ITO, New Delhi V. Sh Karam Chand Mehra, New Delhi

ITA 5318/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81703 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 5 318 /DEL/201 1 ASSTT. YR: 200 6 - 07 INCOME - TAX OFFICER, VS. SH. KARAM CHAND MEHRA, WARD 26(3), NEW DELHI. 3/13, ASAF ALI ROAD, NEW DELHI - 110002. PAN: AAEPM 3036 C ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI VIVEK NANGIA SR. DR ASSESSEE BY : NONE DATE OF HEARING : 1 7 - 09 - 2014 DATE OF ORDER : 19 - 09 - 2014. O R D E R PER S.V. MEHROTRA, A.M: - TH IS APPEAL, PREFERRED BY THE REVENUE, IS DIRECTED AGAINST ORDER DATED 0 2 - 0 9 - 201 1 PASSED BY THE LD. CIT(A) - XXIV, NEW DELHI, IN APPEAL NO. 281 / 08 - 09 , RELATING TO A.Y. 200 6 - 07 . 2. NONE PUT IN APPEARANCE ON BEHALF OF THE ASSESSEE AT THE HEARING DESPITE ISSUE OF NOTICE FOR HEARING. ACCORDINGLY, WE PROCEED TO DISPOSE OF DEPARTMENTAL APPEAL, EX PARTE, QUA THE ASSESSEE AND IN THAT PROCESS WE HAVE HEARD LD. DR AND PERUSED THE ENTIR E MATERIAL AVAILABLE ON RECORD. 2.1. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A SENIOR CITIZEN, IN THE RELEVANT ASSESSMENT YEAR , DERIVED INCOME FROM PROPRIETORSHIP CONCERN M/S 2 MADHUBAN. THE ASSESSEE HAD ALSO DECLARED NIL LONG TERM CAPITAL GAIN O N SALE OF PROPERTY. THE AO NOTICED THAT THE WORKING OF THE LONG TERM CAPITAL GAIN WAS AS UNDER: SALE PRICE OF C - 1/108 JANAKPURI, DELHI 52,00,000 SALE PRICE OF FURNITURE AND FIXTURE AND OTHER ITEMS 7,00,000 59,00,000 LESS: INDEXED COST OF ACQ UISITION 5,89,198 LONG TERM CAPITAL GAIN 46,10,802 LESS EXEMPTION U/S 54D 55,00,000 PURCHASE OF C - 1/367 PALAM VIHAR GURGAON STAMP DUTY 2,93,380 TAXABLE LONG TERM CAPITAL GAIN NIL. 2.2. THE AO REQUIRED THE ASSESSEE TO SUBMIT SALE DEED OF THE PROPERTY SOLD, PURCHASE DEED OF THE NEW PROPERTY, JUSTIFICATION OF CLAIM OF EXEMPTION U/S 54 AND BANK STATEMENT S OF ALL THE BANK ACCOUNTS HELD BY HIM IN F.Y. 2005 - 06. 2.3. FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE AO NOTICED THAT THE PROPERTY SOLD WAS IN THE SINGLE NAME OF ASSESSEE. HOWEVER, THE NEW PROPERTY PURCHASED I.E. C - 1/367, PALAM VIHAR GURGAON WAS IN THE NAME OF THREE PERSONS, NAMELY, ASSESSEE, HIS SON SHRI YOGESH MEHRA AND HIS DAUGHTER - IN - LAW SMT. POONAM MEHRA WIFE OF SHR I YOGESH MEHRA. THE AO REQUIRED THE ASSESSEE TO EXPLAIN, AS TO WHY BENEFIT OF EXEMPTION U/S 54 MAY NOT BE ALLOWED AT 1/3 RD OF THE AMOUNT CLAIMED BY THE ASSESSEE AS HE HAD 1/3 RD S HARE IN THE SAME. 2.4. IN RESPONSE, ASSESSEE SUBMITTED AFFIDAVITS OF SELF , S HRI YOGESH MEHRA , AND MRS. POONAM MEHRA AND COPY OF JUDGMENT IN THE CASE OF JCIT VS. SMT. ARMEDA K. BHAYA 95 ITD 313 IN SUPPORT OF ITS CLAIM THAT U/S 54 EVEN WHEN , IN THE PURCHASE OF THE NEW PROPERTY NAMES OF OTHER RELATIVES OF THE ASSESSEE WERE INCLUDED FOR THE PURPOSE OF SAFETY AND CONVENIENCE, BUT THE ENTIRE CONSIDERATION 3 OF THE PROPERTY HAD BEEN PAID OUT OF THE SOLE FUNDS OF THE ASSESSEE THE DEDUCTION U/S 54 COULD NOT BE DENIED. 2.5. THE AO, AFTER CONSIDERING THE ASSESSEE SUBMISSIONS, POINTED OUT TH AT IT IS EVIDENT FROM THE BANK STATEMENT THAT THERE WERE DEPOSITS IN ASSESSEE S BANK FROM THE SAVING BANK A/C NO. 2149 WHICH BELONGED TO SHRI YOGESH MEHRA AND SHRI LOKESH MEHRA . HE FURTHER POINTED OUT THAT THERE WERE DEPOSITS IN ASSESSEE S BANK ACCOUNT FRO M THE A/C NO. 1000044324 - 4, WHICH BELONGED TO SHRI YOGESH MEHRA, POONAM MEHRA AND ADITI MEHRA. THESE DEPOSITS HAD BEEN MADE BEFORE THE PURCHASE OF PROPERTY. FURTHER, ASSESSEE S OWN BANK ACCOUNT, FROM WHICH PAYMENT FOR PURCHASE OF NEW PROPERTY HAD BEEN MADE , WAS IN THE JOINT NAME OF SHRI KARAM CHAND MEHRA AND SHRI YO G ESH MEHRA. FURTHER, SHRI YOGESH MEHRA WAS ONE OF THE THREE PURCHASERS, NAMED IN THE PURCHASE DEED. FROM THE AFFIDAVITS FILED BY SON AND DAUGHTER - IN - LAW OF THE ASSESSEE I.E. SHRI YOGESH MEHRA AND POONAM MEHRA , THE AO POINTED OUT THAT THEY MADE IT CLEAR THAT THEY HAD INTEREST, TITLE AND RIGHT IN THE SAID PROPERTY. HE, THEREFORE, CONCLUDED THAT CONSTRUCTIVE OWNERSHIP OF THE PROPERTY WAS IN THE HANDS OF THE THREE PERSONS, WHOSE NAMES WERE APPEAR ING IN THE PURCHASE DEED. THEREFORE, HE ALLOWED ONLY 1/3 RD SHARE IN THE NEW PROPERTY AND WORKED OUT BENEFIT U/S 54 ACCORDINGLY. 2.6. BEFORE LD. CIT(A), ASSESSEE, INTER ALIA, SUBMITTED COPY OF HIS BANK A/C TO PROVE THAT THE MONEY RECEIVED BY HIM FROM SAL E OF JANAKPURI PROPERTY WAS UTILIZED BY HIM FOR PURCHA S E OF GURGAON PROPERTY . IT WAS CONTENDED THAT SECTION 54 TALKS ONLY ABOUT PURCHASE OF NEW RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR OR TWO YEARS AFTER THE DATE OF TRANSFER OF THE OLD RESIDENTIAL HO USE. NO RESTRICTIONS HAVE BEEN IMPOSED BY THE SECTION AS TO IN WHOSE NAME THE NEW PROPERTY SHOULD HAVE BEEN PURCHASED. THE ASSESSEE HAD RELIED ON FOLLOWING DECISIONS: 4 - CIT VS. V NATRAJAN 287 ITR 271 (MAD); - JCIT SPL. RANGE - 40 VS. MRS. AHMEDA K BHAYA 95 ITD 313 (MUM); - ITO WARD - 1, GURGAON VS. SMT. SARASWATI RAMANATHAN 116 ITD 234 (DEL); - CIT VS. CHANDANBEN MAGANLAL 245 ITR 182 (GUJ). 2.7. LD. CIT(A) DELETED THE ADDITION, INTER ALIA, OBSERVING AS UNDER: 4.1. I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTAN C ES OF THE CASE AND I FIND THAT THE CA S E OF THE APPELLANT IS SIMILAR TO THE CA S ES OF V NATRAJAN (SUPRA). THE APPELLANT HAS INCLUDED THE NAMES OF HIS SON AND HIS DAUGHTER - IN - LAW TO AVOID FUTURE LITIGATION AS HE WAS HIMSELF A SENIOR CITIZEN OF MORE THAN 80 YEARS. THE FUNDS UTILIZED FOR THE PURCHASE OF NEW PROPERTY FOR THE SAME FUNDS RECEIVED AS SALE CONSIDERATION OF THE OLD PROPERTY. THE AO WAS NOT JUSTIFIED IN GRANTING EXEMPTION ONLY TO THE EXTENT OF 1/3 RD TO THE APPELLANT. ACCORDINGLY, THE ADDITIO N MADE BY THE AO ON THIS GROUND IS DELETED. 2.8. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 26,79,675/ - MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN AFTER RESTRICTING EXEMPTION CLAIMED U/S 54 OF THE I.T. ACT, 1961. 3. L D. DR SUBMITTED THAT LD. CIT(A) HAS NOT CONSIDERED THE FINDIN G OF AO THAT IN THE BANK A/C FROM WHICH PAYMENT WAS MADE FOR PURCHASE OF NEW PROPERTY, FUNDS WERE DEPOSITED FROM THE ACCOUNT OF OTHER TWO CO - OWNERS AND, THEREFORE, ASSESSEE WAS ENTITLED TO ONLY 1/3 RD EXEMPTION IN RESPECT OF NEW PROPERTY, PARTICULARLY WHEN THE NEW PROPERTY WAS PURCHASED IN THE NAMES OF THREE CO - OWNERS. 4. WE HAVE CONSIDERE D THE SUBMISSIONS OF LD. DR AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE SALE CONSIDERATION RECEIVED BY 5 ASSESSEE WAS RS. 52 LACS AND PURCHASE PRICE OF NEW PROPERTY WAS RS. 55 LACS. LD. CIT(A) HAS, INTER ALIA, GIVEN A SPECIFIC FINDIN G THAT THE FUNDS , RECEIVED AS SALE CONSIDERATION OF THE OLD PROPERTY, WERE UTILIZED FOR THE PURCHASE OF NEW PROPERTY . THE MAIN CONTENTION OF LD. DR , AS NOTED EARLIER, IS THAT FUNDS WERE RECEIVED FROM OTHER CO - OWNERS ALSO. SECTION 54 ONLY CONTEMPLATES F OR PURCHASE OF PROPERTY OR CONSTRUCTION OF PROPERTY BY ASSESSEE AND IT NO WHERE REFERS TO THE FUNDS WHICH ARE TO BE UTILIZED FOR PURCHASE OR THE CONSTRUCTION OF THE PROPERTY. THE ONLY REQUIREMENT IS THAT THE PROPERTY SOLD SHOULD HAVE BEEN A RESIDENTIAL H OUSE, THE INCOME OF WHICH WAS CHARGEABLE TO UNDER THE HEAD INCOME FROM HOUSE PROPERTY , AND ON THAT BEING SOLD, THE ASSESSEE PURCHASES/ CONSTRUCTS A RESIDENTIAL HOUSE WITHIN THE PRESCRIBED TIME LIMIT . THE SECTION NOWHERE DEBARS THE ASSESSEE FROM PURCHA SING/ CONSTRUCTING THE NEW RESIDENTIAL HOUSE (NEW ASSET), BY INCLUDING NAME OF OTHERS ALSO IN THE PROPERTY. 4.1. IT IS WELL SETTLED LAW THAT A LIBERAL CONSTRUCTION HAS TO BE PLACED ON EXEMPTION/ DEDUCTION PROVIS I ON AND TECHNICALITIES SHOULD NOT COME IN WAY FOR ALLOWING THE EXEMPTION/ DEDUCTION. ONCE THE ALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS LESS THAN THE PURCHASE PRICE OF THE NEW ASSET, THEN THE EXEMPTION CANNOT BE DENIED MERELY BECAUSE FUNDS OF OTHERS AL SO GOT MIXED UP WITH THE FUNDS OF THE ASSESSEE. THE PRESUMPTION WOULD BE THAT FUNDS OF ASSESSEE WERE FIRST UTILIZED AND THE BALANCE FUNDS WERE CONTRIBUTED BY OTHERS. IN OUR OPINION, MERELY BECAUSE THE FUNDS WERE CONTRIBUTED BY CO - OWNERS AS THEIR NAMES WERE IN PURCHASE DEED, PARTICULARLY WHEN THEY WERE FAMILY MEMBERS, WAS OF NO CONSEQUENCE AS SECTION 54 DOES NOT PUT ANY SUCH CONDITION. THE ASSESSEE WAS MORE THAN 80 YEARS OF AGE AND THEREFORE THIS ASPECT CANNOT BE IGNORED WHILE CONSIDERING THE ENTIRE CONSPEC TUS. 4.2. IN THE CASE OF CIT VS. V. NATRAJAN 287 ITR 271 (MAD.), THE ASSESSEE OWNED A HOUSE AND SOLD THE SAME. IT WAS ALSO AN ADMITTED POSITION THAT HE 6 PURCHASED A PROPERTY AT MADRAS IN THE NAME OF HIS WIFE SMT. SMT. MEERA OUT OF THE MONEY OBTAINED BY HIM BY SALE OF THE PROPERTY AT BANGALORE. THE HON BLE MADRAS HIGH COURT HELD THAT ASSESSEE WAS ENTITLED FOR EXEMPTION U/S 54 OF THE ACT. 4.3. IN VIEW OF ABOVE, WE SEE NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A), DELETING THE ADDITION MADE BY THE AO ON THE ISSUE IN QUEST ION. 5. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 09 - 2014. SD/ - SD/ - ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 - 09 - 2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR