SHRI UDAIVEER SINGH , MATHURA V. INCOME TAX OFFICER, WARD-3, BHARATPUR

ITA 493/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4811 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWINI HOSMANI JCIT DHK
• Keywords: Period of limitation
• Section: 54F; 54; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 493/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 UDAIVEER SINGH, S/O- SHRI UMRAO SINGH, 252, SHREE JEE SHIVSHAW ESTATE, GOVERDHAN ROAD, MATHURA (UP) CUKE VS. INCOME TAX OFFICER, WARD-3 BHARATPUR-321001 (RAJ). LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AHVPS 1954 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJENDRA AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ASHWINI HOSMANI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17/10/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24/03/2017 OF LD. CIT(A), ALWAR FOR THE A.Y. 2011-12 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN CONFIRMING: 1. REOPENING OF THE ASSESSMENT. 2. CONFIRMING THE ADDITION OF LONG TERM CAPITAL GAI N OF RS. 11,58,658/- . ITA 493/JP/2018_ UDAIVEER SINGH VS ITO 2 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASSES SEE IS REGARDING REJECTION OF CLAIM OF DEDUCTION U/S 54 OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE IS INDIVIDUAL AND RETIR ED GOVERNMENT EMPLOYEE. THE ASSESSEE FILED HIS RETURN OF INCOME DE CLARING INCOME OF RS. 2,64,550/- AFTER CLAIMING OF DEDUCTION U/S 54 OF TH E ACT FROM LONG TERM CAPITAL GAIN ARISING FROM TRANSFER OF PROPERTY SITU ATED AT RAIL NAGAR, AJMER ROAD, JAIPUR. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT DEPOSITED S ALE PROCEEDS IN THE CAPITAL GAIN ACCOUNT BEFORE DUE DATE OF FILING OF R ETURN OF INCOME AND THEREFORE, THE CLAIM OF DEDUCTION U/S 54 OF THE ACT WAS DENIED BY THE ASSESSING OFFICER BY HOLDING THAT THE ASSESSEE DID NOT UTILIZE AMOUNT OF NET SALE CONSIDERATION EITHER IN PURCHASING OF ACQU IRING THE NEW RESIDENTIAL HOUSE BEFORE DUE DATE OF FURNISHING OF RETURN U/S 139(1) OF THE ACT. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE DEPOSITED THE AMOUNT IN THE CAPITAL GAIN S CHEME ACCOUNT ON 03/10/2011 AND THEREFORE THERE WAS ONLY A MARGINAL D ELAY IN DEPOSITING THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME. HE H AS FURTHER CONTENDED ITA 493/JP/2018_ UDAIVEER SINGH VS ITO 3 THAT EVEN OTHERWISE THE ASSESSEE HAS INVESTED THE S ALE CONSIDERATION IN THE NEW RESIDENTIAL HOUSE PURCHASED VIDE SALE DEED D ATED 12/10/2011, THUS WHEN THE INVESTMENT WAS MADE WITHIN THE PERIOD P RESCRIBED U/S 54 OF THE ACT THEN THE ASSESSEE IS ELIGIBLE FOR THE BE NEFIT OF THE SAID SECTION. THE LD AR HAS ALSO REFERRED TO THE BANK ACCOUNT OF T HE ASSESSEE FROM WHERE THE PURCHASE CONSIDERATION WAS PAID FOR ACQUIRI NG NEW RESIDENTIAL HOUSE. HENCE, THE LD AR HAS SUBMITTED THAT THE CLAI M OF DEDUCTION U/S 54 OF THE ACT IS ALLOWABLE IN THE CASE OF THE ASSESSEE WHEN THE ASSESSEE HAS COMPLIED WITH THE SUBSTANTIAL CONDITION OF INVESTING THE SALE CONSIDERATION IN PURCHASE OF NEW RESIDENTIAL HOUSE WITHIN THE PRES CRIBED PERIOD OF LIMITATION PROVIDED UNDER THE ACT. 5. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSING O FFICER HAS GIVEN A FINDING THAT NEITHER THE ASSESSEE HAS INVESTED THE NET SALE CONSIDERATION FOR PURCHASE OF NEW HOUSE WITHIN THE PERIOD AS ON OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT NO R THE ASSESSEE HAS DEPOSITED THE AMOUNT IN THE CAPITAL GAIN SCHEME ACC OUNT BY THAT DATE, THEREFORE, IN ABSENCE OF SATISFACTION OF THE REQUIS ITE CONDITION, THE DEDUCTION U/S 154 OF THE ACT CANNOT BE ALLOWED. ITA 493/JP/2018_ UDAIVEER SINGH VS ITO 4 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE ASSESSEE DEPOS ITED THE SALE CONSIDERATION IN THE CAPITAL GAIN ACCOUNT ON 03/10/ 2011 AND THEREAFTER THE ASSESSEE CLAIMED TO HAVE PURCHASED THE NEW RESID ENTIAL HOUSE VIDE SALE DEED DATED 12/10/2011. WE FURTHER NOTE THAT TH E AMOUNT OF PURCHASE CONSIDERATION IS DULY REFLECTED IN THE BAN K ACCOUNT OF THE ASSESSEE, COPY OF WHICH HAS BEEN FILED BY THE LD AR WHEREIN THE CHEQUE WAS CLEARED ON 13/10/2011. THUS, PRIMA FACIE THE ASSE SSEE HAS SATISFIED THE CONDITION OF INVESTMENT FOR PURCHASE OF A NEW RE SIDENTIAL HOUSE WITHIN THE PERIOD PRESCRIBED U/S 54 OF THE ACT. ONCE THE S UBSTANTIAL CONDITION OF INVESTMENT WITHIN THE PRESCRIBED PERIOD HAS BEEN SAT ISFIED THEN EVEN IF THERE IS A DELAY IN DEPOSITING THE SAID AMOUNT IN T HE CAPITAL GAIN ACCOUNT, THE SAME WILL NOT DISENTITLE THE ASSESSEE FROM THE B ENEFIT OF DEDUCTION U/S 54 OF THE ACT. WE FURTHER NOTE THAT AN IDENTICAL IS SUE WAS CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JAG MOHAN SHARMA VS. ITO VIDE ORDER DATED 13/3/2018 IN ITA NO. 1089/ JP/2016 IN PARA 5 AS UNDER: 5. AS REGARDS THE NON DEPOSIT OF THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME, WE NOTE THAT THE ASSESSEE HAS SOLD THE AGRI CULTURAL LAND ON 30 TH NOVEMBER, 2012 AND THE HOUSE WAS PURCHASED ON 30.10 .2014. THEREFORE, THE INVESTMENT MADE BY THE ASSESSEE IS WITHIN TWO Y EARS FROM THE SALE OF THE EXISTING ASSET AND IS NOT BEYOND THE STIPULATED PERIOD AS PROVIDED ITA 493/JP/2018_ UDAIVEER SINGH VS ITO 5 UNDER SECTION 54F OF THE ACT. THE ONLY OBJECTION RA ISED BY THE AO AND ID. CIT (A) IS NON DEPOSIT OF AMOUNT IN THE CAPITAL GAI N ACCOUNT SCHEME. HOWEVER, WHEN THE ASSESSEE HAS INVESTED THE AMOUNT WITHIN THE STIPULATED PERIOD AS PROVIDED UNDER THE PROVISIONS OF SECTION 54F, THEN THE SUBSTANTIAL REQUIREMENT AS PER SECTION 54F(1) IS SA TISFIED. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SARDARMAL KOTHARI (SUPRA) HAS HELD IN PARA 4 AS UNDER:- ' 4. THE REQUIREMENT OF THE PROVISION IS THAT THE ASSESSEE, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER, HAS TO CONS TRUCT A RESIDENTIAL HOUSE IN ORDER TO BECOME ELIGIBLE FOR EXEMPTION. IN THE CASE S ON HAND, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAVE PURCHASED THE LANDS BY INVESTING THE CAPITAL GAIN AND THEY HAVE ALSO CONSTRUCTED RESIDENTIAL HOU SES. IN ORDER TO ESTABLISH THE SAME, THE ASSESSES SUBMITTED BEFORE THE COMMISS IONER (APPEALS) SEVERAL MATERIAL EVIDENCES, VIZ., INVITATION CARD P RINTED FOR THE HOUSE WARMING CEREMONY TO BE HELD ON 12.7.2003. THE ASSES SEE HAVE ALSO PRODUCED THE COMPLETION CERTIFICATES FROM THE MUNIC IPAL AUTHORITY ON 30.1.2004. ON THE BASIS OF THE ABOVE DOCUMENTS, THE COMMISSIONER (APPEALS) CONCLUDED THAT THE REQUIREMENT OF THE STA TUTORY PROVISION HAS BEEN COMPLIED WITH BY THE ASSESSEE AND THAT WAS REC ONFIRMED BY THE TRIBUNAL IN THE ORDERS IMPUGNED.' SIMILAR VIEW WAS TAKEN BY HON'BLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS. K. RAMACHANDRA RAO (SUPRA) AT PAGE 4 AS UNDER:- 'SUB-SECTION (4) IS ATTRACTED ONLY TO A CASE WHERE THE SALE CONSIDERATION IS NOT UTILIZED EITHER FOR PURCHASE OR FOR CONSTRUCTIO N OF A RESIDENTIAL HOUSE. IT HAS NO APPLICATION TO A CASE WHERE THE ASSESSEE INV ESTS THE SALE CONSIDERATION DERIVED FROM THE TRANSFER EITHER IN P URCHASING THE PROPERTY OR CONSTRUCTING THE RESIDENTIAL HOUSE WITHIN THE PERIO D STIPULATED IN SECTION 54F(1). THE PROVISO TO SECTION 54F PUTS AN EMBARGO ON THE APPLICATION OF SECTION 54F TO CASES WHICH ARE MENTIONED IN THE SAI D PROVISO. THAT IS TO BE ELIGIBLE FOR THE BENEFIT UNDER SECTION 54F(1) THE A SSESSEE SHOULD NOT BE OWNING MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN T HE NEW ASSET ACQUIRED OR HE SHOULD NOT PURCHASE ANY RESIDENTIAL HOUSE OTH ER THAN THE NEW ASSET WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANS FER OF RESIDENTIAL ASSET OR CONSTRUCTS ANY RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE RESID ENTIAL ASSET. IN THE ENTIRE SCHEME THERE IS NO PROHIBITION FOR THE ASSESSEE PUT TING UP CONSTRUCTION OUT ITA 493/JP/2018_ UDAIVEER SINGH VS ITO 6 OF SALE CONSTRUCTION RECEIVED BY SUCH TRANSFER OF A SITE WHICH IS OWNED BY HIM AS IS CLEAR FROM THE LANGUAGE USED. IT IS OPEN FOR THE ASSESSEE TO PUT UP A RESIDENTIAL CONSTRUCTION OR TO PURCHASE A RESIDEN TIAL HOUSE. IT IS NOT THE REQUIREMENT OF LAW THAT HE SHOULD PURCHASE A RESIDE NTIAL SITE AND THEN PUTUP CONSTRUCTION. THEREFORE, IN THE INSTANT CASE ADMITTEDLY THE ASSESSEE HAS PURCHASED A VACANT SITE PRI-31.3.2001. FIE SOLD THE ORIGINAL ASSET ON 27.8.2003 ON WHICH DATE HE WAS ALREADY OWNING A SIT E. IN FACT EVEN BEFORE SALE OF THE ORIGINAL ASSET HE HAD STARTED CONSTRUCT ION ON SUCH SITE BY AVAILING LOAN FROM THE BANK. IN TERMS OF SECTION 54 F(1) ALL INVESTMENTS MADE IN THE CONSTRUCTION OF THE RESIDENTIAL HOUSE O F THE SAID SITE WITHIN A PERIOD OF ONE YEAR PRIOR TO 27.8.2003 WOULD BE ELIG IBLE FOR EXEMPTION UNDER SECTION 54F(1). SIMILARLY ALL INVESTMENTS IN THE SA ID CONSTRUCTION AFTER 27.8.2003 WITHIN A PERIOD OF THREE YEARS THEREFROM IS ALSO ELIGIBLE FOR EXEMPTION. THEREFORE, THE ARGUMENT THAT SUCH INVEST MENT IN PUTTING UP A RESIDENTIAL CONSTRUCTION CANNOT BE MADE ON A SITE O WNED BY HIM TO BE ELIGIBLE FOR EXEMPTION IS WITHOUT ANY SUBSTANCE. BO TH THE APPELLATE AUTHORITIES HAVE RIGHTLY EXTENDED THE BENEFIT TO TH E ASSESSEE AND THERE IS NO ERROR COMMITTED BY THEM WHICH CALLS FOR INTERFERENC E.' AGAIN IN THE CASE OF FATHIMA BAI VS. ITO (SUPRA), T HE HON'BLE KARNATAKA HIGH COURT HAS REITERATED ITS VIEW THAT ONCE THE EN TIRE CAPITAL GAIN WAS UTILIZED BY THE ASSESSEE BY PURCHASING A HOUSE PROP ERTY BEFORE THE EXTENDED DUE DATE UNDER SECTION 139(4), THE EXEMPTI ON UNDER SECTION 54 WOULD BE ALLOWABLE TO THE ASSESSEE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS INVESTED THE AMOU NT WITHIN THE STIPULATED PERIOD AS PRESCRIBED UNDER SECTION 54F A ND IN VIEW OF THE VARIOUS DECISIONS CITED SUPRA, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54F IN RESPECT OF THE INVESTMENT MADE IN THE HOUSE PURCHASED ON 13 TH OCTOBER, 2014. HENCE, WHEN THE NET SALE CONSIDERATION WAS UTILIZED B Y THE ASSESSEE FOR PURCHASE OF A NEW HOUSE AND IT WAS NOT THE CASE OF TH E ASSESSEE THAT THE SAID AMOUNT WAS UTILIZED FOR ANY OTHER PURPOSE THEN THE A.O. HAS FULFILLED PRIMARY AND SUBSTANTIAL CONDITION AS PER THE PROVIS IONS OF SECTION 54 OF ITA 493/JP/2018_ UDAIVEER SINGH VS ITO 7 THE ACT AND ACCORDINGLY ELIGIBLE FOR THE DEDUCTION. HENCE WE ALLOW THE CLAIM OF THE ASSESSEE SUBJECT TO THE VERIFICATION O F THE FACT OF PURCHASE OF NEW HOUSE BY THE ASSESSEE AS THIS FACT WAS NOT CONSID ERED BY THE AUTHORITIES BELOW WHILE DECIDING THIS ISSUE. THE ASSE SSING OFFICER IS, ACCORDINGLY, DIRECTED TO VERIFY THE FACT OF PURCHAS E OF NEW HOUSE BY THE ASSESSEE AS CLAIMED VIDE SALE DEED DATED 12/10/2011 . SUBJECT TO SAID VERIFICATION, CLAIM OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 RD OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI UDAIVEER SINGH, MATHURA, (UP). 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-3, BHARATPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 493/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR