Nalluri Madhavi(HUF), Guntur V. The CIT(A)-1, , Guntur

ITA 522/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7030 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 08-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Assessment record; Capital Gains
• Section: 54; 54F; 201; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 522 /VIZ/201 8 ( / ASSESSMENT YEAR : 20 1 5 - 1 6 ) SMT.NALLURI MADHAVI (HUF) D.NO.5 - 45 - 11, 4/10, BRODIPET GUNTUR [PAN :A ANHM7845Q ] VS. INCOME TAX OFFICER WARD - 2( 3 ) GUNTUR ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI G.V.N.HARI , A R / RESPONDENT BY : S MT. SUMAN MALIK, DR / DATE OF HEARING : 2 5 . 0 6 . 201 9 / DATE OF PRONOUNCEMENT : 31 .0 7 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : DELAY : THERE WAS A DELAY OF 14 DAYS IN FILING THE APPEAL. THE ASSESSEE FILED CONDONATION PETITION REQUESTING FOR CONDONING THE DELAY GIVING MEDICAL REASONS AND FILED MEDICAL CERTIFICATE. SINCE THE DELAY WAS ON ACCOUNT OF MEDICAL REASONS AND THE ASSESSEE FILED MEDICAL CERTIFICATE ALONG 2 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR WITH CONDONATION PETITION , AFTER HEARING BOTH THE SIDES, THE DELAY IN FILING THE APPEAL IS CONDONED. 2. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [CIT(A)] - 1, GUNTUR VIDE APPEAL NO . 10195/2017 - 18 DATED 26.07.2018 FOR THE ASSESSMENT YEAR (A.Y.)2015 - 16. 3. THE ONLY GROUND IN THIS CASE IS REJECTION OF DEDUCTION CLAIMED U/S 54F OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). THE ASSESSEE FILED THE RETURN OF INCOME IN THE HUF STATUS FOR THE A.Y.2015 - 16 ADMITTING LOSS OF RS.41,22,834/ - .IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME THE ASSESSEE HA S DECLARED THE SALE CONSIDERATION OF RS.60,00,000/ - TOWARDS HER SHARE O F PROPERTY AT DOOR NO. 3/7, BRODIPET, GUNTUR. INDEXATION COST WORKED OUT RS.13,49,744/ - . SHE HAS PURCHASED A HOUSE PROPERTY ALONG WITH HER HUSBAND FOR A CONSIDERATION OF RS.1,75,46,180/ - AT LODHA BELEZZA, KUKATPALLI, HYDERABAD AND CLAIMED THE DEDUCTION U/S 54F FOR AN AMOUNT OF RS.87,73,090/ - BEING 50% SHARE OF HER INVESTMENT IN THE FLAT PURCHASED AT HYDERABAD AND RETURNED THE LOSS OF RS.41,22,834/ - . THE AO HAS TAKEN UP THE CASE FOR S CRUTINY AND FOUND FROM THE ASSESSMENT RECORD OF A.Y.2014 - 15 AND 2015 - 16 THAT THE PROPERTY SOLD IN QUESTION WAS INDIVIDUAL PROPERTY 3 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR BUT NOT THE HUF PROPERTY. THE AO ALSO FOUND THAT THE FLAT AT LODHA BELEZZA, HYDERABAD WAS PURCHASED IN THE JOINT NAMES OF THE ASSESSEE AND HER HUSBAND SRI N ALLURI SRINATH IN HUF CAPACITY, HENCE VIEWED THAT THE ASSESSEE IS DIS ENTITL ED FOR DEDUCTION U/S 54F OF THE ACT. 3.1. THE ASSESSEE IS THE DAUGHTER OF SHRI CHANNAVAJHULA VISWANADHAM AND DERIVED THE PROPERTY FROM HER FATHER ALONG WITH HER BROTHERS. SHE HAD ENTERED INTO PARTITION AGREEMENT WITH HER BROTHERS SHRI CHANNAVAJHULA PRATAP AND SRI CHANNAVAJHULA PRADEEP VIDE PARTI TION DOCUMENT NO.4780/2014 OF SUB REGISTRAR, GUNTUR ON 01.05.2014. AS PER THE PARTITION DEED, THE ASSESSEE AGREED TO RECEIVE THE PROPERTY WORTH RS.56,00,000/ - . T HE SAID RESIDENTIAL PROPERTY CONSISTS OF RCC BUILDING WITH BUILT UP AREA OF 809.4 SFT ON A SIT E ADMEASURING 918 SQ.YARDS. OUT OF THE SAID 918 SQ.YARDS OF SITE, THE ASSESSEE AGREED TO RECEIVE THE AREA OF 239.91 SQ.YARDS WORTH RS.56,00,000/ - . LATER THE ASSESSEE ALONG WITH HER TWO BROTHERS SOLD THE SAID PROPERTY ON 21.07.2014 FOR A TOTAL CONSIDERATIO N OF 2,70,00,000/ - . OUT OF WHICH , THE ASSESSEE HAD RECEIVED THE SUM OF RS.60,00,000/ - AND OFFERED FOR CAPITAL GAINS TAX AND CLAIMED DEDUCTION U/S 54F IN HER HUF RETURN. 4 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR 3.1. FROM THE ABOVE FACTS, THE AO OBSERVED THAT THE ASSESSEE HAS SOLD HER INDIVIDUAL PROPERTY IN INDIVIDUAL CAPACITY AND CLAIMED THE DEDUCTION IN HUF CA SE , HENCE, VIEWED THAT IMPUGNED SALE CONSIDERATION IS NOT ENTITLED FOR DEDUCTION U/S 54F IN HUF. ACCORDINGLY THE AO ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE FOR WH ICH THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE PROPERTY SOLD WAS RELATED TO HUF PROPERTY OF HER FATHER WHICH SHE RECEIVED IN INDIVIDUAL STATUS AFTER PARTITION AS PER THE DEED. SHE FURTHER STATED THAT SALE PROCEEDS W E RE INVESTED IN HER NAME JOINTLY ALO NG WITH HER HUSBAND IN HUF STATUS AND CLAIMED DEDUCTION U /S 54F. LD.AR ARGUED BEFORE THE AO THAT 54F IS BENEFICIAL PROVISION WHICH IS TO BE INTERPRETED LIBERALLY IN FAVOUR OF THE ASSESSEE. HENCE, REQUESTED TO ALLOW DEDUCTION U/S 54F IN HUF STATUS. HOWEVE R, THE AO NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE REJECTED THE ASSESSEES CONTENTION AND DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE IN HUF STATUS. 4. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) AGREED WITH THE VIEW OF THE AO AND TAKEN THE SUPPORT OF THE DECISION OF ITAT CHENNAI IN THE CASE OF D.DEVADASS (83 TAXMANN.COM 16), WHEREIN THE HONBLE ITAT CHENNAI HELD AS UNDER : 5 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR 8WE PERUSED THE PROVISIONS OF SEC.54F OF THE ACT WHICH ARE B ENEFICIAL PROVISIONS BUT EXEMPTION U/S 54F HAS TO BE CLAIMED ONLY BY PURCHASING CONSTRUCTING NEW RESIDENTIAL PROPERTY IN ASSESSEE OWN NAME AND NOT ON HIS UNMARRIED DAUGHTER. THIS EXEMPTION IS EXCLUSIVE TO BE CLAIMED BY THE ASSESSEE WHICH CANNOT BE CLUBBED OR APPLIED TO THE BLOOD RELATION OR FAMILY MEMBERS AND ALSO RELY ON THE DECISION OF PRAKASH (SUPRA) WHERE THE LORDSHIP HAVE CONSIDERED THAT THE EXEMPTION SHOULD BE ALLOWED ONLY IN THE NAME OF THE ASSESSEE CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS) ON THIS GROUND AND DISMISS THE GROUND OF THE ASSESSEE. THE LD.CIT(A) RELIED ON THE FOLLOWING DECISIONS ALSO AND UPHELD THE ORDER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. 1 . DARAPANENI CHENNA KRISHNAYYA (HUF) VS. CIT (2007) 291 ITR 98 (AP) 2 . VIPIN MALIK (HUF) VS. CIT (2011) 330 ITR 309 (2009) 183 TAXMAN 296 (DELHI) 4.1. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSEE HAS PURCHASED THE RESIDENTIAL HOUSE IN THE JOINT NAMES OF ASSESSEE AND HER HUSBAND IN HUF STATUS AND INV ESTED THE SALE CONSIDERATION IN ACQUIRING THE RESIDENTIAL UNIT . THOUGH IT WAS PURCHASED IN HUF STATUS, IT DOES NOT DEFEAT THE INTENDED PURPOSE OF THE PROVISION OF SECTION 54F AND SECTION 54 IS A BENEFICIAL PROVISION WHICH IS TO BE APPLIED LIBERALLY AND RE QUESTED TO ALLOW THE DEDUCTION U/S 54F OF THE ACT. LDAR ALSO RELIED ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF GRANDHI NAGESWARA RAO (HUF) VS. ACIT, CIRCLE - 2, VISAKHAPATNAM, WHEREIN, THE HONBLE ITAT ALLOWED DEDUCTION IN RESPECT OF PROPERTIES PURCHASED BY THE CO - PARCENER IN THE HANDS OF HUF. 6 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR 5. ON THE OTHER HAND, LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND ARGUED THAT THE PROPERTY SOLD WAS INDIVIDUAL PROPERTY AND THE CAPITAL GAINS ARISING IN INDIVIDUAL CAPACITY ARE NOT ENTITLED FOR DEDUCTION UNDER SECTION 54F IN OTHER STAT U S . H ENCE, ARGUED THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A) AND REQUESTED TO UPHOLD THE ORDER OF LD.CIT(A) . 6. RESPONDING TO THE ARGUMENT OF THE DEPARTMENT, THE LD.AR SUBMITTED THAT IF THE ARGUMENT OF THE DEPARTMENT IS ACCEPTED, THE SALE CONSIDERATION OF THE PROPERTY ALSO S HOULD NOT BE ASSESSED IN THE HANDS OF HUF CASE AND HENCE ARGUED THAT THE ORDER FRAMED BY THE AO IS UNSUSTAINABLE AND REQUESTED TO QUASH THE ORDER . 7 . WE HAVE HEARD BOTH THE PA RTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS SOLD THE PROPERTY BELONGING TO HER AS INDIVIDUAL STATUS AND THE S ALE OF PROPERTY ATTRACTS THE CAPITAL GAINS TAX IN HER INDIVIDUAL CAPACITY. THE ASSESSEE ALSO ACQUIRED THE RESIDENTIAL HOUSE IN JOINT NAMES OF THE ASSESSEE AND HER HUSBAND IN HUF STATUS. THOUGH THE PROPERTY WAS BELONGING TO HER INDIVIDUAL CAPACITY , SHE ADMITTED THE SALE CONSIDERATION FOR TAX IN HUF 7 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR STATUS AND ALSO CLAIMED THE DEDUCT ION IN THE HUF STATUS AND FILED THE INCOME TAX THE RETURN ACCORDINGLY. THE ASSESSEE FURTHER SUBMITTED THAT SHE RECEIVED THE HUF PROPERTY FROM HER FATHER, HENCE SHE ADMITTED THE INCOME IN HUF STATUS AND CLAIMED THE DEDUCT I ON IN HUF STATUS CORRECTLY. THE A SSESSIBILITY OF INCOME IN HUF STATUS AND INDIVIDUAL STATUS ARE DIFFERENT AND BOTH REQUIRED TO BE SEPARATELY ASSESSED TO TAX. THE ASSESSMENT OF INCOME IN ONE STATUS TO ANOTHER STATUS IS NOT PERMISSIBLE AS PER LAW. IF T HE ASSESSEE HAS SOLD THE PROPERTY IN INDIVIDUAL CAPACITY , THE SAME SHOULD BE BROUGHT TO TAX IN INDIVIDUAL CAPACITY. SIMILARLY DEDUCTION U/S 54F IS ALSO PERMISSIBLE FOR THE PROPERTY ACQUIRED IN INDIVIDUAL CAPACITY IN INDIVIDUAL STATUS, BUT NOT IN HUF HANDS. HOWEVER I N THE INSTANT CASE, THE ASSESSEE STATED TO HAVE SOLD THE PROPERTY RECEIVED FROM HUF OF HER FATHER AND MADE THE INVESTMENTS IN HUF STATUS AND ALSO CLAIMED THE DEDUCTION U/S 54F IN HUF STATUS, BOTH THE INCOME AS WELL AS DEDUCTION WAS CLAIMED IN HUF STATUS. THE CONTENTION OF THE ASSESSEE WAS THAT THE HUF PROPERTY INHE R ITED BY HER WAS SOLD AND INVESTED IN HUF STATUS. SINCE THE ASSESSEE HAS NOT CLAIMED ANY OTHER DEDUCTION IN INDIVIDUAL CASE AND ADMITT ED THE SALE CONSIDERATION FOR TAX IN HUF STATUS. WE ARE OF T HE VIEW THAT THE DEDUCTION REQUIRED TO BE ALLOWED U/S 54F IN THE INTEREST OF JUSTICE. 8 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR 7 .1. T HE LD.AR ALSO BROUGHT TO OUR NOTICE THAT IF THE PROPERTY SOLD WAS RELATING TO INDIVIDUAL PROPERTY THE SAME CANNOT BE TAXED IN HUF HANDS. THE CONTENTION OF THE AR A PPEARS TO BE CORRECT. IF THE DEPARTMENT IS OF THE VIEW THAT THE PROPERTY SOLD WAS IN INDIVIDUAL STATUS, THE SAME CANNOT BE TAXED IN HUF CASE. SINCE THE ASSESSEE HERSELF HAS FILED THE RETURN OF INCOME IN HUF STATUS AND ADMITTED THE TAX , WE CONSIDER IT IS JUDICIOUS TO ALLOW THE DEDUCTION IN HUF STATUS. H OWEVER, IN THE INSTANT CASE, IT IS TO BE VERIFIED WHETHER THE ASSESSEE HAS CLAIMED ANY DEDUCTION IN INDIVIDUAL HANDS ALSO. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY WHETHER THE ASSESSEE HAS MADE DOUBLE CLAIM OR ONLY CLAIM IN HUF STATUS. IF THE ASSESSEE DOES NOT MAKE ANY CLAIM FOR DEDUCTION U/S 54F IN HER INDIVIDUAL CASE, WE DIRECT THE AO TO ALLOW THE DEDUCTION U/S 54F. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 9 I.T.A. NO . 522 /VIZ/201 8 . A.Y.20 1 5 - 1 6 SHRI NALLURI MADHAVI (HUF), GUNTUR ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 31 .0 7 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - SMT.NALLURI MADHAVI (HUF), D.NO.5 - 45 - 11, 4/10, BRODIPET, GUNTUR 2. / THE REVENUE - INCOME TAX OFFICER, WARD - 2(3), GUNTUR 3. THE PR.COMMISSIONER OF INCOME TAX, GUNUTR 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM