The ITO, Guntur V. Sri Kalari Venkata Rasaiah (HUF), Guntur

ITA 400/VIZ/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3819 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 16-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVASA RAO
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

ITA NO.400 /VIZAG/2016 SRI KALARI VENKATA ROSAIAH (HUF), GUNTUR 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.400/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) ITO, WARD - 1(2), GUNTUR SRI KALARI VENKATA ROSAIAH (HUF) GUNTUR [ PAN NO. AABHK6395R ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI V. SRINIVASA RAO, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 14.03.2018 / DATE OF PRONOUNCEMENT : 0 4.04.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 {CIT(A)}, GU NTUR VIDE ITA NO.105/CIT(A)-1/GNT/2014-15 DATED 30.5.2016 FOR THE ASSESSMENT YEAR 2011-12. ITA NO.400 /VIZAG/2016 SRI KALARI VENKATA ROSAIAH (HUF), GUNTUR 2 2. THE ASSESSEE FILED RETURN OF INCOME DECLARING TO TAL INCOME OF RS.30,12,840/- ON 29.7.2011. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND T HAT THE ASSESSEE HAS SOLD TWO PROPERTIES DURING THE YEAR UNDER CONSI DERATION AND DECLARED THE LONG TERM CAPITAL GAINS OF RS.56,07,94 5/- IN RESPECT OF PROPERTY SOLD VIDE DOCUMENT NO.7469/2010 DATED 30.7 .2010 AGAINST THE SALE CONSIDERATION OF RS.1,15,84,034/- AND IN RESP ECT OF PROPERTY VIDE DOCUMENT NO.1030/2010 DATED 30.10.2010, THE ASSESSE E DECLARED CAPITAL GAIN OF RS.22,67,990/- AGAINST THE SALE CON SIDERATION OF RS.46,08,000/-. THE AGGREGATE LONG TERM CAPITAL GAI N DECLARED BY THE ASSESSEE WAS ` 78,79,929/- AND CLAIMED THE DEDUCTION U/S 54F OF T HE ACT IN RESPECT OF PURCHASE OF RESIDENTIAL HOUSE PRO PERTY AT VISADALA VILLAGE, MEDIKONDURU MANDAL, GUNTUR DISTRICT. THE PROPERTY WAS PURCHASED ON 7.7.2000 FOR CONSIDERATION OF RS.1.56 CRORES VIDE DOCUMENT NO.1988/2010. IN THE ASSESSMENT PROCEEDIN GS THE A.O. CAUSED ENQUIRY BY DEPUTING THE INSPECTOR, WITH REGA RD TO THE NATURE OF PROPERTY PURCHASED AND FOUND THAT THE SAID PROPERTY WAS USED FOR RUNNING JUNIOR COLLEGE BY NRI EDUCATIONAL SOCIETY F OR A MONTHLY RENT OF RS.30,000/- AND THERE ARE NO RESIDENTIAL HOUSES LOC ATED IN THE VICINITY OF THE SAID PROPERTY. FURTHER, THERE WAS NO KITCHEN, LIVING ROOM, BED ROOMS, ETC. AND THE CLASS ROOMS ARE CONSTRUCTED WIT H RCC ROOF AND THE ITA NO.400 /VIZAG/2016 SRI KALARI VENKATA ROSAIAH (HUF), GUNTUR 3 ASBESTOS CEMENT SHEETS AND THE BUILDING WAS SURROUN DED BY AGRICULTURAL LANDS. HENCE, THE A.O. HELD THAT THE PROPERTY IN Q UESTION IS NOT A RESIDENTIAL HOUSE, AND ACCORDINGLY, HELD THAT THE A SSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 54F OF THE ACT, AND THE SAME WAS DISALLOWED AND ADDED BACK TO THE INCOME. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) ALLOWED THE AP PEAL OF THE ASSESSEE. HENCE, THE REVENUE IS IN APPEAL BEFORE US . 4. DURING THE APPEAL HEARING, THE LD. D.R. ARGUED T HAT THERE WERE NO AMENITIES IN THE HOUSE SUCH AS KITCHEN, BED ROOM ET C. AND THE ENTIRE BUILDING WAS USED FOR RUNNING THE EDUCATION INSTITU TION. THE A.O. DEPUTED THE INSPECTOR AND CAUSED THE ENQUIRIES WHIC H REVEALED THAT THE SAID PROPERTY WAS USED FOR THE PURPOSE OF RUNNING T HE NRI EDUCATIONAL ACADEMY AND THERE ARE NO AMENITIES WHICH ARE REQUIR ED FOR RESIDENTIAL HOUSE, HENCE, ARGUED THAT THE A.O. HAS RIGHTLY DISA LLOWED THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT, WHICH REQUIRED TO BE UPHELD. 5. ON THE OTHER HAND, THE LD. A.R. ARGUED THAT THE ASSESSEE HAS PURCHASED A RESIDENTIAL HOUSE AND AS PER THE PROVIS IONS OF SECTION 54F OF THE ACT, IF THE ASSESSEE PURCHASES RESIDENTIAL H OUSE, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54F OF THE ACT. THE EXT ENT OF THE HOUSE AND USAGE OF HOUSE IS NOT MATERIAL FOR CONSIDERING THE DEDUCTION U/S 54F OF ITA NO.400 /VIZAG/2016 SRI KALARI VENKATA ROSAIAH (HUF), GUNTUR 4 THE ACT. THE ONLY REQUIREMENT IS THE ASSESSEE REQU IRED TO PURCHASE A RESIDENTIAL HOUSE WITHIN 2 YEARS OR CONSTRUCT A HOU SE WITHIN 3 YEARS AFTER THE DATE ON WHICH, THE ASSET WAS TRANSFERRED. THE A SSESSEE HAS FURNISHED THE SALE DEED BEFORE US AND THE SALE DEED ESTABLISHES THAT THE ASSET PURCHASED WAS RESIDENTIAL HOUSE ALONG WITH SH EDS. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, THE ASSESSEE HAD SOLD THE PROPERTIES VIDE DOC UMENT NO.7469/2010 DATED 30.7.2010 FOR A CONSIDERATION OF RS.1,15,84,0 34/- AND ANOTHER PROPERTY FOR A SUM OF RS.46,08,000/- WHICH RESULTED IN LONG TERM CAPITAL GAINS AND THE ASSESSEE CLAIMED THE DEDUCTION U/S 54 F OF THE ACT FOR THE ENTIRE AMOUNT OF RS.78,79,929/-. THE SALE PROCEEDS WERE INVESTED FOR PURCHASE OF RESIDENTIAL HOUSE IN GUNTUR CITY VIDE D OCUMENT DATED 7.7.2010 AND THERE IS NO DISPUTE. AS PER THE SALE DEED, THE PROPERTY PURCHASED BY THE ASSESSEE IS A RESIDENTIAL HOUSE AL ONG WITH SHEDS. IN THE SALE DEED SCHEDULE, IT WAS MENTIONED THAT THE P ROPERTY WAS RCC BUILDING AND SHEDS. AS PER PROVISIONS OF SECTION 5 4F OF THE ACT, IT IS SUFFICIENT IF THE ASSESSEE PURCHASES THE RESIDENTIA L HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE OR 2 YEARS AFTER THE DATE ON WHI CH THE TRANSFER TOOK ITA NO.400 /VIZAG/2016 SRI KALARI VENKATA ROSAIAH (HUF), GUNTUR 5 PLACE OR CONSTRUCTION WITHIN A PERIOD OF 3 YEARS. FOR READY REFERENCE WE EXTRACT RELEVANT PART OF SECTION 54F OF THE ACT, WH ICH READS AS UNDER; 54F(1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4 ), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, N OT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGI NAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR [TWO YEARS] A FTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERI OD OF THREE YEARS AFTER THAT DATE [CONSTRUCTED, A RESIDENTIAL HOUSE] (HEREAFTER IN TH IS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACC ORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY,-- (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CA PITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET C ONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGE D UNDER SECTION 45. 7. IN THE INSTANT CASE, THE ASSESSEE HAS SATISFIED THE CONDITIONS FOR ALLOWING THE DEDUCTION U/S 54F OF THE ACT, I.E. INV ESTMENT WAS MADE WITHIN THE TIME LIMIT ALLOWED UNDER I.T ACT. PROPE RTY PURCHASED BY THE ASSESSEE WAS RESIDENTIAL HOUSE, WHICH IS ESTABLISHE D BY THE SALE DEED. THE REVENUE HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO CONTROVERT THE FACT THAT THE IMPUGNED PROPERTY WAS NOT A RESIDENTI AL HOUSE WHEN IT WAS PURCHASED. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. ITA NO.400 /VIZAG/2016 SRI KALARI VENKATA ROSAIAH (HUF), GUNTUR 6 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 TH APR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 04.04.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1(2), GUNTUR 2. / THE RESPONDENT SRI KALARI VENKATA ROSAIAH (HUF ), PROP: K. KOTESWARA RAO & CO., D.NO.25-16-180, NEAR LAKSHMI THIRUPATHAM MA TEMPLE, G.T. ROAD, GUNTUR-522 004 3. + / THE CIT, GUNTUR 4. + ( ) / THE CIT (A), GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM