Shivkumar Lakshman, CHENNAI V. ITO, CHENNAI

ITA 3442/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2149 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN
• Assessee Lawyers: HEMALATHA K ACA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Tax effect; Benefit of exemption; Capital Gains
• Section: 54F; 73; 13; 54

Judgement Text

, ( ) , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH, CHENNAI , BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT ./ ITA NO.: 3442 / CHNY / 2019 / ASSESSMENT YEAR: 2010-11 SHRI SHIVKUMAR LAKSHMAN, C1, 28, APOLLO LUMIERE, 3 RD MAIN ROAD, GANDHI NAGAR, CHENNAI 600 020/ PAN : ADEPL1876A V. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 1(2), CHENNAI. ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : MS. HEMALATHA.K, ACA /RESPONDENT BY : SHRI A. SUNDARARAJAN, ADDL.CIT / DATE OF HEARING : 13.02.2020 / DATE OF PRONOUNCEMENT : 17.03.2020 / O R D E R 1. THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-16, CHENNAI, IN ITA NO.12/CIT(A)-16/2018-19 DATED 26.11.2019. THE ASSESSMENT WAS FRAMED BY INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD -1(2), CHENNAI FOR THE A.Y. 2010-11 VIDE ORDER DATED 23.07.2015 U/S 254 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN RESTRICTING THE 2 I.T.A. NO.3442/CHNY/2019 CLAIM OF DEDUCTION U/S.54F OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AMOUNTING TO RS.83,62,888/- AS AGAINST CLAIMED BY THE ASSESSEE AT RS.92,35,986/-. FOR THIS, ASSESSEE HAS RAISED VARIOUS GROUNDS AND THE RELEVANT GROUNDS RAISED ARE AS UNDER:- 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING THE CONTENTION OF THE ASSESSING OFFICER IN RESTRICTING THE DEDUCTION CLAIMED U/S 54F OF THE CT TO RS.83,62,888/- AS AGAINST RS.92,35,986/- WHICH THE ASSESSEE IS ENTITLED TO CLAIM (TAX EFFECT: RS.3,24,847/-) 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE CONSIDERED THAT THE AMOUNT OF DEDUCTION CAN BE RESTRICTED TO THE AMOUNT OF CAPITAL GAINS, OR THE COST OF NEW PROPERTY, WHICHEVER IS LESS, ONLY WITH RESPECT TO THE DEDUCTION UNDER SECTION 54 AND NOT UNDER SECTION 54F OF THE ACT. 4. FOR THAT THE LEARNED CIT (APPEALS) ERRED IN PLACING RELIANCE ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF HUMAYUN SULEMAN MERCHANT VS. CCIT IN [2016] 73 TAXMANN.COM 2 (BOMBAY), WHERIN THE ISSUE IS DIFFERENT FROM THAT OF THE APPELLANTS CASE. 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN PLACING RELIANCE ON THE DECISION OF MUMBAI ITAT IN THE CASE OF SMT. BASARIBANU MOHD.RAFIQ LATIWALA V.ITO IN [2017] 81 TAXMANN.COM 62 (MUMBAI-TRIB.), WHEREIN THE ISSUE IS DIFFERENT FROM THAT OF THE APPELLANTS CASE. 3. BRIEFLY STATED FACTS ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE AO U/S.143(3) OF THE ACT VIDE ORDER DATED 10.01.2013, WHEREIN THE ASSESSING OFFICER ADMITTED THE SALE 3 I.T.A. NO.3442/CHNY/2019 CONSIDERATION U/S.50C OF THE ACT AT RS.1,06,17,750/- AND RESTRICTED THE EXEMPTION U/S.54F OF THE ACT, AMOUNTING TO RS.83,62,888/-. THE ASSESSEE CLAIMED INDEXED COST OF IMPROVEMENT BUT THE ASSESSING OFFICER DID NOT ALLOWED THE AMOUNT OF RS.3,07,946/-. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO VIDE ORDER DATED 23.01.2015 UPHELD THE ASSESSMENT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE TRIBUNAL AND TRIBUNAL VIDE ORDER IN ITA NO.402/MDS/2015 DATED 29.05.2015 DIRECTED THE ASSESSING OFFICER TO ADOPT THE ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF CONSIDERING THE DEDUCTION U/S.54F OF THE ACT, RATHER THAN ADOPTING THE VALUE DETERMINED BY THE SUB-REGISTRAR AND ALSO DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF COST OF IMPROVEMENT OF RS.3,07,946/-. THE ASSESSING OFFICER WHILE GIVING APPEAL EFFECT TO THE ORDER OF ITAT FOR ASSESSMENT YEAR 2010-11 IN APPEAL ORDER IN ITA NO.402/MDS/2015 DATED 29.05.2015, PASSED ORDER U/S.254 OF THE ACT, DATED 23.07.2015 AND RESTRICTED THE DEDUCTION U/S.54F OF THE ACT, AS DIRECTED BY ITAT AT RS.83,62,888/- AS THE INVESTMENT IN THE NEW PROPERTY WAS ONLY RESTRICTED TO THE EXTENT OF RS.83,62,888/-. AGGRIEVED AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER GIVING EFFECT TO THE APPEAL ORDER OF THE TRIBUNAL U/S.254 OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE ASSESSEE BEFORE CIT(A) AS WELL AS BEFORE ASSESSING OFFICER CLAIMED THAT THE ENTIRE AMOUNT OF DEDUCTION CALCULATED ON 4 I.T.A. NO.3442/CHNY/2019 PROPORTIONATE BASIS AS STATED U/S.54F OF THE ACT IS FULLY ELIGIBLE FOR DEDUCTION AND THE ENTIRE AMOUNT OF RS.92,35,986/- SHOULD BE ALLOWED. THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF GOULI MAHADEVAPPA VS. ITO, REPORTED IN 33 TAXMANN.COM 47 (KAR). THE CIT(A) AFTER GOING THROUGH THE SUBMISSIONS AND ALSO CONSIDERING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HUMAYUN SULEMAN MERCHANT VS. CCIT, REPORTED IN [2016] 73 TAXMANN.COM 2 (BOMBAY) UPHELD THE COMPUTATION OF DEDUCTION MADE BY ASSESSING OFFICER WHILE GIVING THE APPEAL EFFECT TO THE ORDER OF TRIBUNAL U/S.54F OF THE ACT. THE CIT(A) NOTED THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF HUMAYUN SULEMAN MERCHANT, SUPRA HELD THAT THE ASSESSING OFFICER HAS RIGHTLY COMPUTED THE DEDUCTION U/S.54F OF THE ACT, RESTRICTING THE INVESTMENT IN THE NEW ASSET AT RS.35 LAKHS AND THUS RESTRICTING THE EXEMPTION U/S.54F OF THE ACT PROPORTIONATELY TO THE AMOUNT INVESTED IS CORRECT. AGGRIEVED AGAINST THE FINDINGS OF CIT(A), THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE ME. I NOTED THAT THE ABOVE FACTS ARE UNDISPUTED, ONLY DISPUTE IS WHAT SHOULD BE THE CONTENT OF CLAIM OF DEDUCTION U/S.54F OF THE ACT. BEFORE ME, THE LD.COUNSEL FOR THE ASSESSEE DREW MY ATTENTION TO THE PROVISIONS OF SECTION 54FOF THE ACT, AND THE COMPARATIVE PROVISION OF 5 I.T.A. NO.3442/CHNY/2019 SECTION 54 OF THE ACT. ACCORDING TO THE LD.COUNSEL, THE AMOUNT OF DEDUCTION CAN BE RESTRICTED TO THE AMOUNT OF CAPITAL GAIN OR THE COST OF NEW PROPERTY, WHICHEVER IS LESS, ONLY UNDER THE PROVISIONS OF SECTION 54 AND NOT UNDER SECTION 54F OF THE ACT. SHE STATED THAT THE AMOUNT OF DEDUCTION WHICH IS CLAIMED U/S.54F OF THE ACT, CANNOT BE RESTRICTED TO THE INVESTMENT MADE IN THE NEW PROPERTY. THE ENTIRE AMOUNT OF DEDUCTION CALCULATED ON PROPORTIONATE BASIS IS FULLY ELIGIBLE TO BE CLAIMED AS DEDUCTION FROM CAPITAL GAINS. I NOTED THAT THIS ISSUE HAS BEEN CONSIDERED EXACTLY ON IDENTICAL FACTS BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HUMAYUN SULEMAN MERCHANT, SUPRA. (XV) HOWEVER, THE FACTUAL SITUATION ARISING IN THE PRESENT CASE IS DIFFERENT. THE RETURN OF INCOME IS ADMITTEDLY FILED ON 4TH NOVEMBER, 1996. IN TERMS OF SECTION 54F(4) OF THE ACT AS INTERPRETED BY THE GAUHATI HIGH COURT IN RAJESH KUMAR JALAN (SUPRA) THE AMOUNTS SUBJECT TO CAPITAL GAIN ON SALE OF THE CAPITAL ASSET FOR PURPOSE OF EXEMPTION, HAS TO BE UTILIZED BEFORE THE DATE OF FILING OF RETURN OF INCOME. IN THIS CASE 4TH NOVEMBER, 1996 IS THE DATE OF FILING THE RETURN OF INCOME. IT IS NOT DISPUTED THAT ON 4TH NOVEMBER, 1996 WHEN THE RETURN OF INCOME WAS FILED, THE ENTIRE AMOUNT WHICH WAS SUBJECT TO CAPITAL GAIN TAX HAD NOT BEEN UTILIZED FOR THE PURPOSE OF CONSTRUCTION OF NEW HOUSE NOR WERE THE UNUTILIZED AMOUNTS DEPOSITED IN THE NOTIFIED BANK ACCOUNTS IN TERMS OF SECTION 54F(4) OF THE ACT BEFORE FILING THE RETURN OF INCOME. IT IS ALSO TO BE NOTED THAT IN LINE WITH THE INTERPRETATION OF GAUHATI HIGH COURT ON SECTION 54F(4) OF THE ACT, THE ASSESSING OFFICER HAD TAKEN INTO ACCOUNT ALL AMOUNTS UTILIZED FOR CONSTRUCTION OF A HOUSE BEFORE FILING THE RETURN OF INCOME ON 4TH NOVEMBER, 1996 FOR EXTENDING THE BENEFIT OF EXEMPTION UNDER SECTION 54F OF THE ACT. THEREFORE, IN THE PRESENT FACTS, THE DECISION OF THE GAUHATI HIGH COURT IN RAJESH 6 I.T.A. NO.3442/CHNY/2019 KUMAR JALAN (SUPRA) WOULD NOT APPLY SO AS TO HOLD THAT THE APPELLANT HAD COMPLIED WITH THE SECTION 54F(4) OF THE ACT. IN VIEW OF THE ABOVE, IM OF THE VIEW THAT THE ASSESSING OFFICER HAS RIGHTLY RESTRICTED THE DISALLOWANCE TO THE EXTENT OF INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF NEW ASSET AND THUS RIGHTLY COMPUTED THE EXEMPTION U/S.54F OF THE ACT, PROPORTIONATELY TO THE AMOUNT INVESTED. HENCE, I FIND NO INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES AND ACCORDINGLY I UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2020 AT CHENNAI. SD/- ( ) (MAHAVIR SINGH) / VICE PRESIDENT /CHENNAI, /DATED, THE 13 TH MARCH, 2020 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF.