Mr. Deepak Bhardwaj, Uttar Pradesh V. ITO, Noida

ITA 4684/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2005 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Keywords: Set aside; Capital Gains
• Section: 143(3); 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 4684/DEL/2016 ASSESSMENT YE AR: 2013-14 MR. DEEPAK BHARDWAJ 202, T-7, PARSHWANATH PANORMA, NEAR P3 GOLCHAKKAR SECTO SAWARN NAGRI, GREATER NOIDA, U.P.201306 PAN:AHXPB 5310Q VS. INCOME TAX OFFICER, WARD-1(3), NOIDA. (APPLICANT) (RESPONDENT) APPELLANT BY: SH . ASHWANI MITTAL, CA RESPONDENT BY: SH. JA GDISH SINGH, SR. DR DATE OF HEARING: 16/3/2020 DATE OF ORDER : 20/3/2020 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 29/7/2016 IN APPEAL NO . 254/2015-16/NOIDA BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-1, NOIDA (LD. CIT(A)), FOR THE ASSESSME NT YEAR 2013-14, MR DEEPAK BHARADWAJ (THE ASSESSEE) FILED THIS APP EAL. 2 ITA NO.4684/DEL/2016 ASST. YEAR: 2013-14 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RUNNING OF TRACTOR ON HI RE BASIS AND ALSO RECEIVING RENTAL INCOME FROM ANCESTRAL PROPERTIES. ON 3/5/2012 ASSESSEE SOLD 1 RESIDENTIAL PROPERTY FOR A CONSIDER ATION OF RS. 1.40 CRORES AND DERIVED THE LONG TERM CAPITAL GAIN (LTCG ) TO THE TUNE OF RS.99,77,362/-. UNDER SALE DEED DATED 13/7/2012 ASS ESSEE PURCHASED A RESIDENTIAL PLOT FOR A CONSIDERATION OF RS.1,00,81, 000/- CONSTRUCTION OF A RESIDENTIAL HOUSE. ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 31/7/2013 DECLARING AN INCOME OF RS.2,25,100/-AFTER CLAIMING THE LONG TERM CAPITAL GAIN (LTCG) AS EXEMPTION UNDER SECTION 54 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). ASSESSEE COULD NOT CONSTRUCT THE RESIDENTIAL HOUSE TILL THE EXPIRY OF THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE OLD PROPERTY IN RESPECT OF WHICH TH E EXEMPTION UNDER SECTION 54 OF THE ACT WAS CLAIMED AND SUCH PE RIOD EXPIRED BY 2/5/2015. ASSESSEE, THEREFORE, OFFERED THE LONG TER M CAPITAL GAINS OF RS.99,77,362/-TO TAXATION IN THE ASSESSMENT YEAR : 2016-17 SINCE THE PERIOD FROM THE DATE OF TRANSFER OF OLD PROPERT Y EXPIRED IN THE PREVIOUS YEAR 2015-16. 3. LEARNED ASSESSING OFFICER, HOWEVER, WHILE PASSIN G THE ORDER DATED 30/1/2016 UNDER SECTION 143(3) OF THE ACT IN RESPECT OF THE ASSESSMENT YEAR 2013-14 DISALLOWED THE EXEMPTION CL AIMED UNDER SECTION 54 OF THE ACT ON THE GROUND THAT THE ASSESS EE HAD NOT CONSTRICTED THE HOUSE PROPERTY WITHIN THE PERIOD OF 3 YEARS. 3 ITA NO.4684/DEL/2016 ASST. YEAR: 2013-14 AGGRIEVED BY SUCH AN ORDER OF THE LEARNED ASSESSING OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), BU T VIDE ORDER DATED 29/7/2016 THE LD. CIT(A) UPHELD THE ORDER PAS SED BY THE LEARNED ASSESSING OFFICER DISALLOWING THE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT. 4. AGGRIEVED BY THE IMPUGNED ORDER, ASSESSEE PREFER RED THIS APPEAL BEFORE US STATING THAT BY PURCHASING A RESID ENTIAL PLOT OF LAND ON 13/7/2012 FOR A CONSIDERATION OF RS.1, 00, 81, 0 00/-WHICH IS MORE THAN THE CAPITAL GAINS CLAIMED AS EXEMPTION BY THE ASSESSEE, THE ASSESSEE BECAME ELIGIBLE TO CLAIM EXEMPTION UNDER S ECTION 54 OF THE ACT IN THE ASSESSMENT YEAR 2013-14 VIDE CBDT CI RCULAR NO. 667 DATED 18/10/1993 IN TERMS OF WHICH THE COST OF LAND IS ALSO ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT. ACCORDI NG TO THE LD. AR, EVEN IF THE ASSESSEE COULD NOT COMPLIED THE REQUIRE MENT OF COMPLETION OF CONSTRUCTION WITHIN THE PERIOD OF 3 Y EARS FROM THE DATE OF TRANSFER, THE CAPITAL GAINS WOULD BE TAXABL E AS INCOME ONLY IN THE ASSESSMENT YEAR 2016-17, I.E. THE YEAR IN WH ICH THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF OLD ASSET EXPI RES AND THE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT IN TH AT YEAR CANNOT BE DENIED. SHE PLACED RELIANCE ON THE DECISIONS OF THE TRIBUNAL IN THE CASE OF SRI PRASAD NIMMAGADDA VS. DCIT (2013) 32 TAXMAN.COM 5 (HYDERABAD-TRIB) AND VEGESINA KAMALA VS. ITO (2016) 66 TAXMANN.COM 280 (VISAKHAPATNAM-TRIB). 4 ITA NO.4684/DEL/2016 ASST. YEAR: 2013-14 5. PER CONTRA, SUBMISSION OF THE LD. DR IS T HAT IF WE ACCEPT THE CONTENTION OF THE ASSESSEE, IT WOULD NU TO THE BENE FIT OF THE ASSESSEE SINCE THE INTEREST COST OF THE TAXABLE CAP ITAL GAINS WOULD ESCAPE TAX FOR 3 YEARS. HE FURTHER SUBMITTED THAT T HE PROVISO TO SUBSECTION 2 OF SECTION 54 IS AVAILABLE TO ONLY THA T PART OF UNUTILISED CAPITAL GAINS WHICH IS OVER AND ABOVE THE COST OF C ONSTRUCTING A NEW RESIDENTIAL HOUSE AND IS DEPOSITED IN A DESIGNATED BANK ACCOUNT PRIOR TO THE DUE DATE UNDER SECTION 139 OF THE ACT AND IS UTILISED IN ACCORDANCE WITH ANY SCHEME WHICH THE CENTRAL GOVERN MENT MAY BY NOTIFICATION IN THE OFFICIAL GAZETTE FRAME IN THIS REGARD AND PROOF OF SUCH DEPOSIT WAS ENCLOSED WITH THE RETURN OF INCOME . 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. THERE IS NO DISPUT E AS TO THE FACTS INVOLVED IN THIS MATTER. ONLY QUESTION THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE UNUTILISED PORTION OF CAPITAL GAINS IS LIABLE FOR TAX EITHER IN THE YEAR IN WHICH SUCH LON G TERM CAPITAL GAINS AROSE OR IN THE YEAR IN WHICH THE PERIOD OF 3 YEARS FOR SUCH UTILISATION EXPIRES. UNDER IDENTICAL FACTS CIRCUMST ANCES, WHERE THE ASSESSEE HAD INVESTED THE LONG TERM CAPITAL GAINS I N PURCHASE OF LAND TOWARDS CONSTRUCTION OF HOUSE BUT COULD NOT CO MPLETE THE CONSTRUCTION BEFORE THE EXPIRY OF 3 YEARS AS TO PRE TEND UNDER LAW, THE HYDERABAD BENCH OF TRIBUNAL IN THE CASE OF SRI PRASAD NIMMAGADDA (SUPRA) HELD THAT ON EXAMINATION OF SECT ION 54 AND 54F OF THE ACT, IT IS FOUND THAT THE PROVISIONS CON TAINED IN SECTION 54 5 ITA NO.4684/DEL/2016 ASST. YEAR: 2013-14 INCLUDING THE PROVISO ARE PARI MATERIA WITH SECTION 54F OF THE ACT AND THE PROVISO TO SECTION 54 LAYS DOWN THAT IF THE AMOUNT OF CAPITAL GAIN IS NOT UTILISED TOWARDS CONSTRUCTION OF RESIDE NTIAL HOUSE WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF OR IGINAL ASSET, THEN, IT WILL BE CHARGED TO CAPITAL GAIN UNDER SECTION FO RTIFY OF THE ACT IN THE YEAR IN WHICH THE PERIOD OF 3 YEARS FROM THE DA TE OF TRANSFER OF THE ORIGINAL ASSET EXPIRES. 7. IN THAT CASE ALSO THE ASSESSEE INVESTED THE LONG TERM CAPITAL GAINS ON PURCHASE OF LAND TOWARDS CONSTRUCTION OF T HE HOUSE, WHICH COULD NOT BE CONSTRUCTED WITHIN THE STIPULATED PERI OD OF 3 YEARS AS THE POSSESSION OF THE LAND COULD NOT BE DELIVERED B Y THE DEVELOPER AND IN SUCH CIRCUMSTANCES THE ASSESSEE CLAIMED EXEM PTION UNDER SECTION 54 OF THE ACT COULD NOT BE DENIED LEVY OF P ROVISO TO SECTION 54 OF THE ACT. IN SUCH CIRCUMSTANCES, THE TRIBUNAL HELD THAT THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54 OF THE ACT HAS TO BE ALLOWED AND FOR THE PURPOSE OF VERIFICATION O F THE FACT WHETHER THE ASSESSEE OFFERED THE LONG TERM CAPITAL GAINS TO TAX IN THE YEAR IN WHICH THE PERIOD OF 3 YEARS TO PLEADED UNDER LAW EX PIRED, THE MATTER WAS REMANDED TO THE FILE OF THE LEARNED ASSE SSING OFFICER. 8. IN THE CASE OF VEGESINA KAMALA (SUPRA), THE CON TENTION OF THE COMMISSIONER OF INCOME TAX THAT AS PER SECTION 54F OF THE ACT ONLY UNUTILISED PORTION OF SALE CONSIDERATION IS TAXABLE IN THE PREVIOUS YEAR IN WHICH THE PERIOD OF 3 YEARS EXPIRES FROM TH E DATE OF SALE OF 6 ITA NO.4684/DEL/2016 ASST. YEAR: 2013-14 ORIGINAL ASSET, BUT THE INVESTMENT MADE IN THE VACA NT SITE HAS TO BE TAXED IN THE YEAR IN WHICH CAPITAL GAIN AROSE HAS E XPRESSLY BEEN REJECTED BY THE TRIBUNAL AND THE TRIBUNAL HELD THAT A SINCE THE ASSESSEE HAD OFFERED TO CAPITAL GAIN THE LONG TERM CAPITAL GAINS AFTER COMPLETION OF 3 YEARS FROM THE DATE OF SALE OF ORIG INAL ASSET, IT WAS IN ACCORDANCE WITH LAW. 9. NO CONTRARY DECISION IS EITHER PLEADED OR BROUGH T TO OUR NOTICE BY THE REVENUE AND AS ON THE DATE THESE 2 DE CISIONS OF THE TRIBUNAL HOLD THE FIELD. IN VIEW OF THE IDENTITY OF FACTS AND CIRCUMSTANCES INVOLVED IN THE CASES HAVE ALREADY BE EN DECIDED WITH THE FACTS OF THE CASE ON HAND, IN THE ABSENCE OF AN Y CHANGE OF CIRCUMSTANCES OR DECISIONS TO THE CONTRARY, WE FIND IT DIFFICULT TO DEVIATE THE CONSISTENT VIEW ALREADY TAKEN BY THE TR IBUNAL. WE THEREFORE, WHILE RESPECTFULLY FOLLOWING THE DECISIO NS REFERRED TO ABOVE FIND IT DIFFICULT TO UPHOLD THE ADDITION AND DIRECT THE ASSESSING OFFICER TO THE ADDITION IF THE ASSESSEE OFFERED THE LONG TERM CAPITAL GAINS TO TAX IN THE ASSESSMENT YEAR 2016-17. SUBJEC T TO THESE OBSERVATIONS, FOR THE LIMITED PURPOSE OF VERIFICATI ON, WE SET ASIDE THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFI CER TO GRANT EXEMPTION FOR THE ASSESSMENT YEAR: 2013-14 IF THE A SSESSEE OFFERED THE LONG TERM CAPITAL GAINS TO TAX IN THE ASSESSMEN T YEAR: 2016-17. 7 ITA NO.4684/DEL/2016 ASST. YEAR: 2013-14 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN OPEN COURT ON THIS THE 20 TH MARCH, 2020 . SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEM BER DATED: 20/3/2020 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI