M/s. Satya Prakash Singh (HUF), New Delhi V. ITO, New Delhi

ITA 4922/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7070 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 15-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: P K MISHRA
• Keywords: Capital asset; Deemed to accrue or arise in india
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH : SMC-II, NEW DELHI BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.4922/DEL/2015 ASSESSMENT YEAR : 2012-13 SATYA PRAKASH SINGH (HUF), 7/27, MAYADEEP, CHOUDHARY DEEP CHAND MARG, SOUTH PATEL NAGAR, NEW DELHI 110 008. PAN: AAFHS 4827L VS. THE INCOME TAX OFFICER, WARD 50(2), NEW DELHI. APPELLANT RESPONDENT APPELLANT BY : SHRI P.K. MISHRA, CA RESPONDENT BY : SHRI S.K. JAIN, SR. DR DATE OF HEARING : 15.09.2016 DATE OF PRONOUNCEMENT : 21.09.2016 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 28.05.2015 OF THE CIT(APPEALS)-XVII, NEW DELHI INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS) IS BAD IN LAW AND ON THE FACTS OF THE CAS E. 2 (A) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF DEDUCTI ON U/S 54F OF THE INCOME TAX ACT, 1961 IN RESPECT OF INVES TMENT OF RS.42,31,000/- FOR PURCHASE OF PLOT BY THE APPEL LANT FOR CONSTRUCTION OF RESIDENTIAL HOUSE. ITA NO.4922/DEL/2015 PAGE 2 OF 6 (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPE AL) ERRED IN SUSTAINING THE FINDING OF THE ASSESSING OFFICER THAT INVESTMENT IN PLOT IS NOT ELIGIBLE FOR DEDUCTION U/ S 54F OF THE INCOME TAX ACT, 1961. 4. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO EACH OTHER. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND A ND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. 2. THE ISSUE IN DISPUTE IN THIS APPEAL RELATES TO THE ASSESSMENT YEAR IN WHICH THE DEEMED INCOME IN THE HANDS OF ASSESSEE IS TO BE TAXED ON ACCOUNT OF WITHDRAWAL OF DEDUCTION U/S. 54F OF THE ACT. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE HAS SOLD A PLOT IN GURGAON FOR A CONSIDERATION OF R S.1,76,00,000 VIDE SALE DEED DATED 03.08.2011. THE ENTIRE CAPITAL GAIN WORK ED OUT HAS BEEN CLAIMED TO BE EXEMPT U/S. 54F OF THE ACT, BUT SUBSE QUENTLY THE ASSESSEE COULD NOT ACQUIRE A RESIDENTIAL HOUSE ON ACCOUNT OF DELAY IN ALLOTMENT OF THE APARTMENT BY THE BUILDER WITHIN THE PRESCRIBED PERI OD. 4. WHILE COMPLETING THE ASSESSMENT FOR THE AY 2012- 13, THE ASSESSING OFFICER NOTICED THESE FACTS AND DISALLOWED THE CLAI M OF DEDUCTION U/S. 54F OF THE ACT AND MADE ADDITION THEREOF. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS), BUT DID NOT FIND FAVOUR WI TH HIM. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AND REITERATED ITS CONTENTIONS. THE LD. COUNSEL FOR THE ASSESSEE HAS P LACED RELIANCE UPON THE PROVISO TO SECTION 54F OF THE ACT WITH THE SUBMISSI ON THAT IN CASE THE ITA NO.4922/DEL/2015 PAGE 3 OF 6 ASSESSEE COULD NOT ACQUIRE THE RESIDENTIAL HOUSE WI THIN THE PERIOD PRESCRIBED U/S. 54F OF THE ACT I.E., ONE YEAR BEFO RE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE OR WITHIN A PERIO D OF THREE YEARS AFTER THE DATE OF CONSTRUCTION OF RESIDENTIAL HOUSE; THE CAPI TAL GAIN SHALL BE CHARGED U/S. 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET EXP IRES. THEREFORE, THE CAPITAL GAIN CAN ONLY BE CHARGED IN THE ASSESSMENT YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL A SSET EXPIRES AND NOT IN THE YEAR IN WHICH DEDUCTION IS CLAIMED. 6. THE LD. DR PLACED RELIANCE UPON THE ORDER OF THE CIT(APPEALS). 7. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, I FIND THAT THE MAIN CONTROVE RSY REVOLVES AROUND AN ISSUE AS TO IN WHICH YEAR THE CAPITAL GAIN IS TO BE CHARGED U/S. 45 OF THE ACT. WHETHER IT SHOULD BE IN THE PREVIOUS YEAR IN WHICH THE IMMOVABLE PROPERTY WAS SOLD OUT AND CAPITAL GAIN ACCRUES, OR, IN THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TR ANSFER OF ORIGINAL ASSET EXPIRES. IN THIS REGARD, I HAVE CAREFULLY EXAMINED THE PROVISIONS OF SECTION 54F OF THE ACT AND I FIND THAT PROVISO TO SUB-SECTI ON (4) OF SECTION 54F CLEARLY SAYS THAT THE AMOUNT OF CAPITAL GAIN ARISIN G FROM THE TRANSFER OF ORIGINAL ASSET SHALL BE CHARGED U/S. 45 AS INCOME O F THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TR ANSFER OF ORIGINAL ASSET ITA NO.4922/DEL/2015 PAGE 4 OF 6 EXPIRES. FOR THE SAKE OF REFERENCE, THE PROVISIONS OF SECTION 54F IS EXTRACTED HEREUNDER:- 54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LO NG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WI THIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TH E TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YE ARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, . . (4) PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONST RUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1 ), THEN, ( I ) THE AMOUNT BY WHICH ( A ) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRAN SFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ) OF SUB-SECTION (1), EXCEEDS ( B ) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED H AD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PU RCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPE CIFIED IN SUB-SECTION (1) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TH E TRANSFER OF THE ORIGINAL ASSET EXPIRES ; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE U NUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. ITA NO.4922/DEL/2015 PAGE 5 OF 6 8. FROM THE LANGUAGE OF THE SECTION, IT IS CLEAR TH AT CAPITAL GAIN IS TO BE CHARGED U/S. 45 AS INCOME OF THE PREVIOUS YEAR IN W HICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES, AND NOT IN THE YEAR IN WHICH THE CAPITAL GAIN ACCRUES. IN THE SE CIRCUMSTANCES, I FIND FORCE IN THE CONTENTION OF THE ASSESSEE, BUT THE AS SESSEE HAS NOT PLACED ANY EVIDENCE ON RECORD TO ESTABLISH THAT HE HAS OFF ERED THE CAPITAL GAIN IN THAT PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEA RS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. IN THE ABSENC E OF COMPLETE INFORMATION, PROPER DIRECTIONS CANNOT BE ISSUED. I ACCORDINGLY SET ASIDE THE ORDER OF CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION NOT TO CHARGE THE CAPITAL GAIN IN THE IMP UGNED ASSESSMENT YEAR I.E. AY 2012-13, AS IT IS TO BE CHARGED IN THE PREV IOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES AND IN THIS REGARD NECESSARY VERIFICATION BE MADE BY TH E AO. IF THE ASSESSEE HAS NOT OFFERED THE CAPITAL GAIN CHARGEABLE TO TAX IN THAT YEAR, THE AO MAY REOPEN THE ASSESSMENT AND ASSESS THE CAPITAL GAIN A S INCOME OF THAT PREVIOUS YEAR. ACCORDINGLY, THE APPEAL OF THE ASSE SSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF SEPTEMBER 2016. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER NEW DELHI, DATED, THE 21 ST SEPTEMBER, 2016. /D S/ ITA NO.4922/DEL/2015 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR, ITAT, NEW DELHI.