DCIT Circle -6(1), Hyderabad V. Suryadevara Venkateswara Rao, Hyderabad

ITA 423/Hyd/2022

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0314 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 17-10-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 01-09-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Capital Gains
• Section: 143(3); 139(1)

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA-IT No. 423/Hyd/2022 (निर्धारण वर्ा / Assessment Year: 2016-17) Deputy Commissioner of Income Tax, Circle-6(1), Hyderabad Vs. Sri Suryadevara Venkateswara Rao, Hyderabad [PAN No. AAJHS8453C] अपीलधर्थी / Appellant प्रत्‍यर्थी / Respondent निर्धाररती द्वधरध/Assessee by: Shri K.A. Sai Prasad, AR रधजस्‍व द्वधरध/Revenue by: Shri Shakeer Ahamed, DR स ु िवधई की तधरीख/Date of hearing: 18/10/2023 घोर्णध की तधरीख/Pronouncement on: 31/10/2023 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Challenging the order dated 17/06/2022 passed by the learned Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Suryadevara Venkateswara Rao (“the assessee”) for the assessment year 2016-17, Revenue preferred this appeal. ITA No. 423/Hyd/2022 Page 2 of 6 2. Brief facts of the case are that in the order dated 29/12/2018 under section 143(3) of the Income Tax Act, 1961 (for short “the Act”), learned Assessing Officer made three additions. First addition is in respect of the set-off claimed by the assessee of the interest received against the interest paid. Second addition is in respect of disallowance of cost of improvement of the house property that was sold to derive long term capital gains and the third addition is by denying the deduction claimed by the assessee under section 54GB of the Act. 3. Insofar as this appeal is concerned, the addition made in respect of cost of construction and the deduction claimed under section 54GB(1)(iii) of the Act alone are the subject matter. At the outset, it is submitted that both these additions were made in the case of the co-sharer of the property, who happens to be the wife of the assessee. In her case also, these two additions were considered by the learned CIT(A) and by order dated 15/09/2020, the learned CIT(A)-6 in appeal No. 10679/2018- 19/A2/CIT(A)-6, additions were deleted. Revenue challenged the deletion of addition under section 54GB(1)(iii) of the Act in ITA No. 472/Hyd/2021 and allowed the deletion of addition in respect of the cost of construction to attain finality. 4. Insofar as the addition on account of cost of construction is concerned, learned Assessing Officer opined that it shall not be more than Rs. 800 per sqft., as against the claim of the assessee at Rs. 1300/- per sqft. In respect of the very same property, learned CIT(A) allowed the cost of construction at Rs. 1,304/- in case of the wife of the assessee. Revenue allowed it to be final without challenging the same before the Tribunal. ITA No. 423/Hyd/2022 Page 3 of 6 Now, it is not open for the Revenue to contend otherwise. The same property cannot have two different cost of construction. We, therefore, do not find any rationale in the plea taken by the Revenue and dismiss Ground No. 1. 5. Coming to Ground No. 2 in respect of the deduction under section 54GB(1)(iii) of the Act, according to the learned Assessing Officer, the assessee invested in the equity shares of M/s. Styrax Laboratories Ltd., but that company did not purchase the new asset within one year, namely, on or before 30/07/2017 and, therefore, in terms of section 54GB(1)(iii) of the Act, the assessee is not entitled to claim deduction. These facts are identical to the facts in the case of the wife of the assessee, who happens to be the co-sharer in the disposed of property. 6. In the appeal filed by her against the denial of the deduction under section 54GB(1)(iii) of the Act, learned CIT(A) dealt with this issue in extenso, and after an elaborate discussion, in the light of the decision of the Hon’ble Apex Court in the case of Fibre Boards Pvt. Ltd., (2015) 376 ITR 596 (SC) held that section 54G makes it clear that the assessee is given a window of three years after the date on which transfer has taken place to purchase new machinery or plant or acquire building or land. She also considered the question whether advance payments can be considered as purchase and answered it in the affirmative, and directed the learned Assessing Officer to delete the disallowance and allow the claim of the assessee for deduction under section 54GB of the Act. ITA No. 423/Hyd/2022 Page 4 of 6 7. When the Revenue preferred appeal against such a finding of the learned CIT(A), a Co-ordinate Bench of this Tribunal upheld the findings of the learned CIT(A), with the following observations: “8. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The crux of the issue in dispute is that out of sale consideration of Rs. 6,00,00,000/- received on transfer of ½ share of the residential property, the assessee had invested an amount of Rs. 4.75 crores towards subscription of equity in M/s Styrax Labs Ltd. and the same was claimed as deduction u/s 54GB of the Act. The AO after scrutinizing the financials of the company for the FYs 2016-17 and 2017-18 concluded that as per the fixed assets schedule for the FY 2017-18, additions to the depreciation schedule show addition to vehicles valued at Rs. 25,26,112/- and there are no assets including plant and machinery and, hence, disallowed the claim of deduction u/s 54GB of the Act. The CIT(A), on the other hand, observed that the assessee had invested the net consideration received on transfer of the long term capital asset (transferred in February, 2016) in the equity shares of an eligible company before the due date of filing of return of income u/s 139(1) by subscribing to equity shares in July 2016 and the company has allotted the shares in July, 2016, The company M/s Styrax Labs has in its annual report for the FY 2016-17 in the notes to the balance sheet has vide note 2.5 mentioned that it had given advances amounting to Rs. 9.65 crores for purchase of capital goods. The purchases were made and the machinery was installed in the FY 2018-19. In view of the above observations, the CIT(A) held that the entire amount has been utilized for the purchase of new machinery or plant and is evident from the purchase invoices and notes to the financials. Accordingly, he directed the AO to allow the assessee’s claim of deduction u/s 54GB of the Act. The CIT(A) relied on the judgment of the Hon’ble Supreme court in the case of Fibre Boards (P) Ltd., 376 ITR 596, on which reliance placed by the assessee. On considering the totality of the facts and circumstances of the case, we do not find any infirmity in the decision of the CIT(A) in directing the AO to allow the assessee’s claim of deduction u/s 54GB of the Act. Accordingly, the grounds raised by the Revenue on this issue are dismissed.” ITA No. 423/Hyd/2022 Page 5 of 6 8. Since the learned CIT(A) followed this view taken by the Co-ordinate Bench of the Tribunal, we do not find any illegality or irregularity in such findings. Consequently, we uphold the findings of the learned CIT(A) and dismiss ground No. 3 of the appeal. 9. In the result appeal of the Revenue is dismissed. Order pronounced in the open court on this the 31 st day of October, 2023. Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER Hyderabad, Dated: 31/10/2023 TNMM ITA No. 423/Hyd/2022 Page 6 of 6 Copy forwarded to: 1. Deputy Commissioner of Income Tax, Circle-6(1), Hyderabad. 2. Sri Suryadevara Venkateswara Rao, Plot No. 260, MLA and MPs Colony, Road No. 10C, Jubilee Hills, Hyderabad. 3. The Pr. CIT, Hyderabad 4. DR, ITAT, Hyderabad. 5. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD