Shri Ramesh Kumar Singla, Ambala City V. ITO, Ambala

ITA 575/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5131 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES(SMC), CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 575/CHD/2016 ASSESSMENT YEAR: 2012-13 SHRI RAMESH KUMAR SINGLA, VS. THE ITO SCF: 8, VIKAS VIHAR, WARD-3, AMBALA AMBALA CITY PAN NO. AEZPS4190Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 31/05/2017 DATE OF PRONOUNCEMENT : 01/06/2017 ORDER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-2, GURGAON DT. 08/03/2016 FOR AY 2012-13 ON THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 34,86,072/- MADE BY D ISALLOWING THE DEDUCTION CLAIMED UNDER SECTION 54F IN UTTER DISREGARD OF THE EXPLANA TION RENDERED WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)HA S FURTHER ERRED IN UPHOLDING THAT THE ASSESSEE HAD PURCHASED ONLY A PLOT AND NOT A RESIDE NTIAL HOUSE WHICH IS CONTRARY TO THE FACTS ON RECORD AND AS SUCH THE DEDUCTION DISALLOWE D IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 2 BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECLA RING INCOME OF RS. 3,09,240/- WAS FILED ON 15/08/2012. THE AO NOTED TH AT THE ASSESSEE HAD EARNED INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN ON ACC OUNT OF SALE OF IMMOVABLE PROPERTY. THE ASSESSEE HAD CLAIMED DEDUCT ION UNDER SECTION 54F AGAINST THESE CAPITAL GAINS. IN SUPPORT OF THIS CLA IM ASSESSEE FILED A COPY OF THE REGISTERED PURCHASE DEED DT. 07/10/2011. THE AO NOT ED THAT IN THE PURCHASE DEED IT WAS CLEARLY MENTIONED THAT CAPITAL ASSET PU RCHASED WAS A RESIDENTIAL PLOT. THE AO POINTED OUT THAT DEDUCTION UNDER SECTI ON 54F IS ALLOWABLE ONLY IN THE CASE OF PURCHASE OF RESIDENTIAL HOUSE OR CONSTR UCTION OF RESIDENTIAL HOUSE 2 AND NOT IN THE CASE OF PURCHASE OF PLOT. THE AO CON FRONTED THE ASSESSEE WITH THESE FACTS AND ASKED THE ASSESSEE TO JUSTIFY THE C LAIM OF DEDUCTION UNDER SECTION 54F. THE ASSESSEE CLAIMED THAT HE HAD PURCH ASED A OLD HOUSE AND NOT A PLOT. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND AGAIN REFERRED TO PURCHASE DEED AND POINTED OUT THAT IT W AS NOT MENTIONED IN THE DEED THAT ANY HOUSE WAS EXISTING ON THE SAID PLOT. THE AO ALSO POINTED OUT THAT THE WORD PLOT HAD BEEN USED REPEATEDLY IN THE REGIS TERED DEED. THE AO ALSO GOT ENQUIRY CONDUCTED THROUGH HIS INSPECTOR WHO VI SITED THE SITE AND REPORTED THAT THERE WERE NO CONSTRUCTION ON THE SAID PLOT ON THE DATE OF THE INSPECTION AND IT APPEARED THAT PLOT WAS LYING AS SUCH FOR THE LAST FOUR TO FIVE YEARS. THE AO ACCORDINGLY HELD THAT THERE WERE NO EVIDENCE OF PUR CHASE OF HOUSE AND DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 54 F . 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEF ORE THE LD. CIT(A) AND FILED WRITTEN SUBMISSION WHICH IS REPRODUCED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT DURING THE YEAR UND ER CONSIDERATION THE ASSESSEE HAS SOLD PLOT NO. 17-B, SEC-1, URBAN ESTATE, AMBALA CITY FOR CONSIDERATION OF RS. 50,00,000/- AND COMPUTED LONG TERM CAPITAL GAIN (LT CG) WHICH WERE REDUCED BY EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT. IT WAS EXPLAINED THAT ASSESSEE HAS MADE INVESTMENT IN PURCHASE OF OLD RES IDENTIAL HOUSE AMOUNTING TO RS. 50,70,000/- I.E., COST OF THE HOUSE AND STAM P DUTY ETC. DURING THE ASSESSMENT YEAR UNDER APPEAL, THEREFORE, ASSESSEE I S ENTITLED TO CLAIM THE EXEMPTION UNDER SECTION 54F OF THE ACT AGAINST LTCG . THE ASSESSEE DURING THE COURSE OF HEARING PROVIDED COPY OF THE ORIGINAL INT KAL OBTAINED FROM THE MUNICIPAL CORPORATION, AMBALA WHEREIN IT IS CLEARLY MENTIONED THE NAME OF THE ASSESSEE AS OWNER OF THE HOUSE AND SAME IS ISSUED B Y MUNICIPAL CORPORATION AMBALA AND THE SAME IS ISSUED ONLY IN THE CASE OF R ESIDENTIAL HOUSE AND NOT IN THE CASE OF THE PLOT AS THE RECORD OF THE PLOT IS M AINTAINED IN THE OFFICE OF REGISTRAR OF THE DISTRICT AND THE RECORD OF REGISTR ATION OF HOUSE IS MAINTAINED IN THE OFFICE OF MUNICIPAL CORPORATION. THE AO OBTAINE D REPORT FROM THE INSPECTOR 3 BUT IT WAS EXPLAINED THAT HOUSE WERE DEMOLISHED LAT ER ON AFTER PURCHASE AND THE INSPECTOR ALSO STATED IN HIS REPORT THAT SAID P LOT WAS VERY MUCH COVERED BY BOUNDARY WALL ALONG WITH MARKS/SIGNS OF OLD HOUSE. THE ASSESSEE ALSO OBTAINED BILL OF WATER / SEWERAGE CHARGES FROM PUBLIC HEALTH ENGG. DEPARTMENT, AMBALA CITY DT. 31/03/2015 WHICH IS ISSUED ONLY IN THE CAS E OF BUILT UP HOUSE, WHICH IS STILL IN THE NAME OF THE PREVIOUS OWNER I.E., HELAN RIPAN . THE ASSESSEE THEREFORE PRODUCE SUFFICIENT EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE PURCHASE OLD HOUSE THEREFORE ENTITLED FOR DEDUCTION UNDER SECTIO N 54 F OF THE ACT. LD. CIT(A) ON THE SAME REASONING AS GIVEN BY THE AO THAT IN TH E SALE DEED ONLY WORD PLOT HAVE BEEN MENTIONED , DISMISSED THE APPEAL OF THE A SSESSEE. 4. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 5. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSION MADE BEFORE AUTHORITIES BELOW AND ALSO FILED COPY OF THE SALE D EED IN FAVOUR OF THE ORIGINAL OWNER TO SHOW THAT THE WORD HOUSE IS MENTIONED IN T HE SALE DEED TO SHOW THAT ASSESSEE PURCHASED OLD HOUSE. 6. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER O F AUTHORITIES BELOW. 7. AFTER CONSIDERING THE RIVAL SUBMISSION, I AM OF THE VIEW AUTHORITIES BELOW WERE NOT JUSTIFIED IN DENYING EXEMPTION UNDER SECTI ON 54F OF THE ACT. THE ASSESSEE FILED COPY OF THE SALE DEED OF THE PROPERT Y IN QUESTION PURCHASED BY THE ASSESSEE BEARING NO. 50/37 L, MODEL TOWN AMBALA CITY WHICH WAS IN FAVOUR OF THE EARLIER PURCHASER SMT. REENA JAIN WHICH WAS PURCHASED FROM SELLER SHRI. PARVEJ ANDRUES. COPY OF WHICH IS FILED AT PAGE 4 OF THE PAPER BOOK IN WHICH IT IS SPECIFICALLY MENTIONED THAT IT IS AN 50 YEARS OLD H OUSE HAVING ROOMS ETC. AND THAT IT IS REGISTERED WITH MUNICIPALITY OF AMBALA C ITY. IT IS A RESIDENTIAL HOUSE AND HAS WATER AND SEWERAGE CONNECTION. THE POSSESSION O F THE HOUSE IS HANDED OVER TO THE PURCHASER. THE DATE OF THIS SALE DEED I S 15/10/2007. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE SMT REENA JAIN LATER ON SO LD THIS HOUSE TO OTHER OWNER 4 AND ASSESSEE LATER ON PURCHASED THIS HOUSE FROM SMT . SHWETA SHARMA VIDE REGISTERED SALE DEED DT. 07/10/2011, COPY OF WHICH FILED AT PAGE 20 OF THE PAPER BOOK. THOUGH IN THIS SALE DEED THE WORD PLOT IS MEN TIONED BUT IT IS ALSO MENTIONED THAT THE PURCHASER I.E., ASSESSEE ON THE BASIS OF THE SALE DEED WILL HAVE RIGHT TO GET THE PROPERTY TRANSFERRED IN THE R ECORD OF THE MUNICIPAL CORPORATION AMBALA. COPY OF NAKAL JAMA BANDI OF MUN ICIPAL CORPORATION, AMBALA CITY ARE FILED AT PAGE 28 AND 29 OF THE PAPE R BOOK WHICH GIVES THE NAME OF EARLIER OWNER OF THE PROPERTY AND LATER ON TRANSFERRED IN THE NAME OF SMT. REENA JAIN THEN TO SMT. SHWETA SHARMA AND THEN IN THE NAME OF THE ASSESSEE. IT DESCRIBED THE PROPERTY IN QUESTION AS RESIDENTIAL CUM COMMERCIAL. IT IS VERY WELL SETTLED THAT HOUSE TAX IS PAYABLE ONLY IN RESPECT OF THE CONSTRUCTED PROPERTY. NO HOUSE TAX IS PAYABLE FOR THE PLOT THER EFORE THE ENTRIES RECORDED IN THE MUNICIPAL CORPORATION OF AMBALA CITY ARE RELEVA NT FACTOR TO PROVE THAT THE PROPERTY IN QUESTION WAS REGISTERED AS RESIDENTIAL CUM COMMERCIAL PROPERTY THEREFORE IT WAS A CONSTRUCTED PROPERTY MAY BE THE OLD ONE. THE COPY OF THE WATER / SEWERAGE CHARGE ISSUED BY THE PUBLIC HEALTH ENGG. DEPARTMENT AMBALA CITY IS FILED WHICH IS DATED 31/03/2015 TO S HOW THAT WATER SUPPLY WAS PROVIDED IN THE HOUSE IN QUESTION. THE EVIDENCE ON RECORD ARE SUFFICIENT TO HOLD THAT ASSESSEE PURCHASED AN OLD RESIDENTIAL HOUSE FR OM ITS EARLIER OWNER BUT ASSESSEE HAS DEMOLISHED THE HOUSE IN QUESTION LATER ON THEREFORE AFTER SEVERAL YEARS IF INSPECTION IS DONE BY ITI IN THE PROPERTY IN QUESTION, THERE WOULD BE NO CONSTRUCTION IN THE PROPERTY, THEREFORE REPORT OF T HE INSPECTOR MAY NOT BE THE RELEVANT FACT TO DECIDE THE ISSUE FOR DEDUCTION UND ER SECTION 54 F OF THE ACT. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE RE PORT OF THE INSPECTOR EVEN REVEALED THAT THE PROPERTY IS COVERED BY BOUNDARY W ALL ALONGWITH MARKS/SIGNS OF OLD HOUSE THEREFORE THE AUTHORITIES BELOW SHOULD NOT HAVE REJECTED THE CLAIM OF ASSESSEE BY MERELY CONSIDERING THE FACT THAT PLO T IS MENTIONED IN THE SALE DEED. IT IS KNOWN FACT THAT SALE DEED ARE PREPARED BY THE DEED WRITERS AND THERE MAY BE A MISTAKE IN MENTIONING THE PROPERTY I N QUESTION AS PLOT ONLY. 5 CONSIDERED THE ABOVE DISCUSSION, IN THE LIGHT OF TH E RELEVANT AND COGENT MATERIAL PRODUCED ON RECORD, I AM OF THE VIEW THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THAT HE HAS PURCHASED A RESIDENTIAL HOUSE WITH IN THE MEANING OF SECTION 54 F OF THE ACT FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 54 F OF THE ACT. THE ORDERS OF THE AUTHORITIES BELOW ARE ACCORDINGLY SET ASIDE AND AO IS DIRECTED TO GRANT EXEMPTION / DEDUCTION UNDER SE CTION 54F OF THE ACT TO THE ASSESSEE AND SHAL RECALCULATE THE LTCG AS PER LAW. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 01/06/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT(A), THE DR