DCIT, New Delhi V. Sh. Sohil Chand, New Delhi

ITA 343/DEL/2013

• Counselvise Citation: 34320114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 18-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 343/DEL/2013 ASSESSMENT YEAR : 2009-10 DCIT, CIRCLE 32(1), VS. SH. SOHIL CHAND, NEW DELHI B-19, DEFENCE COLONY, NEW DELHI 110 024 GIR / PAN: AAAPC1683P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRR KUMAR, SR. DR RESPONDENT BY : SHRI G N GUPTA, ADV. ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 30.10.2012. THE ONLY GROUND RAISED BY THE RE VENUE IS THE ACTION OF LD. CIT(A) BY WHICH HE HAD DELETED AN ADDITION OF R S.93,70,691/- MADE BY THE A.O. ON ACCOUNT OF DENIAL OF CLAIM U/S 54F OF T HE ACT, AS IN THE OPINION OF THE A.O., THE ASSESSEE DID NOT MAKE INVESTMENT W ITHIN PRESCRIBED PERIOD AND THEREFORE, DID NOT COMPLY WITH THE CONDITIONS M ENTIONED IN SECTION 54F OF THE I. T. ACT, 1961. 2. AT THE OUTSET, LD. D.R. READ FORM THE ASSESSMENT ORDER AND SUBMITTED THAT THE FIRST PAYMENT FOR BOOKING OF FLAT WAS MADE ON 12.02.2008 WHEREAS THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE A CT WHEREAS THE FLAT WAS REGISTERED ON 11.03.2010. FROM THE SCHEDULE OF PAY MENT AS MENTIONED IN ASSESSMENT ORDER, LD .D.R. SUBMITTED THAT THE ASSES SEE HAD NOT COMPLIED ITA NO343/DEL/2013 2 WITH THE PROVISIONS OF SECTION 54F AND, THEREFORE, THE A.O. HAD RIGHTLY DENIED THE EXEMPTION. IN THIS RESPECT, LD. D.R. IN VITED OUR ATTENTION TO PARA 7A OF THE ASSESSMENT ORDER WHEREIN THE A.O. HAD MAD E DISCUSSION AS TO WHY THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 54F . LD. D.R. FURTHER READ FORM LD. CIT(A)S FINDINGS AND SUBMITTED THAT L . C IT(A) HAS GRANTED RELIEF TO THE ASSESSEE AND HAS TRAVELLED BEYOND THE INTENT ION OF THE LEGISLATURE AND, THEREFORE, HIS ORDER IS LIABLE TO BE SET ASIDE. 3. LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE AS SESSEE HAD INVESTED THE LONG TERM CAPITAL GAIN WITHIN A PERIOD OF 2 YEA RS AND IN THIS RESPECT, INVITED OUR ATTENTION TO PARA 2 OF THE ASSESSMENT O RDER. IT WAS SUBMITTED THAT FIRST 3 PAYMENTS WERE THOUGH MADE BEFORE THE DATE O F CAPITAL GAIN ACCRUED AND EVEN IF THESE ARE IGNORED, THE PAYMENTS MADE AT SL. NO.4-7 ALONE WERE SUFFICIENT TO QUALIFY THE DEDUCTION U/S 54F OF THE ACT. LD. A.R. HEAVILY RELIED UPON THE FOLLOWING CASE LAWS: I) CIT VS J.R. SUBRAMANYA BHAT 165 ITR 571 II) CIT VS H.K. KAPOOR 234 ITR 753 III) CIT VS SAMBADNDAM UDAYKUMAR 345 ITR 389 IV) SMT. SHANTABEN P GANDHI VS CIT 129 ITR 218 V) CIT VS R L SOOD 245 ITR 727 4. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT HE ASSESSEE HAD EARNED LON G TERM CAPITAL GAIN ON SALE OF VARIOUS MUTUAL FUND AND THE AMOUNT OF LONG TERM CAPITAL GAIN WAS RS.93,70,691/-. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F ON THE BASIS THAT HE HAD MADE AN ELIGIBLE INVESTMENT LIABLE FOR DEDUCTION U/S 54F OF THE ACT. THE A.O. DENIED THE CLAIM OF DEDUCTION ON THE BASIS THAT FLAT WAS PURCHASED AND REGISTERED BY THE ASSESSEE ON 11.03.2 010 AND, THEREFORE, THE ASSESSEE HAD NOT MADE COMPLIANCE TO THE PROVISIONS OF SECTION 54F(I) OF THE ACT. LD. CIT(A) HAS ALLOWED THE RELIEF TO THE ASSE SSEE BY HOLDING AS UNDER: ITA NO343/DEL/2013 3 5. I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER P ASSED BY THE AO U/S.143(3) DATED 9/11/2011 AND CONSIDERED THE WRITT EN SUBMISSIONS FILED BY THE APP~ I ALSO PERUSED THE CASE LAWS REFE RRED BY THE AO AS WELL AS THE AR OF THE APPELLANT. ON PERUSAL OF THE ENTIRE MATERIAL ON RECORD, THE QUESTION WHICH NEEDS TO BE ADDRESSED FI RST IS WHETHER THE APPELLANT IS ENTITLED FOR EXEMPTION OF CAPITAL GAIN THAT AROSE FROM THE TRANSFER TO CAPITAL ASSETS OR NOT. THE FACTS BORNE FROM THE RECORD REVEALS THAT THE APPELLANT EARNED LONG TERM CAPITAL GAINS AMOUNTING TO RS.93,70,691/- DURING THE YEAR UNDER CONSIDERATI ON. THIS IS NOT IN DISPUTE THAT THE AMOUNT WAS INVESTED FOR PURCHASE O F A RESIDENTIAL PROPERTY BY THE APPELLANT. IT IS NOTED THAT THE APP ELLANT BOOKED A FLAT AT MUMBAI ON 12/2/2008 AND THE FLAT WAS REGISTERED IN THE NAME OF THE APPELLANT ON 10/3/2010. THE AO OBSERVED THAT SINCE THE CAPITAL GAINS ARE EARNED FROM APRIL 2008 TO OCTOBER 2008 AND BOOK ED A FLAT ON 12/2/2008 AND WHEREAS THE FLAT WAS REGISTERED ON 10 /3/2010, THE APPELLANT'S CASE DOES NOT FALL WITHIN THE ONE YEAR BEFORE OR TWO YEAR AFTER CLAUSE AND THEREFORE NOT ENTITLED FOR EXEMPTI ON OF CAPITAL GAIN. IN THE COURSE-OF THE APPELLATE PROCEEDINGS, THE APP ELLANT SUBMITTED THAT EXEMPTION U/S.54F OF THE ACT IS AVAILABLE TO T HE APPELLANT IF THE PROPERTY IS PURCHASED WITHIN TWO YEARS FROM THE DAT E OF TRANSFER. AFTER A CAREFUL CONSIDERATION OF SUBMISSIONS OF THE AR AN D CONTENTS OF THE ORDER OF THE AO AND AFTER RELYING ON VARIOUS JUDICI AL PRONOUNCEMENTS PUT FORTH BY E AO AS WELL AS THE APPELLANT, IN MY O PINION THE APPELLANT DESERVED TO GET EXEMPTION DUE TO THE FACT THAT DATE OF REGISTRATION AND DATE OF BOOKING THE FLAT, IS IRRELEVANT FOR ALLOWIN G THE CLAIM U/S.54F. WHAT IS IMPORTANT HERE IS WHETHER THE CAPITAL GAINS SO EARNED HAS BEEN INVESTED EITHER IN PURCHASING OF CONSTRUCTING A RESIDENTIAL HOUSE. AS PER THE CIRCULAR NO.672 DATED 16/12/1993 ISSUED BY CBDT, IT IS SEEN THAT THE APPELLANT IS ENTITLED TO GET EXEMPTIO N EVEN IF A FLAT OR HOUSE PROPERTY IS ALLOTTED. RELIANCE IS PLACED ON H ON'BLE MADRAS HIGH COURT DECISION IN THE CASE OF CIT VS. SARDARMA L KOTHARI, AND ANOTHER 302-ITR-286 (MAD) WHERE IT WAS HELD THAT SE CTION 54F IS A BENEFICIAL PROVISION FOR PROMOTING THE CONSTRUCTION OF RESIDENTIAL HOUSES AND REQUIRED TO BE CONSTRUED LIBERALLY FOR A CHIEVING THIS PURPOSE. THE INTENTION OF THE LEGISLATURE WAS TO EN COURAGE THE INVESTMENTS IN THE ACQUISITION OF RESIDENTIAL HOUSE PROPERTY. THE WORD USED IN SECTION IS 'PURCHASED' OR 'CONSTRUCTED'. TH E CONDITION PRECEDENT FOR CLAIMING BENEFIT OF SECTION 54F IS TH AT CAPITAL GAIN SHOULD BE PARTED BY THE APPELLANT AND INVESTED EITH ER IN PURCHASE OF A ITA NO343/DEL/2013 4 RESIDENTIAL HOUSE OR CONSTRUCTION OF A RESIDENTIAL HOUSE. THIS VIEW ALSO IS SUPPORTED BY THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. R.L. SOOD 245-ITR-727(DEL). 5. ON PERUSAL OF THE ABOVE, WE FIND THAT LD. CIT(A) HAS PASSED A VERY REASONED AND SPEAKING ORDER WITH WHICH WE DO NOT FI ND ANY INFIRMITY. 6. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH NOV., 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 07 TH NOV., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER