DCIT, Dehradun V. Smt. Nilima Dutt, Dehradun

ITA 352/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6969 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-01-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 22-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAJESH GUPTA
• Keywords: Source of fund; Cost of acquisition; Revised return; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 54F; 250; 54EC; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.352/DEL./2016 (ASSESSMENT YEAR : 2013-14) DCIT, CIRCLE 2, VS. MAJ. GEN. PRANAB DUTT, DEHRADUN. (LEGAL HEIR OF LATE SMT. NILIMA DUTT, C/O MOHIT GOEL & COMPANY, 32, E.C. ROAD, DEHRADUN. (PAN : ABRPD4221E) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI RAJESH GUPTA & SOMIL AGARWAL, ADVOCATES REVENUE BY : SHRI S.K. JAIN, SENIOR DR DATE OF HEARING : 10.01.2017 DATE OF ORDER : 16.01.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 2, DEHRADUN (HEREINAFTER REFERRED TO AS THE REVENU E) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORD ER DATED 04.11.2015 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), DEHRADUN UNDER SECTION 250 (6) OF THE INCOME-TAX AC T, 1961 (FOR ITA NO.352/DEL./2016 2 SHORT THE ACT) QUA THE ASSESSMENT YEAR 2013-14 ON THE GROUNDS INTER ALIA THAT :- 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N ALLOWING RENOVATION CHARGES IN NEW HOUSE EVEN IF THE BILLS/VOUCHERS COULD NOT BE PRODUCED BY THE ASSESSEE. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 54 DESPITE THE FACT THAT THE NEW RESIDENTIAL HOUSE WAS PURCHASED IN JOINT NAMES AND THE BANK ACCOUNT FORM WHICH PAYMENTS WERE MADE WAS ALSO A JOINT ACCOUNT. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 54EC DESPITE THE FACT THE BONDS WAS PURCHASED IN JOINT NAMES AND THE BANK ACCOUNT FROM WHICH PAYMENTS WERE MADE WAS ALSO A JOINT ACCOUNT. 4. THE ORDER OF THE LD. CIT (APPEALS) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED THE FACTS OF THIS CARE ARE : DURI NG THE REOPENING PROCEEDINGS UNDER SECTION 147/148 OF THE INCOME-TAX ACT, 1961, ASSESSEE FILED HER REVISED RETURN ON 26.12.2014 IN COMPLIANCE TO THE NOTICE U/S 148 OF THE ACT. THEREAFTER NOTICE U /S 142 (1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS SERVED UPON THE AS SESSEE. ASSESSING OFFICER NOTICED DURING ASSESSMENT PROCEED INGS THAT THE ASSESSEE HAS SOLD RESIDENTIAL PROPERTY FOR A CONSID ERATION OF RS.8,50,00,000/- HAVING 2/3 RD SHARE IN THE SAME. AO, BY INVOKING THE PROVISIONS CONTAINED U/S 50-C OF THE ACT, COMPU TED THE LONG TERM CAPITAL GAIN AS UNDER :- ITA NO.352/DEL./2016 3 SL.NO. PARTICULARS AS PER ASSESSEE AS PER DEPARTMENT 1. SALE CONSIDERATION OF BOTH THE PROPERTIES RS.8,50,00,000 RS.8,71,88,000 2. 2/3 RD SHARE OF THE ASSESSEE RS.5,66,61,000 RS.5,81,25,333 3. INDEXED COST OF ACQUISITION RS.48,56,403 RS.48,56,403 4. LONG TERM CAPITAL GAIN RS.5,18,04,597 RS.5,32,68,930 3. AO FURTHER NOTICED THAT THE DEDUCTIONS OF RS.3,7 6,55,763/- FOR INVESTMENT IN PURCHASE OF NEW HOUSE COMPUTED BY THE ASSESSEE ARE AS UNDER :- COST OF PURCHASE RS.3,25,00,000 REGISTRATION CHARGES RS.4,61,526 STAMP DUTY RS.29,35,417 LEGAL EXPENSES RS.2,70,000 AMOUNT SPENT ON RENOVATION RS.14,88,820 TOTAL INVESTMENT IN NEW HOUSE RS.3,76,55,763 4. AO NOTICED THAT THE FLATS SOLD BY THE ASSESSEE W ERE PURCHASED IN THE NAME OF TWO PERSONS, NAMELY, THE A SSESSEE AND HER DAUGHTER-IN-LAW, SMT. PURABI DUTT. ASSESSEE WAS CA LLED UPON TO FURNISH COPY OF BANK ACCOUNT AND BILLS & VOUCHERS O F EXPENSES OF RENOVATION CHARGES AMOUNTING TO RS.14,88,820/- BUT ASSESSEE FILED THE BILLS & VOUCHERS OF EXPENSES TO THE EXTENT OF R S.13,00,000/- ONLY AND AS SUCH, THE AO DISALLOWED THE DIFFERENCE OF RS.1,88,820/- AS EXPENSES MADE ON RENOVATION CHARGE S. AO COMPUTED THE NET INCOME FROM LONG TERM CAPITAL GAIN OF THE ASSESSEE AS UNDER :- ITA NO.352/DEL./2016 4 CAPITAL GAIN RS.5,32,68,930 LESS DEDUCTION U/S 54 RS.1,87,33,472 LESS DEDUCTION U/S 54EC RS.16,66,666 NET LONG TERM CAPITAL GAIN RS.3,28,68,792 5. AO MADE AN ADDITION OF RS.2,37,19,964/- (RS.3,28 ,68,792/- - RS.91,48,828/- RETURNED ON ACCOUNT OF LTCG) TO TH E INCOME OF THE ASSESSEE AS LONG TERM CAPITAL GAIN. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS ALLOWED THE APPEAL. FEEL ING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 8. CIT (A) DELETED THE ADDITION OF RS.1,88,820/- OU T OF THE INVESTMENT OF RS.14,88,820/- CLAIMED BY THE ASSESSE E ON THE RENOVATION OF THE HOUSE PROPERTY. THE LD. AR FOR T HE ASSESSEE CONTENDED THAT SUCH BILLS AND VOUCHERS WERE NOT AVA ILABLE BECAUSE THE WORK WAS PROCURED FROM THE DAILY WAGERS COMPLET ED WITHIN THREE MONTHS. HOWEVER, THE LD. DR RELIED UPON THE ORDER OF THE AO IN THIS REGARD. WE ARE OF THE CONSIDERED VIEW T HAT WHEN THE ITA NO.352/DEL./2016 5 AO GOT SATISFIED REGARDING RENOVATION OF THE HOUSE CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT TO TH E TUNE OF RS.13,00,000/- ON THE BASIS OF BILLS AND VOUCHERS P RODUCED BY THE ASSESSEE, CONTENTION OF THE ASSESSEE THAT THE AMOUN T OF RS.1,88,820/- WAS SPENT BY WAY OF LABOUR CHARGES GI VEN TO THE DAILY WAGERS WHO HAVE WORKED FOR A PERIOD OF THREE MONTHS IS SUSTAINABLE. ONE CANNOT BE EXPECTED TO PROCURE THE VOUCHERS FOR MAKING PAYMENTS TO THE DAILY WAGERS WHO EVEN KEEPS ON CHANGING AS PER AVAILABILITY IN THE LABOUR MARKET. SO, WE F IND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE CIT (A). THIS GROUND IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 9. LD. CIT (A) DELETED THE ADDITION OF RS.1,87,33,4 72/- MADE BY THE AO ON THE GROUND THAT THE ASSESSEE PURCHASED THE PROPERTY IN THE JOINT NAME BY RETURNING THE FOLLOWING FINDIN GS :- 13. I HAVE DULY CONSIDERED THE FACTS AND CIRCUMSTA NCES OF THE CASE. IT HAS BEEN JUDICIALLY HELD IN A NUMBER OF CASES, DETAILS OF WHICH HAVE BEEN CITED BY THE COUNSEL FOR THE ASSESSEE IN THE SUBMISSION MADE BEFORE THE UNDERSIG NED, THAT IT DOES NOT MATTER IF THE PROPERTY IS PURCHASED IN A JOINT NAME OR FOR THAT MATTER EVEN IN THE NAME OF A CLOSE RELA TIVE. TO AVAIL THE BENEFIT UNDER SECTION 54, IT IS THE SOURC E OF FUNDS THAT IS RELEVANT. THUS IF AN ASSESSEE HAS INVESTED THE E NTIRE FUNDS IN A PURCHASE OF A RESIDENTIAL PROPERTY, EVEN IF TH AT PROPERTY IS PURCHASED IN A JOINT NAME OR EVEN IN THE NAME OF A CLOSE RELATIVE, THAT ASSESSEE WOULD BE ENTITLED TO CLAIM THE BENEFIT OF DEDUCTION UNDER SECTION 54, TO THE EXTENT THAT THE INVESTMENT BEARS RELATION TO THE CAPITAL GAIN OBTAINED BY THE SALE OF ANOTHER RESIDENTIAL PROPERTY. I THINK THE ASSESSING OFFICER HAS ITA NO.352/DEL./2016 6 MISDIRECTED HIMSELF IN STATING THAT THE SAID CASE L AWS DO NOT APPLY TO THE ASSESSEE'S CASE BECAUSE THEY PERTAIN T O INVESTMENT MADE IN THE NAME OF THE WIFE WHILE THE ASSESSEE HAD MADE THE INVESTMENT IN HER OWN NAME AND THAT OF HER DAUGHTER IN LAW. THE EXEMPTION CANNOT BE DENIED TO A 95 YEAR OLD WID OWED LADY, SIMPLY BECAUSE SHE DOES NOT HAVE A LIVING SPO USE. SHE HAS MADE THE INVESTMENT IN HER OWN NAME AND ONE OF HER CLOSEST RELATIVES, HER DAUGHTER IN LAW, TO WHOM SHE ULTIMATELY BEQUEATHED THE PROPERTY. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SUGGEST THAT THE INVESTMENT MADE IN THE PROPERTY WAS MADE BY ANY PERSON OTHER T HAN THE ASSESSEE. SIMPLY BECAUSE THE BANK ACCOUNT IS A JOIN T ACCOUNT DOES NOT MEAN THAT THE FUNDS EMANATING FROM SUCH AC COUNT TOWARDS THE PURCHASE HAVE BEEN CONTRIBUTED BY ALL T HE HOLDERS OF THAT ACCOUNT. FOR DETERMINATION OF THE FACTS, TH E CREDIT ENTRIES HAVE TO BE EXAMINED. THE ASSESSEE HAS BROU GHT ON RECORD THE FACT THAT ALL THE CREDIT ENTRIES IN THE SAID ACCOUNT AT SBI, PERTAIN TO THE ASSESSEE, WHO WAS THE FIRST HOL DER OF THE SAID BANK ACCOUNT. PERUSAL OF THE SAME SHOWS THAT T HERE ARE NO OTHER MAJOR CREDIT ENTRIES IN THE SAID ACCOUNT O THER THAN THOSE CONTRIBUTED BY THE ASSESSEE OUT OF HER SHARE OF THE SALE OF THE HOUSE PROPERTY AT 22 KALIDAS ROAD DEHRADUN. ALL THE CHEQUES PERTAINING TO THE PURCHASE OF PROPERTY AT K OLKATA ARE SEEN TO EMANATE FROM THIS ACCOUNT AND OUT OF THE FU NDS SO CONTRIBUTED BY THE ASSESSEE. THUS THERE IS NO REASO N TO ASSUME THAT SMT PURABI DUTT HAD CONTRIBUTED ANY AMOUNT TOW ARDS THE PURCHASE OF THE PROPERTY AT KOLKATA. THAT BEING THE CASE THERE IS NO REASON TO DENY THE ASSESSEE THE BENEFIT OF DE DUCTION UNDER SECTION 54, TO THE EXTENT OF RS 1,87,33,472/- ONLY ON ACCOUNT OF THE FACT THAT THE ASSESSEE PURCHASED THE PROPERTY IN A JOINT NAME. THE ADDITION MADE IN THIS REGARD IS T HEREFORE DELETED AND THE ASSESSEE IS TO BE ALLOWED THE ENTIR E AMOUNT INVESTED BY HER AS DEDUCTION U/S 54. 10. LD. AR FOR THE ASSESSEE CONTENDED THAT SINCE TH E ASSESSEE HAS REINVESTED THE SALE PROCEEDS OF THE PROPERTY SOLD B Y HER DURING FY 2012-13 FOR A SALE CONSIDERATION OF RS.8,50,00,000/ - OUT OF WHICH ASSESSEES SHARE COMES TO RS.5,81,19,521/- HAVING C APITAL GAIN OF RS.1,06,07,501/- AND THE JOINT OWNER OF THE PROPERT Y, NAMELY, SMT. PURABI DEVI HAS NOT INVESTED ANYTHING, THE EXEMPTIO N U/S 54 OF THE ITA NO.352/DEL./2016 7 ACT CANNOT BE DENIED. HOWEVER, ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY THE AO. 11. PERUSAL OF THE FINDINGS RETURNED BY LD. CIT (A) GOES TO PROVE THAT HE HAS THRASHED THE MATTER THREADBARE BY PERUS ING THE BANK ACCOUNT MAINTAINED WITH STATE BANK OF INDIA VIDE WH ICH THE ENTIRE REINVESTMENT IN PURCHASING THE HOUSE HAS BEEN MADE BY THE ASSESSEE, THOUGH THE HOUSE WAS PURCHASED IN THE JOI NT NAME OF THE ASSESSEE AS WELL AS HER DAUGHTER-IN-LAW, SMT. PURAB I DEVI. SO, WHEN THE SOURCE OF FUNDS INVESTED IN THE HOUSE HAVE COME FROM ASSESSEE HERSELF WHICH SHE HAS GOT BY SELLING HER P ROPERTY FOR A SALE CONSIDERATION OF RS.5,81,19,521/-, SHE CANNOT BE DE NIED THE BENEFIT OF SECTION 54 MERELY BECAUSE OF THE FACT THAT THE P ROPERTY WAS ALSO PURCHASED IN THE JOINT NAME OF HER DAUGHTER-IN-LAW. MOREOVER, THE ENTIRE SALE CONSIDERATION RECEIVED BY THE ASSESSEE FORM THE SALE OF PROPERTY WAS RECEIVED THROUGH BANK AND SMT. PURABI DEVI HAS UNDISPUTEDLY NOT INVESTED ANY AMOUNT TOWARDS MAKING PAYMENT OF SALE PROCEEDS OF THE NEW PROPERTY. 12. TO SUPPORT HIS CONTENTIONS, LD. AR FOR THE ASSE SSEE RELIED UPON THE JUDGMENTS CITED AS (I) CIT VS. RAVINDER KUMAR ARORA (2012) 342 ITR 38 (DEL.); AND (II) CIT VS. KAMAL WAHAL (2013) 351 ITR 4 (DEL.) , RENDERED BY HONBLE DELHI HIGH COURT. THE RATIO OF BOTH THE JUDGMENTS IS THAT, WHEN NEW RESIDENTIAL ITA NO.352/DEL./2016 8 PROPERTY HAS BEEN PURCHASED BY THE ASSESSEE IN JOIN T NAMES OF ASSESSEE AND HIS CLOSE RELATIVE BY INVESTING THE EN TIRE AMOUNT OF LONG TERM CAPITAL GAIN, THE ASSESSEE IS ENTITLED FO R FULL EXEMPTION U/S 54F OF THE ACT. THE RATION OF THE JUDGMENT IN THE CASES OF CIT VS. RAVINDER KUMAR ARORA AND CIT VS. KAMAL WAHAL (SUPRA) IS APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNE D BY THE LD. CIT (A), THE GROUND NO.2 IS DETERMINED AGAINST THE REVE NUE. GROUND NO.3 13. CIT (A) ALSO DELETED THE ADDITION OF RS.50,00,0 00/- CLAIMED U/S 54-EC ON PURCHASE OF NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) BONDS WHICH WERE IN THE NAMES OF MRS. NILIMA DUTT, ASSESSEE, SHRI PRANAB DUTT AND SMT. PURABI DUTT. L D. AR FOR THE ASSESSEE TO SUPPORT THE ORDER PASSED BY LD. CIT (A) CONTENDED THAT SINCE THE INVESTMENT HAS BEEN MADE BY THE ASSESSEE IN PURCHASING THE NHAI BONDS OUT OF HER OWN FUNDS FROM THE SALE O F HOUSE PROPERTY, SHE IS ENTITLED TO EXEMPTION U/S 54EC. 14. LD. DR FOR THE REVENUE RELIED UPON THE ORDER OF THE AO. 15. THE AO HAS ALLOWED AN AMOUNT OF RS.16,66,666/- BEING 1/3 RD OF THE INVESTMENT AS DEDUCTION U/S 54-EC TO THE ASS ESSEE. HOWEVER, BARE PERUSAL OF SECTION 54-EC GOES TO PROV E THAT THERE IS NO MENTION THAT THE LONG TERM INVESTMENT IN SPECIFI ED ASSETS SHOULD ITA NO.352/DEL./2016 9 BE IN THE NAME OF ASSESSEE ONLY RATHER THE CORE ISS UE TO BE SEEN IS AS TO WHAT WAS THE SOURCE OF FUND. NO DOUBT, THE BOND S WERE PURCHASED BY WAY OF CHEQUES ISSUED FORM JOINT ACCOU NT OF THE ACCOUNT HOLDERS BUT FURTHER PERUSAL OF THE BANK ACC OUNT GOES TO PROVE THAT THE ASSESSEE HAS RECEIVED RS.75,00,000/- AS THE SALE CONSIDERATION OUT OF WHICH THE AMOUNT OF PURCHASE O F LONG TERM SPECIFIC ASSETS WERE INVESTED. SO, FOLLOWING THE R ATIO OF THE JUDGMENTS IN THE CASES OF CIT VS. RAVINDER KUMAR ARORA AND CIT VS. KAMAL WAHAL (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEDUCTION OF THE E NTIRE AMOUNT OF RS.50,00,000/- INVESTED BY HER. SO, FINDING NO ILL EGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE CIT (A), THIS GROUND IS DETERMINED AGAINST THE REVENUE. 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDI NG NO MERIT IN THE APPEAL FILED BY THE REVENUE, THE SAME IS HER EBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF JANUARY, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBE R DATED THE 16 TH DAY OF JANUARY, 2017 TS ITA NO.352/DEL./2016 10 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), DEHRADUN. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.