Shri. Kondal Rao Madhavaram, Bangalore V. Income Tax Officer, Ward- 3(1)(1), Bangalore

ITA 370/BANG/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5945 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 28-01-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R PREMI JT BENGALU RU
• Assessee Lawyers: B R SUDHEENDRA
• Section: 54F; 13; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO. 370/BAN G/2020 ASSESSMENT YEAR: 2012 - 13 SHRI KONDAL RAO MADHAVARAM, NO.38/69, CASA DI MODA APARTMENT, ENTS GREEN GARDEN LAYOUT, KUNDALAHALLI GATE, MARATHAHALLI, BANGALORE 560 037. PAN: AKYPM 0944P VS. THE INCOME TAX OFFICER, WARD 3(1)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : S HRI B.R. SUDHEENDRA, ADVO CATE RESPONDENT BY : S MT. R. PREMI, JT. CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 28. 01 . 202 1 DATE OF PRONOUNCEMENT : 03 .0 2 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F THE CIT(APPEALS), BENGALURU-12, BANGALORE DATED 28.02.2 019 FOR THE ASSESSMENT YEAR 2012-13. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE PUR CHASED A LAND IN 2005 SITUATED AT SHUBH ENCLAVE IN VARTHUR HOBLI, BA NGALORE EAST TALUK. THE ASSESSEE PURCHASED THIS PROPERTY BY TWO SEPARAT E DEEDS CONSISTING OF 7096 SQ.FT. IN THE EASTERN PORTION AND 4014 SQ.FT. IN THE WESTERN PORTION AND TOTAL COST IN PURCHASE OF ABOVE PROPERTIES WAS RS.3 2,07,373. THE ABOVE ITA NO.370/BANG/2020 PAGE 2 OF 4 TOTAL COST IN PURCHASE OF ABOVE PROPERTIES WAS RS.3 ,20,07,373. THE ABOVE PROPERTY WAS SOLD BY THE ASSESSEE ON 10.10.2011 AND ASSESSEES SHARE OF SALE CONSIDERATION WAS RS.1,16,00,000. THE ASSESSE E STARTED CONSTRUCTING A RESIDENTIAL PROPERTY. THE ASSESSEE SPENT THE SAL E PROCEEDS OF RS.81.49 LAKHS BEFORE 9.10.2014, BUT THE BUILDING WAS NOT CO MPLETED. THE ASSESSEE COMPUTED CAPITAL GAIN OF RS.65,34,029 AND CLAIMED D EDUCTION U/S. 54F ON THE GROUND THAT HE HAS SPENT A SUM OF RS.81.49 LAKH S ON CONSTRUCTION. THE AO DENIED DEDUCTION U/S. 54F ON THE REASON THAT BUI LDING WAS INCOMPLETE WITHIN THE PERIOD OF THREE YEARS. 3. ON APPEAL, THE CIT(APPEALS) CONFIRMED THE ORDER OF AO OBSERVING THAT THE ASSESSEE HAD NOT FULFILLED THE MANDATORY C ONDITION LAID DOWN IN SECTION 54F OF THE ACT. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, ADMITTEDLY, THE ASSESSEE INVESTED THE SALE CONSIDERATION RECEIVED IN CONSTRUCTION OF A NEW HOUSE AND INCURRE D A COST OF RS.81.49 LAKHS. THE AO DENIED EXEMPTION U/S. 54F ON THE GRO UND THAT CONSTRUCTION WAS NOT COMPLETED WITHIN THE PERIOD OF 3 YEARS. NO W THE CONTENTION OF THE LD. AR IS THAT THOUGH THE CONSTRUCTION WAS NOT FULL Y COMPLETED, STILL THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT. THE ASSESSEE HAS INVESTED THE CONSIDERATION IN CONSTRUCTION OF HOUSE WITHIN THE STIPULATED PERIOD AND TO THE EXTENT OF INVESTMENT THE ASSESSEE WAS ENTITLED TO THE DEDUCTION U/S. 54F, THOUGH CONSTRUCTION WAS NOT COM PLETED WITHIN THE PERIOD OF 3 YEARS. FOR THIS PURPOSE, HE RELIED ON THE FOLLOWING JUDGMENTS:- 1. CIT V. SMT. B.S. SHANTAKUMARI [2015] 60 TAXMANN.COM 74 (KAR) 2. CIT V. SARDARMAL KOTHARI [2008] 302 ITR 286 (MADRAS ) 3. SMT. BABITA KEMPARAJE URS V. CIT [2017] 167 ITD 125 (BANG) ITA NO.370/BANG/2020 PAGE 3 OF 4 5. WE HAVE GONE THROUGH THE ABOVE JUDGMENTS CITED B Y THE LD. AR. AS HELD IN THE ABOVE JUDGMENTS, IN ORDER TO GET BENEFI T OF DEDUCTION U/S. 54F, THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY THE SAME. IT IS ENOUGH IF THE ASSESSEE ESTABLISHES THAT HE HAD INVESTED THE ENTIRE NET CONSIDERATION WITHIN THE STIPULATED PERI OD IN THE CONSTRUCTION OF A NEW HOUSE. THE SAID VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT V. SMT. B.S. SHANTAKUMARI (SUPRA) AND FOLLOWED BY THIS TRIBUNAL IN THE CASE OF SMT. BABITA KEMPARAJE URS (SUPRA) . BEING SO, IN OUR OPINION, THE CLAIM OF THE ASSESSEE IS REQUIRED TO BE ALLOWED BY THE AO IN THE LIGHT OF ABOVE JUDGMENTS. ACCORDINGLY, WE H OLD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S. 54F OF THE ACT, EVEN IF THE ASSESSEE HAS NOT COMPLETED THE CONSTRUCTION WITHIN THE PERIOD OF 3 Y EARS. HOWEVER, FOR THE LIMITED PURPOSE OF QUANTIFICATION, WE REMIT THE ISS UE TO THE FILE OF AO. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 6. THE NEXT GROUND IS WITH REGARD TO ADDITION U/S. 68 OF THE ACT OF RS.38,85,074. THE ASSESSEE HAD TAKEN LOAN FROM VAR IOUS PARTIES. HOWEVER, THE ASSESSEE HAS NOT FILED CONFIRMATION LE TTERS FROM THE LENDERS OF THE LOAN TO THE TUNE OF RS.38,85,074. SINCE THERE WAS NO CONFIRMATION TO THE ABOVE AMOUNT, ADDITION WAS MADE BY THE AO. ON APPEAL, THE CIT(APPEALS) CONFIRMED THE SAME. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THESE CREDITS APPEAR IN THE BOOKS OF ACCOUNT OF ASS ESSEE AND THE ASSESSEE IS LIABLE TO PRODUCE THE PROOF REGARDING T HE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS. B EFORE US, THE LD. AR SUBMITTED THAT THE ASSESSEE FILED THE CONFIRMATION LETTER ALONG WITH PAN BEFORE THE CIT(APPEALS) AND THE ADDITION CANNOT BE SUSTAINED. HOWEVER, WE FIND NO ADJUDICATION BY THE CIT(APPEALS) ON THIS ISSUE. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THIS ISSUE TO THE FILE OF T HE AO WITH A DIRECTION TO THE ITA NO.370/BANG/2020 PAGE 4 OF 4 ASSESSEE TO PRODUCE NECESSARY EVIDENCE WITH ALL ING REDIENTS OF SECTION 68 ABOUT THE IDENTITY, GENUINENESS AND CAPACITY OF THE LENDER. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF ASSESSIN G OFFICER FOR FRESH CONSIDERATION. 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF FEBRUARY, 2021. SD/- SD/- ( BEE NA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 3 RD FEBRUARY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.