ITO, CHENNAI V. Sasidhar malladi, CHENNAI

ITA 3377/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4629 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 30-03-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 16-12-2016
• Court: TRIBUNAL
• Department Lawyers: R VIJAYARAGHAVAN
• Assessee Lawyers: A V SREEKANTH
• Keywords: Sale consideration of property below Jantri Value; Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . / ITA NO. 3377/MDS/2016 / ASSESSMENT YEAR : 2013-14 THE INCOME-TAX OFFICER, INTERNATIONAL TAXATION -1(2), GREAMS ROAD, CHENNAI 6. ( /APPELLANT) V. SHRI SASIDHAR MALLADI, NO.10/7A, LALITHA MAHAL ANNA SATHYA NAGAR, MAIN ROAD, RAMAPURAM, CHENNAI 600 089. PAN AQIPM1186F RESPONDENT) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT ! / DATE OF HEARING : 30.03.2017 '# ! / DATE OF PRONOUNCEMENT : 11.05.2017 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-16, CHEN NAI DATED 26.09.2016. - - ITA 3377/16 2 2. THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS T HAT THE CIT(APPEALS) ERRED IN ALLOWING THE ENTIRE CLAIM OF EXEMPTION U/S.54F OF 1,74,81,890/- MADE BY THE ASSESSEE AS AGAINST 49,90,930/- AS RESTRICTED BY THE ASSESSING OFFICER. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME FOR ASSESSMENT YEAR UNDER CONSIDERATION DECL ARING TOTAL INCOME OF 8,08,000/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND DURING THE SCRUTINY PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD SOLD A PROPERTY AND ADMITTED SALE CONSIDERATION OF 2,56,50,000/- AND AFTER CLAIMING EXEMPTION U/S.54EC AND U/S.54F OF THE ACT, OFFERED TAXABLE LT CG AT 5,58,841/-. HOWEVER, THE AO AFTER CARRYING OUT D ETAILED SCRUTINY OF THE CASE ARRIVED TO A TAXABLE LTCG AT 1,61,82,542/-. THE AO HAS ADOPTED SALE CONSIDERATION UNDER THE PRO VISIONS OF SEC.50C OF THE ACT AND PROPORTIONATELY DISALLOWED E XEMPTION U/S.54F OF THE ACT AND ALSO DISALLOWED COMMISSION P AYMENT AND BROKERAGE CHARGES. THE AO HAS ALSO ADOPTED COST OF INDEXATION IN THE YEAR IN WHICH THE ASSET WAS FIRST HELD BY TH E ASSESSEE IN VIEW OF THE PROVISO TO EXPLANATION (III) TO SEC.48 OF THE ACT. - - ITA 3377/16 3 AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). 4. ON APPEAL, THE CIT(APPEALS) OBSERVED THAT THE LA ND APPURTENANT TO, IS NECESSARY FOR EFFECTIVE ENJOYMEN T OF A BUILDING AS A RESIDENTIAL HOUSE. THEREFORE, THE BUILDING TO GETHER WITH THE LAND IS AN INDIVISIBLE AND INTEGRAL UNIT OF A RESID ENTIAL PROPERTY AND ACCORDINGLY THE ASSESSEE MAKING INVESTMENT INTO PURCHASE OF A 9 PLOT TO CONSTRUCT A RESIDENTIAL BUILDING QUA LIFIES FOR EXEMPTION U/S.54F OF THE ACT. ACCORDINGLY, THE CIT (APPEALS) DIRECTED TO THE AO NOT TO ALLOW DEDUCTION U/S.54F O F THE ACT PROPORTIONATELY BUT TO ALLOW AS PER ACTUAL INVESTME NT MADE FOR PURCHASE OF PLOTS TO BUILD A RESIDENTIAL UNIT AND A LLOWED THE APPEAL OF THE ASSESSEE. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. WE ARE OF THE OPINION THAT THE ASSESSEE CAME BEFORE THIS TRIBUNAL AGAINST THE IMPUGNED ORDER OF LD.CIT( A) IN ITA NO.3390/MDS./2016. THE TRIBUNAL VIDE ORDER DATED 10 .02.2017 IN ITA NO.3390/MDS./2016 REMITTED THE ISSUE RELATIN G TO THE - - ITA 3377/16 4 COMPUTATION OF INDEXATION OF COST TO THE FILE OF AO WITH FOLLOWING OBSERVATIONS:- 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND TH E ORDERS OF THE AUTHORITIES BELOW. ASSESSEE HAD SPECIFICALLY RE LIED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE O F MANJULA J. SHAH (SUPRA) WHEREIN IT WAS HELD THAT HOLDING PE RIOD OF THE PREVIOUS OWNER ALSO SHOULD BE CONSIDERED FOR COMPUT ING THE INDEXED COST WHERE THE PROPERTY CAME TO THE NAME OF THE ASSESSEE THROUGH A GIFT DEED. IN OUR OPINION A SETT LEMENT DEED CANNOT BE VIEWED DIFFERENTLY. NEVERTHELESS, WE FIND THAT NONE OF THE LOWER AUTHORITIES HAD VERIFIED THE SETTLEMENT D EED DATED 12.10.2012, BY VIRTUE OF WHICH ASSESSEE CLAIMED OWN ERSHIP OF THE PROPERTY WHICH WAS SOLD. A CAREFUL VERIFICATION OF SUCH SETTLEMENT DEED IS NECESSARY SINCE THE SALE WAS AFF ECTED WITHIN A FORTNIGHT OF THE DATE OF THE SETTLEMENT. IT IS NE CESSARY TO VERIFY WHETHER SETTLEMENT DEED WAS A PURE SETTLEMENT OR A TRANSFER FOR CONSIDERATION. IT IS ALSO NECESSARY TO VERIFY W HO WAS THE ACTUAL OWNER OF THE PROPERTY WHICH WAS SOLD. WE THE REFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE REGARDING COMPUTATION OF CAPITAL GAINS AND APPLICAT ION OF COST INFLATION INDEX BACK TO THE FILE OF THE LD. ASSESSI NG OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. - - ITA 3377/16 5 IN VIEW OF THE ABOVE ORDER OF TRIBUNAL, IT IS APPRO PRIATE TO REMIT THE ISSUE DISPUTED BY THE DEPARTMENT TO THE F ILE OF AO TO DECIDE THE SAME ALONG WITH THE ISSUE REMITTED BY THE TRIBUNAL IN ASSESSEES APPEAL. ACCORDINGLY, THE IS SUES RAISED BY THE ASSESSEE IS REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATION, IT NEEDLESS TO SAY THAT THE AO HAS G IVEN AN OPPORTUNITY TO THE ASSESSEE AND DECIDE THEREUPON. 6. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 11 TH MAY, 2017 AT CHENNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 11 TH MAY, 2017. K S SUNDARAM ;D EFGF /COPY TO: ;D EFGF / COPY TO: 1 . / APPELLANT 3. H3 / CIT(A) 5. FIJ K / DR 2. / RESPONDENT 4. H / CIT 6. JLM / GF