The DCIT, Circle 1(3), Vadodara V. Smt. Jagrutiben Harishkumar Chokshi, Vadodara

ITA 3422/AHD/2015

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9690 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHIR M K PATEL
• Keywords: Capital asset; Cost of acquisition
• Section: 54F; 54

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD L LL LOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK ] YS[KK ] YS[KK ] YS[KK LNL; ,OA LNL; ,OA LNL; ,OA LNL; ,OA EK/KQFERK EK/KQFERK EK/KQFERK EK/KQFERK JKW; JKW;JKW; JKW;] U;KF;D ] U;KF;D ] U;KF;D ] U;KF;D LNL; LNL; LNL; LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ITA NO.3422/AHD/2015 ( / ASSESSMENT YEAR : 2012-13) DCIT, CIRCLE 1(3), VADODARA 390 007. / VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI, CHOKSHI BAZAR, PADRA, VADODARA. ./ ./ PAN/GIR NO. : ABEPC 7231 J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRASOON KABRA, SR.D.R. / RESPONDENT BY : SHIR M. K. PATEL, A.R. / DATE OF HEARING 28/06/2018 !'# / DATE OF PRONOUNCEMENT 25/09/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THIS IS THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-5, VADODARA, D ATED 07.08.2015 IN THE ASSESSMENT YEAR (AY) 2012-13. 2. THE GROUNDS OF THE APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) ERRED IN BY DIRECTING THE AO TO ALLOW DED UCTION U/S 54F OF THE I.T. ACT, 1961 WITHOUT APPRECIATING FIND INGS OF THE AO AND THE FACTS AND CIRCUMSTANCES ESTABLISHED ON RECO RDS SHOWS THAT ASSESSEE HAD NOT FULFILLED THE CONDITION LAID DOWN AS PER PROVISION OF THE I.T. ACT, 1961 AND EXEMPTION CLAIM ED U/S 54F OF THE I.T. ACT WAS ERRONEOUS. ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 2 - 2. THAT THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND , OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET AS IDE AND THAT THE AO BE RESTORED. 3. THE ONLY ISSUE RAISED BY THE REVENUE IN THE GROU NDS OF APPEAL IS THAT LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION OF RS. 75,11,815.00 U/S 54F OF THE ACT THOUGH THE CONDITIONS LAID DOWN UNDE R THE PROVISIONS OF ACT WERE NOT FULFILLED. 4. BRIEFLY, STATE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND OFFERED HER INCOME UNDER THE HEAD HOUSE PROPERTY, LTCG, AND INCOME FROM OTHER SOURCES IN HER RETURN OF INCOME. 4.1 DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E HAD SOLD A NON AGRICULTURAL PLOT OF LAND ON 20 TH JUNE 2011 FOR A TOTAL CONSIDERATION OF RS. 1,22,39,332/- AND OFFERED LONG TERM CAPITAL GAIN OF RS. 15,17,806/- ON SUCH PLOT OF LAND. THE COMPUTATION OF LTCG OFFERED BY THE ASSESSEE IS AS UNDER: SALE CONSIDERATION: RS. 1,22,39,332/- LESS: INDEX COST OF ACQUISITION (RS. 20,66,943/-) LESS: INDEX COST OF IMPROVEMENT (RS. 11,42,768/-) LTCG RS. 90,29,611/- EXEMPTION U/S 54F (RS. 75,11,815/-) OFFERED LTCG RS. 15,17,806/- ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 3 - 4.2 AS SUCH THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION HAD PURCHASED A NON-AGRICULTURE PLOT OF LAND WORTH OF R S.1,01,82,000/-AND CLAIMED EXEMPTION UNDER SECTION 54F IN RESPECT OF T HE SAME. 4.5 HOWEVER THE AO REJECTED THE CLAIM OF THE ASSESS EE MADE U/S 54F OF THE ACT AS THE ASSESSEE COULD NOT FURNISH ANY EV IDENCE REGARDING THE CONSTRUCTION OF THE HOUSE. 4.6 THE AO ALSO OBSERVED IN HIS ORDER THAT DURING T HE HEARING ON 19 TH JANUARY 2015 THE REPRESENTATIVE OF ASSESSEE ADMITTE D THAT HOUSE IS UNDER CONSTRUCTION. HOWEVER, THE AO WAS OF THE VIEW THAT THE HOUSE SHOULD HAVE BEEN CONSTRUCTED WITHIN THE 3 YEARS FROM THE D ATE OF TRANSFER OF THE LAND I.E. 20/6/2014. 4.7 ACCORDINGLY, THE AO HELD THAT THE ASSESSEE COULD NOT COMPLY WITH THE PROVISIONS OF SECTION 54F OF THE ACT AND ADDED BACK RS. 75,11,815/- IN RESPECT OF EXEMPTION CLAIMED U/S 54F OF THE ACT TO THE TOTAL INCOME. 5. AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE LD . CIT(A). THE ASSESSEE BEFORE THE LD. CIT-A CLAIMED THAT HE HAS P URCHASED A PLOT OF LAND NO. 14, TP SCHEME NO., FP 74,78,79,83, & 84 AT VILLAGE ANKODIA FROM THE LAND OWNERS & DEVELOPERS M/S CORNER POINT INFRASTRUCTURE PVT. LTD FOR RS. 101.82 LACS INCLUDING STAMP DUTY & REGI STRATION FEES OF RS. 4.82 LACS. ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 4 - THE ASSESSEE FURTHER CONTENDED THAT SELLER OF SUCH PLOT (M/S CORNER POINT INFRASTRUCTURE PVT. LTD) HAS ALREADY OBTAINED PERMI SSION OF CONSTRUCTION FROM VUDA I.E. LOCAL AUTHORITY ON 17 TH AUGUST 2009 VIDE PERMISSION NO. UDA/PERMISSION/PLAN-7/11/2009. THE ASSESSEE ALSO SU BMITTED THIS FACT IS CLEAR FROM PAGE 5 OF THE SALE DEED NO. 4161 DATED 3 0-3-2012. 5.1 THE ASSESSEE BEFORE THE CIT(A) ALSO SUBMITTED T HAT LAND PURCHASED IS A RESIDENTIAL PLOT OF LAND WITH THE PE RMISSION TO CONSTRUCT THE RESIDENTIAL HOUSE ON IT. THEREFORE THE EXEMPTION U/ S 54F OF THE ACT SHOULD BE ALLOWED. 5.2 THE LD. CIT(A) AGREED WITH THE CONTENTION OF AS SESSEE AND REVERSED THE ORDER OF AO. THE LD. CIT(A) HAS HELD A S UNDER: 6.4 THE ASSESSING OFFICER HAS DISALLOWED CLAIMED EXEMPTION U/S 54F OF THE ACT MAINLY ON THE GROUND THAT THE CONSTRUCTI ON OF THE RESIDENTIAL HOUSE WAS NOT COMPLETE EVEN AFTER THREE YEARS OF TH E SALE OF THE ORIGINAL ASSET AND IN THE OPINION OF THE ASSESSING OFFICER, COMPLETION OF CONSTRUCTION WITHIN THREE YEARS OF THE DATE OF SALE IS A CONDITION PRECEDENT FOR CLAIMING EXEMPTION U/S 54F OF THE ACT . SINCE THIS CONDITION WAS NOT FULFILLED, THE ASSESSING OFFICER DENIED CLAIMED EXEMPTION U/S 54F TO THE ASSESEE. IN THIS REGARD, T HE ASSESSEE HAS ARGUED THAT ONCE THE AMOUNT RECEIVED ON SALE OF ORI GINAL ASSET WAS INVESTED IN THE NEW ASSET WITHIN THREE YEARS OF THE DATE OF SALE, THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 54F AND COM PLETION OF THE CONSTRUCTION OF THE RESIDENTIAL HOUSE BEYOND A PERI OD OF THREE YEARS COULD NOT LEAD TO DENIAL OF CLAIMED EXEMPTION. IN T HIS REGARD, THE ASSESEE PLACED RELIANCE ON THE DECISIONS OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS SARDARMAL KOTHARI [2008] 302 ITR 286 (MAD), WHERE IT WAS HELD THAT IN ORDER TO GET BENEFIT U/S 54F, ASSESSEE NEED NOT COMPLETE CONSTRUCTION OF HOUSE AND OCCUPY THE SAME. 6.5 IT IS CLEAR FROM THE MATERIAL AVAILABLE ON RECORD T HAT THE ASSESEE HAD INVESTED A SUM OF RS.1,01,82,000/- OUT OF THE C APITAL GAINS IN PLOT ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 5 - NO. 14, FINAL PLOT NO. 74,78 &79, VILLAGE ANKODIA, WHICH WAS PURCHASED FOR CONSTRUCTION OF RESIDENTIAL HOUSE. TH E INTENTION OF THE ASSESSEE FOR CONSTRUCTION OF A RESIDENTIAL HOUSE IS EVIDENT FROM A COPY OF DEVELOPMENT/CONSTRUCTION PERMISSION FROM VUDA, A COPY J OF THE LAY OUT PLAN AND BUILDING PLAN SUBMITTED BY THE ASSESSE E, COPIES OF VARIOUS OTHER STATUTORY APPROVALS FOR CONSTRUCTION OF RESID ENTIAL HOUSE, SUBMITTED BY THE ASSESSEE AND COPIES OF BALNCE SHEE TS FOR A.Y. 2013-14 AND 2014-15 SUBMITTED BY HER, SHOWING INVESTMENT IN CONSTRUCTION OF HOUSE. HON'BLE MADRAS HIGH COURT HAS, IN CIT VS SAR DARMAL KOTHARI [2008] 302 ITR 286 (MAD), HELD THAT IN ORDER TO GET BENEFIT U/S 54 F OF THE ACT, ASSESSEE NEED NOT COMPLETE CONSTRUCTION OF HOUSE AND OCCUPY THE SAME. HON'BLE ITAT, MUMBAI HAS, IN THE CASE OF HASMUKH N. GALA VS ITO IN ITA NO. 7512/MUM/2013, HAS ALSO HELD THAT ONCE THE AMOUNT OF CAPITAL GAINS HAS BEEN INVESTED BY THE ASSESSEE IN A NEW ASSET WITHIN AVAILABLE TIME, EVEN IF THE CONSTRUCTION OF THE NEW ASSET IS NOT COMPLETED WITHIN THREE YEARS, EXEMPTION U/S 54 OF THE ACT CAN NOT BE DENIED TO THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSION AND PART ICULARLY THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE O F SARDARMAL KOTHARI (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO ALLOW EXEMPTION U/S 54F TO THE ASSESSEE. THE ASSESSEE SUCCEEDS ON THIS GROUND OF APPEAL. 5.3 AGGRIEVED BY THE ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR BEFORE US SUBMITTED THAT THE CONSTRUC TION OF THE RESIDENTIAL HOUSE WAS NOT CONSTRUCTED WITHIN THE TI ME SPECIFIED WHICH IS COMPULSORY FOR CLAIMING THE EXEMPTION UNDER THE PRO VISIONS OF SECTION 54F OF THE ACT. THE LD. DR RELIED ON SEVERAL JUDGME NTS IN SUPPORT OF HIS CLAIM. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 7. ON THE OTHER HAND THE LD. AR SUBMITTED THAT THER E WAS APPROVAL FOR THE CONSTRUCTION OF THE HOUSE AND THE EXPENSES WERE INCURRED ON THE SAME. HE ACCORDINGLY PRAYED FOR THE DEDUCTION OF TH E CAPITAL GAIN UNDER SECTION 54F OF THE ACT. THE LD. AR PLACED HIS RELIA NCE ON SEVERAL ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 6 - JUDGMENTS IN SUPPORT OF HIS CLAIM. THE LD. AR VEHEM ENTLY SUPPORTED THE ORDER OF THE LD. CIT-A. 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND CASE LAW CITED BY BOTH THE PARTIES. THE ONLY ISSUE IN THE PRESENT APPEAL IS WITH REGARD TO THE CLAIM OF EXEMPTION U/S 54F MADE BY THE ASSESSEE WHICH WAS DISALLOWED B Y THE AO. BUT SUBSEQUENTLY THE ASSESSEE IN FIRST APPEAL SUCCEEDS BEFORE THE LD CIT(A). 8.1 AT THE OUTSET WE NOTE THAT THERE IS NO DOUBT TH AT THE PLOT PURCHASED BY THE ASSESSEE IS A RESIDENTIAL PLOT AND THE PERMI SSION FOR CONSTRUCTING THE RESIDENTIAL PROPERTY IS ALREADY TAKEN FROM THE LOCAL AUTHORITY BY THE SELLER OF SUCH PLOT. THE FACT OF PERMISSION OBTAINE D FROM THE LOCAL AUTHORITY IS MENTIONED ON SALE DEED ITSELF. 8.2 ON PERUSAL OF BALANCE SHEET OF THE ASSESSEE DAT ED 31 ST MARCH 2014/2015 AND LEDGER OF SEVASI HOME CONSTRUCTION FO R THE YEAR 2013-14 & 2014-15, WE NOTE THAT ASSESSEE HAS INCURRED EXPEN SES ON CONSTRUCTION OF RESIDENTIAL PROPERTY. THE RELEVANT EXTRACT OF TH E BALANCE SHEET IS REPRODUCED AS UNDER: ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 7 - ASSETS AS ON 31-3-2014 AMOUNT RS. ADVANCED TO CHOKSHI PARTH HARISH INFO SYSTEM PVT LTD. HOUSE CONSTRUCTION (SEVASI) 79,21,800.00 37,500.00 7,18,403.00 ASSETS AS ON 31-3-2015 AMOUNT RS. OTHER INVESTMENT AGRI. LAND MUVAL (24-05-14) HOUSE CONSTRUCTION (SEVASI) 30,76,005.00 12,03,456.00 8.3 THUS THE ONLY DISPUTE IS THAT ASSESSEE COULD NO T CONSTRUCT THE RESIDENTIAL HOUSE WITHIN THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF OLD PROPERTY AS STIPULATED IN THE SECTION 54F OF THE ACT. 8.4 IN THIS REGARD IT IS WORTH TO MENTION HERE THA T IT IS SETTLED LAW THAT THE PROVISIONS OF SECTION 54F OF THE ACT ARE BENEFI CIAL TO ASSESSEE. THEREFORE THE SAME SHOULD BE READ LIBERALLY. SINCE THE PROVISIONS OF SECTION 54F OF THE ACT IS A BENEFICIAL PROVISION TO ASSESSEE, WE ARE INCLINED TO HOLD THAT THE BENEFIT OF THE PROVISIONS OF SECTION SHOULD NOT BE DENIED MERELY BECAUSE ASSESSEE COULD NOT COMPLETE T HE CONSTRUCTION OF HOUSE WITHIN THREE YEARS FROM THE DATE OF TRANSFER. ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 8 - 8.5 IN THIS REGARD WE ALSO FIND SUPPORT FROM THE HO NBLE MADRAS HIGH COURT IN CASE OF CIT VS. SARDARMAL KOTHARI REPORTED IN 302 ITR 286 WHICH IS AS UNDER: IN ORDER TO GET THE BENEFIT UNDER SECTION 54F, THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY T HE SAME. CIRCULAR NO. 667, DATED 18-10-1993 ([1993] 204 ITR (ST.) 103 ) WOULD NOT IN ANY WAY ADVANCE THE CASE OF THE REVENUE TO COME TO THE CONCLUSION THAT IN ORDER TO HAVE THE BENEFIT UNDER SECTION 54F, THE CO NSTRUCTION SHOULD HAVE BEEN COMPLETED. 8.6 WE ALSO FIND THE SUPPORT FROM THE ORDER OF THIS TRIBUNAL IN THE CASE OF VINOD UGARDAS PATEL VS. ACIT IN ITA 529/AHD/2014 DATED 02.01.2017 WHEREIN IT WAS HELD UNDER : 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE C ONTROVERSY IN THE INSTANT CASE REVOLVES AROUND THE ELIGIBILITY OF DED UCTION OF S. 54F IN THE FACTS OF THE CASE. IN THIS INSTANT CASE, THE ASSESS EE HAS CLAIMED DEDUCTION UNDER SECTION 54F ON THE GROUND THAT A PL OT OF LAND HAS BEEN PURCHASED ON WHICH RESIDENTIAL HOUSE WAS CONSTRUCTE D BY THE ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF BENEVOLENT PROVISION OF SECTION 54F ON DEPLOYMENT O F NET CONSIDERATION ARISING ON SALE OF 'ORIGINAL ASSET' ( TRANSFER OF A LONG TERM CAPITAL ASSET NOT BEING A RESIDENTIAL HOUSE) FOR THE PURPOSE OF C ONSTRUCTION OF RESIDENTIAL HOUSE NOTWITHSTANDING DELAY IN CONSTRUC TION WITHIN THE STIPULATED PERIOD OF 3 YEARS. AT THE THRESHOLD, WE FIND OURSELVES IN AGREEMENT WITH THE PROPOSITION CANVASSED ON BEHALF OF THE ASSESSEE THAT SECTION 54F OF THE IT ACT IS A BENEFICIAL PROVISION FOR PROMOTING THE CONSTRUCTION OF RESIDENTIAL HOUSE AND THEREFORE REQ UIRES TO BE CONSTRUED LIBERALLY FOR ACHIEVING THAT PURPOSE. THE INTENTION OF LITERATURE IS TO ENCOURAGE INVESTMENTS IN THE ACQUISITION OF RESIDEN TIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT THE STRICT REQUIREMENT OF THE LAW SO LONG AS THE CONSIDERATION HAS BEEN APPRO PRIATED FOR CONSTRUCTION OF A RESIDENTIAL HOUSE. THE CONDITION OF CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN A PERIOD OF 3 YEARS HAS BE EN SOMEWHAT READ DOWN AND RELAXED BY THE JUDICIAL PRECEDENTS AS RELI ED UPON BY THE ASSESSEE. WE, THUS OBSERVE THAT MERELY BECAUSE THE CONSTRUCTION COULD NOT BE COMPLETED WITHIN A STIPULATED PERIOD OF THRE E YEARS AFTER THE DATE ITA NO.3422/AHD/2015 DCIT VS. SMT. JAGRUTIBEN HARISHKUMAR CHOKSHI ASST.YEAR 2012-13 - 9 - OF TRANSFER OF ORIGINAL ASSET AS CONTEMPLATED UNDER SECTION 54F OF THE ACT, THIS BY ITSELF WOULD NOT ACT AS AN HANDICAP FO R AVAILING BENEFIT OF 54F. RESPECTFULLY, FOLLOWING THE JUDGMENTS AS DISCUSSED ABOVE WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT-A. HENCE, WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 9. IN RESULT APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 25/09/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; YKS [KK LNL; U;KF;D LNL; YKS[KK LNL; U;KF;D LNL; YKS[KK LNL; U;KF;D LNL; YKS[KK LNL; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 25/09/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-5, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD