Shri. B. Veerappa (HUF), Bangalore V. ITO, Bangalore

ITA 357/BANG/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1492 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: PRATIBHA
• Keywords: Opportunity of being heard; Additional evidence; Cost of acquisition
• Section: 143(3); 54B; 54F; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER A ND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO. 357 /BANG/201 5 (ASSESSMENT YEAR: 20 08 - 09 ) SHRI B.VEERA PPA (HUF), NO.101, BHARAT VILLA, 3 RD MAIN, DOMLUR LAYOUT, BANGALORE. APPELLANT PAN: AAHHB3846A VS. INCOME - TAX OFFICER, WARD 7(2), BANGALORE. RESPONDENT APPELLANT BY: SMT. PRATIBHA, ADVOCATE. RESPONDENT BY: SHRI P.K.SRIHARI, ADDL.CIT(DR) DATE OF HEARING : 11 /09/2 015. DATE OF PRONOUNCEMENT: 09 / 1 0/2015. O R D E R PER VIJAY PAY RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12/2/2015 OF THE CIT(A) - 2, BANGALORE, FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1) THE LEARNED CIT (A) ERRED IN PASSING THE ORDER IN THE MANNER WHICH HE DID. ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 2 OF 9 2) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO TOWARDS THE EXEMPTION CLAIMED U/S. 54B OF THE ACT WITHOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT. 3) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS NOT AN KARTA OF HUF FAMILY, HE IS ONE OF THE COPARCENER OF THE FAMILY AND THE APPELLANT GOT A SHARE FROM ANCESTRAL PROPERTY. ACCORDINGLY IT SHOULD BE TREATED AS LONG TERM CAPIT AL GAIN AND ALLOWED THE CLAIM OF THE APPELLANT. 4) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY AO TOWARDS THE EXEMPTION CLAIMED U/S. 54F OF THE ACT WITHOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT. 5) THE LEARNED CIT(A) GROSSLY ERRED IN CO NFIRMING THE ACTION OF THE AO TOWARDS ISSUING TWO DEMAND NOTICES DATED 24.12.2010 & 30.12.2010 RESPECTIVELY TO THE APPELLANT AND CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE IS NO PROVISION IN THE ACT FOR REVISING THE ORDER BY ISSUE OF ANOTHER DEMAND NOTICE AND ACCORDINGLY THE ACTION OF THE AO CONFIRMED BY CIT(A) IS REQUIRED TO BE DELETED. 6) THE LEARNED CIT(A) OUGHT T O HAVE APPRECIATED THAT THE KARTA OF FAMILY SMT.KAVERAMMA HAS RECEIVED THE AMOUNT AND DISTRIBUTED AMONG CO PARCENER AND ALSO SHE DECLARED IN H ER RETURN. THE LEARNED CIT(A) FURTHER OUGHT TO HAVE APPRECIATED THAT THE ASSESSMENT CONCLUDED IN HER CASE BY AO HAS TAKEN A DIFFERENT VIEW. HENCE, THE DISALLOWANCE MADE IN THE HANDS OF THE APPELLANT HAS TO BE DELETED. 7) THE LEARNED CIT(A) ERRED IN CONFI RMING THE ADDITION MADE TOWARDS THE LEGITIMATE INCIDENT EXPENSES FROM INCOME EARNED 8) WITHOUT PREJUDICE, THE ADDITIONS/ DISALLOWANCES AS UPHELD ARE ARBITRARY, EXCESSIVE AND OUT TO BE DELETED IN TOTO. 9) THE CIT(A) ERRED IN UPHOLDING THE INTEREST U/S.2 34B OF THE ACT WHICH IS LIABLE TO DELETED. 10) FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 3 OF 9 3. THE ASSESSEE IS A KARTA OF AN HUF AND FILED RETURN OF INCOME FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION ON 2/12/2009 DECLARING TOTAL INCOME OF RS.1,23,377/ - AFTER CLAIMING DEDUCTION U/S 54B AND 54F OF THE INCOME - TAX ACT, 1961 [ THE ACT FOR SHORT]. THE ASSESSEE SOLD A PROPERTY AT PANATHUR VILLAGE, VARTHUR HOBLI, BANGALORE EA ST ALONG WITH HIS CO - OWNERS FOR A CONSIDERATION OF RS.1.30 CRORE VIDE AGREEMENT OF SALE. APART FROM THIS, ASSESSEE HAS ALSO SOLD PROPERTY BEARING SURVEY NO.112 , BEING POWER OF ATTORNEY ON BEHALF OF SMT.KAVERAMMA FOR A CONSIDERATION OF RS.1.36 CRORES. BOT H THESE PROPERTIES WERE CLAIMED TO BE AGRICULTURAL LAND S AND THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54B ON THE GROUND THAT THE ASSESSEE AND CO - OWNERS PURCHASED FURTHER AGRICULTURAL LAND DURING THE SPECIFIED PERIOD. A PART OF THE CONSIDERATION WAS ALSO INV ESTED IN CONSTRUCTION OF THE RESIDENTIAL UNIT AND THEREFORE, THE ASSESSEE CLAIMED DEDUCTION U/S 54F. THE AO, WHILE COMPLETING ASSESSMENT U/S 143(3) DENIED BOTH THE DEDUCTIONS CLAIMED U/S 54B AS WELL AS54F BY TREATING CAPITAL GAIN AS SHORT - TERM CAPITAL GAIN (STCG). THE AO HAS CONSEQUENTLY REJECTED THE INDEXED COST OF ACQUISITION. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED THAT THE PROPERTIES IN QUESTION ARE ANCESTRAL PROPERTIES AND THE ASSESSEE WAS HAVING ONLY A SHARE IN TH E PROPERTY WHEREAS THE PROPERTY BELONGS TO LARGER HUF COMPRISING OF FATHER AND UNCLES OF THE ASSESSEE. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE AO ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 4 OF 9 BY TREATING THE CAPITAL GAIN ARISING FROM THE TRANSFER OF TH E PROPERTY AS STCG AS WELL AS THE ENTIRE INCOME WAS ASSESSED IN THE HANDS OF THE ASSESSEE - HUF. 4. WE HAVE HEARD LEARNED AR OF THE ASSESSEE AS WELL AS THE LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE PROPERTY BEARING SURVEY NO.77, PANATHUR VILLAGE, VARTHUR HOBLI, BANGALORE EAST, THE AO HAS RECORDED THE FACTS IN PARAS.7 AND 8 AS UNDER: 7. THE MEMBERS OF THE HUF ARE: 1. SRI. B VEERAPPA, KARTHA OF HUF 2. SMT. SHANTA VEERAPPA, WIFE 3. SNIT SHIPKI SUNIL , DAUGHTER 4. SRI. SHASHANK SON. THE PERSON AT SL. NO.3, SMT. SHIPKI SUNIL IS THE DAUGHTER OF SRI. B VEERAPPA, WHO IS ALREADY MARRIED AND LIVING WITH HER HUSBAND. THE SUBJECTED LAND/IMMOVABLE PROPERTY IN QUESTION IS THE OLD AND GRANTED LAND BY THE GOVERNM ENT TO FORE FATHERS WHICH WAS INHERITED BY THE SUCCESSORS OF THE FAMILY MEMBERS. 8. AFTER HEARING THE REPRESENTATIVE OF THE ASSESSEE AND CONSIDERING THE WRITTEN STATEMENT DATED 16/12/2010, FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSM ENT IS COMPLETED AS UNDER: A.PROPERTY BEARING NO. 77, PANATHUR VILLAGE, VARTHUR HOBLI.BANGALORE EAST. THE ARGUMENT AS GENERATED DURING THE COURSE OF PROCEEDINGS IS DISCUSSED BELOW; 1. THE COMPENSATION RECEIVED OF RS:1,30,00,000/ - IN RESPECT OF PROPERTY BEARING SURVEY NO. 77 OF PANATHUR VILLAGE,VARTHUR HOBLI, BANGALORE EAST, HAVING 2 ACRES AND 30 GUNTAS OF LAND. ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 5 OF 9 2. SALE CONSIDERATION RECEIVED AS PER AGREEMENT IN RESPECT OF PROPERTY BEARING SURVEY NO. 112 OF AREA 2 ACRES AND 07 GUNTAS FOR RS: 1,36,00,000/ - . WHILE COMPUTING THE TAXABLE INCOME, THE ASSESS E E HAS CLAIMED DEDUCTION U/S 54B BY TREATING THE TRANSACTION AS LONG TERM CAPITAL GAIN AND ALSO THE INDEXED COST OF ACQUISITION IN RESPECT OF THE LAND. ON VERIFICATION OF THE RECORDS, IT IS SEEN THAT THE PROPERTY IS DEVOLVED TO THE ASSESSEE AS PER SETTLEMENT DEED AND ALSO AS PER THE COMPROMISE PETITION FILED BEFORE THE PRINCIPAL CITY CIVIL AND SESSION JUDGE COURT AT BANGALORE IN O.S. NO. 16632/2004 AND DECREED BY THE SAID HONOURABLE CO URT DATED: 16/04/2007 . 5. IT IS THUS CLEAR THAT THE AO CONSIDERED AND HELD THAT THE ASSESSEE HAS ACQUIRED THE PROPERTY BY VIRTUE OF THE COMPROMISE DEED AND ORDER OF THE CIVIL COURT DATED 16/4/2007. ON PERUSAL OF THE SETTLEMENT/COMPROMISE DE ED AND C ONSEQUENTIAL ORDER OF THE PRINCIPAL CITY CIVIL & SESSIONS COURT, IT IS CLEAR THAT IN THE SAID COMPROMISE PROCEEDINGS, SMT. KAVERAMMA CONFIRMED AND RATIFIED THE SALE OF THE PROPERTY AT SURVEY NO.77, PANATHUR VILLAGE, VARTHUR HOBLI, BANGALORE EAST, IN FAVOUR OF ONE RAMACHANDRA, DEFENDANT NO.2 IN THE SAID SUIT PROCEEDINGS BEFORE THE PRINCIPAL CITY CIVIL & SESSIONS COURT. THUS BY VIRTUE OF THE SETTLEMENT/COMPROMISE IN THE COURT PROCEEDINGS, NO NEW TITLE OR ANY RIGHT IN THE SAID PROPERTY WAS ACQUIRED BY THE ASS ESSEE BEFORE US. FURTHER, IT APPEARS THAT THE PROPERTY IN QUESTION BELONGS TO THE LARGER HUF CONSISTING OF THE FATHER, MOTHER, UNCLE AND AUNTS ETC., OF THE ASSESSEE AND NOT THE HUF OF THE ASSESSEE COMPRISING THE ASSESSEE, HIS WIFE, SON AND DAUGHTER. IF T HE ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 6 OF 9 ASSESSEE RECEIVED ANY SHARE IN THE SAID CONSIDERATION OR COMPENSATION RECEIVED UNDER THE COMPROMISE/SETTLEMENT, THE SAME IS BY VIRTUE OF ITS UNDIVIDED SHARE IN THE ANCESTRAL PROPERTY. THEREFORE, THE ISSUE IS REQUIRED TO BE EXAMINED BY CONSIDERING THE A SSESSABILITY OF THE CAPITAL GAIN IN THE HANDS OF THE OTHER JOINT OWNER/CO - SHARE/CO - PART ITIONER OF THE PROPERTY OF THE LARGER HUF. 6. AS FAR AS THE PROPERTY AT SURVEY NO.112 IS CONCERNED, THERE IS NO DISPUTE THAT THE SAID PROPERTY WAS ACQUIRED BY THE ANCESTORS OF THE ASSESSEE AND THEREFORE, FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN U/S 48 OF THE ACT, THE PROVISIONS OF SEC.49(1) AND 47 ARE RELEVANT TO DETERMINE THE DATE OF ACQUISITION. IT IS WELL SETTLED PROPOSITION OF LAW THAT IF THE PROPERTY I S ACQUIRED BY INHERITANCE OR PARTITION OR SETTLEMENT OF ANCESTRAL PROPERTY THEN THE DATE OF ACQUISITION WOULD BE THE DATE WHEN THE PROPERTY WAS FIRST ACQUIRED BY THE ORIGINAL OWNER. THE ASSESSEE HAS BROUGHT OUT THE FACT THAT THE ENTIRE CAPITAL GAIN IN RES PECT OF THE PROPERTY BEARING SURVEY NO.112 HAS BEEN ASSESSED IN THE HANDS OF SMT.KAVERAMMA ALSO VIDE ASSESSMENT ORDER DATED 28/3/2003. WE NOTE THAT THE AO, IN THE CASE OF SMT. KAVERAMMA UNDER PAN AQYPK6275D HAS ASSESSED THE CAPITAL GAIN IN RES PECT OF THE SAID PROPERTY HAS DISCUSSED IN PARAS.4 & 7 AS UNDER: 4. THE ASSESSEE FILED THE COMPUTATION OF TOTAL INCOME FOR THE YEAR ENDED 31/03/2008 RELEVANT TO THE AY 2008 - 09 ALONG WITH THE ORIGINAL RETURN OF INCOME FILED ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 7 OF 9 ON 1/12/2009, IT IS OBSERVED FR OM THE COMPUTATION OF TOTAL INCOME THAT THE ASSESSEE HAS DECLARED CAPITAL GAINS FOR HAVING RECEIVED THE CONSIDERATION IN RESPECT OF TWO PROPERTIES SITUATED AT SURVEY NO.77, PANATHUR VILLAGE, VARTHUR HOBLI, BANGALORE EAST. THE TOTAL AREA IS 2 ACRES AND 30 GUNTAS FOR CONSIDERATION RS.1,30,00,000/ - AND THE ANOTHER PROPERTY VIDE SURVEY NO.112, PANATHUR VILLAGE, VARTHUR HOBLI, BANGALORE EAST. THE TOTAL AREA IS 2 ACRES AND 7 GUNTAS FOR A CONSIDERATION OF RS.1,36,00,000/ - AND CLAIMED EXEMPTION U/S 54B TO THE EXTE NT OF RS.10,71,695/ - AND 54F TO THE EXTENT OF RS.85,16,110/ - AND CLAIMED COST OF INFLATION INDEX AND DEDUCTIONS. THE ASSESSEE DECLARED NET CAPITAL GAINS OF RS.1,11,809/ - . IN THIS REGARD BASED ON THE MATERIAL AVAILABLE ON RECORDS, I.E. SALE DEEDS EXECUTED AND THE COMPROMISE DECREE HAVE BEEN EXAMINED. .. 7. THE ASSESSEE HAS DECLARED CAPITAL GAINS AGAINST THE PROPERTY SITUATED AT SURVEY NO.112, PANATHUR VILLAGE, VARTHUR HOBLI, BANGALORE EAST TO THE EXTENT OF 2 ACRES AND 7 GUNTAS FOR A CONSIDERATION OF R S.1,36,00,000/ - AND CLAIMED INDEXED COST OF ACQUISITION, INVESTMENT IN AGRICULTURAL LAND ETC. IN THIS REGARD, IT IS OBSERVED FROM THE AGREEMENT FOR SALE DATED 13/10/206 EXECUTED AND REGISTERED IN THE SUB - REGISTRAR OFFICE, BANGALORE SOUTH TALUK VIDE BOOK NO .18393/67 DATED 13/10/2006, THE ASSESSEE AND OTHERS HAVE TRANSFERRED THIS PROPERTY IN FA V OUR OF SRI B.N.ADARSH FOR A CONSIDERATION OF RS.1,36,00,000/ - DURING THE FINANCIAL YEAR 2006 - 07 RELEVANT TO ASSESSMENT YEAR 2007 - 08. WHEREAS THE ASSESSEE HAS NOT DISCL OSED THIS LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEAR 2007 - 08. THE CLAIM MADE BY THE ASSESSEE FOR THE AY 2008 - 09 IS THEREFORE NOT TENABLE AND HENCE NOT CONSIDERED. 7. THE ASSESSEE HAS ALSO FILED AN APPLICATION UNDER RULE 29 OF THE IT RULES, A ND PRAYED FOR ADMISSION OF ADDITIONAL EVIDENCE COMPRISING OF THE DOCUMENTS 2 TO 5 AS UNDER: I) COPY OF ASSESSMENT ORDER PASSED U/S 144 IN THE CASE OF SMT.KAVERAMMA FOR THE AY 2008 - 09 DATED 28/3/2013. ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 8 OF 9 II) COPY OF ABSOLUTE SALE DEED DATED 30/3/2007. III) COPY OF RETURN OF INCOME FILED IN THE HANDS OF HUF FOR AY 2013 - 14. IV) COPY OF INTIMATION U/S 143(1) OF THE ACT FOR AY 2013 - 14 IN APPELLANT S CASE. THE DOCUMENTS FILED BY THE ASSESSEE, BEING ADDITIONAL EVIDENCE, ARE VERY MUCH RELEVANT AND CRUCIAL FOR ADJUDICATING THE MATTER OF ASSESSMENT OF CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. I N VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE OBSERVATIONS MADE IN THE FOREGOING PARAGRAPH WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE OF CO MPUTATION OF CAPITAL GAINS AS WELL AS THE DEDUCTION U/S 54B AND 54F IS REQUIRED TO BE RE - CONSIDERED ALONG WITH THE CASE OF SMT.KAVERAMMA. ACCORDINGLY, THE MATTER IS SET ASIDE TO THE RECORD OF THE AO FOR DE NOVO CONSIDERATION OF THE MATTER IN THE LIGHT OF THE FACT AS DISCUSSED ABOVE AND THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. NEEDLESS TO SAY THE ASSESSEE SHALL BE GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE PASSING THE FRESH ORDER. 8 . IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. PRON OUNCED IN THE OPEN COURT ON 09 TH OCTOBER , 201 5 . SD/ - SD/ - (JASON P BOAZ ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER E KSRINIVASU LU ,SPS ITA NO . 357/BANG/2015 B.VEERAPPA(HUF) PAGE 9 OF 9 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE