ACIT, New Delhi V. Sh. Bharat Bhushan Panchal, New Delhi

ITA 5326/DEL/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8803 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: VIKAS JAIN ADVS; SANAT KAPOOR C S AND
• Keywords: Capital asset; Cost of acquisition
• Section: 80C; 11A; 54F; 234B; 12A; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. GEORGE GEORGE K. , JM ITA NO. 4914 /DEL/201 2 : ASSTT. YEAR : 200 9 - 10 SH. BHARAT BHUSHAN PANCHAL, C - 148, VIVEK VIHAR, DELHI - 95 VS ACIT, CIRECLE 35(1) NEW DELHI - 110002 (APPELLANT) (RESPONDENT) ITA NO. 5326/DEL/2012 : ASSTT. YEAR : 2009 - 10 ACIT, CIRECLE 35(1) NEW DELHI - 110002 VS SH. BHARAT BHUSHAN PANCHAL, C - 148, VIVEK VIHAR, DELHI - 1100 95 (APPELLANT) (RESPONDENT) PAN NO. AAHPP4096L ASSESSEE BY : SH. SANAT KAPOOR, C. S. AND & VIKAS JAIN, ADVS. REVENUE BY : SMT. PARWINDER KAUR , DR DATE OF HEARING : 13 .01.2015 DATE OF PRONOUNCEMENT : 30 .0 3 .2015 ORDER PER N. K. SAINI, AM: THE SE CROSS APPEALS BY THE ASSESSEE AND THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER DATED 04.07.2012 OF CIT(A) - XXVII, NEW DELHI. 2. IN THE ASSESSEE S APP EAL I.E. ITA NO. 4914/DEL/2012, FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, THE LD. CIT(A), HAS ERRED IN NOT ALLOWING THE EXEMPTION CLAIMED BY THE ASSESSEE U/S 54F AT RS. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 2 46,00,630/ - ON ACCOUNT OF INVESTMEN T OF RS. 46,68,400/ - MADE BY HIM, AGAINST SALE OF HIS IMMOVABLE PROPERTY BEING PART OF PLOT NO. 12A, SITUATED AT MANDOLI, SHAHDARA, DELHI FOR TOTAL CONSIDERATION OF RS. 47,30,747/ - . OBSERVATIONS OF THE LD. AO ARE EITHER FACTUALLY INCORRECT OR LEGALLY UNTEN ABLE. 2. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE LD. AO S ACTION TO RESTRICT THE ADMISSIBLE DEDUCTION U/S 80C AT RS. 59,576/ - , AS AGAINST CLAIMED BY THE ASSESSEE AT RS. 88,341/ - 3. THAT ON THE FACTS OF T HE CASE AND UNDER THE LAW, THE CHARGING OF INTEREST U/S 234A & 234B IS UNJUSTIFIED & ILLEGAL IN REJECTING THE CLAIM MADE BY THE APPELLANT U/S 54F IN RESPECT OF PURCHASE OF NEW ASSETS (C) FOR RS. 46,68,400/ - , AGAINST LONG TERM CAPITAL GAIN ON SALE OF ASSETS (A). 3 . THE GROUNDS RAISED IN THE DEPARTMENTAL APPEAL READ AS UNDER: 1. THAT THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS BY OBSERVING THAT SECTION 54F IS APPLICABLE ON THE INSTANT CASE. 2. THAT THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS BY IGNORING THE VARIOUS JUDICIAL PRONOUNCEMENTS GIVEN BY ASSESSING OFFICER WITHOUT ANY BASIS. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 3 3. THAT THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF CLAUSE (II) OF THE PROVISO OF SECTION 54F(1), AS HE HAD PURCHASED OTH ER RESIDENTIAL HOUSE AFTER THE PURCHASE OF A NEW ASSET WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET. 4. THAT THE LD. CIT(A) COMMITTED AN ERROR IN OBSERVING THE EXEMPTION ON PROPORTIONATE BASIS AMOUNTING TO RS. 20,79,900/ - WAS A LLOWABLE TO THE APPELLANT IN TERMS OF PROVISIONS OF SECTION 54F(1)(B). 5. THE APPELLANT C RAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 4 . FROM THE ABOVE GROUNDS, IT IS GATHERED T HAT THE ISSUE VIDE GROUND NO. 1 RAISED BY THE ASSESSEE AND VIDE GROUND NOS. 1 & 4 BY THE DEPARTMENT RELATES TO THE EXEMPTION U/S 54F OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 5 . FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AS SESSEE FILED HIS RETURN OF INCOME ON 25.03.2010 DECLARI NG AN INCOME OF RS. 28,46,986/ - , O UT OF THIS THE ASSESSEE CLAIMED DEDUCTION UNDER CHAPTER VI - A TO THE EXTENT OF RS. 88,341/ - . THE SAID RETURN WAS PROCESSED U/S ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 4 143(1) OF THE ACT AND SUBSEQUENTLY, THE C ASE WAS SELECTED FOR SCRUTINY THROUGH CASS. 6 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD DECLARED INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN S FOR A SUM OF RS. 25,56,756/ - AND CLAIMED CAPITAL GAIN AS EXEMPT U/S 54F OF THE ACT. THE AO ALSO NOTICED THAT THE ASSESSEE HAD SOLD ONE VACANT PLOT DIVISIBLE INTO TWO UNITS VIDE TWO SEPARATE SALE DEEDS FOR A TOTAL SALE CONSIDERATION OF RS. 94,73,002/ - WITH THE RESULTANT TOTAL LONG TERM CAPITAL GAIN S OF RS. 93,35,656/ - WHI CH WAS CLAIMED AS EXEMPT U/S 54 OF THE ACT ON ACCOUNT OF BUYING TWO RESIDENTIAL HOUSES VIDE TWO SEPARATE SALE DEEDS ONE FROM SMT. RAJRANI AND OTHER FROM A BUILDER AS PER FOLLOWING DETAILS: INVESTMENT MADE TO ACQUIRE NEW ASSET D PAYMENT TO SMT. RAJRANI ON 30.08.2008 - 5,00,000/ - PAYMENT TO SMT. RAJRANI ON 30.08.2008 - 5,00,000/ - PAYMENT TO SMT. RAJRANI ON 02.09.2008 - 5.00.000/ - EXPENSES ON DALALI, DOCUMENTATION, DEVELOPMENT AND FINISHING - RS. 6,10,500/ - INVESTMENT MADE TO ACQUIRE NEW ASSET C ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 5 08.01.2008 - 5 ,00,000/ - 22.01.2008 - 5,00,000/ - 09.02.2008 - 6,00,000/ - 19.03.2008 - 14,12,480/ - 10.05.2008 - 9,00,000/ - EXPENSES ON DALALI, DOCUMENTATION, DEVELOPM ENT AND FINISHING - RS. 7,55,920/ - 7. THE AO ASKED THE ASSES SEE TO EXPLAIN AS TO WHY CLAIM FOR EXEMPTION U/S 54 O F THE ACT BE NOT RESTRICTED TO ONE PROPERTY ONLY AND HOW THE ORIGINAL PROPERTY WAS SOLD TO TWO PERSONS WHEN THE PROPERTY WAS CONSIDERED TO BE ONE INDIVISIBLE LOT. IN RESPONSE TO THE ABOVE THE ASSESSEE SUBMITTED TO THE AO AS UNDER: KINDLY REFER TO THE DIS CUSSION HELD WITH THE UNDERSIGNED, THE ASSESSEE HAS CLAIMED THE EXEMPTION U/S 54(1) OF THE INCOME TAX ACT, 1961. IN RESPECT OF SALE CONSIDERATION OF THE LONG TERM CAPITAL GAIN FOR THE PURPOSE OF PURCHASE OF RESIDENTIAL PROPERTIES. YOUR GOODSELF HAS POINT ED OUT THAT THE EXEMPTION IS NOT APPLICABLE BEING VACANT LAND SOLD BY THE ASSESSEE. THE EXEMPTION IS APPLICABLE ONLY IN CASE OF SALE OF RESIDENTIAL HOUSE AND SALES CONSIDERATION IS INVESTED FOR THE PURPOSE OF PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE. AS PER SECTION 54F(1) OF THE INCOME TAX ACT, 1961, (SUBJECT TO THE PROVISIONS OF SUB - SECTION (4), WHERE IN THE CASE OF AN ASSESSEE BEING AN ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 6 INDIVIDUAL OR A HINDU UNDIVIDED FAMILY), THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, NO T BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR (TWO YEARS) AFTER THE DUE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THRE E YEAR AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREINAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS S ECTION, THAT IS TO SAY - A) IF THE COST OF THE NEW AS SETS IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45. B) IF THE COST OF THE NEW ASSETS IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45. 2. THAT THE DECLARATION BY THE ASSESSEE THAT HE HAS NOT HAVE ANY RESIDE NTIAL HOUSE ON THE DATE OF TRANSFER OF PROPERTY IS ENCLOSED. KEEPING IN VIEW OF THE ABOVE SAID FACTS YOU R GOODSELF IS KINDLY REQUESTED TO ALLOW THE EXEMPTION U/S 54F INSTEAD OF 54(1) OF THE INCOME TAX ACT, 1961. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 7 8. THE AO AGAIN ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY CLAIM OF EXEMPTION U/S 54F BE NOT DENIED AND THE CAPITAL GAINS ARISING ON THE TRANSFER OF ORIGINAL ASSET BE ADDED BACK TO THE INCOME FOR THE REASON THAT THE SALE PROCEEDS HAD BEEN REINVESTED IN THE AC QUISITION OF TWO HOUSE PROPERTIES WHICH VIOLATES THE CONDITIONS OF SECTION 54F . THE ASSESSEE VIDE LETTER DATED 05.12.2011 EXPLAINED TO THE AO AS UNDER: IN CONTINUATION OF MY LETTER DATED 29.11.2011 AND WITH REFERENCE TO THE REMARKS MADE BY YOU ON THE ORDER SHEET ON 25.11.2011, IT IS RESPECTFU LLY SUBMITTED AS UNDER: THAT INITIALLY THE EXEMPTION HAD BEEN INADVERTENTLY CLAIMED U/S 54 OF THE I.T. ACT, 1961. ON THE LAST DATE OF HEARING YOU HAVE BEEN REQUESTED TO KINDLY CONSIDER & ALLOW THE EXEMPTION U/S 54F OF THE I.T. ACT, 1961. YOU HAVE BEEN KIN D ENOUGH TO ALLOW ME TO MOVE AHEAD WITH THE CORRECT CLAIM OF EXEMPTION U/S 54F OF THE I.T. ACT, 1961. THAT YOU HAVE CORRECTLY, POINTED OUT THE EXEMPTION U/S 54F OF THE I.T. ACT, 1961 IS AVAILABLE, WHERE THE ASSESSEE DOES NOT OWN MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET. IT IS RESPECTFULLY MADE CLEAR THAT AT THE TIME OF MAKING SALES OF BOTH OF IMMOVABLE PROPERTIES, TO TWO DIFFERENT PERSONS THROUGH TWO SEPARATE SALE DEEDS, I DID NOT OWN ANY RESI DENTIAL HOUSE OTHER THAN THE NEW ASSETS. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 8 THAT I WISH TO CLARIFY HERE THAT I NEVER OWNED THE RESIDENTIAL HOUSE, BEARING NO. C - 48, VIVEK VIHAR, DELHI 110095. THE SAID RESIDENTIAL HOUSE WAS & IS OWNED BY MY MOTHER. THAT DURING THE PREVIOUS YEAR, RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, I HAD SOLD MY TWO IMMOVABLE PROPERTIES TO TWO DIFFERENT PERSONS, THROUGH TWO SEPARATE SALE DEEDS. I HAVE REWORKED OUT THE ASSESSABLE LONG TERM CAPITAL GAINS SEPARATELY FOR BOTH THE SOLD IMMOVABLE PROPERTIES, AS PER SHEETS ENCLOSED AS APPENDIX A & B. YOU WILL OBSERVE/APPRECIATE I HAD CLAIMED EXEMPTION ON A/C OF TWO DIFFERENT NEW ASSETS AGAINST TWO DIFFERENT SALES MADE BY HIM. YOU WILL FURTHER OBSERVE/APPRECIATE THAT I HAD NOT VIOLATED THE PROVISIONS OF SECTION 54F OF THE I.T. ACT, 1961. ON THE FACTS OF THE CASE AND UNDER THE LAW THE EXEMPTION CLAIMED U/S 54F OF THE I.T. ACT, 1961 CANNOT BE DENIED TO ME. THAT NOW I HAVE REALIZED THAT THE TAXABLE LONG TERM CAPITAL GAINS HAD BEEN INCORRECTLY WORKED OUT AT RS. 25,56,756/ - , WHILE THE TAXABLE LONG TERM CAPITAL GAINS WAS RS. 27,92,432/ - (SEE APPENDIX - C). TO THIS EXTENT MY RETURN OF INCOME MAY KINDLY BE TREATED TO HAS BEEN REVISED. THAT IN CASE YOU STILL HOLD SOME DIFFERENT VIEW ON THIS ISSUE, KINDLY COMMUNICATE YOU R VIEW POI NT AND THE BASIS THEREOF, TO ENABLE ME TO FURTHER CLARIFY THE POSITION/SUPPORT MY CONTENTION. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 9 PROPERTY A AMOUNTS SALE CONSIDERATION DATE 20.12.2007 06.02.2008 18.03.2008 07.04.2008 15.04.2008 LESS: INDEXED COST OF ACQUISITION LONG - TERM CAPITAL GAI NS INVESTMENT MADE TO ACQUIRE NEW ASSET C D ATE 08.01.2008 22.01.2008 09.02.2008 19.03.2008 10.05.2008 EXPENSES ON DALALI, DOCUMENTATION, DEVELOPMENT & FINISHING TAXABLE LONG TERM CAPITAL GAINS ON SALE OF PORPERTY A SALE CONSIDERATION LESS: EXEMPTION U/S 54F 9,50,000 10,00,000 20,00,000 7,25,000 55,747 47,30,747 68,673 4 7 , 30.747 459000*582/389 5,00,000 5,00,000 6,00,000 14,12,480 9,00,000 7,55,920 46,62,074 47,30,747 46, 00,630 46,68,400 46,68,400*46,62,074/ 47,30,747 1,30,115 PROPERTY B AMOUNTS SALE CONSIDERATION DATE 07.04.2008 15.04.2008 47,25,000 17,255 4,742,255 47,42,255 ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 10 LESS: INDEXED COST OF ACQUISITION LONG - TERM CAPITAL GAINS INVESTMENT MADE TO ACQUIRE NEW ASSE T D DATE 30.08.2008 30.08.2008 02.09.2008 EXPENSES ON DALALI, DOCUMENTATION, DEVELOPMENT & FINISHING TAXABLE LONG TERM CAPITAL GAINS ON SALE OF PROPERTY B SALE CONSIDERATION LESS: EXEMPTION U/S 54F 45900*582/389 68,673 5,00,000 5,00,000 5,00,000 6,10,500 46,73, 582 47,42,255 20,79,938 21,10,500 21,10,500*46,73,582/ 47,42,255 26,62,317 SUMMAY AMOUNT TAXABLE LONG TERM CAPITAL GAIN ON SALE OF PROPERTY A TAXABLE LONG TERM CAPITAL GAIN ON SALE OF PROPERTY B TOTAL 130 ,115 2,662,317 2,792,432 9. THE AO, HOWEVER WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND MADE THE ADDITION OF RS. 65,43,224/ - BY STATING THAT THE ASSESSEE DID NOT FULFILL THE ELIGIBILITY CONDITIONS PRESCRIBED BY SECTION 54F OF TH E ACT. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 11 CIT VS AJAX PRODUCTS LTD. 55 ITR 741 (SC) CIT VS INDO - MERCANTILE BANK LTD. (1959) 36 ITR 1 (SC) S. C. CAMBATTA AND CO. LTD. VS CIT (1952) 21 ITR 121 (BOM.) TARULATA SHYAM VS CIT 108 ITR 318 MC DOWEL L & CO. LTD. (1985) 154 ITR 148 (SC) WORKMENT OF ASSOCIATED RUBBER INDUSTRY LTD. VS ASSOCIATED RUBBER INDUSTRY LTD. (1986) 157 ITR 77 (SC) CIT VS DURGA PRASAD MORE 82 ITR 540 (SC) BOMBAY OIL INDUSTRIES LTD. VS DCIT (2000) 82 ITD 626 (MUMBAI) 1 0 . BEING AGGRIE VED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THERE WAS NO VIOLATION OF THE PROVISIONS OF PROVISO (A)(II) TO SECTION 54F OF THE ACT . IT WAS FURTHER STATED THAT TH E ASSESSEE HAD NOT PURCHASED ANY RESIDENTIAL HOUSE OTHER THAN THE N EW ASSET S WHICH WERE PURCHASED IN RESPECT OF TWO DIFFERENT DEEDS. IT WAS FURTHER STATED THAT THE ASSESSEE WAS NEITHER HAVING ANY RESIDENTIAL HOUSE AS ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET NOR HAD HE PURCHASED ANY RESIDENTIAL HOUSE AFTER ACQUIRING T HOSE TWO NEW ASSETS. AS REGARDS TO THE CASE LAWS RELIED UPON BY THE AO, THE ASSESSEE SUBMITTED THAT THOSE WERE NOT RELEVANT BECAUSE NONE OF THE CASE LAWS REFERRED TO BY THE AO WITH REFERENCE TO SECTION 54F. IT WAS ALSO STATED THAT EVEN IF THE EXEMPTION U/S 54F WAS TO ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 12 BE DISALLOWED WITH RESPECT TO NEW ASSET C ON THE GROUND THAT THE ASSESSEE HAD PURCHASED ANOTHER RESIDENTIAL HOUSE D WITHIN ONE YEAR FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET, THEN TOO EXEMPTION WITH RESPECT TO NEW ASSET D COULD NOT BE DISALLOWED. 1 1 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE SOLD A PLOT OF LAND THROUGH TWO DIFFERENT SALE DEEDS TO TWO DIFFERENT INDIVIDUALS AND THE SALE CONSIDERATION WAS INVESTED IN PURCHASE OF TWO RE SIDENTIAL HOUSE PROPERTIES. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAD PURCHASED THE PLOT NO. 12A, VILLAGE - MANDOLI, DELHI AS A SINGLE UNIT THROUGH ONE PURCHASE DEED FOR RS. 91,800/ - AND BY SELLING THIS PLOT OF LAND TO TWO DIFFERENT PERSONS I.E. HUSBAND AND WIFE THROUGH TWO SEPARATE SALE DEEDS, IT CANNOT BE SAID THAT THE ASSESSEE HAD SOLD TWO DIFFERENT IMMOVABLE PROPERTIES. ACCORDING TO THE LD. CIT(A), IT WAS THE SAME PLOT WHICH HAS BEEN SOLD IN TWO DIFFERENT PARTS THROUGH TWO DIFFERENT SALE DEED S . T HEREFORE, THE CONTENTION OF THE ASSESSEE THAT HE HAD PURCHASED TWO NEW ASSETS IN RESPECT OF TWO SALE INSTANCES OF IMMOVABLE PROPERTIES CANNOT BE ACCEPTED. THE LD. CIT(A) FURTHER OBSERVED THAT THE EXEMPTION U/S 54F OF THE ACT IN RESPECT OF LONG TERM ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 13 CAP ITAL GAIN S IS AVAILABLE IN RESPECT OF TRANSFER OF ANY LONG TERM ASSET NOT BEING A RESIDENTIAL HOUSE AND WHEN THE SAME IS INVESTED IN THE PURCHASE/CONSTRUCTION OF A RESIDENTIAL HOUSE . THEREFORE, IT DOES NOT MATTER WHETHER THE ASSESSEE HAD SOLD ONE LONG TERM CAPITAL ASSET OR MORE ASSETS BUT THE RESULTING EXEMPTION OF LONG TERM CAPITAL GAIN S IS ONLY WITH RESPECT TO A RESIDENTIAL HOUSE AND NOT MORE THAN ONE RESIDENTIAL HOUSE. THE LD. CIT(A) FURTHER OBSERVED THAT IN ASSESSEE S CASE THE SALE CONSIDERATION HAD BEE N INVESTED BY HIM IN THE PURCHASE OF TWO RESIDENTIAL HOUSES WHEREAS IN TERMS OF PROVISIONS OF SECTION 54F OF THE ACT , T HE EXEMPTION IS AVAILABLE TO THE ASSESSEE IF THE LONG TERM CAPITAL GAINS ARE INVESTED IN THE PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE A ND THAT THE CLAUSE (A)(II) OF THE PROVISO OF SECTION 54F PROVIDES THAT IF THE ASSESSEE PURCHASES ANY RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET, THEN EXEMPTION U/S 54F(1) IS NOT AVAIL ABLE TO THE ASSESSEE. THE LD. CIT(A) POINTED OUT THAT THE ASSESSEE FIRST PURCHASE D A RESIDENTIAL HOUSE PROPERTY (ASSET C ) ON 10.05.2008 AND SUBSEQUENTLY PURCHASED ANOTHER HOUSE PROPERTY (ASSET D ) ON 02.09.2008 AND APART FROM THESE TWO RESIDENTIAL HOUSE S, T HE ASSESSEE DID ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 14 NOT HAVE ANY OTHER RESIDENTIAL HOUSE I.E. ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET ON 09.04.2008, THE ASSESSEE DID NOT HAVE ANY RESIDENTIAL HOUSE. THEREFORE, IF THE ASSET C IS CONSIDERED AS THE NEW ASSET THEN EXEMPTION U/S 54F CA NNOT BE ALLOWED TO THE ASSESSEE IN TERMS OF CLAUSE (II) OF THE PROVISO AS THE ASSESSEE PURCHASED A RESIDENTIAL HOUSE ASSET D OTHER THAN THE NEW ASSET WITHIN ONE YEAR OF THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THE LD. CIT(A) FURTHER STATED THAT IF THE ASSET D IS TO BE CONSIDERED AS NEW ASSET THEN THE PROPORTIONATE EXEMPTION CANNOT BE ALLOWED TO THE ASSESSEE AS IN THAT CASE, THE ASSESSEE WOULD HAVE ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WHICH IS ALLOWED IN TERMS OF CLAUSE (I) OF THE PROVISO. A S THE TOTAL INVESTMENT IN ASSET D WAS ONLY RS. 21,10,500/ - (TOTAL NET CONSIDERATION WAS RS. 94,73,002/ - AND TOTAL LONG TERM CAPITAL GAINS WERE RS. 93, 35,656/ - ), EXEMPTION ON PROPORTIONATE BASIS AMOUNTING TO RS. 20,79,900/ - WAS ALLOWABLE TO THE ASSESSEE I N TERMS OF PROVISIONS OF SECTION 54F(1)(B) OF THE ACT. ACCORDINGLY, T HE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 46,63,324/ - . 12 . NOW THE ASSESSEE IS IN APPEAL AGAINST THE SUSTENANCE OF ADDITION AND THE DEPARTMENT IS IN APPEAL AGAINST THE RELIEF ALLOWED T O THE ASSESSEE. THE LD. COUNSEL FOR THE ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 15 ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE PURCHASED ONE PLOT WHICH WAS DIVIDED IN TWO PLOTS HAVING DIFFERENT NUMBERS , TH O SE PLOTS WERE SOLD TO TWO D IFFERENT PERSONS THROUGH SEPARATE SALE DEEDS BUT THE EXEMPTION U/S 54F HAS BEEN ALLOWED BY THE D EPARTMENT IN RESPECT OF ONE PLOT ONLY. HE DREW OUR ATTENTION TOWARDS PAGE NO. 26 OF THE PAPER BOOK WHICH IS A COPY OF THE PART OF S ALE DEED RELATING TO PLOT NO. 12 AHE ALSO DREW OUR ATTENTION TOWARDS PAGE NO. 46 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF PART OF S ALE DEED RELATING TO PLOT NO. 11 A. IT WAS SUBMITTED THAT THE ASSESSEE PURCHASED ONE PLOT OUT OF KHAS RA NO. 12/23 AND BIFURCATED IT INTO TWO PLOTS MEASURING 413 SQ. YDS. A ND 414 SQ . YDS. WHICH WERE SOLD AS PLOT NOS. 12A AND 11A RESPECTIVELY TO SMT. ANJALI GUPTA AND SH. PRADEEP GUPTA. IT WAS FURTHER STATED THAT THE LD. CIT(A) WRONGLY CONFIRMED THE ACTION OF THE AO WHO DISALLOWED THE CLAIM OF THE ASSES SEE BY CO NSIDERING THE PROVISIONS CONTAINED IN PROVISO (A)(II) TO SUB - SECTION (1) OF SECTION 54 OF THE ACT INSTEAD OF CLAUSE (A)(I) OF SECTION 54F(1) OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE WAS NOT THE OWNER OF MORE THAN ONE HOUSE WHEN ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 16 THE SECOND HO USE WAS PURCHASED, THEREFORE, EXEMPTION U/S 54F WAS AVAILABLE IN RESPECT OF SECOND HOUSE ALSO. 13 . IN HER RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS MADE IN THEIR RESPECTIVE ORDERS. RELIANCE WAS PLACED ON THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF ITO VS MS. SUSHILA M. JHAVERI (2007) 292 ITR 1 (A.T) (MUM.) 14 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE REC ORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE PURCHASED A PLOT NO. 12A SITUATED IN THE VILLAGE MANDOLI, DELHI . THE SAID PLOT WAS DIVIDED INTO TWO PLOTS AND SEPARATE NUMBERS WERE GIVEN TO THOSE PLOTS I.E. 12A AND 11A. THE PLOT NO. 12A W AS MEASURING 413 SQ. YDS. I.E. 345.31 SQ METER WHICH IS EVIDENT FORM PAGE NOS. 25 & 26 OF THE ASSESSEE S PAPER BOOK. THE ANOTHER PLOT NO. 11A WAS MEASURING 414 SQ. YDS. I.E. 346.15 SQ METER. THE PLOT NO. 12A WAS SOLD TO SH. PRADEEP GUPTA FOR A SUM OF RS. 4 7,30,747/ - AND THE ANOTHER PLOT I.E. 11A WAS SOLD TO SMT. SARITA GUPTA FOR A SUM OF RS. 47,42,255/ - . THE ASSESSEE CLAIMED THE EXEMPTION U/S 54F ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 17 IN RESPECT OF TWO RESIDENTIAL HOUSES PURCHASED FOR RS. 46,68,400/ - AND RS. 21,10,500/ - FROM THE SALE PROCEEDS OF PLOT NOS. 11A AND 12A RESPECTIVELY . IN THE INSTANT CASE TO RESOLVE THE PRESENT CONTROVERSY, IT IS RELEVANT TO DISCUSS THE PROVISIONS CONTAINED IN SECTION 54F(1) OF THE ACT WHICH READ AS UNDER: 54F(1) [ SUBJECT TO THE PROVISIONS OF SUB - SECTION (4 ), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY ] , THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG - TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AN D THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR [ TWO YEARS ] AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO A S THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY - (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAP ITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 18 THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF TH E NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45: PROVIDED THAT NOTHING CONTAINED IN THI S SUB - SECTION SHALL APPLY WHERE (A) THE ASSESSEE - (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF T RANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIO D OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY . ] EXPLANATION - FOR THE PURPOSES OF THIS SECTION - 25[***] 26 [***] NET CONSIDERATION , IN RELATION TO THE TRANSFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS RED UCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 19 15 . FROM THE PROVISIONS OF THE ABOVE SAID PROVISO (A)(I) TO SUB - SECTION (1) OF SECTION 54F OF THE ACT , IT WOULD BE CLEAR THAT THE PROVISIONS OF SUB - SECTION (1) TO SECTION 54F OF THE ACT SHALL NOT APPLY WHERE THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET. IN THE PRESENT CASE THE ASSESSEE SOLD PLOT NO. 11A FOR RS. 47,30,747/ - AND THE INDEXED COST OF ACQUISITION OF THE SAID PLOT WAS OF RS. 68,673/ - . AS SUCH THE LONG TERM CAPITAL GAINS WORKED OUT TO RS. 46,62,074/ - . THE SAID LONG TERM CAPITAL GAINS WAS INVESTED BY THE ASSESSEE IN PURCHASING THE RESIDENTIAL HOUSE FOR A SUM OF RS. 46,68,400/ - AS PER FOLLOWING DETAILS: INVESTMENT MADE TO ACQUIR E NEW ASSET C DATE 08.01.2008 5,00,0000 22.01.2008 5,00,0000 09.02.2008 6,00,000 19.03.2008 14,12,480 10.05.2008 9,00,000 EXPENSES ON DALALI, DOCUMENTATION DEVELOPMENT & FINISHING 7,55,920 46,68,400 T HE EXEMPTION U/S 54F OF THE ACT IN RESPECT O F TH IS PLOT WORKED OUT TO RS. 46,00,630/ - . FROM THE ABOVE DETAILS IT WOULD BE CLEAR THAT THE ASSESSEE PURCHASED ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 20 THE NEW RESIDENTIAL HOUSE ON 10.05.2008 AND THE PLOT NO. 12A WAS SOLD T O SH. PRADEEP GUPTA ON 11.04.2008 FOR A SUM OF RS. 47,30,747/ - WHICH IS EVIDENT FROM THE COPY OF THE SALE DEED PLACED AT PAGE NOS. 22 TO 41 OF THE ASSESSEE S PAPER BOOK. AS SUCH THE TAXABLE LONG TERM CAPITAL GAINS WORKED OUT AT RS. 1,30,117 (RS. 47,30,747/ - RS. 46,00,630/ - ) , WHEN THE ASSESSEE PURCHASED THIS RESIDENTIAL HOUSE FOR A SUM OF RS. 46,68,400 , HE WAS NOT HAVING ANY OTHER HOUSE, SO HE WAS ENTITLED FOR THE EXEMPTION U/S 54F OF THE ACT. T HEREAFTER THE ASSESSEE SOLD ANOTHER PLOT BEARING NO. 11A TO SMT. SARITA GUPTA ON 11. 04.2008 WHICH IS EVIDENT FROM THE PAGE NOS . 42 TO 58 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF THE SALE DEED FOR A SUM OF RS. 47,42,255/ - , T HE INDEXED COST OF ACQUISITION OF THE SAID PLOT WAS AT RS. 68,673/ - , A S SUCH THE LONG TERM CAPITAL GAINS WOR KED OUT TO RS. 46,73,582/ - . T HE ASSESSEE OUT OF THE SAID SALE CONSIDERATION PURCHASED ANOTHER RESIDENTIAL HOUSE PROPERTY FOR A SUM OF RS. 21,10,500/ - AS PER FOLLOWING DETAILS: INVESTMENT MADE TO ACQUIRE NEW ASSET D DATE 30.08.2008 5,00,000 30.08. 2008 5,00,000 ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 21 02.09.2008 5,00,000 EXPENSES ON DALALI DOCUMENTATION, DEVELOPMENT & FINISHING 6,10,500 21,10,500 16 . FROM THE ABOVE DETAILS IT WOULD BE CLEAR THAT AT THE TIME OF PURCHASING THE NEW RESIDENTIAL HOUSE F OR A SUM OF RS. 21,10,500/ - . THE ASSESSEE WAS HAVING ONLY ONE RESIDENTIAL HOUSE WHICH WAS EARLIER PURCHASED ON 10.05.2008. THEREFORE, THE ASSESSEE WAS ENTITLED FOR EXEMPTION U/S 54F OF THE ACT IN RESPECT OF THIS HOUSE ALSO AS PER THE PROVISIONS CONTAINED I N PROVISO (A)(I) TO SUB - SECTION (1) OF SECTION 54F OF THE ACT. THE SALE CONSIDERATION OF RS. 47,42,255/ - RELATING TO PLOT NO. 11A WAS UTILIZED BY THE ASSESSEE FOR PURCHASING THE NEW HOUSE FOR A SUM OF RS. 21,10,500/ - , THEREFORE, THE EXEMPTION U/S 54F WAS A LLOWABLE FOR A SUM OF RS. 20,79,938/ - (21,10,500 46,73,582 47,42,255) AND TAXABLE LONG TERM CAPITAL GAINS WORKED OUT TO RS. 26,62,317/ - (RS. 47,42,255/ - - RS. 20,79,938/ - ). WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HERE IN ABOVE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO SUSTAIN THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS FOR A SUM OF RS. 46,6 3,324/ - . ACCORDINGLY, WE DELETE THE ADDITION CONFIRMED BY THE LD. CIT(A) . ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 22 17 . THE NEXT ISSUE VIDE GROUND NO. 2 OF THE ASSESSEE S APPEAL RELATES TO THE DEDUCTION U/S 80C OF THE ACT. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80C OF THE ACT FOR A SUM OF RS. 88,341/ - . THE AO, HOWEVER, IN THE ABSENCE OF COMPLETE DO CUMENTARY EVIDENCES ALLOWED THE DEDUCTION FOR A SUM OF RS. 59,576/ - . WHEN THE MATTER WAS TAKEN TO THE LD. CIT(A), THE ACTION OF THE AO WAS CONFIRMED. 18 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CLAIMED T HE DEDUCTION AS PER FOLLOWING DETAILS: DATE AMOUNT PAID TO REMARKS 02/05/2008 3,193.00 LIC OF INDIA DEDUCTION ALLOWED 17/05/2008 15,000.00 MAX NEW YORK LIFE INS. CO. LTD. DEDUCTION NOT ALLOWED (ON A/C OF WANT OF PROOF) 05/08/2008 12,075.00 LIC OF I NDIA DEDUCTION ALLOWED 08/10/2008 3,555.00 LIC OF INDIA DEDUCTION NOT ALLOWED (ON A/C OF WANT OF PROOF) 08/10/2008 3,193.00 LIC OF INDIA DEDUCTION ALLOWED 23/01/2009 12,075.00 LIC OF INDIA DEDUCTION ALLOWED 49,091.00 DATE CHILD 1 CHILD 2 T OTAL FEES TUITION FEES TOTAL FEES TUITION FEES 25/04/2008 8,930 3750 8,540 3,510 ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 23 18/07/2008 3,750 3750 3,510 3,510 14/11/2008 3,750 3750 3,510 3,510 28/01/2009 3,750 3750 3,510 3,510 20,180 15000 19,070 14,040 19 . THE LD. COUNSEL FOR THE ASSESSEE R EQUESTED THAT THE MATTER MAY BE SENT BACK TO THE AO FOR VERIFICATION BECAUSE THE ASSESSEE WAS NOT ABLE TO PRODUCE THE COPIES OF THE PAYMENTS BEFORE THE AO WHICH WERE AVAILABLE WITH THE ASSESSEE. THE LD. DR IN HER RIVAL SUBMISSIONS STRONGLY SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE MATTER MAY NOT BE SENT BACK TO THE AO BECAUSE THE OPPORTUNITY WAS GIVEN BY THE AO AS WELL AS THE LD. CIT(A) BUT THE ASSESSEE COULD NOT FURNISH THE PROOF OF MAKING THE PAYMENTS TO JUSTIFY THE CLAIM OF RS. 88,341/ - . 2 0 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD , WE DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF THE AO FOR VERIFICATION AND IF IT IS FOUND THAT THE ASSESSEE INVESTED RS. 88,341/ - IN LIC AND THE TUITION FEES OF THE CHILDREN THEN THE CLAIM MAY BE ALLOWED IN ACCORDANCE WITH LAW. ITA NO S . 4914 & 5326 /DEL/2012 BHARAT BHUSHAN PANCHAL 24 21 . GROUND NO. 3 RELATING TO CHARGING OF INTEREST U/S 234A AND 234B IS CONSEQUENTIAL IN NATURE. WE ORDER ACCORDINGLY. 2 2 . IN THE DEPARTMENTAL APPEAL THE ONLY ISSUE I NVOLVED WAS RELATING TO THE EXEMPTION U/S 54F OF THE ACT WHICH WE HAVE ALREADY ADJUDICATED IN THE FORMER PART OF THIS ORDER WHILE DECIDING THE GROUND NO. 1 OF THE ASSESSEE S APPEAL. 23 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES AND THAT OF THE DEPARTMENT IS DISMISSED . ( ORDER PRON OUNCED IN THE COURT ON 30 /0 3 / 201 5 ) . SD/ - SD/ - ( GEORGE GEORGE K. ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 /0 3 /2015 *SUBODH* COPY FO RWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR