Sri Lakshmi Narayana Prasad , Bangalore V. Income Tax Officer Ward-6(3)(1), , Bangalore

ITA 463/BANG/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5982 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI JT BENGALU RU
• Assessee Lawyers: PRATHIB
• Keywords: Principle of natural justice; Corroborative evidences; Valuation report; Capital Gains
• Section: 234B; 201; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER IT A NO. 463/ BANG / 20 18 ASSESSMENT YEAR: 201 3 - 14 SHRI LAKSHMI NARAYANA PRASAD, SUBRAMANYA PRASAD, NO.20, NANDHINI TILES, NEXT TO MORE V, R.T. NAGAR POST, HEBBAL, BANGALORE 560 094. PAN: AUVPS 1506Q VS. THE INCOME TAX OFFICER, WARD 6(3)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : S MT. PRATHIB A R., A D VOCATE RESPONDENT BY : SMT . R . PREMI, JT. CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 0 3 .0 2 .202 1 DATE OF PRONOUNCEMENT : 04. 0 2 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 20.10.2017 OF THE CIT(APPEALS), BENGALURU-6, BENGALURU FOR THE ASSESSMENT YEAR 2013-14 ON THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LEARNED CIT (A) ERRED IN PASSING THE ORDER IN THE MANNER THAT HE DID. 2) THE LEARNED CIT (A) OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE ASSESSEE AND REFRAINED FROM CONF IRMING THE DISALLOWANCE OF THE CLAIM OF EXEMPTION U/S 54 OF TH E ACT. ITA NO.463/BANG/2018 PAGE 2 OF 6 3) THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH AT NO NEW RESIDENTIAL PROPERTY HAS BEEN CONSTRUCTED COST WAS SUPPORTED BY AN APPROVAL VALUER REPORT AND CONSEQUENTLY THE E XISTENCE OF THE NEW RESIDENTIAL PROPERTY COULD NOT BE DOUBTED A ND ACCORDINGLY THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE WAS ELIGIBLE FOR THE DEDUCTION U/S 54 OF T HE ACT. 4) THE LEARNED CIT (A) OUGHT TO HAVE REFERRED THE I SSUE TO THE DEPARTMENT VALUER OFFICER TO ASCERTAIN THE COST OF THE NEW CONSTRUCTION IN THE PRINCIPLES OF NATURAL JUSTICE A ND DECIDED THE QUOTATION OF DEDUCTION U/S 54 OF THE ACT. 5) THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE WAS ENTITLED TO THE DEDUCTION U/S 54 OF THE ACT ON THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE IN RESPECT OF NEW RESIDENTIAL PROPERTY. 6) WITHOUT PREJUDICE, THE ADDITIONS ARE EXCESSIVE, ARBITRARY AND UNREASONABLE AND OUGHT TO BE DELETED IN FILL. 7) THE LEARNED CIT (A) ERRED IN LEVYING THE INTERES T U/S 234B AND 234C OF THE ACT. 8) FOR THESE AND OTHER GROUNDS THAT MAYBE URGED AT TIME OF HEARING OF THE APPEAL THE ASSESSEE PRAYS THAT THE A PPEAL MAY BE ALLOWED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 30.1.2014 DECLARING AN INCOME OF RS.3,37, 070/-. IN THE COURSE OF SCRUTINY ASSESSMENT IT WAS FOUND THAT HE HAD SOLD T HE PROPERTY FOR THE CONSIDERATION OF RS. 79,72,000/- AND THE LONG TERM CAPITAL GAINS WAS DETERMINED AT RS.63,50,344/-. THE ASSESSEE CLAIMED THE EXEMPTION U/S.54 OF THE INCOME-TAX ACT, 1961 [THE ACT] TO THE TUNE OF RS.62,77,000/- AND ALSO CLAIMED BROKERAGE OF RS.80,000/-. THE ASSESSEE WAS ASKED TO FURNISH THE DOCUMENTS TO SUPPORT THE CLAIM OF COST OF CONST RUCTION OF RESIDENTIAL PROPERTY U/S.54 OF THE ACT. THE ASSESSEE SUBMITTED THAT THE RESIDENTIAL PROPERTY WAS CONSTRUCTED ON A REVENUE SITE UNDER HI S OWN SUPERVISION AND FOR HIS OWN OCCUPATION AND CONSEQUENTLY HE DID NOT MAINTAIN THE RECORDS IN ITA NO.463/BANG/2018 PAGE 3 OF 6 FULL AND IT WAS ALSO SUBMITTED THAT THERE WAS NO AP PROVAL FOR THE PLAN SINCE IT COULD NOT BE OBTAINED AS CONSTRUCTION WAS ON A R EVENUE SITE AND THE REVENUE AUTHORITIES WERE ONLY KEEN TO COLLECT THE T AXES AND NOT PROVIDING ANY APPROVAL TO THE PLAN. HOWEVER, THE DETAILS OF B REAK-UP OF THE COST WAS GIVEN. THE AO, HOWEVER, HELD THAT NO PART OF COST O F CONSTRUCTION WAS LIABLE TO BE ALLOWED ON ACCOUNT OF THE FACT THAT THE ASSES SEE DID NOT PRODUCE ANY EVIDENCE BY WAY OF VOUCHERS AND DOCUMENTS TO PROVE THE CONSTRUCTION. EVEN THE VALUATION REPORT SUBMITTED BY THE ASSESSEE FROM THE APPROVED VALUE TO SUPPORT THE COST OF CONSTRUCTION WHEREIN T HE COST WAS DETERMINED BY APPLYING CPWD RATES WAS NOT ACCEPTED. CONSEQUENT LY, THE CLAIM FOR DEDUCTION U/S. 54 OF THE ACT WAS DISALLOWED AND A T OTAL INCOME OF RS.66,14,070/- WAS DETERMINED. 3. ON THE CLAIM OF DEDUCTION U/S. 54 OF THE ACT, TH E CIT(APPEALS) OBSERVED THAT HAD SOLD ORIGINAL ASSET BEING A VACAN T SITE DURING THE FY 2012-13 BUT RELEVANT SALE DEED APPEARS TO HAVE NOT BEEN PRODUCED BEFORE THE AO IN SUPPORT OF THE PROOF OF SALE FOR A CONSID ERATION AMOUNTING TO RS. 79,72,000/- WHICH WAS CLAIMED TO HAVE BEEN REINVEST ED IN CONSTRUCTION OF A NEW RESIDENTIAL PROPERTY ON A REVENUE SITE WHICH AP PEARS TO HAVE BEEN OWNED BY THE ASSESSEE AS SEEN FROM THE SALE DEED DA TED 07-08-2011. IN THE ABSENCE OF THE SALE DEED IT CANNOT BE SEEN WHET HER THE ORIGINAL ASSET SOLD WAS A LAND AND BUILDING BEING A RESIDENTIAL HO USE FOR WHICH DEDUCTION IS ADMISSIBLE U/S 54 OF THE ACT AS CLAIME D BY THE ASSESSEE. THE ASSESSEE HEAVILY RELIED UPON THE DOCUMENTS SUCH AS SALE DEEDS, CONSTRUCTION AGREEMENT, VALUATION CERTIFICATE, BBMP ASSESSMENT OF THE NEWLY CONSTRUCTED PROPERTY AND PERSONAL SPOT INSPEC TION OF THE AO. THE CIT(A) OBSERVED THAT DISPUTED ISSUE TO BE CONSIDERE D IS WHETHER THE APPELLANT IS ENTITLED FOR DEDUCTION U/S 54 OF THE A CT OUT OF THE SALE CONSIDERATION OF RS. 79,72,000/- RECEIVED ON THE SA LE OF ORIGINAL ASSET SOLD IN THE FY 2012-13 RELEVANT TO AY 2013-14. THE CIT( A) WAS OF THE VIEW THAT ITA NO.463/BANG/2018 PAGE 4 OF 6 THE ASSESSEE APPEARED TO HAVE SOLD A VACANT SITE NO T BEING A RESIDENTIAL HOUSE AND THEREFORE THE DEDUCTION U/S 54 OF THE ACT IS NOT ALLOWABLE IN SPITE OF THE APPROPRIATION OF THE SALE CONSIDERATIO N IN ACQUISITION OF A NEW ASSET BY WAY OF CONSTRUCTION OF RESIDENTIAL HOUSE S AID TO HAVE BEEN CONSTRUCTED ON A REVENUE SITE. THE CIT(A) NOTED TH AT THE CONSTRUCTION ACCORDING TO VALUATION CERTIFICATE HAD COMMENCED IN JANUARY 2013 AND COMPLETED IN DECEMBER, 2013 AND THEREAFTER PROPERTY WAS ASSESSED TO BBMP TAX AS PER DOCUMENT PRODUCED BY THE ASSESSEE C LAIMING IT TO BE BBMP ASSESSMENT. HE WAS OF THE VIEW THAT UNLESS TH E PROPERTY FALLS WITHIN THE JURISDICTION OF BBMP, BBMP ASSESSMENT WOULD NOT HAVE TAKEN PLACE AND THEREFORE ASSESSEES CONTENTION THAT IT WAS A R EVENUE SITE AND PLAN WAS NOT SANCTIONED WAS REJECTED. THE CIT(A) FINALL Y HELD THAT IN THE ABSENCE OF ANY EVIDENCE BY THE ASSESSEE THAT THE OR IGINAL ASSET WAS A RESIDENTIAL HOUSE, DEDUCTION U/S. 54 OF THE ACT WAS ADMISSIBLE AND UPHELD THE ORDER OF AO. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE CLAIM OF ASSESSEE U/S. 54 WAS DEN IED ON THE REASON THAT ASSESSEE HAS NOT FILED ANY SUPPORTING EVIDENCE TO S HOW THE SALE CONSIDERATION WAS REINVESTED IN NEW RESIDENTIAL PRO PERTY. BEFORE US, THE LD. AR POINTED OUT TO THE COPIES OF BANK STATEMENTS AND SUBMITTED THAT THE AMOUNT IS ACCOUNTED OUT OF SALE CONSIDERATION TOWAR DS CONSTRUCTION OF NEW RESIDENTIAL HOUSE AND DEDUCTION U/S. 54 HAS TO BE G RANTED. HOWEVER, THE ASSESSEE HAS NOT PRODUCED THE RELEVANT BILLS, VOUCH ERS AND RECEIPTS TOWARDS INCURRING THE COST OF CONSTRUCTION OF NEW R ESIDENTIAL PROPERTY. THE ASSESSEE PLEADED FOR AN OPPORTUNITY TO PRODUCE THE RELEVANT EVIDENCE IN SUPPORT OF THE COST OF CONSTRUCTION OF NEW RESIDENT IAL HOUSE. 5. THE ARGUMENT OF THE LD. DR IS THAT THERE IS NO E VIDENCE TO SHOW THAT THE ORIGINAL ASSET SOLD BEING A RESIDENTIAL HOUSE. IN REPLY, THE LD. AR SUBMITTED THAT THIS WAS NOT THE ISSUE FOR DENYING D EDUCTION U/S. 54 BY THE ITA NO.463/BANG/2018 PAGE 5 OF 6 AO. SHE ALSO SUBMITTED THAT THE SCHEDULE OF PROPER TY IN ORIGINAL SALE DEED DATED 7.4.2017 ITSELF SHOWS THAT ASSESSEE HAS PURCH ASED THE SITE NO.20 AT CHOLANAYAKANAHALLI VILLAGE, KASABA HOBLI, BANGALORE NORTH TALUK SITUATED WITHIN WARD NO.96 GUDDADAHALLI MAIN ROAD, BMP, MEAS URING EAST TO WEST: NORTHERN SIDE 37 FT, SOUTHERN SIDE : 45 FT., AND NORTH TO SOUTH : EASTERN SIDE 78 FT. AND ON THE WESTERN SIDE 94 FT. ALONG WITH TWO SQUARES A.C SHEET SHED WITH ELECTRIC AMENITY AND THE SAME W AS SOLD VIDE SALE DEED DATED 29.8.2012. BEING SO, IN OUR OPINION, TH E CIT(APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE PROPERTY SOLD WAS NOT A RESIDENTIAL HOUSE. WE ARE OF THE OPINION THAT THE LD. ARS REQUEST FOR OP PORTUNITY TO PRODUCE ALL THE RELEVANT DOCUMENTS HAS TO BE ACCEPTED. ACCORDINGLY , WE REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H CONSIDERATION AND DIRECT THE ASSESSEE TO PRODUCE ALL THE EVIDENCE IN SUPPORT OF HIS CLAIM FOR DEDUCTION U/S. 54. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF FEBRUARY, 2021. SD/- SD/- ( N V VASUDEVAN ) ( CHANDRA POOJARI ) VIC E PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 4 TH FEBRUARY, 2021. / DESAI S MURTHY / ITA NO.463/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.