Sangeeta Uberoi, New Delhi V. ACIT, New Delhi

ITA 5537/DEL/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3601 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 08-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHOUDHARY
• Keywords: Capital asset; Valuation report
• Section: 54F; 131; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 5537/DEL/2010 (ASSESSMENT YEAR: 2006-07) A APPELLANT BY : SH. TARANDEEP SINGH, ADV. RESPONDENT BY : SH. BEDOBANI CHOUDHARY, SR.DR DATE OF HEARING : 13-04-2017 DATE OF PRONOUNCEMENT : 25-04-2017 O R D E R PER BEENA A. PILLAI, J.M : 1. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 07.10.2010 PASSED BY LD. CIT (A )- XXIII, NEW DELHI FOR ASSESSMENT YEAR 2006-07 ON FOLLOWING GROUNDS OF APPEAL: 1. THE APPELLANT ORDER IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED C.I.T.(A) WAS NOT JUSTIFIED IN UPHOLDING THE ASSESSMENT ORDER REJECTING THE CLAIM OF RS.43.69.578 MADE BY THE APPELLANT TOWARDS DEDUCTION UNDER SECTION 54F OF THE INCOME TAX ACT. 1961. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: SANGEETA OBERAI B-10A, GREATER KAILAS-I, NEW DELHI. VS. AC IT CIRCLE-23(1), ROOM NO. 190, C. R. BUILDING, NEW DELHI GIR/PAN: AAGPU8313G (APPELLANT) (RESPONDENT) 2 ITA NO. 5537/DEL/2013 (AY 2009-10) ASSESSEE FILED HER RETURN OF INCOME ON 31/10/2006 DECLARING TOTAL INCOME OF RS.1,01,39,182/-. THE SAM E WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND CASE WAS SELECTED FOR SCRUTINY. ACCORDINGLY NOTICE UNDER SEC TION 143 (2) OF THE ACT WAS ISSUED IN RESPONSE TO WHICH REPRESEN TATIVES OF ASSESSEE APPEARED AND FILED DETAILS AS CALLED BY AS SESSING OFFICER. 3. DURING THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED THAT ASSESSEE HAD GENERATED LONG TERM CAPITAL GAIN FROM SALE OF PROPERTY TO TUNE OF RS.1,44,46,680/-. ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT AMOUNTING TO RS.43,69,578/- BY PURCHASING RESIDENTIAL PLOT AT D- 123, SECTOR-48, NOIDA. ASSESSEE WAS ASKED TO FURNISH DET AILS IN RESPECT OF LAND PURCHASED AS WELL AS THE INVESTMENT MADE U/S 54F BEFORE 31.03.2006. LD. AO OBSERVED THAT ASSESSE E WAS SHOWING TOTAL COST OF CONSTRUCTION FOR YEAR UNDER CONSIDERATION TO THE EXTENT OF RS.1,58,465/- ON LAN D OF WORTH RS. 42 LACS APPROXIMATELY. LD. AO ALSO OBSERVED THA T BY WAY OF AN ORDER OF COURT THE DATE OF SALE WAS SHIFTED T O BE NOVEMBER 2005. LD. AO OBSERVED THAT CLAIM OF DEDUCT ION UNDER SECTION 54F COMPRISED OF FOLLOWING AMOUNTS: COST OF LAND : RS. 41, 72, 543/- COMMISSION TO BROKER : 37, 570/ - RS. 42, 11, 113/- LESS COST OF CONSTRUCTION : RS. 1, 58, 465/- 4. ASSESSING OFFICER DISALLOWED CLAIM OF DEDUCTION UN DER SECTION 54F ON FOLLOWING BASIS: 3 ITA NO. 5537/DEL/2013 (AY 2009-10) I) THE VALUATION REPORT IS FROM AN UNREGISTERED VALUER ; II) THE AMOUNT SPENT ON CONSTRUCTION WAS VERY LOW TO HA VE RESULTED IN A RESIDENTIAL HOUSE; III) ASSESSEE HAS NOT DEPOSITED ANY AMOUNT IN CAPITAL G AIN ACCOUNT SCHEME; IV) THE PERIOD OF 3 YEARS PERMISSIBLE UNDER SECTION 54 F TO CONSTRUCT A RESIDENTIAL HOUSE FROM THE DATE OF TRAN SFER OF PROPERTY EXPIRES IN OCTOBER/NOVEMBER 2005; WHEREAS NO CONSTRUCTION HAS BEEN DONE TILL THE DATE OF PASS ING OF THE ORDER, WHICH IS BASED UPON THE REPORT OF THE INSPECTOR, WHO PERSONALLY VISITED THE SITE. 5. AGGRIEVED BY ASSESSMENT ORDER, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO CONFIRMED DISALLOWANCE MADE BY ASSESSING OFFICER. 6. AGGRIEVED BY ORDER OF LD. CIT(A) ASSESSEE IS IN AP PEAL BEFORE US NOW. 7. THE ONLY ISSUE RAISED BY ASSESSEE IS IN RESPECT OF THE DISALLOWANCE UNDER SECTION 54F OF THE ACT. 8. LD. COUNSEL SUBMITTED THAT ASSESSEE HAD SOLD IMMOV ABLE PROPERTY ON 09.03.2006 AND HAD EARNED LONG TERM CAP ITAL GAIN AMOUNTING TO RS.14,446,680/-. SUBSEQUENTLY, ASSESSE E PURCHASED PLOT FOR CONSTRUCTION OF RESIDENTIAL PROP ERTY AT D-123, SECTOR 48, NOIDA FOR RS.43,69,578/-. AS THE SAME HAS BEEN INVESTED IN PURCHASE OF RESIDENTIAL PLOT AND C ONSTRUCTION THEREON, SAID SUM WAS CLAIMED FOR EXEMPTION UNDER S ECTION 54F. LD. COUNSEL SUBMITTED THAT CORRESPONDING CAPIT AL GAIN ARISING THERE FROM AT RS.1,44,466/- WAS DULY DISCLO SED IN 4 ITA NO. 5537/DEL/2013 (AY 2009-10) RETURN OF INCOME FILED AND PART OF SALE PROCEEDS WE RE INVESTED IN CONSTRUCTION OF RESIDENTIAL HOUSE ON WHICH EXEMP TION UNDER SECTION 54F WAS CLAIMED AMOUNTING TO RS.43,69 ,578/-. LD. COUNSEL SUBMITTED THAT ASSESSEE HAD SUBMITTED PHOTOGRAPH OF SITE AT PLOT, INSPECTION CERTIFICATE FROM VALUER DATED 30.06.2008 AND COPY OF CONTRACT FOR CONSTRUCT ION OF HOUSE, BEFORE ASSESSING OFFICER, VIDE LETTER DATED 05.12.2008. HE THUS SUBMITTED THAT ASSESSEE IS ENTITLED TO CLAI M OF EXEMPTION UNDER SECTION 54F FOR YEAR UNDER CONSIDER ATION. LD. COUNSEL REFERRED TO THE COMPILATION OF PAPER BOOK W HEREIN FOLLOWING DECISIONS HAS BEEN ENCLOSED: A) CIT VERSUS SAMBANDAM UDAYKUMAR REPORTED IN 345 ITR 389 (KAR.) B) CIT VERSUS SMT. BY S SHANTAKUMARI REPORTED IN 23 3 TAXMAN 347 (KAR) 9. ON THE CONTRARY LD. DR SUBMITTED THAT, ASSESSEE HA D NOT SOUGHT ANY APPROVAL FROM NOIDA AUTHORITIES FOR CONS TRUCTION OF ALLEGED RESIDENTIAL HOUSE. SHE SUBMITTED THAT IN THE LETTER REFERRED BY LD. COUNSEL, EXACT DATE OF COMMENCEMENT OF CONSTRUCTION IS NOT A SPECIFIED. ACCORDING TO HER L ETTER OF NOIDA AUTHORITIES CLEARLY MENTIONED DATE OF COMMENCEMENT OF CONSTRUCTION AS MAY BE 27.02.2009. SHE FURTHER SU BMITTED THAT ASSESSEE HAS ALSO NOT APPLIED FOR A COMPLETION CERTIFICATE, HAD CONSTRUCTION ACTUALLY COMPLETED. 10. LD. DR FURTHER SUBMITTED THAT ASSESSING OFFICER HA D ISSUED SUMMONS UNDER SECTION 131 TO M/S KAUSHIK ASSOCIATES WHO HAD ISSUED A CERTIFICATE OF CONSTRUC TION. HE 5 ITA NO. 5537/DEL/2013 (AY 2009-10) SUBMITTED THAT SAID M/S KAUSHIK ASSOCIATES WERE NOT TRACEABLE AT THE ADDRESS PROVIDED AND ALSO DID NOT RESPOND TO SUMMONS ISSUED. LD. DR FURTHER SUBMITTED THAT ASSES SEE HAD SOLD THE ASSET ON 10.10.2005, ACCORDINGLY PERIOD OF 3 YEARS ENDED ON OCTOBER OR NOVEMBER 2008. SHE SUBMITTED TH AT BY THIS TIME THERE WAS NO CONSTRUCTION ON PROPERTY AND THERE HAS BEEN NO DOCUMENTARY EVIDENCE SUBMITTED BY ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO SUPPORT HIS CLAIM OF ANY CONSTRUCTION BEING COMPLETED OF A RESIDENTIAL U NIT. SHE SUBMITTED THAT AN INSPECTOR WAS APPOINTED FOR PHYSI CAL VERIFICATION WHO HAS ALSO APPARENTLY MENTIONED AN APPROXIMATE PERIOD DURING WHICH THE CONSTRUCTION WO ULD HAVE BEEN DONE. 11. LD. DR ALSO SUBMITTED THAT DECISIONS RELIED UPON B Y LD. COUNSEL CANNOT BE APPLIED TO FACTS OF PRESENT CASE AS THE BASIC EXISTENCE OF RESIDENTIAL UNIT ITSELF IS IN QUESTION . IN DECISIONS THAT HAS BEEN REFERRED TO AND RELIED UPON BY LD. CO UNSEL. SHE SUBMITTED THAT THERE IS CONSTRUCTION THAT IS IN EXI STENCE WHICH ITSELF IS THE DISTINGUISHING FEATURE FROM THE PRESE NT FACTS OF CASE. 12. IN REJOINDER LD. COUNSEL HAS SUBMITTED THAT ACTUAL DATE OF TRANSFER OF CAPITAL ASSET WAS 06.03.2006 AS ASSE SSEE HAD RECEIVED ENTIRE SALE CONSIDERATION ON OCTOBER 2005 AND SALE AGREEMENT WAS ENTERED INTO ON 06.03.2006. HE SUBMIT TED THAT TRANSFER WAS THUS COMPLETED ON MARCH 2005 ACCORDING LY; TIME PERIOD FOR CONSTRUCTION OF RESIDENTIAL UNIT WAS TO EXPIRE ON MARCH, 2008. HE SUBMITTED THAT FOR ASSESSEE TO AVAI L 6 ITA NO. 5537/DEL/2013 (AY 2009-10) EXEMPTION UNDER SECTION 54F COULD HAVE PURCHASE RES IDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE DATE OF TR ANSFER WHEREAS ASSESSEE HAS ADMITTEDLY PURCHASED A PLOT BY TRANSFER DEED DATED 01.12.2005 AND NOT RESIDENTIAL HOUSE. IT HAS BEEN SUBMITTED THAT SUBSEQUENT CONSTRUCTION STARTED AFTE R THE TRANSFER TOOK PLACE ON 06.03.2006. HE SUBMITTED THA T ASSESSEES CLAIM OF EXEMPTION FOR CONSTRUCTION OF H OUSE HAS TO BE CONSIDERED FOR A PERIOD OF 3 YEARS AFTER DATE OF TRANSFER. 13. LD. COUNSEL REFERRED TO LETTER DATED 24.04.2009 AN D 01.10.2009 WHEREBY COMPOUNDING FEES HAS BEEN LEVIED BY NOIDA AUTHORITIES, FOR NOT OBTAINING PRIOR APPROVAL OF BUILDING PLAN WHICH ITSELF IMPLICATES THAT SAID STRUCTURE WA S PRE- EXISTING AS ON THAT DATE. LD. COUNSEL SUBMITTED THA T ASSESSEE HAD NO DEALINGS WITH SAID M/S KAUSHIK ASSOCIATES EI THER BEFORE OR ANY TIME THEREAFTER AND DOES NOT HAVE ANY KIND OF ASSOCIATION WITH THEM. HE SUBMITTED THAT ASSESSEE W AS ALSO UNABLE TO LOCATE THE SAID M/S KAUSHIK ASSOCIATES AN D THEIR WHEREABOUTS SO AS TO ASSIST ASSESSING OFFICER, AFTE R GAP OF 3 TO 4 YEARS. HE SUBMITTED THAT ASSESSEE WAS NOT REGULAR LY DEALING OR ASSOCIATED WITH SAID PARTY AND HENCE ABSENCE OF M/S KAUSHIK ASSOCIATES SHOULD NOT BE CONSIDERED AGAINST ASSESSEE. 14. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS AND JUDICIAL PROCEEDINGS PLACE D BEFORE. 15. IT IS OBSERVED THAT YEAR UNDER CONSIDERATION IS IN WHICH TRANSFER OF PROPERTY TOOK PLACE. IT IS FURTHER OBSE RVED THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS IN VESTED AN 7 ITA NO. 5537/DEL/2013 (AY 2009-10) AMOUNT OF RS.41,72,543/- OUT OF CAPITAL GAIN EARNED IN PURCHASE OF A PLOT ON 01.12.2005 AND HAS INCURRED A COST OF RS. 1,58,465/- TOWARDS CONSTRUCTION, WHICH HAS BEEN CLAIMED FOR PURPOSES OF SECTION 54F. THE AUTHORITIES BELOW HAS DISALLOWED CLAIM OF ASSESSEE ON THE BASIS OF A REPO RT DATED 08.12.2008 OF INSPECTOR SENT BY ASSESSING OFFICER, WHEREIN IT HAS BEEN REPORTED THAT PROPERTY AT D-123, SECTOR 48 , NOIDA WAS VACANT PLOT AS ON 08. 12. 2008. IT IS ALSO PERT INENT TO NOTE THAT DURING REMAND PROCEEDINGS WHILE MATTER WAS PEN DING BEFORE FIRST APPELLATE AUTHORITY, INSPECTOR HAS REP ORTED THAT TWO ROOMS ON GROUND FLOOR ARE BUILT AS ON 14.06.201 0 WHICH IS INHABITED BY SERVANT, WHO GOES TO WORK IN MORNING A ND COMES BACK IN THE NIGHT. 16. THE ARGUMENT ADVANCED BY LD. COUNSEL REGARDING REGULARIZING PLAN OF CONSTRUCTION WITH NOIDA AUTHOR ITY BY PAYMENT OF PENALTY AMOUNTING TO RS.36,000/- APPROXI MATELY, BEING COMPOUNDING FEES, IS SUPPORTED BY LETTER DATE D 04.01.2010 ISSUED BY NOIDA AUTHORITY AND ISSUANCE O F CHALLAN DATED 24.04.2009, PLACED AT PAGE 15 AND 16 OF PAPER BOOK. ASSESSEE HAS THEREAFTER, MADE PAYMENT OF SAID AMOUN T AS ON 01.10.2009, RECEIPT OF PAYMENTS BEING MADE BY ASSES SEE IS PLACED AT PAGE 17 OF PAPER BOOK. THESE DOCUMENTARY EVIDENCES GO TO PROVE THAT ASSESSEE REGULARISED ITS DEFAULT W ITH AUTHORITIES. 17. SECTION 54F HAS BEEN INTRODUCED BY LEGISLATURE TO PROMOTE HOUSING SCHEME, BEING A BENEFICIAL PROVISION MUST B E CONSTRUED LIBERALLY. IF ASSESSEE HAS INVESTED THE CAPITAL GAI NS EARNED FROM SALE OF IMMOVABLE PROPERTY INTO PLOT AND, FOR CONST RUCTION OF A 8 ITA NO. 5537/DEL/2013 (AY 2009-10) RESIDENTIAL HOUSE, THE EXEMPTION CANNOT BE DENIED T O ASSESSEE. FOR THE YEAR UNDER CONSIDERATION IT IS OBSERVED THA T ASSESSEE HAS CLAIMED AN AMOUNT OF RS.1,58,465/- TOWARDS CONSTRUC TION COST WHICH CANNOT BE DENIED UNDER THE PRESENT SCENARIO. 18. HOWEVER, WE MAY AT THIS JUNCTURE MENTION THAT ADMI TTEDLY ASSESSEE HAS NOT INVESTED THE BALANCE CAPITAL GAIN AMOUNT INTO ANY SPECIFIED CAPITAL GAINS ACCOUNT AS PER SUB-CLAS S 4 OF SECTION 54F. THERE IS NOTHING ON RECORD FOR THE YEAR UNDER CONSIDERATION TO PROVE THAT BALANCE CAPITAL GAINS HAVE BEEN PAID FOR PURPOSES OF CONSTRUCTION OF PROPOSED RESIDENTIAL HOUSE. AS T HE REQUIREMENT IS CONSTRUCTION OF A RESIDENTIAL HOUSE AS PER THE SECTION AND THAT ASSESSEE HAS INCURRED COST OF CONS TRUCTION ON THE PLOT WHICH HAS NOT BEEN DENIED BY AUTHORITIES B ELOW EXEMPTION TO THAT EXTENT IS AVAILABLE FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY THE GROUND RAISED BY ASSESSEE FOR THE Y EAR UNDER CONSIDERATION IS ALLOWED WITH THE ABOVE DIREC TIONS. IN THE RESULT APPEAL FILED BY THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2017. SD/- SD/- (R. K.PANDA) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 25.04.2017 @M!T