ACIT, New Delhi V. Sh. Sumit Gupta, New Delhi

ITA 4976/DEL/2011

• Counselvise Citation: 497620114 RSA 2011
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: MURTHY
• Keywords: Cost of acquisition
• Section: 142(1); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI) BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 4976/DEL/2011 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE 31(1), VS. SUMIT GUPTA, NEW DELHI 26, JOR BAGH, NEW DELHI GIR / PAN:AJZPG1556B C.O. NO.399/DEL/2011 (ASSESSMENT YEAR 2007-08) SHRI SUMIT GUPTA, VS. ACIT, CIRCLE 31(1), 26, JORBAGH, NEW DELHI NEW DELHI-110003 (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. ANIMA BARNWAL, SR. DR RESPONDENT BY : SHRI M.S. MURTHY, ADV. DATE OF HEARING : 27.11.2015 DATE OF PRONOUNCEMENT : 09.12.2015 ORDER PER KULDIP SINGH, JM: SINCE IDENTICAL ISSUE ARISES FOR DETERMINATION IN B OTH THE AFORESAID APPEAL AND CROSS OBJECTIONS, THE SAME ARE TAKEN UP TOGETHE R TO BE DISPOSED OF BY WAY OF SINGLE ORDER TO AVOID REPETITION OF DISCUSSI ON. 2. THE APPELLANT, ACIT, CIRCLE 31(1), NEW DELHI (HE REINAFTER REFERRED AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.08.2011 PASSED BY LD. CIT(A) XXVI, N EW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON THE GROUNDS INTER ALIA T HAT: ITA NO.4976/DEL/2011 2 '(A) WHETHER LD. CIT(A) IS RIGHT IN HOLDING THAT AS SESSEE IS ENTITLED TO CLAIM EXEMPTION U/S 54 FROM THE LONG TERM CAPITAL G AIN IN RESPECT OF INVESTMENT OF RS. 2, J 5,63,0001- IGNORING THE [ACT THAT ASSESSEE FAILED TO PROVIDE DOCUMENTARY EVIDENCE OF FINAL ALLOTMENT OF PROPERTY TO BE CONSIDERED AS PURCHASED FOR CLAIMING EXEMPTION U/S 54 OF THE INCOME TAX ACT, 1961? (B) WHETHER PROVISIONAL ALLOTMENT CAN BE TREATED ' PURCHASED' WITHIN THE MEANING OF SECTION 54 OF THE INCOME TAX ACI, 1961. 3. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: DU RING THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE QUA THE ASSE SSMENT YEAR 2007-08, THE CASE WAS SUBJECTED TO SCRUTINY AND CONSEQUENTLY, NO TICES U/S 143(2) AND 142(1) WERE SERVED UPON THE ASSESSEE AND IN RESPONS E THERETO, SHRI M. C. MAHESHWARI, FCA I/AR APPEARED FROM TIME TO TIME, FI LED NECESSARY DETAILS / DOCUMENTS AND THE CASE WAS ALSO DISCUSSED WITH HIM, THE ASSESSEE BEING ONE OF THE COPARCENERS OF BHIMSEN GUPTA, HUF HAS DE CLARED NET TAXABLE INCOME (LONG TERM CAPITAL GAIN) AT RS.26,58,970/- A FTER CLAIMING EXEMPTION U/S 54EC AND THE SET OFF OF SHORT TERM CAPITAL GAIN . THE ASSESSING OFFICER ALLOWED THE EXEMPTION OF CAPITAL GAIN TO THE EXTENT OF RS.50,00,000/- ON ACCOUNT OF INVESTMENT IN RURAL ELECTRIFICATION FUND U/S 54EC OF THE ACT. HOWEVER, DISALLOWED THE EXEMPTION IN RESPECT OF PUR CHASE OF RESIDENTIAL HOUSE U/S 54 AND THAT OF SET OFF OF SHORT TERM CAPI TAL LOSS ON THE SALE / PURCHASE OF SHARES ON THE GROUND THAT THE ASSESSEE HAS PRODUCED ONLY PROVISIONAL ALLOTMENT OF THE VILLA IN HIS NAME WHIC H DOES NOT SATISFY THE CONDITION LAID DOWN U/S 54 TO AVAIL EXEMPTION FROM THE NET LONG TERM CAPITAL GAIN. EVEN AFTER LAPSE OF TWO YEARS FROM THE PROVIS IONAL ALLOTMENT, THE ASSESSEE HAS FAILED TO FURNISH ANY DETAIL AND DOCUM ENTARY EVIDENCE AS TO THE FINAL ALLOTMENT OF THE PROPERTY IN HIS NAME AS WELL AS ANY OTHER EVIDENCE THAT ITA NO.4976/DEL/2011 3 HE IS ENJOYING PEACEFUL POSSESSION OF THE PROPERTY. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTI ON FOR LONG TERM CAPITAL GAIN U/S 54 IN RESPECT OF THE INVESTMENT OF RS.2,15 ,63,000/- AND CONSEQUENTLY, ASSESSED THE TAXABLE INCOME AT RS.2, 76,88, 768/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT( A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER DISALLOWING THE CLAIM U/S 54 OF THE ACT. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEF ORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 5. THE ASSESSEE HAS ALSO FILED C.O, NO.399/DEL/201 1 CHALLENGING THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THIS CASE AND PRAYED FOR DISMISSAL OF THE APPEAL FILED BY THE REVENUE. 6. WE HAVE HEARD AUTHORIZED REPRESENTATIVES OF BOT H THE PARTIES, GONE THROUGH MATERIAL PLACED ON RECORD IN THE LIGHT OF F ACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUTHORITIES BELOW. 7. LD. D.R. ASSAILING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT SINCE 1HE PROVISIONAL ALLOTMENT LETTER RELIED UPON BY THE ASSESSEE DOES NOT SATISFY THE CONDITIONS LAID DOWN U/S 54 OF THE ACT TO AVAIL OF EXEMPTION, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION; THAT THE ASSESS EE IS REQUIRED TO PROVE THAT THERE IS A PURCHASE AND POSSESSION OF THE HOUSE TO AVAIL OF THE EXEMPTION U/S 54; THAT SINCE THE HOUSE STATED TO HAVE BEEN PURCHA SED BY THE ASSESSEE WAS NOT HABITABLE DURING THE RELEVANT PERIOD, HE WAS NO T ENTITLED FOR ANY EXEMPTION. 8. AT THE VERY OUTSET, LD. A.R. GOT RECORDED HIS S TATEMENT THAT HE DOES NOT WANT TO PROCEED WITH THE CROSS APPEAL FILED IN THIS CASE AND CONSEQUENTLY THE SAME STANDS DISMISSED AS WITHDRAWN. ITA NO.4976/DEL/2011 4 9. HOWEVER, ON THE OTHER HAND, LD. A.R. REPELLED T HE ARGUMENTS ADDRESSED BY LD. D.R. BY CONTENDING INTER ALIA THAT TO AVAIL OF THE EXEMPTION U/S 54 OF THE ACT, THERE IS NO CONDITION THAT THE H OUSE SHOULD BE HABITABLE; THAT SINCE THE SUBSTANTIAL SALE CONSIDERATION HAS B EEN PAID BY THE ASSESSEE, HE IS ENTITLED TO AVAIL EXEMPTION U/S 54 OF THE ACT AN D RELIED UPON THE JUDGEMENT CITED AS CIT VS R. L. SOOD, 245 ITR 727 A ND BALRAJ VS (IT 254 ITR 22 DELIVERED BY HON'BLE JURISDICTIONAL HIGH COU RT. 10. UNDISPUTEDLY, THE ASSESSEE BEING A COPARCENER OF BHIM SEN GUPTA (HUF), GOT 1/5 TH SHARE OF HUF PROPERTY AND DURING THE YEAR UNDER ASSESSMENT, DECLARED NET TAXABLE LONG TERM CAPITAL GAIN AT RS.26,58,970/- AFTER CLAIMING EXEMPTION U/S 54 AND 54E C OF THE AC T AND SET OFF OR SHORT TERM CAPITAL LOSS AS PER DETAILS REPRODUCED AS UNDE R: 'ASSESSEE HAS DECLARED NET TAXABLE LTCG AT RS.26.58 ,970/- AFTER CLAIMING EXEMPTION U/S 54 I 54EC AND THE SET OFF OF SHORT TE RM CAPITAL LOSS AS PER DETAILS GIVEN HEREIN BELOW: LONG TERM CAPITAL GAIN RS.3,08,42,550/- LESS EXEMPTIONS: (I) PURCHASE OF RESIDENTIAL HOUSE I.E. UNIT NO GV-14. THE PALM SPRINGS. SECTOR-54 URBAN ESTATE, GURGAON U/S 54 RS.2,L 5,63,000 /- (II) RURAL ELECTRIFICATION BOND U/S 54EC RS50,00,00 0/-RS. 2,65, 63,000/- LONG TERM CAPITAL GAIN RS.42.79.550/- B) SHORT TERM CAPITAL LOSS ON SALES/ PURCHASE OF SH ARES BE SET OFF U/S 70(2) (-)RS.16,20,850/- RS.26,58,970/- 11. SHORT QUESTION ARISES FOR DETERMINATION IN THI S CASE IS, 'AS TO WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION FROM LONG TE RM CAPITAL GAIN IN RESPECT OF INVESTMENT OF RS.2,15,63,000/- U/S 54 OF THE ACT ON THE BASIS OF PROVISIONAL ALLOTMENT LETTER'? 12. UNDISPUTEDLY, PROPERTY OF HUF WAS SOLD ON 24.0 8.2006 FOR A TOTAL CONSIDERATION OF RS.22,83,00,000/- AND AFTER ADJUST ING THE INDEX COST OF ITA NO.4976/DEL/2011 5 ACQUISITION I.E. RS.L,48,17,450/-, THE NET TAXABLE LONG TERM CAPITAL GAIN COMES TO RS.3,08,42,5501- OUT OF WHICH THE CLAIM OF ASSES SEE U/S 54EC QUA PURCHASE OF RURAL ELECTRIFICATION FUND TO THE TUNE OF RS,50,00,0001- HAS BEEN ACCEPTED. 13. THE ASSESSEE CLAIMED THE EXEMPTION U/S 54 OF T HE ACT FOR THE NET LONG TERM CAPITAL GAIN REGARDING PURCHASE OF RESIDENTIAL HOUSE I.E. UNIT NO.GV- 14, PALM SPRINGS, URBAN ESTATE, GURGAON FOR A CONSI DERATION OF RS.2,15,63,000/-. THE ASSESSEE RELIED UPON THE LETT ER DATED 03.05.2007 FROM THE BUILDER M/S EMAAR MGF PVT. LTD. IN SUPPORT OF I NVESTMENT MADE IN THE PURCHASE OF IMMOVABLE PROPERTY. THE ASSESSING OFFIC ER DECLINED THE CLAIM ON THE SOLE GROUND THAT THERE IS ONLY A PROVISIONAL ALLOTMENT OR VILLA IN THE NAME OF ASSESSEE AND THE ASSESSEE HAS FAILED TO BRI NG ON RECORD ANY DOCUMENTARY EVIDENCE TO ESTABLISH THE FINAL ALLOTME NT OF PROPERTY IN HIS NAME. 14. THE RATIO OF THE JUDGMENT RELIED UPON BY THE L D. A.R. IN THE CASES CITED AS CIT VS R. L. SOOD, 245 ITR 727 AND 8ALRAJ VS CIT 254 ITR 22, DELIVERED BY HON'BLE JURISDICTIONAL HIGH COURT, IS THAT WHEN THE SUBSTANTIAL AMOUNT OF COST OF NEW HOUSE HAS BEEN PAID WITHIN A YEAR, THOUGH REGISTRATION OF SALE DEED MADE SUBSEQUENTLY OR THE LONG TERM CAP ITAL GAIN FROM THE SALE OF PROPERTY USED FOR PURCHASING RESIDENTIAL PROPERTY W ITHIN ONE YEAR BY WAY OF AGREEMENT FOR SALE AND BY ENTERING INTO POSSESSION AFTER PURCHASING THE RESIDENTIAL HOUSE, REGISTRATION IS NOT IMPERATIVE, THE ASSESSEE IS ENTITLED TO AVAIL OF THE EXEMPTION OF LONG TERM CAPITAL GAIN U/ S 54 OF THE ACT. 15. WHEN UNDISPUTEDLY, THE ASSESSEE HAS PAID SUBST ANTIAL AMOUNT I.E. 95% OF THE TOTAL COST OF ACQUISITION OF RESIDENTIAL PRO PERTY WITHIN ONE YEAR FROM THE SALE OF RESIDENTIAL PROPERTY BY VIRTUE OF PROVI SIONAL ALLOTMENT LETTER, ITA NO.4976/DEL/2011 6 WHICH IS ON BETTER FOOTING THAN AGREEMENT TO SELL, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE JUDGEM ENT (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FIND ING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER, WE HEREBY DISMISS THE PRESENT APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASS ESSEE ARE ALSO DISMISSED AS WITHDRAWN. 17. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH DEC., 2015. SD./- SD./- ( N. K. SAINI) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 09 TH DEC., 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.4976/DEL/2011 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 8/12 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 09/12/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 09/12 SR. PS/PS 7 FILE SENT TO BENCH CLERK 10/12 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER