Shri Nandkishore Ramanlal Parikh HUF, Ahmedabad V. The Income Tax Officer, Ward-5(2)(3), Ahmedabad

ITA 490/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5863 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Set aside
• Section: 54F; 54

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 490/AHD/2017 / ASSESSMENT YEAR: 2013-14 NANDKISHORE RAMANLAL PARIKH- HUF CHITRAKUT F.P.390 BH. SHAKUNTAL COMPLEX C.N.VIDYALAY ROAD AMBAWADI, ELLISBRIDGE AMEDABAD 380 006. PAN : AAGHN 0923 H VS ITO, WARD-5(2)(3) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : ARTI N. SHAH, AR REVENUE BY : LALIT P. JAIN, SR.DR / DATE OF HEARING : 18/04/2019 /DATE OF PRONOUNCEMENT : 30/04/2019 O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-5, AHMEDABAD DATED 5.1.2017 PASSED FOR TH E ASSTT.YEAR 2013- 14. 2. ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, WHICH ARE ARGUMENTATIVE AND DESCRIPTIVE IN NATURE. AT THE TI ME OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE HAS CONFINED GRIEVANCE OF THE ASSESSEE QUA ONE ISSUE VIZ. WHETHER EXEMPTION UNDER SECTION 54F IS AVAILABLE TO THE ASSESSEE OR NOT ON THE INVESTMENT OF CAPITAL GAIN I N PURCHASE OF A FLAT. ITA NO.490 /AHD/2017 - 2 - 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECO RD THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME ELECTRONICALLY ON 6.7.20 13 DECLARING TOTAL INCOME AT RS.278/-. HER CASE WAS SELECTED FOR SCR UTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED A ND SERVED UPON THE ASSESSEE. SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE WAS HAVING 1/8 TH SHARE IN A PROPERTY AT PATIDAR SOCIETY, C.G.ROAD, AHMEDABAD. SHE HAS SOLD HER 1/8 TH SHARE ON 25.2.2013 FOR A SUM OF RS.90.00 LAKHS. SHE INVESTED RS.80 LAKHS ON 3.7.2013 IN BANK OF BARODA UNDER CAPITAL GAIN ACCOUNT SCHEME AS PER SEC TION 54F OF THE ACT. THEREAFTER, SHE HAD PURCHASED RESIDENTIAL FLAT ON 1 8.10.2014 FOR A SUM OF RS.1,25,00,000/-. THIS PURCHASE HAS BEEN MADE WITH IN THE PRESCRIBED TIME LIMIT OF TWO YEARS AS PROVIDED UNDER SECTION 5 4F(1) OF THE ACT. SHE CLAIMED THAT NO CAPITAL GAIN TAX IS LEVIABLE UPON T HE ASSESSEE. THE LD.AO DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE, AND HE ALLOWED THE DEPOSITS MADE IN THE CAPITAL ACCOUNT AT RS.80 LAKHS . HE MADE ADDITION OF RS.8,01,740/-. APPEAL TO THE CIT(A) DID NOT BRI NG ANY RELIEF TO THE ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE COMPILED CERTAIN DETAILS IN TABULAR FORM AND IT IS IMPERATIVE UPON US TO TAKE NOTE OF T HESE DETAILS FOR ADJUDICATION OF THIS ISSUE. IT READS AS UNDER: SR.NO. PARTICULARS 1. SALE PRICE (OWN SHARE) 90,00,000 2. DATE OF SALE 25/02/2013 3. COST OF PROPERTY AS ON 01/04/81 (AS PER ASSESSEE) 2,16,837/- 4. INDEXED COST 18,47,451 ITA NO.490 /AHD/2017 - 3 - 5. COST OF PROPERTY AS ON 01/04/81 (AS PER AO) 2,07,050 7 INDEXED COST 17,64,066 7 AMOUNT DEPOSITED IN CAPITAL GAIN A/C. SCHEME ON 03/07/2013 80,00,000 8. NEW PROPERTY PURCHASED AS ON 18/10/2014 1,25,00,000 5. THE STAND OF THE ASSESSEE IS THAT SINCE SHE HAS MADE INVESTMENT IN PURCHASE OF A NEW FLAT AND UTILISED THE TOTAL CAPIT AL GAIN. IN OTHER WORDS, SHE HAS INVESTED THE AMOUNT MORE THAN THE SALE CONS IDERATION, THEREFORE, NO CAPITAL GAIN IS TAXABLE IN HER HANDS UNDER SECTI ON 54F(1), AND SHE IS ENTITLED FOR EXEMPTION IN TOTO . THE CASE OF THE AO IS THAT SINCE SHE HAS NOT DEPOSITED THE SALE CONSIDERATION IN A CAPITAL A CCOUNT BEFORE THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(1) OF TH E ACT, THEREFORE, SHE CANNOT CLAIM EXEMPTION AS CONTEMPLATED UNDER SECTIO N 54F(4). IN OTHER WORDS, ACCORDING TO THE AO, BENEFIT OF SECTION 54F SHOULD BE AVAILABLE TO THE ASSESSEE, IF SHE HAD PURCHASED NEW RESIDENTIAL FLAT WITHIN ONE YEAR BEFORE THE SALE OF HOUSE OR TWO YEARS AFTER THE SAL E, BUT IN SUCH CONDITION SHE HAS TO MAKE DEPOSIT OF CONSIDERATION/CAPITAL GA IN IN A BANK ACCOUNT MAINTAINED UNDER THE CAPITAL GAINS CHEME. SHE FAIL ED TO MAKE SUCH DEPOSITS BEFORE THE DATE OF FILING OF RETURN, THERE FORE, SHE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 54F. BEFORE ME, THE LD .COUNSEL FOR THE ASSESSEE MADE REFERENCE TO THE DECISION OF ITAT, AH MEDABAD BENCHES IN THE CASE OF ASHOK KAPASIAWALA VS. IT), 63 TAXAMNN.C OM 284. SHE HAS PLACED ON RECORD COPY OF THIS ORDER. DIVISION BENC H OF THE ITAT HAS CONSIDERED THIS ASPECT AND AFTER PUTTING RELIANCE U PON THE DECISION OF KARNATAKA HIGH COURT, ALLOWED THE CLAIM OF THE ASSE SSEE IN AN IDENTICAL ITA NO.490 /AHD/2017 - 4 - SITUATION. THE REASON RECORDED BY THE HONBLE COUR T IS WORTH TO NOTE IN THIS CONNECTION. IT READ AS UNDER: 6.2 THE HON'BLE KARNATAKA HIGH COURT IN THE CASE O F K. RAMACHANDRA RAO (SUPRA) ANSWERED THE QUESTION IN FAVOUR OF ASSES SEE I.E. WHEN THE ASSESSEE HAD INVESTED THE ENTIRE SALE CONSIDERATION IN CONSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THE THREE YEARS FROM THE D ATE OF TRANSFER. COULD HE BE DENIED EXEMPTION UNDER SECTION 54 F ON THE GROUN D THAT HE DID NOT DEPOSIT THE SAID AMOUNT IN CAPITAL GAIN ACCOUNT SCH EME BEFORE THE DUE DATE PRESCRIBED U/S.139(1) OF THE ACT. THE HON'BLE HIGH COURT OF KARNATAKA HIGH COURT HELD AS UNDER: 'AS IT CLEAR FROM SUB-SECTION (4) IN THE EVENT OF TH E ASSESSEE NOT INVESTING THE CAPITAL GAINS EITHER IN PURCHASING THE RESIDENT IAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE WITHIN THE PERIOD STIPULATED IN SECTION 54F(1), IF THE ASSESSEE WANTS THE BENEFIT OF SECTIO N 54F, THEN HE SHOULD DEPOSIT THE SAID CAPITAL GAINS IN AN ACCOUNT WHICH IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT. IN OTHER WORDS IF HE WANT OF CL AIM EXEMPTION FROM PAYMENT OF INCOME TAX BY RETAINING THE CASH, THEN T HE SAID AMOUNT IS TO BE INVESTED IN THE SAID ACCOUNT. IF THE INTENTION IS N OT TO RETAIN CASH BUT TO INVEST IN CONSTRUCTION OR ANY PURCHASE OF THE PROPE RTY AND IF SUCH INVESTMENT IS MADE WITHIN THE PERIOD STIPULATED THE REIN, THEN SECTION 54F(4) IS NOT AT ALL ATTRACTED AND THEREFORE THE CO NTENTION THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE BANK ACCOUNT AS STIPULATED AND THEREFORE, HE IS NOT ENTITLED TO THE BENEFIT EVEN T HOUGH HE HAS INVESTED THE MONEY IN CONSTRUCTION IS ALSO NOT CORRECT.' 6.3 IN THE PRESENT CASE, THE ASSESSEE PURCHASED NEW ASSET ON 05/10/2009 AND HAD TRANSFERRED THE ORIGINAL ASSET ON 8/01/2008. AS PER SECTION 54F (1) OF THE ACT, THE EXEMPTION WOULD BE AVAILABLE IF THE AS SESSEE PURCHASED THE RESIDENTIAL HOUSE WITHIN TWO YEARS AFTER THE DATE W HEN TRANSFER TOOK PLACE. AS PER THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT , THE PROVISIONS OF SECTION 54F(4) WOULD NOT BE ATTRACTED IN THE EVENT I F THE ASSESSEE HAS PURCHASED OR CONSTRUCTED THE RESIDENTIAL HOUSE WITH IN THE PERIOD PRESCRIBED UNDER SECTION 54(1) OF THE ACT. IN THE CASE IN HAND, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAD PURCHASED WITHIN TWO YEARS [THE PERIOD PRESCRIBED U/S.54(F(1)] A NEW ASSET ON 05/10/ 2009 FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THE REVENUE HAS NOT CITED OR PLACED ON RECORD ANY CONTRARY JUDGMENT BY THE HON'BLE JURISDICTIONAL HIGH COURT OR HON'BLE SUPREME COURT. THEREFORE, RESPECTFULLY FOLL OWING THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CAS E OF K. RAMACHANDRA RAO (SUPRA), WE HEREBY SET ASIDE THE IMPUGNED ORDER AND DIRECT THE AO TO ITA NO.490 /AHD/2017 - 5 - RE-COMPUTE THE ASSESSED INCOME AFTER GRANTING THE B ENEFIT OF SECTION 54F OF THE ACT TO THE ASSESSEE 6. I FIND NO DISPARITY ON THE FACTS. IN THE CASE O F ASHOK KAPASIAWALA (SUPRA) ALSO THE ASSESSEE DID NOT DEPOSIT THE SALE CONSIDERATION IN THE BANK ACCOUNT BEFORE THE DUE DATE OF FILING OF RETUR N. BUT OTHERWISE PURCHASE OF HOUSE IS WITHIN TWO YEARS STIPULATED IN SECTION 54F(1) OF THE ACT. IT IS NOT THE CASE OF THE ASSESSEE THAT SHE H AS PURCHASED BEYOND THE PERIOD AS CONTEMPLATED IN SECTION 54F(1). THE ONLY FAILURE IS, SHE HAS NOT DEPOSITED THE SALE CONSIDERATION IN CAPITAL ACCOUNT . THIS CONDITION HAS NOT BEEN CONSIDERED AS MANDATORY BY THE HONBLE KAR NATAKA HIGH COURT. IN THE DECISION OF TRIBUNAL IN THE CASE OF ASHOK KAPASIAWALA (SUPRA) DIVISION BENCH HAS FOLLOWED THIS DECISION. NO CONTRARY DECISION WAS BROUGHT TO MY NOTICE BY THE DEPARTMENT. THEREF ORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH CO URT AND DECISION OF ITAT (SUPRA), I ALLOW THE APPEAL OF THE ASSESSEE AN D DIRECT THE AO TO GRANT EXEMPTION UNDER SECTION 54F TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2019. SD/- (RAJPAL YADAV) JUDICIAL MEMBER