Shri S. Krishna, Hyderabad, Hyderabad V. The ACIT, Circle -6(1), Hyderabad

ITA 49/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66273 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Keywords: Capital asset; Cost of acquisition; Corroborative evidences
• Section: 54B; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 48/HYD/2011 ASSESSMENT YEAR 2007-08 SRI S. RAMESH GOUD HYDERABAD PAN: BFOPS3857K VS. THE ASS. CIT CIRCLE-6(1) HYDERABAD APPELLANT RESPONDENT I.T.A. NO. 49/HYD/2011 ASSESSMENT YEAR 2007-08 SRI S. KRISHNA HYDERABAD PAN: ARDPS6638N VS. THE ASS. CIT CIRCLE-6(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI MOHD. AFZAL RESPONDENT BY: SRI V. SRINIVAS DATE OF HEARING: 08.08.2012 DATE OF PRONOUNCEMENT: 07.09.2012 O R D E R PER CHANDRA POOJARI, AM: THESE TWO APPEALS BY DIFFERENT ASSESSEES ARE DIREC TED AGAINST DIFFERENT ORDERS OF THE CIT(A) DATED 30.11. 2010 FOR ASSESSMENT YEAR 2007-08. THE ISSUE IN THESE APPEAL S IS COMMON IN NATURE. THEREFORE, THESE APPEALS ARE CLUBBED TO GETHER, HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2. AS THE FACTS ARE SAME IN THESE APPEALS, FOR BREVITY , WE TAKE UP THE APPEAL IN ITA NO. 48/HYD/2011. THE FIRST GR OUND IN THIS APPEAL IS WITH REGARD TO NON-GRANTING OF DEDUCTION U/S. 54 OF THE INCOME-TAX ACT, 1961. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAD OFFERED AN AMOUNT OF RS. 3,41,25,000 T OWARDS LONG I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 2 TERM CAPITAL GAIN DURING THE YEAR. OUT OF THE SAID GAINS, THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 54F OF RS. 47,2 1,163 BESIDES THE CLAIM OF DEDUCTION U/S. 54B OF RS. 2,41 ,28,805. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO FURNISH THE DETAILS IN REGARD TO THE DEDUC TION CLAIMED U/S. 54F. THE REPRESENTATIVE OF THE ASSESSEE FILED HIS SUBMISSION STATING THAT THE ASSESSEE HAD PURCHASED A PLOT NO. MIG 1810, ADMEASURING 224.66 SQUARE YARDS SITUATED AT NALLAGANDLA VILLAGE, R.R. DISTRICT. IT WAS ALSO ST ATED BY HIM THAT THE TOTAL COST WAS RS. 50,26,980 WHICH INCLUDED THE COST OF PLOT AT RS. 15,26,980 AND CONSTRUCTION OF RESIDENTIAL HO USE THEREON AT RS. 35 LAKHS. HOWEVER, THE ASSESSEE COULD NOT FIL E THE DEED COPY OF THE PROPERTY AND DETAILS REGARDING CONSTRUC TION THEREOF. THE DETAILS REGARDING THE INVESTMENT IN HOUSE PROPE RTY WERE ALSO NOT FURNISHED, DESPITE BEING GIVEN SEVERAL OPP ORTUNITIES. ACCORDINGLY, THE CLAIM OF DEDUCTION U/S. 54F WAS NO T ALLOWED. 3. ON APPEAL THE CIT(A) CONFIRMED THE ORDER OF THE ASS ESSING OFFICER. THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT THE ASSESSEE PURCHASED AN OLD HOUSE IN THE NAME OF HIS WIFE, MIC NO. 1810 IN SY. NO. 26, 401 TO 412 ADMEASURING ABOU T 224.66 SQUARE YARDS SITUATED AT BHEL MIG, NALLAGANDLA VILL AGE, SERILINGAMPALLI MUNICIPALITY, RR DISTRICT FOR A CON SIDERATION OF RS. 13,94,500 AND THEREAFTER THE ASSESSEE RENOVATED THE BUILDING BY SPENDING RS. 35 LAKHS. ACCORDING TO THE AR THE AMOUNT INVESTED IN HOUSE PROPERTY IS MADE OUT OF SALES CON SIDERATION RECEIVED ON SALE OF LONG TERM CAPITAL ASSET. THE A R RELIED ON VARIOUS JUDICIAL PRECEDENTS AS FOLLOWS: (A) CIT V. V. NATARAJAN (287 ITR 271) (MAD) (B) LATE MIR GULAM ALI KHAN V. CIT (165 ITR 278) (AP) (C) CIT VS. RAVINDER KUMAR ARORA (042 ITCL 498) 4. THE LEARNED DR SUBMITTED THAT FOR AVAILING THE DEDU CTION U/S. 54F OF THE ACT INVESTMENT IN THE NEW ASSET SHO ULD BE IN THE I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 3 NAME OF THE ASSESSEE AND NOT IN THE NAME OF ANY OTH ER PERSON. ACCORDING TO THE DR THE REQUIREMENT OF SECTION 54F IS NOT COMPLIED WITH. BEING SO, DEDUCTION IS NOT GRANTED TO THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE THE ASSESSEE HAS TAKEN A P LEA THAT HE HAS MADE INVESTMENT IN THE NEW ASSET VIZ., BHEL MIG NO. 1810, SY. NO. 26, 401 TO 412 ADMEASURING ABOUT 224.66 SQUARE YARDS SITUATED AT BHEL MIG, NALLAGANDLA VILLAGE, SERILING AMPALLI MUNICIPALITY, RR DISTRICT. THEREAFTER THE ASSESSEE IMPROVED THE PROPERTY FOR THE PURPOSE OF BETTER REQUIREMENT OF T HE FAMILY. THE REASON FOR DENYING THE DEDUCTION U/S. 54F IS TH AT THE NEW PROPERTY IS NOT STANDING IN THE NAME OF THE ASSESSE E. THERE ARE DIVERGENT VIEWS ON THIS ISSUE OF GRANTING DEDUCTION U/S. 54F WHEN THE PROPERTY STANDS IN THE NAME OF WIFE OR CHI LDREN. THE JURISDICTIONAL HIGH COURT IN THE CASE OF MIR GULAM ALI KHAN (BY LEGAL REPRESENTATIVE MRS. NOOR BEGUM) VS. CIT (SUPR A) HELD THAT EXEMPTION U/S. 54F OF THE ACT IS TO BE ALLOWED EVEN IF THE PROPERTY PURCHASED OUT OF SALE PROCEEDS OF RESIDENT IAL HOUSE IS INVESTED IN PURCHASE OF ANOTHER RESIDENCE OF HOUSE PROPERTY EVEN WHEN THE NEW HOUSE IS REGISTERED IN NAME OF SO N. THE SAME VIEW WAS TAKEN BY THE MADRAS HIGH COURT IN THE CASE OF CIT VS. V. NATARAJAN (287 ITR 271) WHEREIN THE ASSE SSEE PURCHASED A PROPERTY IN THE NAME OF HIS WIFE TO CLA IM EXEMPTION U/S. 54 AND INCOME OF WIFE HAS BEEN ASSESSED IN THE HANDS OF HUSBAND; THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S . 54F. THE DELHI HIGH COURT IN THE CASE OF CIT V. RAVINDER KUM AR ARORA (042 ITCL 498) HELD THAT ASSESSEE IS ELIGIBLE FOR D EDUCTION U/S. 54F OF THE ACT WHERE RESIDENTIAL PROPERTY WAS PURCH ASED OUT OF CAPITAL GAIN ARISING FROM SALE OF A FLAT REGISTERED IN THE NAME OF HIMSELF AND HIS WIFE. CONSIDERING THE ABOVE JUDICI AL PRECEDENTS, WE ARE OF THE OPINION, THAT IF THE NEW RESIDENTIAL HOUSE I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 4 PURCHASED OUT OF THE CAPITAL GAIN ARISING OUT OF CO NSIDERATION RECEIVED FROM THE TRANSFER OF ORIGINAL CAPITAL ASSE T, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT THOUG H IT IS IN THE NAME OF HIS WIFE. IN THE PRESENT CASE THERE IS ALL EGATION THAT THE ASSESSEE HAS NOT INVESTED THE CAPITAL GAIN ARISING OUT OF TRANSFER OF ORIGINAL LONG TERM CAPITAL ASSET IN RESIDENTIAL PROPERTY. IN OTHER WORDS, IF THE ASSESSEE HAS ACQUIRED THE CAPIT AL ASSET IN THE NAME OF HIS WIFE AND THE AMOUNT INVESTED IS OUT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF LONG TERM CAPITAL ASSE T, THEN THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. ACCORDIN GLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY WHETHER THE PROPERT Y PURCHASED BY THE ASSESSEE IN HIS WIFE'S NAME IS OUT OF FUNDS FROM CONSIDERATION RECEIVED FROM TRANSFER OF LONG TERM C APITAL ASSET AND GRANT DEDUCTION U/S. 54F OF THE ACT, IF IT IS S O. 6. THE NEXT GROUND IS WITH REGARD TO NON GRANTING OF DEDUCTION U/S. 54B OF THE ACT. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS. 2,41,28,8 05 AS DEDUCTION U/S. 54B FROM THE LONG TERM CAPITAL GAIN S. THE ASSESSEE PRODUCED DETAILS IN THIS REGARD BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ALONG WITH COPIES OF DOCUMENTS. VIDE A LETTER DATED 17.12.200 9, IT WAS CONTENDED THAT THE EXPENSES HAD BEEN INCURRED FOR D EVELOPMENT OF THE LAND. THE ASSESSEE ALSO PRODUCED COPIES OF RECEIPTS ON PLAIN PAPER, STATING THAT THE EXPENDITURE HAD BEEN INCURRED FAR CLEARING BOULDERS AND ROCKS FROM THE LAND. THE ASSE SSING OFFICER NOTICED THAT ALL THE EXPENSES WERE SHOWN AS MADE IN CASH. HE, THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN AS TO H OW THE CLAIM OF EXPENDITURE COULD BE ACCEPTED IN THE ABSENCE OF SUPPORTING EVIDENCE. HE NOTED THAT THE ADDRESSES OF THE RECIPI ENTS THEREON ALSO WERE NOT CLEAR AND COMPLETE. THE ASSESSEE HAD NOT ENTERED INTO ANY CONTRACT / AGREEMENT FOR SUCH WORKS, THOUG H IN ALL THE RECEIPTS THE WORK HAD BEEN DESCRIBED AS REMOVAL OF BOULDERS I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 5 AND CANALLING. BESIDES, THERE WAS NO BASIS FOR EST IMATION OF THE WORK DONE AND ASCERTAINING THE EXTENT THEREOF. FUR THER, THE ASSESSEE HAD NOT PRODUCED ANY BOOKS OF ACCOUNTS AND SUPPORTING BILLS/VOUCHERS IN THIS REGARD. HE ALSO B ROUGHT TO THE NOTICE OF THE ASSESSEE THAT IN THE PURCHASE DEED, T HE PROPERTY HAD BEEN DESCRIBED AS 'AGRICULTURAL DRY LAND', WHER EAS THE 'AGRICULTURAL LAND' CONTEMPLATED UNDER SEC. 54B DEN OTES LAND WHICH IS UNDER AGRICULTURAL OPERATION AND IS FIT FA R SUCH OPERATIONS, WITH THE POSSIBILITY OF YIELDING AGRICU LTURAL PRODUCTS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPL AIN AS TO HOW THE LAND, IN WHOSE RESPECT HUGE EXPENDITURE OF RS. 1.5 CRORES WAS BEING CLAIMED, CONTENDING THAT THE SAME WAS COV ERED WITH ROCKS AND BOULDERS AT THE TIME OF PURCHASE, COULD B E TERMED AS AGRICULTURAL LAND. HE FURTHER REQUIRED THE ASSESSE E TO EXPLAIN AND TO FURNISH EVIDENCE TO THE EFFECT THAT THE SAID LAND WAS BEING USED BY THE EARLIER OWNER FAR AGRICULTURAL PU RPOSES IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFE R. 7. IN RESPONSE, IT WAS SUBMITTED BY THE REPRESENTATIVE OF THE ASSESSEE THAT THE ASSESSEE HAD PURCHASED THE AGRICU LTURAL LAND WITH AN INTENTION TO LEVEL THE LAND, SO AS TO HAVE MORE SPACE FOR AGRICULTURAL OPERATION, ENGAGING LABOUR TO CRUSH AN D REMOVE THE ROCKS AND ALSO TO LEVEL THE LAND. THE ASSESSEE ARGU ED THAT THE AMOUNTS WERE PAID IN CASH AS THE LABOUR IS AN UNORG ANIZED SECTOR. IT WAS CLAIMED THAT FOR THIS REASON ONLY TH E RECEIPTS WERE OBTAINED ON PLAIN PAPER. THE ASSESSEE ALSO FURNISHE D THE ADDRESSES OF THE CASH RECIPIENTS, ADMITTING THAT TH ERE WAS NO AGREEMENT CONTRACT FOR THE WORKS EXECUTED. THE ASSE SSING OFFICER FOUND THAT THERE WERE NO WORKS CONTRACT AGREEMENTS/DEED FOR THE WORKS CLAIMED TO HAVE BEEN EXECUTED. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER TH AT THERE WAS NO ESTIMATION OF THE WORKS DONE AND NO BASIS ON WHI CH THE CLAIMED AMOUNT HAD BEEN ASCERTAINED. HE FURTHER OBS ERVED THAT I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 6 NO BOOKS OF ACCOUNTS AND SUPPORTING BILLS/VOUCHERS FOR THE EXPENSES WERE PRODUCED FOR VERIFICATION. BASED ON THE ABOVE INFORMATION, THE ELIGIBLE DEDUCTION U/S. 54B WAS RE STRICTED TO RS. 23,37,505 ONLY, BEING THE EXPENDITURE/INVESTMENT SU PPORTED BY THE DOCUMENTARY EVIDENCE, AS PER THE CHART GIVEN IN THE ASSESSMENT ORDER. ON APPEAL, THE CIT(A) CONFIRMED THE SAME. 8. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS ONLY HAVING EDUCATION OF HIGHER SECONDARY. HE IS NOT AWARE OF THE INCOME- TAX ACT. BEING SO HE HAS NOT MAINTAINED REGULAR BO OKS OF ACCOUNT. THE ASSESSEE HAS PURCHASED LAND WHICH IS NOT FIT FOR AGRICULTURAL OPERATIONS. HE CARRIED ON THE DEVELOP MENT WORK FOR THE PURPOSE OF REMOVING THE BOULDERS AND FILLED UP THE LAND WITH FERTILE SOIL. HE HAS SPENT HUGE AMOUNT FOR MA KING THE LAND FIT FOR AGRICULTURAL ACTIVITIES. IN LOCAL AREA THE CONTRACT WORK WAS GOT DONE FOR WHICH THE ASSESSEE HAS NOT ENTERED INT O ANY WRITTEN CONTRACT. THE ASSESSEE BEING AGRICULTURIST, HE IS NOT AWARE OF THE INTRICACIES OF LAW. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE WITHOUT CARRYING OUT REQUISITE ENQUIRI ES REGARDING THE IMPROVEMENT MADE TO THE LAND AND THE EXPENDITUR E INCURRED THEREON. THE AR SUBMITTED THAT THE ASSESSEE PLACED NECESSARY EVIDENCE IN THE FORM OF SURVEY FROM TAHSILDAR, JHAR SANGAM MANDAL, DISTRICT MEDAK, NATKAL MANDAL, DISTRICT MED AK, KOHIR MANDAL, DIUSTRICT MEDAK, WHERE THE TAHSILDAR CONFIR MED THE IMPROVEMENT MADE TO THE LAND AND DEDUCTION U/S. 54B IS TO BE ALLOWED. 9. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED BILLS AND VOUCHERS FOR INCURRING EXPENDITU RE FOR IMPROVEMENT OF THE LAND. ALL PAYMENTS WERE MADE BY CASH. THE CONFIRMATIONS FURNISHED BY THE ASSESSEE ARE NOT VER IFIABLE. THE ASSESSEE HAS NOT PRODUCED ANY AGREEMENT ENTERED WIT H THE I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 7 PARTIES WHO CARRIED ON THE ACTIVITIES OF DEVELOPMEN T. HE RELIED ON THE ORDER OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THERE IS NO DISPUTE REGARDING THE CARRY ING OUT OF IMPROVEMENT WORKS ON THE LAND TO MAKE IT FIT FOR AG RICULTURAL OPERATIONS. THIS IS ALSO SUPPORTED BY THE CERTIFIC ATE ISSUED BY THE GOVERNMENT AUTHORITIES. THE ASSESSEE ALSO PROD UCED CERTAIN EVIDENCE IN THE FORM OF CONFIRMATION LETTERS CONFIR MING THE IMPROVEMENT. THE CERTIFICATE ISSUED BY THE REVENUE AUTHORITIES HAS TO BE CONSIDERED AS GENUINE UNLESS PROVED CONTR ARY. FURTHER THE FACT THAT THE LAND WAS HAVING BOULDERS AND ROCK S IS NOT DOUBTED. IN OUR OPINION, THE DISPUTE IS ONLY WITH REGARD TO QUANTIFICATION OF EXPENDITURE. IT IS THE DUTY OF T HE ASSESSEE TO PLACE NECESSARY EVIDENCE REGARDING INCURRING OF COR RECT EXPENDITURE FOR DEVELOPMENT AS THE ASSESSEE CARRIED OUT THE IMPROVEMENT ON THE LAND. THE ASSESSEE IS DIRECTED T O PLACE NECESSARY EVIDENCE IN SUPPORT OF THE CLAIM. ON PRO DUCTION OF NECESSARY EVIDENCE, THE ASSESSING OFFICER IS DIRECT ED TO GRANT DEDUCTION IN ACCORDANCE WITH LAW. AS SUCH THE ENTI RE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION WITH A DIRECTION TO THE ASSESSEE TO P LACE NECESSARY EVIDENCE IN SUPPORT OF THE CLAIM OF THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. THE NEXT GROUND IN THIS APPEAL IS WITH REGARD TO CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY FI XING THE COST OF ACQUISITION OF LAND AT RS. 24,000 AS ON 1.4.1981 AS AGAINST RS. 4 LAKHS CLAIMED BY THE ASSESSEE. THE CIT(A) REJECT ED THE GROUND ON THE REASON THAT THE ASSESSEE DID NOT MAKE ANY SU BMISSION BEFORE HIM AND THE ASSESSING OFFICER HAD ADOPTED TH E COST OF LAND AT RS. 24,000 ON THE BASIS OF INFORMATION OBTA INED FROM SRO. HOWEVER, THERE IS NO MENTIONING OF WHAT COMPA RABLE CASES I.T.A. NOS. 48&49/HYD/2011 S/SRI S. RAMESH GOUD & S. KRISHNA ============================ 8 THE ASSESSING OFFICER CONSIDERED TO DETERMINE THE V ALUE OF LAND AS ON 1.4.1981 AT RS. 24,000. BEING SO, WE REMIT T HE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFTER BRINGING COMPARABLE CASES ON RECORD. THIS APPEAL I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. ALL THE GROUNDS IN ITA NO. 49/HYD/2011 ARE IDENTICA L AND THE FACTS ARE ALSO SIMILAR TO THAT OF ITA NO. 48/HY D/2011. ACCORDINGLY, ITA NO. 49/HYD/2011 IS ALSO REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIO N. 13. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2012. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 7 TH SEPTEMBER, 2012 TPRAO COPY FORWARDED TO: 1. SRI S. RAMESH GOUD, C/O. SRI MOHD. AFZAL, ADVOCA TE, 11-5- 465, FLAT NO. 402, SHERSON'S RESIDENCY, CRIMINAL CO URT ROAD, RED HILLS, HYDERABAD-500 004. 2. SRI S. KRISHNA, C/O. SRI MOHD. AFZAL, ADVOCATE, 11-5-465, FLAT NO. 402, SHERSON'S RESIDENCY, CRIMINAL COURT R OAD, RED HILLS, HYDERABAD-500 004. 3. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-6(1 ), IT TOWERS, HYDERABAD. 4. THE CIT(A)-IV, HYDERABAD. 5. THE CIT-III, HYDERABAD 6. THE DR A BENCH, ITAT, HYDERABAD