AT CHENNAI SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:26TH APRIL, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF