Shri Sangram J Patel, Baroda V. DCIT,(International Taxation), Vadodara

ITA 377/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2584 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 15-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SHYAM PRASAD
• Assessee Lawyers: M J SHAH
• Keywords: Benefit of exemption; Set aside
• Section: 143(3); 54F; 250; 139(1); 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO.377/AHD/2018 / ASSTT. YEAR: 2013-2014 SHRI SANGRAM J. PATEL, C/O. SHRI NIMESH GANDHI, CHARTERED ACCOUNTANTS, 217, PHONIC COMPLEX, NR. SURAJ PLAZA COMPLEX, SAYAJI GUNJ, BARODA-390007. PAN: ACXPP6793J VS. D.C.I.T., INTERNATIONAL TAXATION, BARODA. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI M.J. SHAH, A.R REVENUE BY : DR. SHYAM PRASAD, SR.D.R /DATE OF HEARING : 05/08/2021 /DATE OF PRONOUNCEMENT: 25/10/2021 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-13, AHMEDABAD, DATED 27/09/2017 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2013-2014. ITA NO.377/AHD/2018 ASSTT. YEAR 2013-14 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: THE APPELLANT OBJECTS TO THE ORDER U/S 250 DATED 27.09.2017 PASSED BY HON COMMISSIONER OF INCOME TAX (APPEALS)-13,AHMEDABAD ON THE FOLLOWING AMONGST OTHER GROUNDS OF APPEAL. (1) (A) THAT THE HON C I T (APPEALS) HAS ERRED IN NOT ALLOWING DEDUCTION OF RS 6450000 U/S 54 FOR INVESTMENT IN ACQUIRING OF NEW FLAT. (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANTS GENUINE CLAIM FOR INVESTMENT OF RS 6450000 OUGHT TO BE ALLOWED U/S 54 OF THE I T ACT 1961 (2) (A) THAT THE HON C I T(APPEALS) ERRED IN OBSERVING AND HOLDING THAT THE FOR ACQUIRING A NEWLY CONSTRUCTED FLAT THE TIME-LIMIT IS TWO YEARS AND NOT THREE YEARS. (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPELLATE HAD ACQUIRED THE FLAT IN THE SCHEME WHICH IS NEWLY CONSTRUCTED. (3) (A) THAT THE LEARNED C IT (APPEALS) ERRED IN HOLDING THAT THE NEWLY ACQUIRED FLAT OUGHT TO HAVE BE ACQUIRED WITHIN TWO YEARS. (B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE TIME PERIOD APPLICABLE IS THREE YEARS AND NOT TWO YEARS. (4) (A) THAT THE LEARNED C I T(APPEALS) FAILED TO APPRECIATE THE FACT THAT SUBSTANTIAL PART OF THE PAYMENT OF RS 5 051000 WAS PAID AT THE TIME OF BOOKING. (5) (A) THE HON CI T (APPEALS) ERRED IN OBSERVING THAT THE APPELLATE HAS NOT SATISFIED THE CONDITIONAL ENUMERATED BY THE ACT THEREFORE NOT ENTITLED FOR DEDUCTION U/S 54 OF THE ACT. (B) THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, IT OUGHT TO BE HELD THE CONDITION ENUMERATED UNDER PROVISION OF THE ACT ARE FULFILLED AND THAT THE APPELLANT IS ENTITLED TO DEDUCTION OF INVESTMENT UNDER 54 OF THAT ACT. WITHOUT PREJUDICE TO THE GROUND NO 5(A) AND (5)(B) .SUITABLE AMOUNT TO BE DIRECTED TO BE ALLOWED TOWARDS INVESTMENT U/S 54 OF THE ACT. THE APPELLANT RESERVE RIGHT TO ADD, AMEND AND/OR DELETE ANY GROUNDS OF APPEAL AS AND WHEN THE OCCASION ARISES 3. THE ONLY INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO BY DENYING THE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT FOR 64,50,000/- ONLY. 4. THE NECESSARY FACTS AS CULLED OUT FROM THE ORDER OF THE AUTHORITIES BELOW ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND NON-RESIDENT ASSESSEE. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT FOR AN AMOUNT OF 50,51,000/- ONLY AND 14 LAKH UNDER 54(2) OF ITA NO.377/AHD/2018 ASSTT. YEAR 2013-14 3 THE ACT. THE IMPUGNED AMOUNT OF EXEMPTION WAS ON ACCOUNT OF THE INVESTMENT MADE IN THE CONSTRUCTION OF THE PROPERTY FOR 50,51,000/- AND THE DEPOSIT OF 14 LAKH IN THE CAPITAL GAIN ACCOUNT SCHEME. 4.1 HOWEVER, THE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE ESTABLISHING THE FACT THAT HE HAS PURCHASED ANY PROPERTY WITHIN THE TIME PRESCRIBED UNDER THE PROVISIONS OF SECTION 54F OF THE ACT EXCEPT THE AGREEMENT FOR PURCHASE OF THE PROPERTY. IN SUCH AGREEMENT, THERE WAS NO DETAIL APPEARING FOR THE PAYMENT TO BE MADE OR PAYMENT SCHEDULE AGAINST THE PURCHASE OF THE PROPERTY. LIKEWISE, THE ASSESSEE HAS NOT BROUGHT ANYTHING ON RECORD SUCH AS THE BANK STATEMENT DEPICTING THE PAYMENT FOR THE PURCHASE OF THE PROPERTY. ACCORDINGLY, THE AO DENIED THE CLAIM OF THE ASSESSEE UNDER SECTION 54F AND 54 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). 6. THE ASSESSEE BEFORE THE LEARNED CIT (A) CONTENDED THAT HE HAS MADE THE PAYMENT OF 50, 51,000/- FOR THE PURCHASE OF THE PROPERTY WITHIN THE FINANCIAL YEAR UNDER CONSIDERATION TO M/S SARNAM PROPERTIES. LIKEWISE, HE HAS DEPOSITED A SUM OF 14 LAKHS DATED 3 RD APRIL 2013 IN THE CAPITAL GAIN ACCOUNT SCHEME MUCH BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AS SPECIFIED UNDER SECTION 139(1) OF THE ACT. ACCORDINGLY, THE ASSESSEE CONTENDED THAT HE IS ELIGIBLE FOR DEDUCTION/EXEMPTION UNDER SECTION 54 OF THE ACT. THE ASSESSEE, SIMILARLY, ALSO SUBMITTED THAT THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO HIM BY THE BUILDER VIDE LETTER DATED 15 TH MARCH 16. 7. HOWEVER, THE LEARNED CIT (A) REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE PROVISIONS OF SECTION 54/54F OF THE ACT REQUIRES TO PURCHASE THE NEW RESIDENTIAL PROPERTY WITHIN 2 YEARS FROM THE DATE WHEN THE PROPERTY WAS SOLD. AS SUCH, THE TIME LIMIT FOR PURCHASE OF THE NEW PROPERTY EXPIRED ON 15 MARCH 2015 WHEREAS THE ASSESSEE RECEIVED THE POSSESSION DATED 15 MARCH 2016 WHICH IS ALMOST ITA NO.377/AHD/2018 ASSTT. YEAR 2013-14 4 AFTER THE LAPSE OF ONE YEAR. THUS THE CONDITION AS SPECIFIED UNDER SECTION 54 HAS NOT BEEN FULFILLED. THUS THE LEARNED CIT (A) DISREGARDED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO. 8. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 34 AND CONTENDED THAT THE ENTIRE AMOUNT FOR THE PURCHASE OF THE PROPERTY WAS PAID AND DEPOSITED IN THE CAPITAL GAIN ACCOUNT SCHEME WITHIN THE PRESCRIBED TIME. THE LEARNED AR FOR THIS PURPOSE DRAWN OUR ATTENTION ON PAGE 2 OF THE PAPER BOOK WHERE THE BANK STATEMENT OF THE ASSESSEE WAS PLACED. 9.1 THE LEARNED AR FURTHER CONTENDED THAT THE BENEFIT IS EXTENDED TO THE ASSESSEE IF HE CONSTRUCTS THE HOUSE WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE PROPERTY. AS THE ASSESSEE HAS GIVEN MONEY TO THE BUILDER FOR THE CONSTRUCTION OF THE HOUSE, THEN THE TIME LIMIT FOR THE ASSESSEE SHOULD BE EXTENDED FOR 3 YEARS FROM THE DATE OF TRANSFER OF THE PROPERTY. THUS IN SUCH A SCENARIO, THE ASSESSEE GOT THE POSSESSION ON 15 TH MARCH 2016 WHICH IS WELL WITHIN A PERIOD OF 3 YEARS. THE LEARNED AR IN SUPPORT OF HIS CONTENTION RELIED ON THE ORDER OF MUMBAI TRIBUNAL IN THE CASE OF KISHORE H. GALAIYA VS. ITO REPORTED IN 24 TAXMANN.COM 11 9.2 THE LEARNED AR ALSO CONTENDED THAT THE IMPUGNED PROPERTY WAS HELD BY THE ASSESSEE JOINTLY ALONG WITH THE BROTHER, WHO ALSO MADE INVESTMENT FOR THE PURCHASE OF THE PROPERTY FROM THE SAME BUILDER AND DEPOSITED THE SUM OF 14 LAKHS IN THE CAPITAL GAIN ACCOUNT SCHEME. THE AO OF THE BROTHER OF THE ASSESSEE WAS ALSO THE SAME. AS SUCH THE AO, IN THE CASE OF THE BROTHER OF ASSESSEE HAS ACCEPTED THE CLAIM OF THE ASSESSEE. ACCORDINGLY THE LEARNED AR, CONTENDED THAT THE FACTS OF THE CASE ON HAND ARE IDENTICAL TO THE FACTS OF THE CASE OF THE BROTHER OF THE ASSESSEE. ACCORDINGLY, THE LEARNED AR CONTENDED THAT THE ASSESSEE SHOULD BE ALLOWED THE BENEFIT OF EXEMPTION UNDER SECTION 54 OF THE ACT AS THE PRESENT CASE IS IDENTICAL TO ITA NO.377/AHD/2018 ASSTT. YEAR 2013-14 5 THE FACTS OF THE CASE OF THE BROTHER OF THE ASSESSEE. FOR THIS PURPOSE, THE LEARNED AR DREW OUR ATTENTION ON THE ASSESSMENT ORDERS OF THE ASSESSEES BROTHER WHICH IS PLACED ON RECORD. 10. ON THE OTHER HAND THE LEARNED DR BEFORE US CONTENDED THAT THE ASSESSEE WAS REQUIRED TO PURCHASE THE HOUSE WITHIN A PERIOD OF 2 YEARS BUT HE HAS FAILED TO DO SO. LIKEWISE, THERE WAS NO EVIDENCE FILED BY THE ASSESSEE ESTABLISHING THE FACT WHETHER HE HAS DEPOSITED A SUM OF 14 LAKHS IN THE CAPITAL GAIN ACCOUNT SCHEME. EVEN THE ENTRY SHOWN IN THE BANK ACCOUNT OF THE ASSESSEE DOES NOT SUGGEST SO. 11. THE LEARNED DR FURTHER SUBMITTED THAT ANY MISTAKE COMMITTED BY THE AO IN THE CASE OF THE BROTHER OF THE ASSESSEE DOES NOT MEAN THAT THE SAME MISTAKE SHOULD BE REPEATED BY THE SAME AO IN THE CASE OF THE ASSESSEE. ACCORDINGLY THE LEARNED DR WAS OF THE VIEW THAT THE PRINCIPLES OF CONSISTENCY CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE PRESENT CASE THE DISPUTE IS ON TWO FOLDS. THE 1 ST ISSUE RELATES WHETHER THE ASSESSEE HAS PURCHASED THE PROPERTY WITHIN A PERIOD OF 2 YEARS FROM THE DATE OF TRANSFER AND THEREFORE HE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT FOR 50,51,000/-. THE 2 ND ISSUE RELATES WHETHER THE ASSESSEE HAS DEPOSITED A SUM OF 14 LAKHS IN THE CAPITAL GAIN ACCOUNT SCHEME. 12.1 IN CONNECTION WITH THE 1 ST ISSUE, WE NOTE THAT THE PAYMENT OF 50,,51,000/- WAS MADE TO THE BUILDER IN THE FINANCIAL YEAR IN WHICH THE PROPERTY WAS TRANSFERRED BY THE ASSESSEE AND THIS FACT WAS ALSO NOT DISPUTED BY THE AUTHORITIES BELOW. IN THIS REGARD, WE ALSO PERUSED THE BANK STATEMENT OF THE ASSESSEE AVAILABLE ON PAGE 2 OF THE PAPER BOOK. IN THE BANK STATEMENT, THE NAME OF THE BUILDER WAS APPEARING SHOWING THE PAYMENT OF 50,51,000/- WITHIN THE FINANCIAL YEAR UNDER CONSIDERATION. MOVING FURTHER, THE FLAT WAS HANDED OVER TO THE ASSESSEE AFTER THE EXPIRY OF 2 YEARS ITA NO.377/AHD/2018 ASSTT. YEAR 2013-14 6 WHICH CONTRAVENES THE PROVISIONS OF SECTION 54 OF THE ACT. HOWEVER WE FIND THAT THE MUMBAI TRIBUNAL IN THE CASE OF KISHORE H. GALAIYA (SUPRA) HAS HELD THAT ONCE THE ASSESSEE BOOKED FLAT WITH BUILDER AND STARTED MAKING PAYMENT OF INSTALMENT. FURTHER, THE BUILDER WAS TO HANDOVER THE POSSESSION OF THE FLAT TO ASSESSEE ON COMPLETION OF CONSTRUCTION. THEN SUCH ACT OF THE ASSESSEE IS TO BE CONSIDERED AS CONSTRUCTION OF NEW RESIDENTIAL HOUSE NOT THE PURCHASE OF PROPERTY. ACCORDINGLY THE TIME LIMIT WILL EXTEND TO 3 YEARS FROM THE DATE OF TRANSFER OF PROPERTY TO COMPLETE THE CONSTRUCTION. 12.2 IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF EXEMPTION AVAILABLE TO HIM UNDER THE PROVISIONS OF SECTION 54/54F OF THE ACT ON ACCOUNT OF THE DELAY ON THE PART OF THE BUILDER. 12.3 WITH RESPECT TO THE DEPOSIT OF 14 LAKHS IN THE CAPITAL GAIN ACCOUNT SCHEME, WE HAVE PERUSED THE BANK STATEMENT FILED BY THE ASSESSEE AND NOTE THAT THERE IS A PAYMENT OF 14 LAKHS. BUT THIS PAYMENT DOES NOT INDICATE THE FACT THAT THE ASSESSEE HAS DEPOSITED THE SAME IN THE CAPITAL GAIN ACCOUNT SCHEME. THE LEARNED AR, AT THE TIME OF HEARING HAS ALSO NOT BROUGHT ANYTHING ON RECORD ESTABLISHING THE FACT THAT THE IMPUGNED AMOUNT REPRESENTS THE MONEY DEPOSITED UNDER THE CAPITAL GAIN ACCOUNT SCHEME. HOWEVER, THE REVENUE HAS ALSO NOT CONDUCTED ANY ENQUIRY TO DISPROVE THE CONTENTION OF THE ASSESSEE BASED ON THE COGENT MATERIALS. NEVERTHELESS, IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO REMIT THIS ISSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE IMPUGNED AMOUNT REPRESENTS THE DEPOSITS MADE UNDER THE CAPITAL GAIN ACCOUNT SCHEME OR NOT. 12.4 IT IS NOT ALSO OUT OF PLACE TO MENTION THAT THE ASSESSEE WAS THE CO-OWNER IN THE PROPERTY ALONG WITH HIS BROTHER. THE CLAIM OF THE ASSESSEES BROTHER BY THE SAME AO WAS ACCEPTED AND THE DEDUCTION/EXEMPTION WAS ALLOWED FOR THE INVESTMENT MADE BY THE CO-OWNER WITH M/S SHARNAM BUILDERS FOR THE PURCHASE OF THE PROPERTY. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE AO WAS TO MAINTAIN THE CONSISTENCY. IN SIMPLE WORDS, THE AO CANNOT REJECT THE CLAIM OF THE ASSESSEE WHEREAS IN THE CASE ITA NO.377/AHD/2018 ASSTT. YEAR 2013-14 7 OF THE BROTHER OF THE ASSESSEE IN THE IDENTICAL FACTS AND CIRCUMSTANCES, THE SAME WAS ACCEPTED. ACCORDINGLY ON THIS COUNT, WE ARE NOT CONVINCED WITH THE FINDING OF THE AUTHORITIES BELOW. HENCE, WE SET ASIDE THE FINDING OF THE LEARNED CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 25/10/2021 AT AHMEDABAD. SD/- SD/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 25/10/2021 MANISH