ITO, New Delhi V. Ms. Meena Ojha, New Delhi

ITA 3619/DEL/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7439 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Keywords: Capital asset; Salary income; Cost of acquisition
• Section: 54; 139

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH E, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3619/DEL/2013 ASSESSMENT YEAR: 2009-10 INCOME - TAX OFFICER, WARD 22(4), NEW DELHI (APPELLANT) VS. MS. MEENA OJHA, A - 94, OKHLA INDL. AREA, PHASE-I, NEW DELHI. PAN: AAAPO 1511A (RESPONDENT) APPELLANT BY SH. G. JOHNSON, SR. DR RESPONDENT BY NONE ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-23, NEW DELHI DATED 30.04.2013 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUND: 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION CLAIMED U/S. 54 OF THE ACT AMOUNTING TO RS.1,22,48,857/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 31.03.2010 DECLARING TOTAL INCOME OF RS.15,21,169/- . THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED. THE ASSESSEE DERIVED INCOME FROM SALARY & HAS SHOWN INCOME FROM HOUSE PROPERTY, BUSINESS AND DATE OF HEARING 03.12.2018 DATE OF PRONOUNCEMENT 18.01.2019 ITA NO. 3619/DEL/2016 2 PROFESSION, BEING SHARE OF PARTNERSHIP FIRM AND OTH ER SOURCES. IT WAS NOTICED THAT THE ASSESSEE HAD SOLD OUT HER RESIDENTIAL BUIL DING AT SECOND FLOOR, W-12, G.K.-1, NEW DELHI AS PER SALE DEED EXECUTED ON 05.0 6.2008 FOR SALE CONSIDERATION OF RS.2.20 CRORES AND CLAIMED LONG-TE RM CAPITAL GAINS OF RS.1,71,52,494/- AS EXEMPT U/S. 54 OF THE IT ACT. I N THE COMPUTATION OF INCOME, THE ASSESSEE HAD CLAIMED THIS EXEMPTION ON THE BASIS OF INVESTMENT/CONSTRUCTION IN NEW RESIDENTIAL PROPERTY AT A-26, NEW FRIENDS COLONY, NEW DELHI (WHICH WAS PURCHASED ON 27.09.200 4) FROM APRIL 2008 TO 31.03.2010. THE ASSESSEE WAS ASKED TO JUSTIFY THE C APITAL GAINS EXEMPTION CLAIMED BY HER. IN RESPONSE, THE ASSESSEE FILED REP LY VIDE LETTER DATED 11.11.2011 AS UNDER : THE ASSESSEE HAS SOLD HER SHARE IN RESIDENTIAL PROPE RTY SITUATED AT W-12, SECOND FLOOR, G.K.-1, NEW DELHI FOR TOTAL SUM OF RS .2.20 CRORES DURING THE YEAR UNDER CONSIDERATION AND INVESTED THE TOTAL CAP ITAL GAIN IN NEW RESIDENTIAL PROPERTY PURCHASED/CONSTRUCTED AND THER EFORE, NOT LIABLE FOR CAPITAL GAIN TAX AFTER INDEXED COST OF ACQUISITION OF PROPERTY. 3. IN HER LETTER DATED 02.12.2011, THE ASSESSEE FUR THER SUBMITTED THAT THE SALE CONSIDERATION RECEIVED AGAINST THE SALE OF SEC OND FLOOR OF W-12, GK-1, NEW DELHI HAS BEEN UTILIZED TOWARDS THE PAYMENT OF PLOT OF LAND AND CONSTRUCTION COST AT A-26, FRIENDS COLONY, NEW DELH I TO CLAIM EXEMPTION U/S. 54 OF THE IT ACT. IN SUPPORT OF HER CONTENTION, THE ASSESSEE FILED COPY OF SALE DEED OF PROPERTY, A-26, NEW FRIENDS COLONY, NEW DEL HI AND OTHER PAPERS RELATING TO CONSTRUCTION OF THIS PROPERTY INCLUDING COPY OF BANK STATEMENT OF HSBC BANK. THE ASSESSING OFFICER OBSERVED THAT THE SAID PROPERTY AT A-26, NEW FRIENDS COLONY, NEW DELHI WAS PURCHASED ON 27.0 9.2004 AND PAYMENT WAS ALSO MADE IN 2004 VIDE CHEQUE NO. 389560 DATED 21.09.2004 AND VIDE ITA NO. 3619/DEL/2016 3 PAY ORDER NO. 191818/- DATED 13.09.2004. THE ASSESS ING OFFICER ALSO NOTICED THAT THE ASSESSEE HAS INCURRED RS.61,33,234/- TOWAR DS CONSTRUCTION OF THE HOUSE PROPERTY WHICH WAS PAID FROM HER SAVING BANK ACCOUNT AND CAPITAL ACCOUNT OF THE PARTNERSHIP FIRM OUT OF WHICH RS.49, 03,637/- RELATED TO THE PERIOD FROM 01.06.2008 TO 30.09.2009, I.E., FROM TH E DATE OF SALE TO THE DATE OF FURNISHING OF RETURN OF INCOME AND HE ALSO NOTED TH AT THE ASSESSEE FAILED TO OPEN CAPITAL GAIN ACCOUNT BEFORE 30.09.2009. THEREF ORE, THE CLAIM ON ACCOUNT OF CONSTRUCTION MADE ON LATER PERIOD IS NOT ALLOWAB LE. ACCORDINGLY, THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S. 54 ONLY TO THE EXTENT OF RS.49,03,637/- AND THE BALANCE AMOUNT OF CAPITAL GA IN TO THE TUNE OF RS.1,22,48,857/- WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE FI LED DETAILED WRITTEN SUBMISSIONS AND RELIED ON MANY CASE LAWS. THE LD. C IT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITIO N BY HOLDING THAT A SUM OF RS.1,60,05,000/- WAS PAID TOWARDS PAYMENT OF LOAN T AKEN FOR PURCHASE OF LAND AND RS.49,03,637/- WAS PAID TOWARDS CONSTRUCTION OF THE HOUSE AND THE ABOVE AMOUNT WAS INVESTED BETWEEN 05.06.2008 & 30.09.2009 . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE ITAT. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE LD. DR REL IED ON THE ASSESSMENT ORDER AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION IGNORING THE FINDINGS REACHED BY THE LD. ASSESSING OFFICER. NONE IS PRESENT ON ITA NO. 3619/DEL/2016 4 BEHALF OF THE ASSESSEE DESPITE PROPER NOTICE. WE, T HEREFORE, HAVE NO OPTION BUT TO DECIDE THE APPEAL EXPARTE QUA ASSESSEE. 6. AFTER HEARING THE LD. DR AND CONSIDERING ENTIRE MATERIAL AVAILABLE ON RECORD, WE OBSERVE THAT IT IS NOT IN DISPUTE THAT T HE PROPERTY WAS SOLD ON 05.06.2008 AND THE DUE DATE FOR FILING OF IT RETURN WAS 30.09.2009. THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 31.03.20 10 WHICH IS A BELATED RETURN AS PER SECTION 139 OF THE ACT. IT IS ALSO NO T DISPUTED THAT THE ASSESSEE HAD PURCHASED PROPERTY A-26, NEW FRIENDS COLONY ON 29.09.2004 BY TAKING A LOAN OF RS.1.94 CRORES FROM HSBC BANK AND THE LOAN WAS ENTIRELY UTILIZED FOR THE PURCHASE OF LAND. THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAINS OF RS.1,71,52,494/- AND HAS SPENT MONEY FOR THE CONSTR UCTION OF HOUSE OF RS.61,33,234/- AND UPTO 30.09.2009, TOTAL AMOUNT WA S SPENT ON THE CONSTRUCTION OF HOUSE TO THE TUNE OF RS.49,03,637/- WHICH HAS BEEN ALLOWED AS EXEMPT U/S. 54 OF THE ACT BY THE ASSESSING OFFICER OUT OF THE TOTAL CAPITAL GAIN. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT OPENED ANY CAPITAL GAIN ACCOUNT WITHIN DUE DATE OF FILING THE RETURN OF INC OME. NOW, WE HAVE TO DECIDE TWO ISSUES. FIRSTLY, THE REPAYMENT OF LOAN WHICH WA S TAKEN IN 2004 FOR THE PURCHASE OF PROPERTY AND EXPENDITURE INCURRED IN CO NSTRUCTION OF HOUSE AFTER THE DUE DATE OF FILING THE RETURN OF INCOME. THE PR OVISIONS OF SECTION 54 READ AS UNDER : PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE. 54. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPI TAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, BEING BUILDINGS OR LANDS A PPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABL E UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER THE DATE ON WHICH THE TRANSFER TOOK ITA NO. 3619/DEL/2016 5 PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YE ARS AFTER THAT DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA, THEN, INSTEAD OF THE CA PITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS TO SAY, ( I ) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THA N THE COST OF THE RESIDENTIAL HOUSE SO PURCHASED OR CONSTRUCTED (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GA IN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET AN Y CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURC HASE OR CONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE NIL ; OR ( II ) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL G AIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR C ONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAPI TAL GAIN. (2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT APP ROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFO RE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTIL ISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FU RNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH R ETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION ( 1) OF SECTION 139 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AN D UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION I N THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROO F OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY, AL READY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB- SECTION (1), THEN, ( I ) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDE R SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FR OM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. EXPLANATION .[ OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993. ] ITA NO. 3619/DEL/2016 6 FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT THE ASS ESSEE IS ELIGIBLE FOR GETTING DEDUCTION U/S. 54(1) IF (I) HE HAS PURCHASED A PROP ERTY WITHIN ONE YEAR PRIOR TO THE DATE OF SALE OF PROPERTY AND (II) IF THE ASS ESSEE PURCHASED A NEW PROPERTY WITHIN TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET OR IF THE ASSESSEE HAS CONSTRUCTED THE HOUSE WITHIN THREE YEA RS FROM THE DATE OF SALE OF ORIGINAL ASSET. IF THE ASSESSEE IS UNABLE TO INVEST ENTIRE CAPITAL GAIN BEFORE FURNISHING OF RETURN OF INCOME U/S. 139, HE HAS TO DEPOSIT THE UNUTILIZED AMOUNT OF CAPITAL GAIN BY OPENING AN ACCOUNT IN ANY NATIONALIZED BANK UNDER THE CAPITAL GAIN SCHEME. FROM THE PERUSAL OF THE OR DER OF THE AUTHORITIES BELOW, WE FIND THAT THE ASSESSEE HAS FURNISHED HIS RETURN OF INCOME ON 31.03.2010 U/S. 139(4) AND HE HAS SPENT MONEY TO TH E EXTENT OF RS.61,33,234/- UPTO THE FILING OF ITS RETURN. THE L D. CIT(A) HAS FOLLOWED THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT V. RAJESH KUMAR JALAN, 286 ITR 274. IN VIEW OF THE ABOVE DECISION, THE ASSESSEE CAN DEPOSIT THE BALANCE CAPITAL GAIN AMOUNT IN CAPITAL GAIN ACCOUNT SCHEME UPTO THE DATE OF FILING OF RETURN U/S. 139(4) OF THE ACT. THE ASSESS ING OFFICER HAS ALLOWED THE EXEMPTION ON THE AMOUNT SPENT UPTO THE DUE DATE OF FILING OF RETURN ONLY AS CONTEMPLATED U/S. 139(1) OF THE IT ACT. 7. AS FAR AS THE APPROPRIATION OF CAPITAL GAIN TOWA RDS REPAYMENT OF BANK LOAN IS CONCERNED, IT IS NOTABLE THAT THE LOAN WAS RAISED IN 2004 AND PROPERTY WAS ALSO PURCHASED ON 27.09.2004. AS PER PROVISIONS OF SECTION 54, THE AMOUNT OF CAPITAL GAIN WHICH IS APPROPRIATED TOWARD S PURCHASE OF A RESIDENTIAL PROPERTY PRIOR TO ONE YEAR FROM THE DAT E OF TRANSFER OF ASSET, IS ITA NO. 3619/DEL/2016 7 ELIGIBLE FOR EXEMPTION. HOWEVER, IN THE INSTANT CAS E, THE ASSESSEE HAD BEEN THE OWNER OF THE SAID PROPERTY IN THE YEAR 2004 WHICH D OES NOT FALL WITHIN ONE YEAR PRIOR TO THE TRANSFER OF ASSET. THEREFORE, THE AMOUNT OF CAPITAL GAIN SPENT BY THE ASSESSEE TOWARDS REPAYMENT OF LOAN IN THE IN STANT CASE IS OUTSIDE THE PROVISIONS OF SECTION 54 OF THE ACT AND THE ASSESSE E, THUS, WOULD NOT BE ELIGIBLE FOR EXEMPTION ON THE BALANCE AMOUNT OF CAPITAL GAIN S USED FOR REPAYMENT OF LOANS TO THE EXTENT OF RS.1,22,68,857/-. THE DECISI ONS RELIED BY THE LD. CIT(A) IN THE IMPUGNED ORDER, IN THESE PECULIAR CIRCUMSTAN CES, ARE NOT FOUND APPLICABLE ON THIS SCORE, HAVING BEEN BASED ON DIFF ERENT FOOTINGS. ACCORDINGLY, THE APPEAL OF THE REVENUE DESERVES TO BE ALLOWED. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01.2019. SD/- SD/- (AMIT SHUKLA) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18.01.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI