Sri. Mammen Adeneth Pappy, Pathanamthitta V. The ITO, Thiruvalla

ITA 498/COCH/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8121 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-04-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 12-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Capital asset
• Section: 54F

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 498/COCH/20 18 ASSESSMENT YEAR : 2012 - 13 SHRI M AMMEN ADENETH PAPPY, ADENETH, VETTIPURAM, PATHANAMTHITTA - 689 645. [PAN: AGXPP 7637B] VS. THE INCOME TAX OFFICER, WARD - 2, THIRUVALLA. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI ANIL D. NAIR, ADV. REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 05/04/ 201 9 DATE OF PRONOUNCEMENT 08 / 0 4 /201 9 O R D E R PER CHANDRA POOJARI, AM: TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), KOTTAYAM DATED 06/08/2018 AND PERTAIN S TO THE A SSESSMENT YEAR 2012 - 13. 2. THE ONLY ISSUE IN THIS APPEAL IS WITH REGARD TO NON GRANTING OF DEDUCTION U/S. 54F OF THE ACT IN R ESPECT OF INVESTMENT MADE IN CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN THE TIME STIPULATED U/S. 139(4) OF THE ACT. 3. THERE WAS A DELAY OF 38 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE LD. AR HAS FILED CONDONATION PETITION ALONGWITH AFFIDAVIT ST ATING TH AT THE APPELLAT E ORDER I.T.A. NO . 498/COCH/2018 2 WAS SERVED ON THE ASSESSEE ON 06/08/2018. THEREFORE, THE APPEAL OUGHT TO HAVE BEEN FILED ON OR BEFORE 05/10/2018. DUE TO THE DEATH OF THE ASSESSEES FATHER, HE COULD NOT FILE THE APPEAL IN TIME WHICH RESULTED IN DELAY OF F ILING THE APPEAL BEFORE THE TRIBUNAL. IT WAS SUBMITTED THAT THE DELAY OCCURRED DUE TO REASONS BEYOND THE CONTROL OF THE ASSESSEE AND THE CONDUCT OF THE ASSESSEE WAS NEITHER WILLFUL NOR CONTUMACIOUS. HENCE, HE PRAYED THAT THE TRIBUNAL MAY CONDONE THE DELA Y OF 38 DAYS IN FILING THE APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE REASONS ADVANCED BY THE ASSESSEE FOR FILING THE APPEAL BELATEDLY BEFORE THIS TRIBUNAL. WE ARE SATISFIED WITH THE REASONS EXPLAINED BY THE ASSESSEE FOR FIL ING THE APPEAL BELATEDLY. ACCORDINGLY, WE CONDONE THE DELAY OF 38 DAYS IN FILING THE APPEAL AND ADMIT THE APPEAL FOR ADJUDICATION. 5. NOW COMING TO THE ISSUE RAISED BY THE ASSESSEE, THE FACTS ARE THAT IN THE RETURN OF INCOME FILED, THE ASSESSEE CLAIM ED DEDUCTION U/S. 54F OF THE ACT ON THE CAPITAL GAIN. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD NOT UTILIZED THE CAPITAL GAIN FOR INVESTMENT IN HOUSE PROPERTY BEFORE DUE DATE OF FURNISHING OF RETURN OF INCOME AND ALSO HAD NOT DEPOSITED THE BALANCE AMOUNT IN THE CAPITAL GAIN ACCOUNT IN THE BANK. THEREFORE, THE ASSESSING OFFICER RESTRICTED THE ALLOWANCE U/S. 54F OF THE ACT TO THE EXTENT OF INVESTMENT MADE BEFORE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT. THE ASSESSING OFFICER RELIED ON TH E DECISION OF THIS TRIBUNAL IN THE CASE OF ROSAMMA KORAH, 45 TAXMANN.COM 153. I.T.A. NO . 498/COCH/2018 3 6. ON APPEAL, THE CIT(A) CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER STATING THAT THE DECISION OF THE JURISDICTIONAL TRIBUNAL IS BINDING ON THE LOWER AUTHORITIES. IN VIEW OF THE SAME, THE CIT(A) UPHELD THE ASSESSMENT OF LONG TERM CAPITAL GAINS AT RS.52,75,000/ - . 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT AN IDENTICAL ISSUE CAME UP FOR OUR CONSIDERATION IN REVENUES APPEAL IN THE CASE OF ITO VS. LATE SHRI K. SASIDHARAN, REP. BY SMT. K.P. SAILAJA IN ITA NO. 56/COCH/2017 DATED 10/07/2018 WHERE IT WAS HELD AS UNDER : 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE SOLD THE CAPITAL ASSET ON 01/04/2005. AD MITTEDLY, THE ASSESSEE FILED THE RETURN OF INCOME ON 18/07/2006 FOR THE ASSESSMENT YEAR 2006 - 07. AS PER SECTION 139(1) OF THE ACT, THE RETURN OF INCOME FOR ASSESSMENT YEAR 2006 - 07 SHOULD HAVE BEEN FILED ON OR BEFORE 31/07/2006. THE ASSESSEE IS SAID TO HA VE MADE INVESTMENT IN CONSTRUCTION OF NEW BUILDING ON 22/01/2007. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE SHOULD HAVE MADE INVESTMENT IN THE RESIDENTIAL BUILDING BEFORE 31/07/2006. THE ASSESSING OFFICER DENIED THE EXEMPTION U/S.54F OF THE ACT ON THE REASON THAT THE RETURN FILED WITHIN THE EXTENDED TIME LIMIT AVAILABLE OF FILING OF RETURN OF INCOME U/S. 139(4) CANNOT BE CONSIDERED. 8.1 THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. FATHIMA BAI (32 DTR 243), THE GUWAHATI HIGH COURT IN THE CAS E OF CIT VS. RAJESH KUMAR JALAN (206 CTR 361) HELD THAT THE DUE DATE FOR THE ASSESSEE TO INVEST THE AMOUNT OF CAPITAL GAINS IN PURCHASE/CONSTRUCTION OF NEW RESIDENTIAL ASSET OR INVESTMENT IN CAPITAL GAINS SCHEME U/S. 54F OF THE ACT REFERS TO THE EXTENDED DUE DATE U/S. 139(4) OF THE ACT. SO FAR AS THE TIME LIMIT FOR ASSESSEE TO INVEST IN CONSTRUCTION OF RESIDENTIAL BUILDING, THE TIME LIMIT AVAILABLE U/S. 139(4) IS TO BE CONSIDERED TO THAT EXTENT WE ARE AGREEING WITH THE CONTENTION OF THE LD. AR. HOWEVER, DURING THE INTERMEDIARY PERIOD, I.E., AFTER THE SALE OF CAPITAL ASSET TILL THE DATE OF INVESTMENT, THE AMOUNT HAS TO BE DEPOSITED IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN AND UTILIZED IN ACCORDANCE WITH ANY SCHEME OF CENTRAL GO VERNMENT NOTIFIED IN OFFICIAL GAZETTE FRAMED IN THIS BEHALF AND THE ASSESSEE SHALL FILE PROOF FOR SUCH DEPOSIT. THE ASSESSING OFFICER IN THIS CASE HAS REJECTED I.T.A. NO . 498/COCH/2018 4 THE CLAIM OF ASSESSEE THAT THE ASSESSEE HAS NOT UTILIZED THE CAPITAL GAINS ON TRANSFER OF CAPIT AL ASSET IN INVESTMENT IN RESIDENTIAL BUILDING AS SPECIFIED IN SECTION 54F(1) OF THE ACT ON THE REASON THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME WITHIN DUE DATE IN TERMS OF SEC. 139(1) OF THE ACT. 8.2 THE LD. DR MADE A PLEA THAT THE ASSESS EE HAS NOT INVESTED THE CAPITAL GAIN IN THE CAPITAL GAIN ACCOUNTS DEPOSIT SCHEME BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S. 139(1) OF THE ACT AND THE INVESTMENT IN THE RESIDENTIAL BUILDING WAS MADE AFTER THE DUE DATE OF FILING THE RETURN OF INC OME AND HENCE, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 54F OF THE ACT. THE LD. ARS CONTENTION IS THAT THE ASSESSEE HAS PURCHASED THE LAND WITH PARTIALLY COMPLETED BUILDING ON 22/01/2007 FOR THE CONSIDERATION OF RS.7.03 LAKHS AND ADDITIONAL EXPENS ES WERE INCURRED AT RS.12.36 LAKHS TO COMPLETE THE PROJECT. THUS, THE TOTAL INVESTMENT IS RS.19.78 LAKHS AND HENCE, DEDUCTION U/S. 54F IS TO BE GRANTED. 8.3 IN OUR OPINION, THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K. RAMACHANDRA RAO (56 TAXMAN.COM 163) IS APPLICABLE WHEREIN IT WAS HELD THAT AS PER SEC. 54F(4), IN THE EVENT OF THE ASSESSEE NOT INVESTING THE CAPITAL GAINS EITHER IN PURCHASING THE RESIDENTIAL BUILDING OR IN CONSTRUCTING A RESIDENTIAL HOUSE WITHIN THE PERIOD STIPULATE D IN SEC. 54F(1), IF THE ASSESSEE WANTS THE BENEFIT OF SEC. 54F, THEN HE SHOULD DEPOSIT THE SAID CAPITAL GAINS IN AN ACCOUNT WHICH IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT. IN OTHER WORDS, IF THE ASSESSEE CLAIMS EXEMPTION FROM PAYMENT OF INCOME TAX BY R ETAINING THE CASH THEN THE SAID AMOUNT IS TO BE INVESTED IN THE SAID ACCOUNT NOTIFIED BY THE CENTRAL GOVERNMENT ON THIS BEHALF. IF THE INTENTION IS NOT TO RETAIN CASH BUT TO INVEST IN CONSTRUCTION OR ANY PURCHASE OF THE PROPERTY AND IF SUCH INVESTMENT IS M ADE WITHIN THE PERIOD STIPULATED THEREIN I.E., SECTION 139(4), THEN SECTION 54F(4) IS NOT ALL ATTRACTED AND THEREFORE, THE CONTENTION THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE BANK ACCOUNT AS STIPULATED AND THEREFORE, HE IS NOT ENTITLED TO THE BENEFIT EVEN THOUGH HE HAS INVESTED THE MONEY IN CONSTRUCTION IS ALSO NOT CORRECT. A SIMILAR VIEW WAS TAKEN BY THE KERALA HIGH COURT IN THE CASE OF DR. XAVIER J. PULLIKAL VS. DCIT (104 DTR 134). IN OUR OPINION, THE ASSESSEE COULD MAKE INVESTMENT IN CONST RUCTION OF NEW RESIDENTIAL BUILDING WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET TO CLAIM DEDUCTION U/S. 54F OF THE ACT. PROVISIONS OF SECTION 54F ARE BENEFICIAL PROVISIONS AND ARE TO BE CONSIDERED LIBERALLY. 8.4 IN VIEW OF THE ABO VE DISCUSSION, WE ARE INCLINED TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE FULFILLMENT OF THE CONDITIONS U/S. 54F OF THE ACT THROUGH INTERMEDIARY PERIOD, I.E., FROM THE DATE OF TRANSFER OF THE CAPITAL ASSET TO THE DATE OF ACTUAL INVESTMENT IN CONSTRUCTION OF RESIDENTIAL BUILDING. ACCORDINGLY THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S. 54F IS REMITTED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO PROVE THE INVESTMENT IN THE RESIDENTIAL BUILDING AS PRES CRIBED U/S. 54F OF THE ACT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S. 139(4) OF THE I.T. ACT, I.E., 31/03/2007. I.T.A. NO . 498/COCH/2018 5 ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7.1 IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S. 54F IS REMITTED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO PROVE THE INVESTMENT IN THE CONSTRUCTION OF RESIDENTIAL HOUSE AS PRESCRIBED U/S. 54F OF THE ACT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S. 139(4) OF THE I.T. ACT . ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION I N THE LIGHT OF THE ORDER OF THE TRIBUNAL CITED SUPRA. THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH APRIL , 2019 SD/ - SD/ - (GEORGE G EORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 08 TH APRIL , 2019 GJ COPY TO: 1 . SHRI MAMMEN ADENETH PAPPY, ADENETH, VETTIPURAM, PATHANAMTHITTA - 689 645. 2. THE INCOME TAX OFFICER, WARD - 2, THIRUVALLA. 3 . THE COMMISSIONER OF INCOME - TAX (AP P EALS) , KOTTAYAM. I.T.A. NO . 498/COCH/2018 6 4. THE PR. COMMISSIONER OF INCOME - TAX, KOTTAYAM. 5 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN