Income Tax Officer, Ward- 2(2)(5), Bangalore V. Ms. Kupparaju Changamaraju Radha, Bangalore

ITA 387/BANG/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6489 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 11-05-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 54; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B’’ BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI BEENA PILLAI, JUDICIAL MEMBER ITA No.387/Bang/2020 Assessment year : 2016-17 The Income-tax Officer, Ward-2(2)(5), Bengaluru. Vs. Ms. Kupparaju Changamaraju Radha, No.59, 36 th Main, 4 th Cross, BTM Dollar Colony, Madiwala, Bengaluru. PAN: ABQPR 0047 M APPELLANT RESPONDENT Assessee by : Shri Deepesh Wagale, C.A Revenue by : Shri Srinath Sadanala, Addl.CIT (DR) Date of hearing : 13.12.2021 Date of Pronouncement : 14.12.2021 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER The Revenue has filed this appeal challenging the order dated 28/11/2019 passed by the ld.CIT(A)-II, Bangalore for assessment year 2016-17. 2. The grounds of appeal urged by the Revenue give raise to the following 2 issues:- a) Allowing deduction claimed by the assessee u/s 54F of the Act b) Not adjudicating the ground relating to disallowance of interest expenditure 3. We heard the parties and perused the records. The assessee filed her return of income for the year under consideration ITA No.387/Bang/2020 Page 2 of 7 declaring a total income of Rs.20,61,910/-. The Assessing Officer completed the assessment disallowing the claim of the assessee u/s 54F of the Act and also interest expenditure claimed against the income from other sources. The assessee carried the matter in appeal before the ld.CIT(A) who allowed the deduction u/s 54F of the Act. Even though the assessee had contested the disallowance of interest expenditure before the ld.CIT(A), yet he did not render his decision on the above said issue. The Revenue has filed this appeal before us on both the issues. 4. The first issue relates to disallowance of deduction claimed u/s 54F of the Act, which has been allowed by the ld.CIT(A). The facts relating to the above said issues are stated in brief. During the year under consideration, the assessee has sold following properties:- a) Building at Rajarajeshwari Nagar – Rs.1.50 crores b) Building at Vidyaranyapura – Rs.2.25 crores c) Plots at No.102E and 103E – Rs.1,37,32,800/- Total – Rs.5,12,32,800/- After indexation, the assessee arrived at long term capital on the sale of above assets at Rs.2,41,79,713/-. The assessee claimed deduction u/s 54 of the Act on the above said amount and accordingly declared Nil long term capital gain. 5. The AO noticed that both the buildings sold by the assessee are commercial properties and remaining properties are two plots. Accordingly, he took the view that the assessee is not eligible for deduction u/s 54, but eligible u/s 54F of the Act. One of the ITA No.387/Bang/2020 Page 3 of 7 conditions for claiming u/s 54F of the Act is that the assessee should not own more than one residential property on the date of sale of assets. 6. The AO noticed the assessee has owned following residential properties:- a) A residential flat in Golden Orchid b) 50% share in residential house located in dollars scheme Madiwala 1 st Stage, wherein the assessee resides. Since the assessee held more than one residential property, the AO held that the assessee is not eligible for deduction u/s 54F of the Act. 7. Before the ld.CIT(A), the assessee contended that she owns only one residential flat in Golden Orchid. In respect of 50% share in the Madiwals building, the assessee submitted that the said building belongs to and owned by her husband. It was submitted that name of the assessee was included as second person only to ensure easy succession of the property to her, which is common practice adopted by everyone. In support of the claim, the assessee furnished copies of wealth tax returns filed by her husband in order to show that her husband has declared the residential property located in Madiwala as his residential house. The ld.CIT(A) was convinced with the explanations of the assessee and held that the residential building located in Madiwala does not belong to the assessee. Accordingly he held that the assessee has owned only one residential house property and accordingly she is eligible for deduction u/s 54F of the Act. ITA No.387/Bang/2020 Page 4 of 7 8. The ld. DR submitted that the ld.CIT(A) has examined Wealth-tax returns of assessee’s husband in order to come to the conclusion that the residential building at Madiwala belongs to the assessee’s husband only. He submitted that these materials were not produced before the AO and the assessee has furnished these details for the first time before Ld CIT(A). He further submitted that the Ld CIT(A) did not confront these materials with the AO and has accepted the claim of the assessee at its face value. He submitted that the claim of the assessee requires verification. Accordingly, the ld.DR submitted that this issue may be restored to the file of the AO for examining the above said claim of the assessee. 9. On the contrary, the ld.AR submitted that there is no dispute with regard to the facts presented before the ld.CIT(A) and hence the decision rendered by the ld.CIT(A) deserves to be accepted. 10. We heard the parties on this issue and perused the record. Admittedly, the details of the ownership of the Madiwala property was submitted to ld.CIT(A) along with the copies of Wealth-tax Returns for the first time. These details and the contentions of the assessee in this regard were not available before the AO. We noticed that the ld.CIT(A) has also not confronted these materials with the AO in order to elicit his opinion with regard to the claim of the assessee. Under the set of facts, we are of the view that this issue requires to be remitted to the file of AO for examining it afresh by duly considering the claim of the assessee with regards to the ownership of the residential building located at Madiwala. ITA No.387/Bang/2020 Page 5 of 7 We earlier noticed that the assessee had claimed deduction u/s 54 of the Act and it is the AO who has stated that the assessee is eligible for deduction u/s 54F of the Act and the said view of the AO has been accepted by the assessee. We also notice that the manner of computation of deduction u/s 54 and 54F are different. However, there was no occasion for the AO to compute the eligible amount of deduction, since he had held that the assessee is not eligible for deduction u/s 54F of the Act. Hence, the manner of computation of deduction also requires to be examined, if the AO is convinced on the claim of the assessee with regard to residential building located in Madivala. 11. Under these set of facts, we set the order passed by the ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh by duly considering the claim of the assessee with regard to the ownership of residential building located at Madiwala. The assessee is also directed to furnish all the relevant materials to prove that the residential building located in Madiwala is not owned by her and she was only a name lender. After hearing the assessee, the AO may take appropriate decision on this issue in accordance with law. 12. The next issue relates to disallowance of interest expenditure claimed by the assessee against income from other sources. We noticed earlier that the ld.CIT(A) did not adjudicate this issue even though contentions were raised by the assessee on this issue. Before us, the Revenue has raised a ground stating that the ld.CIT(A) has not adjudicated this issue. In fact, the Revenue cannot be said to be aggrieved by the action of the ld.CIT(A) in not ITA No.387/Bang/2020 Page 6 of 7 adjudicating this issue. It is the assessee who is aggrieved in this matter, but the assessee is not in appeal before us. Further, the revenue has only pointed out in its ground that Ld CIT(A) has not adjudicated this issue. Accordingly, we are of the opinion that this ground of the revenue does not require adjudication. 13. In the result, the appeal filed by the Revenue is treated as allowed for statistical purposes. Order pronounced in the open court on 14 th December 2021. Sd/- (Beena Pillai) Judicial Member Sd/- (B.R Baskaran) Accountant Member Bangalore, Dated, 14 th December 2021 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore ITA No.387/Bang/2020 Page 7 of 7 1. Date of Dictation ............................................. 2. Date on which the typed draft is placed before the dictating Member ......................... 3. Date on which the approved draft comes to Sr.P.S ................................... 4. Date on which the fair order is placed before the dictating Member .................... 5. Date on which the fair order comes back to the Sr. P.S. ....................... 6. Date of uploading the order on website................................... 7. If not uploaded, furnish the reason for doing so ................................ 8. Date on which the file goes to the Bench Clerk ....................... 9. Date on which order goes for Xerox & endorsement.......................................... 10. Date on which the file goes to the Head Clerk ......................... 11. The date on which the file goes to the Assistant Registrar for signature on the order ..................................... 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order ............................... 13. Date of Despatch of Order. .....................................................