MANOJ KUMAR SABHARWAL, NEW DELHI V. ITO, WARD- 5(3), NEW DELHI

ITA 3930/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4123 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 16-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P GUPTA
• Keywords: Opportunity of being heard; Rule of consistency; Competent authority
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SH. N.K.SAINI, ACCOUNTANT MEMBER AND SH.K.N.CHARY, JUDICIAL MEMBER ITA NO. 3930/DEL/2017 (ASSESSMENT YEAR: 2 012-13) APPELLANT BY SH. RAJ KUMAR GUPTA, CA & SH. SUMIT RESPONDENT BY SH. S.P.GUPTA, SR.DR DATE OF HEARING 14 .0 9 .2017 DATE OF PRONOUNCEMENT 16 . 1 0.2017 ORDER PER K.N.CHARY, JUDICIAL MEMBER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 05.05.2017 IN APPEAL NO.121/15-16 PASSING BY THE CO MMISSIONER OF INCOME TAX (APPEAL) [IN SHORT CIT(A)]-35, NEW DELHI FOR 2012-13 ASSESSMENT YEAR WHEREIN LD.CIT(A) CONFIRMED THE ADDITION OF RS.67,8 3,383/- WHILE DENYING THE DEDUCTION U/S 54 OF THE INCOME TAX ACT, 1961 (IN SH ORT ACT). 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME FOR AY 2012-13 ON 29.03.2013 DECLA RING A TOTAL INCOME OF RS.4,56,170/- AFTER CLAIMING THE DEDUCTION OF RS.1, 15,000/- U/S VIA OF THE ACT. DURING THE SCRUTINY U/S 143(3) OF THE ACT, THE AO F OUND THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD PROPERTY LOC ATED AT MODEL TOWN, DELHI MANOJ KUMAR SABHARWAL, A-1, G.T.KARNAL ROAD, INDUSTRIAL AREA, DELHI-110033. VS ITO, WARD-5(3), C.R.BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 3930/DEL/2017 AND PURCHASED ANOTHER PROPERTY LOCATED AT BIJWASAN, DELHI AND CLAIMED DEDUCTION OF RS.67,83,383/- U/S 54 OF THE ACT. AFT ER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE AO RETURNED A F INDING THAT THE PROPERTY PURCHASED BY THE ASSESSEE WAS NOT A RESIDENTIAL PRO PERTY QUALIFIED FOR EXEMPTION U/S 54 OF THE ACT, AS SUCH, WHILE DISALL OWING THE SAME, THE AO PROCEEDED TO ADD THE SAID SUM OF RS.67,83,383/- TO THE TOTAL INCOME OF THE ASSESSEE. IN THE APPEAL PREFERRED BY THE ASSESSEE, LD. CIT(A) FOUND THAT WHAT THE ASSESSEE HAD PURCHASED WAS A FARM LAND WHEREIN HE CONSTRUCTED A SMALL AREA FOR GUARDING PURPOSE, AND THE EVIDENCES LIKE E LECTRICITY BILLS, PHOTOGRAPHS OF WATER PAYMENTS ETC. IN NO WAY PROVED THAT IN THE FARM LAND THERE IS A DWELLING HOUSE, AND DISTINGUISHED IT FROM A HOUSE F OR BUSINESS, STORAGE, GUARD/ SECURITY PURPOSE. LD. CIT(A) FURTHER FOUND THAT THERE WAS NO ELECTRICITY CONNECTION EXISTING AT THE PROPERTY AT THE TIME OF PURCHASE OF THE SAME AND ELECTRICITY CONNECTION WAS OBTAINED SUBSEQUENTLY. ON THIS ASPECT, RELIANCE WAS PLACED ON SMT. USHARANI KALIDINDI V. ITO [2013] 25 ITR (TRIB. ) 409 [HYDERABAD]; SALEEM FAZELBHOY V. DY.CIT [2007] 106 ITD 167 [MUM .]; MRS. SONIA GULATI V. ITO [2001] 115 TAXMAN 232 [MUM.]; AND ITO V. SMT. ROHIN I REDDY [2009] 313/ ITR (AT) 346 (HYDERABAD) AND LD.CIT(A) HELD THAT THE AO WAS JUSTIFIED IN M AKING ADDITION AS SUCH NO INTERFERENCE WAS REQUIRED. SHE, THEREFORE, DISMISSED THE APPEAL. HENCE, THE ASSESSEE IS BEFORE US IN THIS A PPEAL ON THE FOLLOWING GROUND:- THAT UNDER THE FACTS AND CIRCUMSTANCES, BOTH THE L OWER AUTHORITY GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN NOT ALLOWING TH E EXEMPTION U/S 54 FOR LTCG OF RS.67,83,383/- ON SALE OF RESIDENTIAL HOUSE AT MODEL TOWN, NEW DELHI. ITA NO. 3930/DEL/2017 3. LD.AR, AT THE OUTSET, SUBMITS THAT THE ASSESSEE WAS THE OWNER OF 50% IN THE RESIDENTIAL PROPERTY AT MODEL TOWN, DELHI WHERE AS OTHER 50% BELONGS TO HIS BROTHER NAMELY SH. LALIT SABHARWAL. THE PROPERTY I .E. THE FARM HOUSE AT BIJWASAN, DELHI WAS PURCHASED BY BOTH THE BROTHERS ON 08.12.2011 FOR A TOTAL CONSIDERATION OF RS.1,32,50,000/- WITH EACH BROTHER HAVING 50%, THE AO ALLOWED THE EXEMPTION U/S 54 OF THE ACT TO THE BROT HER WHILE SCRUTINIZING THE RETURN OF INCOME U/S 143(3) AND THOUGH THE PROPERTY SOLD, PROPERTY PURCHASED AND ATTENDED CIRCUMSTANCES ARE IDENTICALLY PLACED, HE HAS CHOSEN TO DENY THE EXEMPTION IN CASE OF THE ASSESSEE WHICH IS NOT CORR ECT ON THE PART OF THE AO. WHILE PLACING RELIANCE REPORTED IN RADHA SWAMI SATSANG VS CIT 193 ITR 321 (SC) [RP 329], LD.AR SUBMITTED THAT A SIMILAR VIEW HAD TO BE TAKE N IN THE MATTER WHEREIN THE FACTS ARE IDENTICAL, AND RULE OF CONSISTENCY SHALL NOT BE VIOLATED WITHOUT ANY COMPELLING REASONS. ON MERITS , IT IS THE SUBMISSIONS OF THE LD.AR THAT THE SALE DEED DATED 08.12.2011 UNDER WHICH THE ASSESSEE AND HIS BROTHER PURCHASED THE PROPERTY CLEARLY SHOWS TH AT THERE EXISTS SAME STRUCTURE AND THE REPORT DATED 23.03.2015 OF THE GO VERNMENT APPROVED ARCHITECT SHOWS THAT SUCH A STRUCTURE IS AN RCC RES IDENTIAL UNIT CONSISTING OF TWO BED ROOMS, KITCHEN, TOILET, LOBBY AND OPEN VARA NDA. HE FURTHER SUBMITTED THAT PRIOR TO PURCHASE OF THE PROPERTY BY THE ASSES SEE, THE RCC STRUCTURE WAS UNDER THE OCCUPATION OF SH. NAND KISHORE WHO WAS RE SIDING THERE WITH HIS FAMILY. ACCORDING TO THE ASSESSEE, THERE EXISTED E LECTRICITY CONNECTION TO THE PROPERTY PURCHASED BY THE ASSESSEE AND HIS BROTHER ON THE NAME OF THE EARLIER OWNER AND IT IS ONLY FOR A NEW CONNECTION THE ASSES SEE APPLIED AND OBTAINED IN THE MONTH OF MARCH 2015. LD.AR SUBMITTED PHOTOGRAP HS TO SHOW THE EXISTENCE OF A HABITABLE RESIDENTIAL UNIT WITH ELECTRICITY PO WER, WATER AND SANITATION IN ITA NO. 3930/DEL/2017 THE PROPERTY PURCHASED UNDER THE SALE DEED DATED 08 .12.2011. INSOFAR AS THE OBSERVATION OF THE AO, BASING ON THE REPORTS OF THE INCOME TAX INSPECTOR AND THE SUB-DIVISIONAL MAGISTRATE, IS CONCERNED, IT IS THE SUBMISSIONS OF THE LD.AR THAT THE INCOME TAX INSPECTOR IS NOT QUALIFIED PERS ON TO CERTIFY THE STRUCTURAL SOUNDNESS OR THE HABITABILITY OF ANY HOUSE AND IT I S ONLY THE ARCHITECT THAT IS COMPETENT TO PERFORM SUCH DUTIES. AS A CONTINUATIO N OF THESE SUBMISSIONS, LD.AR STATED THAT THE GOVERNMENT APPROVED VALUER/AR CHITECT, BY REPORT DATED 23.03.2015, PROVIDED A PLAN RELATING TO THE CONSTRU CTED AREA THEREBY, ESTABLISHING THE EXISTENCE OF THE RCC RESIDENTIAL U NIT CONSISTING OF TWO BED ROOMS, KITCHEN, TOILET, LOBBY AND OPEN VARANDA WITH THE FACILITY OF ELECTRICITY AND WATER. ACCORDING TO HIM, ALL THESE FACILITIES ESTABLISH BEYOND ANY DOUBT THAT THE STRUCTURE IS FIT FOR HUMAN DWELLING AND WH EN ONCE THIS IS BELIEVED, THE QUESTION WHETHER OR NOT THE ASSESSEE RESIDES IN SUC H BUILDING BECOMES IRRELEVANT BECAUSE IT IS NOT THE REQUIREMENT OF LAW U/S 54 OF THE ACT FOR CLAIMING EXEMPTION. ON THE ASPECT OF THE REPORT DA TED 12.01.2015 OF THE SDM, KAPASHERA, NEW DELHI, LD.AR SUBMITS THAT THE REPORT ONLY SAYS THAT ACCORDING TO THE RECORD AVAILABLE WITH THEM, PROPERTY WAS REG ISTERED AS AN AGRICULTURAL LAND AND THERE IS NO WHISPER THEREIN AS TO THE EXIS TENCE OR NON-EXISTENCE OF ANY STRUCTURE THEREON. IN THIS CONTEXT, IT IS THE SUBM ISSION OF THE LD. AR THAT THE OBSERVATIONS OF THE AO AS TO THE NON-AVAILABILITY O F APPROVED PLAN OF CONSTRUCTION ARE OF NO CONSEQUENCE AT ALL, SINCE NO CONDITION IS ATTACHED U/S 54F OF THE ACT THAT THE BUILDING PLAN OF THE RESIDE NTIAL HOUSE CONSTRUCTED, SHOULD BE APPROVED BY THE MUNICIPAL CORPORATION OR ANY OTHER COMPETENT AUTHORITY. ITA NO. 3930/DEL/2017 4. LD.SR.DR VEHEMENTLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE STRUCTURE MEANT FOR BUSINESS, SE ARCH, GUARD/SECURITY PURPOSE IS NOT QUALIFIED FOR EXEMPTION U/S 54F OF T HE ACT AND AFTER CONSIDERING THE MATERIAL IN THE SHAPE OF THE ELECTRICITY BILLS, PHOTOGRAPHS ETC., LD. CIT(A) RIGHTLY REACHED THE CONCLUSION THAT THE ALLEGED STR UCTURE IN THE PROPERTY PURCHASED BY THE ASSESSEE, WAS MEANT FOR THE SECURI TY/GUARDS AND NOT FOR THE RESIDENCE OF THE ASSESSEE. HE, THEREFORE, SUBMITS THAT THERE ARE NO REASONS TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD. REPOR T DATED 13.01.2015 OF THE SUB-DIVISIONAL MAGISTRATE PLACED AT PAGE NO.41 OF THE PAPER BOOK ONLY SAYS THAT THE PROPERTY WAS REGISTERED AS AGRICULTURAL LA ND. IT DOES NOT SPEAK ANYTHING AS TO THE EXISTENCE OR NON-EXISTENCE OF AN Y STRUCTURE OR HABITABLE THEREOF. HOWEVER, ASSESSMENT ORDER ITSELF READS TH AT THERE EXISTS A STRUCTURE. IT IS BASED ON THE REPORT OF THE INSPECTOR POSTED I N THE WARD. NOW THE DISPUTE REVOLVED AROUND THE QUESTION WHETHER SUCH A STRUCTU RE IS HABITABLE OR NOT WITH REFERENCE TO ITS ELIGIBILITY FOR EXEMPTION U/S 54 OF THE ACT. ACCORDING TO THE AUTHORITIES BELOW, SUCH A STRUCTURE IS NOT A HOUSE, HAS NOT BEEN USED BY THE ASSESSEE FOR HIS RESIDENTIAL PURPOSE, BUT IT IS ONL Y A SMALL CONSTRUCTED AREA FOR GUARDING PURPOSES. FIRST OF ALL, WHATEVER MAY BE T HE USE THE STRUCTURE IS PUT TO, RELEVANT QUESTION IS WHETHER IT IS USEFUL FOR T HE PURPOSE OF DWELLING, WHETHER BY THE ASSESSEE OR HIS GUARDS. IN VIEW OF THE DECI SIONS REPORTED IN AMIT GUPTA VS DCIT 6 SOT 403 (DEL.); SMT. PUSHPALATA KANODIA V S WTO 92 ITD 500 (HYD) WHEREIN IT IS HELD THAT IN ORDER TO CERTIFY THAT A HOUSE IS FIT FOR HUMAN HABITATION, IT IS NOT NECESSARY THAT THERE SHOULD B E OF MODERN AMENITIES THAT ARE REQUIRED FOR POSH AND LUXURIOUS LIVING OR THAT THE ASSESSEE SHOULD RESIDE ITA NO. 3930/DEL/2017 THEREIN. IT IS FURTHER HELD THAT THE TERM HOUSE COMMONLY MEANS A ROOM COVERED BY WALLS AND A ROOF. IN THIS CONTEXT, WE P ROCEED TO EXAMINE WHETHER THE SO-CALLED STRUCTURE IN THE PROPERTY PURCHASED B Y THE ASSESSEE COULD BE A HOUSE WITHIN THE MEANING OF SECTION 54F OF THE ACT. 6. BY WAY OF PAGE NO.80 TO 82 OF THE PAPER BOOK, 12 PHOTOGRAPHS ARE PRODUCED ON BEHALF OF THE ASSESSEE AND THESE ARE AT TESTED BY THE GOVERNMENT OF INDIA APPROVED VALUERS BY NAME CHADHA & ASSOCIAT ES. THESE PHOTOGRAPHS CLEARLY SHOW THE EXISTENCE OF THE RCC UNIT WITH THE ROOMS, ROOF, KITCHEN FACILITY, WINDOWS AND ONE VARANDA. ONE OF THE PHO TOGRAPHS CLEARLY SHOWS THE EXISTENCE OF TOILET IN THIS UNIT. THERE IS A WELL AND A PATHWAY WITH PLANT FENCING ON EITHER SIDE. ONE BOREWELL WITH PIPES IS ALSO SENT. FURTHER CEILING FANS AND ARRANGEMENTS FOR SITTING IN FRONT OF THE S TRUCTURE ARE THERE. PAGE 19- 20 OF THE PAPER BOOK ARE THE ARCHITECTURAL PLAN AND THE REPORT OF THE ARCHITECT WHO ARE THE GOVERNMENT OF INDIA APPROVED VALUERS. THE ARCHITECT/GOVT. APPROVED VALUER REPORT DT. 23.03.2015 SHOWS THE PLA N OF CONSTRUCTED AREA WHICH CLEARLY SHOWS THE EXISTENCE OF RCC RESIDENTIA L UNIT CONSISTING OF TWO BEDROOMS, KITCHEN, TOILET, LOBBY AND OPEN VARANDA. THIS CERTIFICATE REMAINS UNDISPUTED. THE ARCHITECTURAL PLAN SHOWS THE EXISTE NCE OF TWO BED ROOMS FOR THE SAID STRUCTURE. THE REPORT SHOWS THAT THERE HA S BEEN A DOMESTIC ELECTRICITY CONNECTION AND ALSO AVAILABILITY OF A TUBE WELL WHI CH IS THE MAIN SOURCE OF WATER SUPPLY OF THEIR UNIT. THERE EXISTS THE FACILI TY FOR THE DISPOSAL OF THE SEWAGE. PAGE NO.18 OF THE PAPER BOOK SHOWS THAT TH ERE WAS AN ELECTRICITY BILL FOR THE DISCONNECTED ELECTRICITY CONNECTION AND THE DATE OF PRINT OUT OF SUCH BILL WAS ON 11.03.2015. IT CLEARLY SHOWS THAT THERE EXI STED ELECTRICITY CONNECTION PRIOR TO THE ELECTRICITY CONNECTION OBTAINED BY THE ASSESSEE AS ON 13.03.2015. ITA NO. 3930/DEL/2017 FURTHER THE STRUCTURAL DESIGN OF THE UNIT AND THE F ACILITIES OF WATER, ELECTRICITY AND OTHER SANITATION CLEARLY MAKES OUT A CASE FOR T HE ASSESSEE THAT THERE EXISTS A STRUCTURE IN THE PROPERTY AND IT WAS FIT FOR HUMA N DWELLING. WHEN ONCE THE ASSESSEE ESTABLISHED THAT THERE EXISTED A HUMAN DW ELLING IN THE PROPERTY PURCHASED BY THEM, WHETHER OR NOT OTHER FACILITIES BEFITTING THE LIFESTYLE OF THE ASSESSEE ARE AVAILABLE, OR WHETHER THE ASSESSEE IS RESIDING THERE OR NOT, ARE TOTALLY IRRELEVANT CONSIDERATIONS TO DEAL WITH THE MATTER FOR EXEMPTION U/S 54F OF THE ACT, IN VIEW OF THE DECISION RENDERED TO ABO VE. FURTHER IN SHYAM SUNDER MUKHIJA VS ITO [1991] 38 ITD 125 (JP) , A CO-ORDINATE BENCH OF THIS TRIBUNAL HELD THAT A FARM HOUSE CAN ALSO TO BE TREATED AS RE SIDENTIAL HOUSE AND THUS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. APART F ROM THIS, IT IS THE OBSERVATION OF THE AO AS WELL AS THE LD.CIT(A) THAT GUARDS WERE RESIDING IN THE STRUCTURE, EXISTING IN THE PROPERTY PURCHASED BY THE ASSESSEE. 7. FURTHER THERE IS NO DENIAL FROM THE REVENUE THAT THE REPORT OF INCOME OF THE BROTHER OF THE ASSESSEE I.E. ONCE SH. LALIT SAB HARWAL WAS SCRUTINIZED U/S 143(3) OF THE ACT AND EXEMPTION U/S 54 OF THE ACT, WAS ALLOWED TO HIM. IT IS NOT THE CASE OF THE REVENUE EITHER THE PROPERTY THAT WA S SOLD OR THE PROPERTY THAT WAS PURCHASED BY TWO BROTHERS STAND ON DIFFERENT FO OTINGS. IT IS ONLY THE MATTER OF EXTENT OF OWNERSHIP. IN BOTH THE PROPERT IES, THE ASSESSEE AND HIS BROTHER CLAIMED 50% OF OWNERSHIP. IN VIEW OF THE D ECISION IN THE CASE OF RADHA SWAMI SATSANG VS CIT 193 ITR 321 (SC) [RP 329], RULE OF CONSISTENCY, THEREFORE, DEMANDS THAT IDENTICAL VIEW HAS TO BE TAKEN IN CASE S OF IDENTICAL FACTS. 8. WITH THIS VIEW OF THE MATTER, WE ARE OF THE CONS IDERED OPINION THAT THE ASSESSEE ESTABLISHED THAT THE STRUCTURE EXISTING IN THE PROPERTY PURCHASED ITA NO. 3930/DEL/2017 UNDER SALE DEED DATED 08.12.2011 ANSWERS THE DESCRI PTION OF EXPRESSION RESIDENTIAL HOUSE AND THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION U/S 54 OF THE ACT. WE, THEREFORE, FIND IT DIFFICULT TO SUSTA IN THE VIEW TAKEN BY THE AUTHORITIES BELOW, AS SUCH WE DIRECT THE AO TO DELE TE THE ADDITION MADE ON THIS GROUND. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2017. SD/- SD/- (N.K.SAINI) (K.N.CHAR Y) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* DATE:- 16.10.2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT AS SISTANT REGISTRAR ITAT NEW DELHI