Smt. Ameeta Wadhwa, Jammu ( J&k) V. The Income-tax Officer, Jammu ( J&k)

ITA 514/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85959 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SSH R K GUPTA; VIRENDER K MAINI CA S
• Keywords: Question of law; Cost of acquisition
• Section: 54B; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.514(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN :AABPW6617L SMT. AMEETA WADHWA, VS. INCOME TAX OFFICER, 36/VII, LANE-15, TAWI VIHAR WARD-1(1), SIDHRA, JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH.R.K. GUPTA & VIRENDER K.MAINI, CA S RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:12/03/2015 DATE OF PRONOUNCEMENT:26 /03/2015 ORDER PER B.P.JAIN,AM: THIS APPEAL OF THE ASSESSEE/ ARISES FROM THE ORDER OF THE CIT(A), JAMMU, DATED 13.06.2014 FOR THE ASSESSMENT YEAR 2 009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING TH E ADDITION OF RS.8,00,000/- ON ACCOUNT OF PARTIAL DISALLOWANCE U/ S 54F OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUND THAT TH E APPELLANT HAS INVESTED THE PART OF THE CAPITAL GAIN AMOUNTING TO RS.8,00,000/- TOWARDS THE CONSTRUCTION OF RESIDENTI AL HOUSE OF WHICH THE LAND IS OWNED BY HER SPOUSE. 2. THAT THE APPELLANT CRAVES LEAVE TO ALTER, AMEND AND ADD TO SUBSTITUTE ANY GROUNDS OF APPEALS BEFORE OR AT THE TIME OF HEARING. ITA NO. 514(ASR)/2014 2 2. THE BRIEF FACTS OF THE CASE AS PER AOS ORDER ARE REPRODUCED HERE UNDER: THE ASSESSEE IS A PRACTICING ADVOCATE OF THE J& K H IGH COURT. DURING THE YEAR UNDER CONSIDERATION GROSS RECEIPTS FROM PRACTICE HAVE BEEN SHOWN AT RS.3,00,500/-. OUT OF THIS, AFTE R DEBIT OF VARIOUS EXPENSES, THE INCOME HAS BEEN SHOWN AT RS.1,40,213/ -. FURTHER, THE ASSESSEE ALSO SHOWN LONG TERMS CAPITAL GAIN OF RS. 30,11,137/- ON ACCOUNT OF SALE OF PLOT OF LAND AT KARORE PUNJAB. T HE LONG TERM CAPITAL GAIN HAS BEEN CLAIMED EXEMPT U/S 54 OF THE I.T. ACT, 1961. THE ASSESSEE SOLD A PLOT OF LAND AT KARORE PUNJAB F OR AN AMOUNT OF RS.32,00,000/-. THIS PLOT WAS PURCHASED BY THE ASSE SSEE IN THE YEAR 1996-97 FOR AN AMOUNT OF RS.98,975/-. THUS, THE IND EXED COST OF ACQUISITION OF THIS PLOT WAS RS.1,88,863/- WHICH WH EN REDUCED FROM THE COST OF CONSIDERATION GAVE RISE TO LONG TERM CA PITAL GAIN OF RS.30,11,137/-. TO CLAIM EXEMPTION FROM THE PAYMENT OF CAPITAL GAIN S TAX THE ASSESSMENT DEPOSITED AN AMOUNT OF RS.24,00,000/- ON 30.07.2009 IN THE CAPITAL GAINS ACCOUNT WITH STATE BANK OF INDIA, HARI MARKET, JAMMU. ANOTHER AMOUNT OF RS.8,00,000/- WAS CLAIMED TO HAVE BEEN INVESTED FOR ACQUIRING A NEW RESIDENTIAL HOUSE BY T HE ASSESSEE AND ACCORDINGLY, THE ENTIRE CAPITAL GAINS WAS CLAIMED E XEMPT U/S 54F OF THE I.T. ACT, 1961. IN ORDER VERIFY THE CLAIM OF THE ASSESSEE, IT WAS A SKED TO FURNISHED DOCUMENTARY EVIDENCE WITH REGARD TO THE CLAIM OF IN VESTMENT IN VIEW RESIDENTIAL PROPERTY. VIDE LETTER DATED 10.8.2011, THE LD. COUNSEL FOR THE ASSESSEE FILED THE REQUISITE DOCUMENTS ON THE B ASIS OF WHICH THE DEDUCTION HAD BEEN CLAIMED. ON PERUSAL OF THESE DOC UMENTS, IT WAS OBSERVED THAT THE INVESTMENT WAS CLAIMED TO HAVE BE EN MADE ON CONSTRUCTION OF A HOUSE AT PLOT NO.36/HIG, PHASE VI I, TAWI VIHAR, SIDHERE. THE PERPETUAL LEASE DEED IN RESPECT OF THE PLOT SHOWED THAT THE SAID PLOT WAS ALLOTTED BY J&K HOUSING CORPORATI ON LTD., TO THE HUSBAND OF THE ASSESSEE SH. G.D WADHWA, FURTHER, TH E PERMISSION ACCORDED FOR CONSTRUCTION OF HOUSE ON THE SAID PLOT ALSO REVEALED THAT THE HOUSE WAS BEING CONSTRUCTED BY THE HUSBAND OF T HE ASSESSEE SH. G.D.WADHA AS THE SAID PERMISSION WAS IN HIS NAME. T HERE WAS NO EVIDENCE WHICH COULD SUGGEST THAT THE HOUSE UNDER C ONSTRUCTION WAS ACTUALLY OWNED BY THE ASSESSEE. ITA NO. 514(ASR)/2014 3 AS PER THE PROVISIONS OF SECTION 54F OF THE I.T. AC T, 1961, DEDUCTION IS ALLOWED ONLY WHEN THE NEW RESIDENTIAL PROPERTY IS B EING CONSTRUCTED BY THE ASSESSEE ITSELF. DEDUCTION IS NOT ALLOWED IF THE INVESTMENT IS MADE IN THE CONSTRUCTION OF HOUSE BELONGING TO THE SPOUSE OF THE ASSESSEE. ACCORDINGLY, THE ASSESSEE WAS REQUESTED T O EXPLAIN AS TO WHY THE DEDUCTION CLAIMED BY HER MAY NOT BE DISALLO WED IN VIEW OF THE FACT THAT PAYMENT NO CONSTRUCTION OF RESIDENTIA L HOUSE WAS BEING MADE BY THE ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE CONFIRMED THE A CTION OF THE AO. 4. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE RE IS NO MENTION U/S 54 OF THE ACT THAT NEW RESIDENTIAL HOUSE SHOULD BE PU RCHASED IN THE NAME OF THE ASSESSEE ONLY. IT MERELY SAYS THAT THE ASSESSEE SH OULD PURCHASE/CONSTRUCT A RESIDENTIAL HOUSE. THE ASSESSEE HAS NOT PURCHASED T HE NEW RESIDENTIAL HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCON NECTED WITH. BUT THE ASSESSEE HAS PURCHASED OR CONSTRUCTED THE HOUSE IN THE NAME OF HER HUSBAND.. THE LD. CIT(A) HAS RELIED UPON THE DECISI ON IN THE CASE OF JAI NARAYAN VS ITO REPORTED IN 306 ITR 351 (P&H), WHICH IN FACT HAS BEEN DISTINGUISHED BY THE SAME COURT IN THE CASE OF CI T VS.GURNAM SINGH REPORTED IN (2010) 227 ITR 278 (P&H). THE LD. CIT(A ) ALSO RELIED UPON THE DECISION OF HONBLE MUMBAI HIGH COURT, IN THE CASE OF PRAKASH VS. INCOME TAX OFFICER & ORS, REPORTED IN (2009) 312 ITR 40, W HICH HAS BEEN DISTINGUISHED BY THE HONBLE DELHI HIGH COURT IN TH E CASE OF CIT VS. RAVINDER KUMAR ARORA, REPORTED IN (2012) 342 ITR 38 (DELHI). ACCORDINGLY, ITA NO. 514(ASR)/2014 4 THE LD. COUNSEL FOR THE ASSESSEE PRAYED TO ALLOW TH E APPEAL OF THE ASSESSEE AND REVERSE THE ORDER OF THE LD. CIT(A). 5. THE LD. DR RELIED UPON THE ORDERS OF BOTH THE A UTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS OF THE PRESENT CASE ARE THAT T HE ASSESSEE HAS SOLD A PLOT FOR RS.32 LACS ON WHICH LONG TERM CAPITAL GAIN WAS CALCULATED AT RS.30,11,137/- AND ON 30.07.2009, THE ASSESSEE DEP OSITED AN AMOUNT OF RS.24,00,000/- IN THE CAPITAL GAINS ACCOUNT WITH S TATE BANK OF INDIA AND BALANCE OF THE AMOUNT WAS SPENT FOR ACQUIRING/CONS TRUCTION A NEW RESIDENTIAL HOUSE AMOUNTING TO RS.8,00,000/- AND AC CORDINGLY EXEMPTION U/S 54F OF THE ACT WAS CLAIMED FOR THE SAID RS.8,00,000 /-. THE SAID CONSTRUCTION OF THE HOUSE FOR RS.8,00,000/- WAS ON A PLOT IN TH E NAME OF THE HUSBAND OF THE ASSESSEE, SH. G.D.WADHWA. THE PLOT WAS NOT OWNE D BY THE ASSESSEE AND THE AO DISALLOWED EXEMPTION U/S 54F OF THE ACT AND THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO BY RELYING ON THE DECISIONS OF VARIOUS COURTS OF LAW MENTIONED HEREINABOVE. 6.1. AS REGARDS THE DECISION RELIED UPON BY THE LD. CIT(A) IN THE CASE OF JAIN NARAYAN VS. ITO (P&H) (SUPRA), THE SAME PERTAI N TO SECTION 54B OF THE ACT AND IS NOT WITH REFERENCE TO SECTION 54F OF TH E ACT, THOUGH THE SAME HAS BEEN DISTINGUISHED BY THE HONBLE PUNJAB & HARYAN A HIGH COURT IN THE ITA NO. 514(ASR)/2014 5 CASE OF CIT VS. GURNAM SINGH (SUPRA), WHERE THE FAC TS OF THE CASE AND DECISION IS REPRODUCED HEREINBELOW: WE HAVE HEARD THE COUNSEL FOR THE REVENUE AND GONE THROUGH THE AFORESAID IMPUGNED ORDER. IN OUR OPINION, FROM THE IMPUGNED ORDER, NO SUBSTANTIAL QUESTION OF LAW IS ARISING FO R CONSIDERATION OF THIS COURT AS THE TRIBUNAL WHILE RECORDING A PURE F INDING OF FACT HAS DISMISSED THE APPEAL OF THE REVENUE. UNDISPUTEDLY, IN THIS CASE THE ASSESSEE HAD SOLD THE AGRICULTURAL LAND WHICH WAS B EING USED BY HIM FOR AGRICULTURAL PURPOSE. OUT OF SALE PROCEEDS OF T HE SAID SALE, THE ASSESSEE HAS PURCHASED OTHER PIECE OF LAND (LAND IN QUESTION) IN HIS NAME AND IN THE NAME OF HIS ONLY SON, WHO WAS BACHE LOR AND DEPENDENT UPON HIM, FOR BEING USED FOR AGRICULTURAL PURPOSES WITHIN THE STIPULATED TIME. FURTHER, IT IS NOT THE CASE OF THE REVENUE THAT FROM THE SALE PROCEEDS OF THE AGRICULTURAL LAND EARLIER OWNED BY THE ASSESSEE, THE LAND IN QUESTION WAS PURCHASED FOR AN Y OTHER PURPOSE THAN THE AGRICULTURAL PURPOSE. UNDISPUTEDLY, THE PU RCHASED LAND IS BEING USED BY THE ASSESSEE ONLY FOR AGRICULTURAL PU RPOSE AND MERELY BECAUSE IN THE SALE DEED HIS ONLY SON WAS ALSO SHOW N AS CO-OWNER, THE TRIBUNAL HAS RIGHTLY COME TO THE CONCLUSION THAT IT DOES NOT MAKE ANY DIFFERENCE BECAUSE THE PURCHASED LAND IS BEING USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSE. IT IS NOT THE CASE OF THE REVENUE THAT THE SAID LAND IS BEING USED EXCLUSIVELY BY HIS SON. IN OUR V IEW, A PURE FINDING OF FACT HAS BEEN RECORDED BY THE TRIBUNAL WHICH DOE S NOT REQUIRE ANY INTERFERENCE IN THIS APPEAL. 6.2. THE LD. CIT(A) ALSO RELIED UPON THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF PRAKASH VS. ITO (SUPRA), WHICH IN FACT HAS BEEN DEALT WITH AND DISTINGUISHED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-XII VS. KAMAL WAHAL, REP ORTED IN 351 ITR 4, MENTIONED HEREINABOVE. THE FACTS OF THE CASE AND D ECISION OF THE COURT AT PAGE 3 & 4 OF THE ORDER IS REPRODUCED HEREINBELOW: ITA NO. 514(ASR)/2014 6 6. THE REVENUE PREFERRED AN APPEAL BEFORE THE TRIBU NAL QUESTIONING THE DECISION OF THE CIT (APPEALS). THE TRIBUNAL, HOWEVER, BY THE IMPUGNED ORDER, AGREED WITH THE DECISION OF THE CIT(APPEALS) AND IN DOING SO FOLLOWED THE JUDGMENT OF THE MADRAS AND ANDHRA PRADESH HIGH COURTS CITED SUPRA AND ALSO ANOTHER JU DGMENT OF THE KARNATAKA HIGH COURT IN DIRECTOR OF INCOME TAX, INT ERNATIONAL TAXATION, BANGALORE : (2011) 203 TAXMAN 208. IT IS ALSO NOTED THE JUDGMENT OF THE BOMBAY HIGH COURT IN PARKASH VS. IT O: (2008) 173 TAXMAN 311 IN WHICH A CONTRARY VIEW WAS TAKEN BUT P REFERRED THE VIEW TAKEN BY THE MADRAS AND KARNATAKA HIGH COURTS ADOPTING THE RULE LAID DOWN BY THE SUPREME COURT IN CIT VS. VEGE TABLE PRODUCTS LTD: 88 ITR 192 WHICH SAYS THAT IF A STATUTORY PROV ISION IS CAPABLE OF MORE THAN ONE VIEW, THEN THE VIEW WHICH FAVOURS THE TAX PAYER SHOULD BE PREFERRED. THE TRIBUNAL ALSO OBSERVED THAT SECTI ON 54F BEING A BENEFICIAL PROVISION ENACTED FOR ENCOURAGING INVEST MENT IN RESIDENTIAL HOUSES SHOULD BE LIBERALLY INTERPRETED. 7. WE HAVE NO HESITATION IN AGREEING WITH THE VIEW TAKEN BY THE TRIBUNAL. APRT FROM THE FACT THAT THE JUDGMENTS OF THE MADRAS AND KARNATAKA HIGH COURTS(SUPRA) ARE IN FAVOUR OF THE A SSESSEE, THE REVENUE FAIRLY BROUGHT TO OUR NOTICE A SIMILAR VIEW OF THIS COURT IN CIT VS. RAVINDER KUMAR ARORA. 2012)342 ITR 38 (DEL.). THAT WAS ALSO A CASE WHICH AROSE UNDER SECTION 54F OF THE AC T. THE NEW RESIDENTIAL PROPERTY WAS ACQUIRED IN THE JOINT NAME S OF THE ASSESSEE AND HIS WIFE. THE INCOME TAX AUTHORITIES RESTRICTED THE DEDUCTION UNDER SECTION 54F TO 50 PERCENT ON THE FOOTING THAT THE DEDUCTION WAS NOT AVAILABLE ON THE PORTION OF THE INVESTMENT WHIC H STANDS IN THE NAME OF THE ASSESSEES WIFE. THIS VIEW WAS DISAPPRO VED BY THIS COURT. IT NOTED THAT THE ENTIRE PURCHASE CONSIDERATION WAS PAID ONLY BY THE ASSESSEE AND NOT A SINGLE PENNY WAS CONTRIBUTED BY THE ASSESSEES WIFE. IT ALSO NOTED THAT A PURPOSIVE CONSTRUCTION I S TO BE PREFERRED AS AGAINST A LITERAL CONSTRUCTION, MORE SO WHEN EVEN A PPLYING THE LITERAL CONSTRUCTION, THERE IS NOTHING IN THE SECTION TO SH OW THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONL Y. AS A MATTER OF FACT, SECTION 54F IN TERMS DOES NOT REQUIRE THAT TH E NEW RESIDENTIAL PROPERTY SHALL BE PURCHASED IN THE NAME OF THE ASSE SSEE; IT MERELY SAYS THAT THE ASSESSEE SHOULD HAVE PURCHASED A RES IDENTIAL HOUSE. 8. THIS COURT IN THE DECISION CITED ALONE ALSO NOTI CED THE JUDGMENT OF THE MADRAS HIGH COURT (SUPRA) AND AGREED WITH TH E SAME, OBSERVING THAT THOUGH THE MADRAS CASE WAS DECIDED I N RELATION TO ITA NO. 514(ASR)/2014 7 SECTION 54 OF THE ACT, THAT SECTION WAS IN PARI MAT ERIAL WITH SECTION 54F. THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH CO URT IN THE CASE OF CIT VS. GURNAM SINGH: (2014) 327 ITR 278 IN WHIC H THE SAME VIEW WAS TAKEN WITH REFERENCE TO SECTION 54F WAS ALSO NO TICED BY THIS COURT. 9. IT THUS APPEARS TO US THAT THE PREDOMINANT JUDIC IAL VIEW, INCLUDING THAT OF THIS COURT, IS THAT FOR THE PURPO SES OF SECTION 54F, THE NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURC HASED EXCLUSIVELY IN HIS NAME. IT IS MOREOVER TO BE NOTED THAT THE AS SESSEE IN THE PRESENT CASE HAS NOT PURCHASED THE NEW HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCONNECTED WITH HIM. HE HAS PURCHA SED IT ONLY IN THE NAME OF HIS WIFE. THERE IS ALSO NO DISPUTE THAT THE ENTIRE INVESTMENT HAS CAME OUT OF THE SALE PROCEEDS AND TH AT THERE WAS NO CONTRIBUTION FROM THE ASSESSEES WIFE. 10. HAVING REGARD TO THE RULE OF PURPOSIVE CONSTRUC TION AND THE OBJECT WHICH SECTION 54F SEEKS TO ACHIEVE AND RESPECTFULLY AGREEING WITH THE JUDGMENT OF THIS COURT, WE ANSWER THE SUBSTANTIAL Q UESTION OF LAW FRAMED BY US IN THE AFFIRMATIVE, IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE. 6.3. FURTHER, RELIANCE WAS MADE BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAVINDER KUM AR ARORA, (DELHI) (SUPRA), WHICH IN FACT HAS BEEN DEALT BY THE HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. KAMAL WAHAL (SUPRA). 6.4. IN THE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE JUDICIAL FINDINGS OF VARIOUS COURTS OF LAW REFERRED TO HEREINABOVE, WE ARE OF THE VIEW THAT THE PURPOSE OF SECTION 54F IS THAT NEW RESIDENTIAL HOUS E NEED NOT BE PURCHASED BY THE ASSESSEE IN HER OWN NAME. IN THE PRESENT CAS E, THE ASSESSEE HAS CONSTRUCTED A HOUSE ON A PLOT OWNED BY HER HUSBAND AND THEREFORE, ENTIRE ITA NO. 514(ASR)/2014 8 INVESTMENT HAVING COME OUT OF SALE PROCEEDS OF THE PLOT SOLD BY THE ASSESSEE AND NOT FROM ANYWHERE ELSE. THE ASSESSEES CASE IS COVERED BY THE DECISION OF THE HONBLE DELHI HIGH COURT, IN THE CASE OF CIT VS. KAMAL WAHAL (SUPRA) AND CIT VS. RAVINDER KUMAR ARORA (SUPRA), W HICH HAS BEEN DEALT BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMAL WAHAL (SUPRA) AND DECISION OF THE HONBLE PUNJAB & HARYANA HIGH C OURT, IN THE CASE OF CIT VS.GURNAM SINGH. IN VIEW OF THE ABOVE DISCUSSIO N, THE LD. CIT(A) IS NOT JUSTIFIED IN NOT ALLOWING THE CLAIM OF THE ASSESSEE . ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS REVERSED AND THE AO IS DIRECTED T O ALLOW THE CLAIM OF THE ASSESSEE. THUS, THE SOLE GROUND TAKEN BY THE ASSESS EE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.514(ASR)/201 IS ALLOWED.. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MARCH, 2015 /SKR/ PRONOUNC ED ON 26.03.2015 SD/- JM COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SMT. AMEETA WADHWA, JAMMU. 2. THE ITO WARD 1(1), JAMMU 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER